The Texas Supreme Court has held that an arbitration agreement signed as a condition of continued employment was not illusory and did not require a savings clause. In In re 24R, Inc., D/B/A The Boot Jack, No. 09-1025 (Tex. Oct. 22, 2010), Frances Cabrera was an at-will employee for 24R, Inc. d/b/a “The Boot Jack” for approximately 15 years. In 2003, 2004 and 2005 she signed an arbitration agreement as a condition of continued employment. In 2007, she developed a medical condition and was ordered by her doctor to eat all of her meals prior to 6 pm. Approximately four months later, Cabrera was terminated by The Boot Jack. She filed suit alleging age and disability discrimination on the theory she was terminated because she requested accommodations to comply with the directions of her doctor. The Boot Jack filed a motion to compel arbitration pursuant to the parties’ 2005 arbitration agreement. The trial court denied the motion to compel arbitration and The Boot Jack sought mandamus relief in the court of appeals. The Corpus Christi Appeals Court denied The Boot Jack’s writ of mandamus (In re 24R, Inc., ___ S.W.3d ___ (Tex. App. Corpus Christi). The Boot Jack then sought mandamus relief from the Texas Supreme Court. Cabrera’s case relied upon the Texas Supreme Court’s decision in In re Halliburton, 80 S.W.3d 566 (Tex. 2002) and a 2003 appellate decision, In re C & H News Co., 133 S.W.3d 642 (Tex. App. – Corpus Christi 2003, orig. proceeding). In Halliburton, the Texas Supreme Court held that the arbitration agreement at issue was not illusory because, although the employer “explicitly reserved the right to unilaterally modify or discontinue the dispute resolution program,” a ten-day notice provision and another provision which stated any amendment could only apply prospectively functioned as a “savings clause” which prevented the employer from avoiding its contractual obligation to arbitrate. Cabrera also relied on the ruling in C & H News which held that an arbitration agreement which incorporated an employee handbook by reference was illusory and unenforceable because the “employer retained the right to unilaterally change the handbook at anytime without prior notice.” Cabrera argued that the arbitration agreement lacked consideration and was illusory because “The Boot Jack retained the right to amend the agreement and was not mutually bound,” and The Boot Jack’s employee manual retained the power to modify or abolish any personnel policy, including the arbitration agreement. The Court disagreed, however, and stated the employee manual was not part of her employment contract because it included an express disclaimer that the “policies and procedures in this manual are not intended to be contractual commitments . . .” The Texas Supreme Court distinguished C & H News, because it found that The Boot Jack’s employee policy manual was a wholly separate document “that does not impose any contractual obligations.” The mere fact that “language in the employee manual recognizes the existence of the arbitration agreement . . . does not diminish the validity of the arbitration agreement as a stand-alone contract.” According to the Court, because the employment contract and arbitration agreement did not incorporate the employee policy manual such that The Boot Jack could have modified the terms at any time without prior notice, the contract and arbitration agreement were not illusory and therefore did not require a Halliburton savings clause. After finding that the arbitration agreement was not illusory, the Texas Supreme Court held that the trial court erred by refusing to compel arbitration, conditionally granted mandamus relief and directed the trial court to vacate its order denying The Boot Jack’s motion to compel arbitration. Disputing blogged here about a similar Texas Supreme Court opinion issued in 2006. Technorati Tags: law, ADR, arbitration

by Holly Hayes In a message to all physicians posted on the American Medical News website this week, Ardis Dee Hoven, MD, chair of the American Medical Association (AMA) Board of Trustees said, “When physicians, hospitals, nurses, technicians, patient advocates and others collaborate, they can help prevent costly hospital admissions and keep patients from cycling between nursing homes and hospitals.” Her message, “Quality care follows when health professionals collaborate,” discusses the role of medical homes and Accountable Care Organizations (ACOs) in integrating and coordinating teamwork between physicians and health care professionals to provide comprehensive care for patients. The most common example of a community-based team approach is the medical home, where collaborative teams of physicians, nurse practitioners and/or physician assistants provide office, hospital and home care. These teams make extensive use of telephone and e-mail consultations and electronic medical records. The medical home model emphasizes consultation rather than referral, and successful medical home patients have greater care coordination, reduced hospitalizations and, ultimately, reduced costs. As in