Healthcare Alert - Arbitrations Made Easier
The South Carolina Court of Appeals, in a decision entitled William F. Pearson, M.D. v. Hilton Head Hospital, et al. (Slip Op. No. 5036), has held that a non-signatory can be compelled to arbitrate disputes with related parties, who are signatories to an arbitration agreement, when the dispute arises out of the same subject matter.
This decision should help healthcare providers litigate any dispute, subject to a contractual arbitration agreement, in a single forum, whether the dispute involves commercial or employment disputes or allegations of personal injury.
In this case, Locum, a medical placement corporation, contracted to place Dr. Pearson with the Hilton Head Hospital. Separate contracts between the Hospital and Locum and between Dr. Pearson and Locum contained arbitration agreements. However, there was no contract or arbitration agreement directly between Dr. Pearson and the Hospital. Dr. Pearson was terminated and filed a single Complaint against the Hospital and Locum alleging, among other things, retaliatory discharge, defamation and breach of contract. The Hospital and Locum filed separate Motions to Compel Arbitration in response to Dr. Pearson’s claims. The Circuit Court granted Locum’s Motion to Compel due to the arbitration agreement between Dr. Pearson and Locum, but the Circuit Court denied the Hospital’s Motion to Compel Arbitration due to an absence of a contract and arbitration agreement between the Hospital and Dr. Pearson.
On appeal, the South Carolina Court of Appeals reversed the Circuit Court’s denial of the Hospital’s Motion to Compel, held that Dr. Pearson knowingly accepted the benefits of the contract between the Hospital and Locum, and found that Dr. Pearson’s causes of action against the Hospital arose as a result of Dr. Pearson being placed at the Hospital by Locum. As a result, Dr. Pearson’s arbitration agreement with Locum encompassed the subject matter of Dr. Pearson’s dispute with the Hospital, and Dr. Pearson could be compelled to arbitrate his dispute with the Hospital, even in the absence of a contractual agreement between the two to arbitrate.
The South Carolina Court of Appeals’ ruling in this case should be helpful to defendant healthcare providers not only in commercial or employment disputes, such as the one involving Dr. Pearson and the Hilton Head Hospital, but also in those involving personal injury allegations. A strong argument can now be made that a plaintiff can be compelled to arbitrate with all of the defendant healthcare providers in a single arbitration proceeding, even if the plaintiff does not have an agreement to arbitrate with all the defendants, as long as the dispute arises from the same subject matter and the plaintiff had accepted the benefits of the contract or agreement.
The legal environment continues to improve in South Carolina for the enforceability of arbitration agreements. To discuss any questions you may have about arbitration provisions in contracts or admission agreements or the arbitrability of disputes, please contact the author, or any member of the healthcare group.
