# Board of Trustees of The University of Alabama, The v. Humana Inc

> District Court, N.D. Alabama · April 23, 2024

URL: https://www.frixlaw.com/law-library/cases/9992137

## Case

- **Court:** District Court, N.D. Alabama
- **Decided:** April 23, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9992137

## How later opinions describe it (automated extraction)

- noting that the federal policy favoring arbitration is taken into consideration even in applying ordinary state law
- recognizing that courts should “rigorously enforce arbitration agreements”
- finding that the language “pursuant to the then-prevailing commercial arbitration rules of the [AAA]” incorporated the AAA arbitration rules

## Opinion text

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION

THE BOARD OF TRUSTEES OF THE }
UNIVERSITY OF ALABAMA, }
}
Plaintiff, }
}
v. } Case No.: 2:24-cv-00165-RDP
}
HUMANA, INC. et al, }
}
Defendants.

MEMORANDUM OPINION

This matter is before the court on Defendants’ Motion to Compel Arbitration, or
Alternatively, Motion to Dismiss (Doc. # 17) and Defendants’ Motion to Stay Discovery and
Federal Rule of Civil Procedure 16’s Requirements (Doc. # 23). These Motions have been fully
briefed (Docs. # 17, 23, 25, 27-29) and are ripe for review. After careful consideration, the court
concludes that Defendants’ Motions are due to be granted in part and denied in part as moot.
I. Background
Plaintiff the Board of Trustees of the University of Alabama (“UAB Hospital”)1 brings this
action against Defendants Humana, Inc., Humana Insurance Company, Humana Health Plan, Inc.,
and fictitious defendants 1-8 (collectively, “Humana” or “Defendants”). (Doc. # 1-1 at 2). Plaintiff
and Defendants are both parties to the “Letter of Agreement – Provider Status and Payment for
Humana Medicare Advantage and Group Retiree Members” (the “Agreement”). (Id. ¶ 1). Under

1 The Board of Trustees of the University of Alabama system (“Board of Trustees”) is the named Plaintiff in
this case. However, the facts alleged in the complaint involve the University of Alabama at Birmingham Hospital
(“UAB Hospital”). (Doc. # 1-1 at 2). Thus, for the sake of clarity, the court will refer to Plaintiff Board of Trustees as
UAB Hospital.
the Agreement, UAB Hospital received reimbursements for services rendered to Defendants’
Medicare Advantage members. (Id. ¶ 2).
On January 9, 2024, Plaintiff filed this action in the Circuit Court of Jefferson County,
Alabama, and on February 9, 2024, the case was removed to this court. (Doc. # 1). In its complaint,

Plaintiff asserts claims based on three theories of recovery: (1) breach of contract; (2) unjust
enrichment; and (3) quantum meruit. (Doc. # 1-1 ¶¶ 37-54).
On March 1, 2024, Defendants filed their Motion to Compel Arbitration. (Doc. # 17). In
support of their motion, Defendants rely on the Hospital Participation Agreement (“HPA”) (Doc.
# 21) between Plaintiff and Health Value Management, Inc. d/b/a ChoiceCare Network
(“ChoiceCare”), an entity that is a “wholly-owned subsidiary of Defendant Humana, Inc.” (Doc.
# 17). Of relevance is the arbitration provision included in the HPA, which provides, in relevant
part:
GRIEVANCE AND APPEALS PROCESS/BINDING ARBITRATION
11.2 In the event of a dispute between [Plaintiff] and ChoiceCare which cannot
be settled by a mutual agreement, including, without limitation, a dispute involving
the interpretation of any provision of this Agreement or otherwise arising out of the
parties’ business relationship[,] the performance of this Agreement by [Plaintiff] or
ChoiceCare, or allegations or claims involving violations of state laws or
regulations other than laws or regulations which provide for resolution of disputes
through regulatory channels, state or federal laws or regulations, such dispute shall
be resolved by binding arbitration, conducted by a single arbitrator selected by the
parties from a panel of arbitrators proposed by the American Arbitration
Association (AAA). … The arbitration shall be conducted in [Alabama], in
accordance with and subject to the Commercial Arbitration Rules of the AAA then
in effect, or under such other mutually agreed upon guidelines.
(Doc. # 21-1 at 7).
Defendants seek to compel arbitration in this case because, they contend, Defendants can
enforce the arbitration clause in the HPA. (Doc. # 17). Plaintiff argues in response that, because
Plaintiff is not suing under the HPA -- an agreement to which Defendants are non-signatories --
but rather under the Letter of Agreement between Plaintiff and Defendants, the court, rather than
an arbitrator, should decide whether Defendants can compel arbitration. (Doc. # 25).
II. Standard of Review
In deciding a motion to compel arbitration, courts determine only whether the parties
agreed to arbitrate and, if so, whether their agreement encompasses the asserted claims. See
Lambert v. Austin Ind., 544 F.3d 1192, 1195 (11th Cir. 2008). If both conditions are met, courts