hospital and clinical settings, community-based collaborations depend heavily on communication (both among team members and with patients) and patient compliance — much harder to accomplish in the “real world.” Clearly, EMR systems play a key role in any community-based medical team approach. In his first major public address, Donald M. Berwick, MD, head of the Centers for Medicare & Medicaid Services, announced goals for CMS and specifically called for more community-based collaborations — in the form of interdisciplinary accountable care organizations. ACOs, which were named in the Patient Protection and Affordable Care Act, aim to integrate and coordinate the work of teams of physicians and health care professionals as a way of providing comprehensive care for patients. More recently, the AMA has urged Dr. Berwick and the FTC to make clear that small and solo physician practices can collaborate around health information technology and quality improvement initiatives that make joint negotiation of fees necessary and justifiable, without incurring the sort of organizational costs that make it necessary for physicians to turn to hospitals. Much is currently being written about teamwork and collaboration in the medical setting. Bob Wachter, MD, posted an article on his blog this week titled “Teamwork Training in Healthcare: More Than Just Kumbaya” that says: In this week’s issue of JAMA, (Julia) Neily (RN, MSN, MPH) and colleagues report the results of a teamwork training program implemented in 74 VA facilities. They found that the intervention (not just teamwork training, but more on this later) was associated with a 50% reduction in post-operative mortality, when compared to a contemporaneous control group of 34 facilities that had not yet implemented this training. While the raw mortality reduction is impressive, the finding… (there were 0.5 fewer deaths for every 1000 procedures) makes the results all the more convincing. We are still learning the best ways to teach teamwork: there is good team training and not-so-good team training. Some of the lessons we learned from our experience were: a) everybody needs to participate; nobody can be allowed to opt out (some ORs now require that surgeons and the other members of OR crews participate in teamwork training to maintain their staff privileges, and their hospitals shut down their ORs for a day to allow the training to be conducted with full participation); b) the training must be intensely multidisciplinary (i.e., you need to get docs, nurses, pharmacists, and others sitting together, working through clinical scenarios – teaching teamwork to separated cohorts of physicians or nurses is a perversion of the concept); c) the use of high-tech simulation can help by amping up the drama, but it isn’t crucial; d) leadership endorsement and support of the program is essential; and e) while there are many companies that can be brought in to help design and implement teamwork training programs (many of them staffed by former or active pilots), programs need to be localized and delivered, at least in part, by folks known and respected by the staff, not by outside consultants. Moreover, we learned that a single training program of 4-8 hours, while helpful, won’t have lasting impact unless it is followed by ongoing efforts to reinforce the lessons and the tools. The initial training is like a vaccination; the effect erodes if it isn’t followed by the appropriate boosters. We have written about the application of conflict resolution techniques in healthcare and about the need for conflict engagement specialists to work with healthcare teams to improve patient care. We welcome your thoughts on this timely topic. Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at holly@karlbayer.com. Technorati Tags: Mediation

In a post entitled “Who Will Guarantee the Safety of Off-shore Oil and Gas Facilities?” on Larry Susskind‘s blog, the Consensus Building Approach, he suggests the need for an off-shore oil and gas industry risk management system akin to the Institute for Nuclear Power Operations (INPO) created after the 1979 accident at Three Mile Island. Although licensing and a variety of other aspects of nuclear power plant operations are managed by federal and state agencies, the INPO is: a not-for-profit organization supported by the nuclear industry, but with an accountable board of directors. INPO conducts evaluations of all nuclear power plants every 18 – 24 months. Each evaluation generates a rating of 1 – 5. Any plant with 4 or 5 ratings has a relatively short time to make the necessary safety improvements, or it stands its liability insurance (without which it would have to shut down). INPO trains and accredits the managers of all licensed nuclear facilities in the United States. It undertakes independent evaluations of any “events” and makes sure that its findings are circulated quickly throughout the industry so that the same mistakes are not made again. INPO provides assistance to individual plant operators when they are not sure how to handle particular problems. An adverse INPO