Health Care Auth. for Baptist Health v. Dickson

330 So.3d 805

The HEALTH CARE AUTHORITY FOR BAPTIST HEALTH, an affiliate of UAB Health System, and The Health Care Authority for Baptist Health, an affiliate of UAB Health System d/b/a Prattville Baptist Hospital

v.Leonidas P. DICKSON II

1190179

Supreme Court of Alabama.

January 15, 2021

James E. Williams and J. Flynn Mozingo of Melton, Espy & Williams, PC, Montgomery; and Louis C. Colley, Prattville, for appellants.

Jeffrey C. Kirby, William T. Johnson III, and Chandler Kirby of Kirby Johnson, P.C., Birmingham; David Vickers and Richard B. White of Law Office of Vickers & White, PLLC, Montgomery; and B.T. Gardner, Jr., of Gardner & Gardner, Tuscumbia, for appellee.

STEWART, Justice.

The Health Care Authority for Baptist Health, an affiliate of UAB Health System ("HCA"), and The Health Care Authority for Baptist Health, an affiliate of UAB Health System d/b/a Prattville Baptist Hospital (hereinafter referred to collectively as "the HCA entities"),¹ appeal from an order of the Autauga Circuit Court denying their motion to compel arbitration in an action brought by Leonidas P. Dickson II. We conclude that the HCA entities waived their right to arbitration, and we affirm the order.

Facts and Procedural History

On February 26, 2015, Dickson sustained injuries as a result of an automobile accident. Following the accident, Dickson was taken to Prattville Baptist Hospital ("PBH"), where he was treated and discharged. Dickson was partially covered by a health-insurance policy issued by Blue Cross and Blue Shield of Alabama, Inc. ("BCBS"). PBH was a party to a "Preferred Outpatient Facility Contract" ("the provider agreement") with BCBS, under which the medical care rendered to Dickson in the emergency department at PBH was reimbursable.²

On May 19, 2017, Dickson filed a complaint in the Montgomery Circuit Court, challenging a reimbursement that PBH had received in exchange for Dickson's medical treatment. Dickson's complaint also sought to certify a class of people who were insured by BCBS and who had received care at any hospital operated by HCA's predecessor, Baptist Health, Inc. ("BHI").³ The complaint set forth several causes of action, including breach of contract, conversion, breach of implied contract, breach of fiduciary duty, and conspiracy to commit the aforementioned causes of action.

On June 22, 2017, the HCA entities filed a motion seeking dismissal of the action on the grounds that Dickson had failed to state a claim upon which relief could be granted, that Dickson had failed to join BCBS as an indispensable party, and that venue was improper in Montgomery County pursuant to § 6-3-7, Ala. Code 1975, and, alternatively, requesting the transfer of the case to the Autauga Circuit Court under the doctrine of forum non conveniens, pursuant to § 6-3-21.1, Ala. Code 1975. Over the course of the following year, the parties actively engaged in the discovery process.

On June 15, 2018, the Montgomery Circuit Court entered an order transferring the case to the Autauga Circuit Court ("the trial court"). On October 11, 2018, the trial court conducted a status conference in which it ruled on various pending discovery motions and denied the HCA entities’ motion to dismiss. Subsequently, the HCA entities filed an answer, but that answer did not raise arbitration as a defense.

On January 14, 2019, the HCA entities filed a motion in the trial court renewing a motion they had filed in the Montgomery Circuit Court seeking to stay discovery, for a protective order, to quash subpoenas, and for the entry of a discovery schedule pending the outcome of the request for class certification. On February 14, 2019, the trial court conducted a hearing on all pending motions and directed the parties to prepare a scheduling order for class-related discovery and a hearing on class certification. On February 28, 2019, the parties filed a joint motion for the entry of a class discovery/certification scheduling order, which was granted by the trial court. Thereafter, the parties participated in class-related discovery, including giving notices of intent to serve and issuing of several nonparty subpoenas and responding to interrogatories and requests for production.

On June 20, 2019, the HCA entities filed a motion to compel arbitration on the grounds that Dickson's health-insurance policy with BCBS requires all claims related to the policy to be arbitrated and that the provider agreement also provides for arbitration, contingent upon the arbitration requirements of the BCBS policy. On October 22, 2019, the trial court entered an order denying the HCA entities’ motion to compel arbitration, without providing reasoning for the denial. The HCA entities filed a motion to reconsider the order, which the trial court denied, and the HCA entities appealed. See Rule 4(d), Ala. R. App. P.