must compel arbitration. See Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (“By
its terms, the Act leaves no place for the exercise of discretion by a district court . . .”); John B.
Goodman Ltd. P’ship v. THF Constr., Inc., 321 F.3d 1094, 1095 (11th Cir. 2003) (internal citation
omitted) (“Under the FAA, a district court must grant a motion to compel arbitration if it is satisfied
that the parties actually agreed to arbitrate the dispute.”); 9 U.S.C. § 3. If the court determines the
plaintiff agreed to arbitrate her asserted claims, the court must either dismiss or stay the action
pending arbitration. Lambert, 544 F.3d at 1195.
The court’s ruling is “in effect a summary disposition of the issue of whether or not there
has been a meeting of the minds on the agreement to arbitrate,” and the standard of review is
analogous to a summary judgment motion. In re Checking Acct. Overdraft Litig., 754 F.3d 1290,

1294 (11th Cir. 2014) (internal quotation marks omitted). Accordingly, the movant must establish
“that there is no genuine dispute as to any material fact” under Rule 56(a) on the question of
whether the parties agreed to arbitrate. “As in a traditional summary judgment motion, an
examination of substantive law determines which facts are material.” Burch v. P.J. Cheese, Inc.,
861 F.3d 1338, 1346 (11th Cir. 2017) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)). A fact is material “if, under the applicable substantive law, it might affect the outcome of
the case.” Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir. 2004). A genuine
dispute as to a material fact exists where “the nonmoving party has produced evidence such that a
reasonable factfinder could return a verdict in its favor.” Waddell v. Valley Forge Dental Assocs.,
Inc., 276 F.3d 1275, 1279 (11th Cir. 2001).
III. Analysis
Under the Federal Arbitration Act (“FAA”), a written arbitration provision in a “contract
evidencing a transaction involving commerce . . . shall be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.

The FAA “reflect[s] both a liberal policy favoring arbitration, and the fundamental principle that
arbitration is a matter of contract.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S.
Ct. 1740 (2011) (citation and quotations omitted). The preference for arbitration is so strong that
any doubts concerning the arbitrability of a dispute must be resolved in favor of arbitration. Doe
v. Princess Cruise Lines, Ltd., 657 F.3d 1204, 1213 (11th Cir. 2011) (internal citation omitted);
see also Picard v. Credit Sols., Inc., 564 F.3d 1249, 1253 (11th Cir. 2009) (recognizing that courts
should “rigorously enforce arbitration agreements”) (internal quotation marks omitted).
It is well established in this Circuit that, when analyzing a motion to compel arbitration,
courts must first address whether a binding arbitration agreement arose under both federal law and
the state law that covers the disputed claims. Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359,

1368 (11th Cir. 2005) (noting that the federal policy favoring arbitration is taken into consideration
even in applying ordinary state law). If such an agreement arose, the FAA directs a court to enter
an order to compel arbitration and dismiss (or, alternatively, stay) all further proceedings in the
action until arbitration has been completed. 9 U.S.C. §§ 3, 4.
When federal courts interpret arbitration agreements, state contract law governs and directs
the analysis of whether the parties committed an issue to arbitration. Parnell v. CashCall, Inc., 804
F.3d 1142, 1144 (11th Cir. 2015) (citing First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944,
115 S. Ct. 1920, 1924 (1995)); see also Caley, 428 F.3d at 1368 (“Thus, in determining whether a
binding agreement arose between the parties, courts apply the contract law of the particular state
that governs the formation of contracts.”). Under Alabama law, a binding agreement is formed
when there is an offer, acceptance, consideration, and “mutual assent to terms essential to the
formation of a contract.” S. Energy Homes, Inc. v. Hennis, 776 So. 2d 105, 108 (Ala. 2000)

(emphasis omitted) (quoting Ex parte Grant, 711 So. 2d 464, 465 (Ala. 1997)).
Because arbitration is a matter of contract, the Supreme Court of the United States and the
Eleventh Circuit have recognized that “parties may agree to arbitrate gateway questions of
arbitrability including the enforceability, scope, applicability, and interpretation of the arbitration
agreement.” Jones v. Waffle House, Inc., 866 F.3d 1257, 1264 (11th Cir. 2017) (quoting Rent-A-
Center, West, Inc. v. Jackson, 561 U.S. 63, 68-69 (2010)); Attix v. Carrington Mortg. Servs., LLC,
35 F.4th 1284, 1295 (11th Cir. 2022). “Just as the arbitrability of the merits of a dispute depends
upon whether the parties agreed to arbitrate that dispute, so the question ‘who has the primary
power to decide arbitrability’ turns upon what the parties agreed about that matter.” First Options
of Chi., Inc., 514 U.S. at 943 (citing AT&T Techs., Inc. v. Commc’n Workers, 475 U.S. 643, 649,