finding usually leads to a rapid turnover in corporate leadership. Susskind argues a similar risk management system would benefit the off-shore oil and gas industry: An INPO-like system for Off-shore Oil and Gas would make sure that appropriate[ly] trained people were managing each site, tough safety and risk management standards reflecting best practices were in place, constant surveillance of all facilities was always underway, complete transparency at site was assured, and serious penalties were in place that the whole industry rather than individual operators were obliged to enforce. A new risk management system like this would not infringe on the role of regulatory agencies that must still take the lead in licensing. According to Susskind, the implementation of such a system may also eliminate some of the political pressure placed upon federal regulators in states like Texas that depend on oil and gas revenue. The entire blog post may be viewed here. What do you think? What mechanisms would prevent another off-shore oil and gas disaster? Technorati Tags: mediation

Mike Wolgin of the Miami office of Jorden Burt, LLP has compiled a list of recent cases which address “manifest disregard” of the law in an arbitral context. They include: Paul Green School of Rock Music Franchising, LLC v. Smith, No. 09-2718 (3d Cir., Aug 2, 2010), affirmed a district court’s confirmation of an arbitration award and held that the award did not constitute a “manifest disregard” of the law. The Third Circuit declined to address whether “manifest disregard” is a valid ground for vacatur of an arbitral award under the Federal Arbitration Act (FAA). The case in not precedential, however. In The Burton Corp. v. Shanghai Viquest Precision Industries, Co., No. 10 Civ. 3163 (S.D.N.Y., August 3, 2010), the court denied a petition to vacate an arbitration award and granted a petition to confirm the award because it found the arbitrator did not exceed his authority and the award was not in “manifest disregard” of the law. The court cited a Second Circuit opinion which states “manifest disregard” of the law remains a valid ground for vacating an arbitration award. Kunz v. JHP Enterprises, LLC, No. 1:09CV115 (D. Utah, August 9, 2010), granted a motion to confirm a Financial Industry Regulatory Authority (FINRA) award and stated the panel did not exhibit “manifest disregard” of the law by concluding that Plaintiffs had a duty to disclose information. The court also noted that “the Tenth Circuit has acknowledged a judicially-created basis for vacating an arbitration award when the arbitrators acted in “manifest disregard” of the law.” In Ozormoor v. T-Mobile USA, Inc., No. 08-11717 (E.D. Mich., August 19, 2010), the court denied a motion to vacate an arbitral award and held the arbitrator did not exceed his authority. After noting that the Sixth Circuit has held that an arbitral “award maybe vacated if it was made in ‘manifest disregard of the law,’” the court declared the moving party failed to show that the arbitrator acted in “manifest disregard” of the law when he upheld a one-year limitation provision in the parties’ arbitration agreement. Westerlund v. Landmark Aviation, No. CV09-0686 (C.D. Cal., August 9, 2010), denied motions to vacate and modify an arbitral award and granted a motion to confirm the award. Additionally, because the award was not “completely irrational,” and nothing in the award demonstrated that the arbitrator engaged in “manifest disregard” of the law, the arbitrator did not exceed his powers. The court also stated even if “manifest disregard” of the law had taken place and vacatur were justified, “the appropriate remedy would be to remand the case to the arbitrator for further proceedings.” Manifest Disregard and Overlapping Remedies Cases: Kaliroy Produce Co. v. Pacific Tomato Growers, Inc., No. Civ. 10-160 (D. Ariz., Aug. 4, 2010), denied a motion to vacate an arbitration award and granted a petition to confirm the award. The court held that the New York Convention’s remedies are not exclusive of remedies available under the FAA. Additionally, the court found the arbitral award did not “fail to draw its essence” from the arbitration agreement, violate public policy or demonstrate a “manifest disregard” of the law. The case is on Notice of Appeal to the Ninth Circuit. In F. Hoffmann-La Roche Ltd. v. Qiagen Gaithersburg, Inc., No. 09 Civ. 7326, 7396 (S.D.N.Y., Aug. 11, 2010), the court denied a motion to vacate an international arbitration award and granted a motion to confirm the award because the matter was “international” under the New York Convention although the FAA also applied. Additionally, the court found that the arbitrator did not exceed his authority and did not demonstrate a “manifest disregard” of the law. Disputing has discussed “manifest disregard” of the law many times since the United States Supreme Court decision in Hall Street Associates, LLC v. Mattel, Inc., 128 S.Ct. 1396 (2008). Blogs on the subject may be viewed here, here and here. Technorati Tags: law, ADR, arbitration, manifest disregard of the law