Standard of Review

This Court's standard of review of a denial of a motion to compel arbitration is well settled:

" ‘ "This Court reviews de novo the denial of a motion to compel arbitration. Parkway Dodge, Inc. v. Yarbrough, 779 So. 2d 1205 (Ala. 2000). A motion to compel arbitration is analogous to a motion for a summary judgment. TranSouth Fin. Corp. v. Bell, 739 So. 2d 1110, 1114 (Ala. 1999). The party seeking to compel arbitration has the burden of proving the existence of a contract calling for arbitration and proving that the contract evidences a transaction affecting interstate commerce. Id. ‘[A]fter a motion to compel arbitration has been made and supported, the burden is on the non-movant to present evidence that the supposed arbitration agreement is not valid or does not apply to the dispute in question.’ Jim Burke Automotive, Inc. v. Beavers, 674 So. 2d 1260, 1265 n.1 (Ala. 1995) (opinion on application for rehearing)." ’ "

Hoover Gen. Contractors-Homewood, Inc. v. Key, 201 So. 3d 550, 552 (Ala. 2016) (quoting Elizabeth Homes, L.L.C. v. Gantt, 882 So. 2d 313, 315 (Ala. 2003), quoting in turn Fleetwood Enters., Inc. v. Bruno, 784 So. 2d 277, 280 (Ala. 2000) ).

Discussion

The HCA entities raise several arguments on appeal in support of their contention that the trial court erred in denying their motion to compel arbitration, including that Dickson's claims are subject to the arbitration provisions of the BCBS policy and the provider agreement, that the arbitrability of Dickson's claims must be determined by an arbitrator, and that Dickson is equitably estopped from disavowing that arbitration of his claims is appropriate. The HCA entities also argue that they did not waive the right to compel arbitration by failing to raise it as an affirmative defense or by participating in litigation and engaging in class-related discovery. Because our resolution as to the issue of waiver is determinative of the appeal, we address that issue first.

Dickson argues that arbitration is an affirmative defense and that the HCA entities waived that affirmative defense by failing to assert it in their answer. Dickson also argues that the HCA entities waived their right to compel arbitration by substantially invoking the litigation process. Waiver is a defense to arbitration. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The HCA entities contend that they did not waive arbitration by failing to raise it as an affirmative defense in their answer. As a general rule, a party waives an affirmative defense when it fails to raise that affirmative defense in a responsive pleading. Grieser v. Advanced Disposal Serv. Ala., LLC, 252 So. 3d 664, 672 (Ala. Civ. App. 2017). However, it has been held that a defendant does not waive its right to enforce an arbitration clause solely because it did not assert arbitration as an affirmative defense in its initial pleading. Hoover General, 201 So. 3d at 553 ; see Ex parte Hood, 712 So. 2d 341, 346 (Ala. 1998) ("[W]e would also affirm that simply failing to plead in one's answer that a plaintiff's claims are subject to arbitration will not in itself constitute a waiver."). The HCA entities filed an answer on October 19, 2018. The answer did not assert arbitration as an affirmative defense. The HCA entities never amended their answer to include the defense of arbitration. Nonetheless, the HCA entities’ failure to include the defense of arbitration in their answer, alone, does not compel the conclusion that they have waived their right to compel arbitration. See Ex parte Hood, 712 So. 2d at 346.

The appropriate test for determining whether a party has waived its right to arbitration has two prongs: "[(1)] whether the party's actions as a whole have substantially invoked the litigation process and [(2)] whether the party opposing arbitration would be prejudiced if forced to submit its claims to arbitration subsequent to the other party's actions invoking the litigation process." Hoover General, 201 So. 3d at 553. Waiver must be determined " ‘based on the particular facts of each case.’ " Voyager Life Ins. Co. v. Hughes, 841 So. 2d 1216, 1219 (Ala. 2001) (quoting Companion Life Ins. Co. v. Whitesell Mfg., Inc., 670 So. 2d 897, 899 (Ala. 1995) ). Thus, "the trial judge's determinations [as to waiver] should be given substantial weight upon review." Id. Nevertheless, Alabama law also makes it clear that, because there is such a strong federal policy favoring arbitration, " ‘a waiver of the right to compel arbitration will not be lightly inferred, and, therefore, that one seeking to prove waiver has a heavy burden.’ " Id. (quoting Mutual Assurance, Inc. v. Wilson, 716 So. 2d 1160, 1164 (Ala. 1998) ).

Dickson commenced the lawsuit in May 2017 -- more than two years before the HCA entities filed their motion to compel arbitration in June 2019. Subsequent to the filing of the complaint, the HCA entities filed a motion to dismiss; supported the attempt by BHI to be dismissed from the action (see note 3, supra); filed motions to stay discovery; opposed Dickson's nonparty subpoenas; submitted briefs to and...