106 S. Ct. 1415, 1418 (1986) (finding that parties may agree to arbitrate arbitrability issues)); Attix,
35 F.4th at 1289. So, while issues of arbitrability are generally decided by the court, parties may
agree to delegate this decision to an arbitrator. Wiggins v. Warren Averett, LLC, 307 So. 3d 519,
522-23 (Ala. 2020) (quoting Regions Bank v. Rice, 209 So. 3d 1108, 1110 (Ala. 2016)).
When an arbitration agreement contains a delegation provision -- an agreement by the
parties to arbitrate gateway issues of arbitrability -- “a court possesses no power to decide the
arbitrability issue. That is true even if the court thinks that the argument that the arbitration
agreement applies to a particular dispute is wholly groundless.” Neal v. GMRI, Inc., No. 1:19-cv-
647-RAH, 2020 WL 698270, at *4 (M.D. Ala. Feb. 11, 2020) (internal citations omitted) (quoting
Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63, 139 S. Ct. 524, 529 (2019)). “Only
if [a court] determine[s] that the delegation clause is itself invalid or unenforceable may [it] review
the enforceability of the arbitration agreement as a whole.” Parm v. Nat’l Bank of Cal., N.A., 835
F.3d 1331, 1335 (11th Cir. 2016); Parnell, 804 F.3d at 1144. However, as the Supreme Court

explained in Kaplan, “[c]ourts should not assume that the parties agreed to arbitrate arbitrability
unless there is clear and unmistakable evidence that they did so.” 514 U.S. at 944, 115 S. Ct. at
1924 (internal quotation marks omitted). Absent a challenge to the delegation provision itself,
federal courts must treat the delegation provision “as valid under § 2, and must enforce it under §§
3 and 4, leaving any challenge to the validity of the Agreement as a whole for the arbitrator.” Rent-
A-Center, 561 U.S. at 72, 130 S. Ct. at 2779.
As this review of relevant case law shows, the court’s role with respect to arbitrability is
narrow. In this case, the parties do not dispute the validity of the HPA, nor the arbitration provision
included in the HPA. Rather, they dispute whether Defendants, as nonsignatories, can enforce this
arbitration provision. The court must first assess whether the HPA clearly and unmistakably

delegates the question of arbitrability to an arbitrator. Then, the court will consider whether
Plaintiff has specifically challenged the validity and/or enforceability of the parties’ delegation
agreement.
A. Plaintiff and ChoiceCare clearly and unmistakably agreed to delegate
questions of arbitrability to an arbitrator.

Because Plaintiff and ChoiceCare agreed to rely on Alabama laws, rules, and regulations
under the arbitration provision, the court applies Alabama law in its analysis. See Parnell, 804
F.3d at 1147. (See also Doc. # 21-1 at 14).
Under Alabama law and the terms of the HPA, the parties agreed to submit questions of
arbitrability to an arbitrator. The Supreme Court of Alabama and the Eleventh Circuit have each
held that when parties incorporate the rules of the AAA into their agreement, “they clearly and
unmistakably agree that the arbitrator should decide whether the arbitration clause applies.” U.S.
Nutraceuticals, LLC v. Cyanotech Corp., 769 F.3d 1308, 1311 (11th Cir. 2014) (alterations and
internal quotation marks omitted) (quoting Terminix Int’l Co., L.P. v. Palmer Ranch Ltd. P’ship,

432 F.3d 1327, 1332 (11th Cir. 2014)); Wiggins, 307 So. 3d at 523 (“When an arbitration provision
indicates that the AAA rules will apply to the arbitration proceedings, we have held that it is ‘clear
and unmistakable’ that substantive-arbitrability decisions are to be made by the arbitrator”);
Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 1074 (9th Cir. 2013) (“Virtually every circuit
to have considered the issue has determined that incorporation of the [AAA] arbitration rules
constitutes clear and unmistakable evidence that the parties agreed to arbitrate arbitrability.”). A
plain reading of the arbitration provision in the HPA makes clear that the signatories agreed that
“[t]he Arbitration shall be conducted in [Alabama], in accordance with and subject to the
Commercial Arbitration Rules of the AAA then in effect, or under such other mutually agreed upon
guidelines.” (Doc. # 21 at 7) (emphasis added); see also Fed. Ins. Co. v. Reedstrom, 197 So. 3d

971, 976 (Ala. 2015) (finding that the language “pursuant to the then-prevailing commercial
arbitration rules of the [AAA]” incorporated the AAA arbitration rules). Commercial Arbitration
Rule 7(a), which governs an arbitrator’s jurisdiction, provides, “[t]he arbitrator shall have the
power to rule on his or her own jurisdiction, including…the arbitrability of any claim or
counterclaim.” Comm. Arb. R. and Mediation Proc. R-7(a). Thus, because the HPA incorporates
the rules of the AAA, questions of arbitrability have been delegated to the arbitrator.
It is the court’s task then to determine what constitutes arbitrability. The Eleventh Circuit
has instructed that arbitrability includes questions about the “‘validity’ or ‘enforceability’ of an
arbitration agreement—i.e., whether the parties have entered into a legally operative arbitration
agreement that is enforceable under law.” Attix, 35 F.4th at 1299; see Parnell, 804 F.3d at 1146
(internal citation omitted) (“[P]arties may agree to commit even threshold determinations to an
arbitrator, such as whether an arbitration agreement is enforceable.”). Arbitrability also covers
whether an arbitration provision applies to nonparties or nonsignatories, as is the issue here.

Wiggins, 307 So. 3d at 522 (citing Anderton v. The Practice-Monroeville, P.C., 164 So. 3d 1094,
1101 (Ala. 2014) and MTA, Inc. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 114 So. 3d 27, 32
(Ala. 2012)); Neal, 2020 WL 698270, at *4-5; see Lawson v. Life of the South Ins. Co., 648 F.3d
1166, 1171 (11th Cir. 2011).
Plaintiff contends that Defendants cannot enforce the arbitration provision as (1) they are
not parties to the HPA and (2) Plaintiff has not sued under the HPA. However, as Alabama law
makes clear, such an assertion presents a question of arbitrability, which is a matter reserved for
the arbitrator.
Plaintiff also argues that, although it agreed to arbitrate issues involving ChoiceCare as a
signatory of the HPA, it did not agree to allow an arbitrator to decide whether Defendants can

enforce the HPA’s arbitration provision. See Rogers v. Tug Hill Operating, LLC, 76 F.4th 279,
288 (4th Cir. 2023). While courts in other Circuits may decide this issue differently, the law in
Alabama provides that, in this context, an arbitrator must decide whether nonsignatories to an
arbitration clause may enforce that arbitration provision. As discussed below, Plaintiff has not
challenged the delegation provision, only whether the delegation provision is valid as to
Defendants.
B. Plaintiff has not specifically challenged the delegation provision.
Plaintiff and ChoiceCare clearly and unmistakably agreed to the delegation provision by
incorporating the AAA Rules into the HPA. In a circumstance like this, a court retains jurisdiction
for a limited purpose — to review any challenge a party makes to a delegation provision. When a
delegation provision is not challenged, a court must treat the delegation provision as valid. Rent-
A-Center, 561 U.S. at 72, 130 S. Ct. at 2779. Plaintiff concedes (1) that it agreed to the delegation
provision and (2) that the delegation would apply to disputes between Plaintiff and ChoiceCare (if
ChoiceCare were the party specifically named in this action). (Doc. # 25 at 10). There is no direct
challenge to the validity of the delegation provision. As to the dispute between it and Humana,
Plaintiff advances only a general challenge to the applicability of the arbitration provision and
HPA.’ Therefore, the court must treat the delegation provision as valid, and it is for the arbitrator
to determine the issue of arbitrability. Rent-A-Center, 561 U.S. at 72.
IV. Conclusion
Here, the HPA clearly and unmistakably delegates the question of arbitrability to an
arbitrator and Plaintiff has not directly challenged that delegation provision. Therefore,
Defendants’ Motion to Compel Arbitration (Doc. # 17) is due to be granted in part to the extent it
seeks to compel the parties to arbitrate the issue of arbitrability. Accordingly, Defendants’ Motion
to Stay proceedings (Doc. # 23) is due to be denied as moot.
An order consistent with this Memorandum Opinion will be entered.
DONE and ORDERED this April 23, 2024.

UNITED STATES DISTRICT JUDGE

? To be sure, Plaintiff only makes reference to the delegation provision in one context: to reiterate its argument
that the arbitration provision does not apply in this case. (Doc. # 25 at 8, 10). Plaintiff contends that Defendants’
arguments in favor of arbitration ignore the fact that they are not signatories to the HPA. (/d.). The court acknowledges
that Defendants did not sign the HPA; however, this argument is not a challenge to the delegation provision but rather
how the HPA applies. See Rent-A—Center, 561 U.S. at 72.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9992137. Public record. Not legal advice.