M3 Healthcare Solutions v. Family Practice Associates, P.A.

996 A.2d 1279, 2010 Del. LEXIS 242, 2010 WL 2163882
CourtSupreme Court of Delaware
DecidedMay 28, 2010
Docket691, 2009
StatusPublished
Cited by2 cases

This text of 996 A.2d 1279 (M3 Healthcare Solutions v. Family Practice Associates, P.A.) is published on Counsel Stack Legal Research, covering Supreme Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
M3 Healthcare Solutions v. Family Practice Associates, P.A., 996 A.2d 1279, 2010 Del. LEXIS 242, 2010 WL 2163882 (Del. 2010).

Opinion

STEELE, Chief Justice:

M3 Healthcare Solutions sought modification, vacation, or correction of an arbitration award, in its answer to Family Practice Associates, P.A.’s complaint to confirm that award. The Vice Chancellor held that M3’s answer did not constitute a statutorily required application to contest an award and, in any case, M3 failed to assert sufficient grounds to alter the award. Although the Vice Chancellor incorrectly decided that M3 improperly applied for modification, vacation or correction, given that Delaware is a liberal pleading jurisdiction, we agree with the remainder of the Vice Chancellor’s decision and AFFIRM the judgment.

FACTUAL AND PROCEDURAL HISTORY

FPA, a medical practice, entered into a billing services agreement with M3, a medical billing company. FPA and M3 agreed to arbitrate any dispute that arose between them.

On March 13, 2007, FPA filed a demand for arbitration with the American Arbitration Association. On March 24, 2009, the arbitrator issued a written arbitration award in favor of FPA. The arbitration award required M3 to pay FPA (1) the principal amount of $60,457.32; (2) $18,834.93 for interest at an 11.25% rate from June 30, 2006; (3) post-award interest at the rate of 11.25%; and (4) $19,103.01 for arbitration costs and expenses.

On April 23, 2009, FPA filed a complaint 1 to confirm the arbitration award. On May 15, M3 filed an answer to FPA’s complaint. M3’s answer presented the following objections: (1) the arbitrator erroneously awarded FPA fees and expenses barred by 10 Del. C. § 5712; (2) the arbitrator should have awarded interest to FPA from the date of the arbitration *1282 award because FPA caused the delay in the resolution with excessive unsupported demands, including refusing to settle the matter for an amount greater than the principle amount awarded; (3) FPA did not properly verify its complaint as Court of Chancery Rule 3(aa) requires; and, (4) the arbitration award should be vacated pursuant to 10 Del. C. § 5714(a)(4) because the arbitrator permitted the testimony of a previously unidentified witness and allowed that witness to offer testimony concerning the internal working guidelines of an insurance company without requiring the witness to produce the internal working guidelines for cross-examination. M3’s answer requested that the Vice Chancellor vacate or modify the arbitration award.

On July 31, 2009, FPA filed a motion for summary judgment seeking confirmation of the arbitration award. In FPA’s opening brief in support of its motion for summary judgment, FPA focused primarily on M3’s failure to file a timely motion or application to vacate or modify the award within the 90-day period prescribed by 10 Del. C. §§ 5714 and 1715. FPA’s opening brief also asserted that M3 had failed to assert the statutory bases for vacating or modifying an arbitration award under 10 Del. C. § 5714(a).

On August 25, 2009, M3 filed an answering brief opposing summary judgment. FPA’s motion for summary judgment alleged that M3 had applied untimely for a modification and vacation of the arbitration award.

In its reply brief, FPA responded to M3’s arguments and also argued that “even if [M3’s] affirmative defenses are deemed timely filed and effective for the purposes of the statutory scheme, such defenses do not fit within the parameters of the limited statutory grounds for vacating or modifying an arbitration award.” M3 objected to the additional arguments and asked the Vice Chancellor to strike those arguments. The Vice Chancellor denied M3’s requests.

Following a hearing on October 22, 2009, the Vice Chancellor granted summary judgment in favor of FPA for two reasons: (1) M3’s answer containing “affirmative defenses” did not constitute the appropriate action necessary to preserve its asserted grounds for modifying, vacating, and correcting the arbitration award under 10 Del. C. §§ 5712, 5714, and 5715; and, (2) even if asserted properly, M3’s asserted grounds for modifying, vacating, and correcting the arbitration award created no triable issues of fact on the existence of a statutory basis to vacate, modify, or correct the arbitration award, and that summary judgment in favor of FPA would still be appropriate.

STANDARD OF REVIEW

We review the Vice Chancellor’s grant of summary judgment de novo, both as to the facts and the law. 2 We must evaluate whether the record shows that there is no genuine issue of material fact, drawing our own inferences in making factual determinations and in evaluating the legal significance of the evidence. 3 We must view the facts of the record, including' any reasonable hypotheses or inferences, in the light most favorable to the non-moving party (here, M3). 4 On review, we must determine whether a Vice Chancellor’s decision to strike “from any pleading any insufficient defense or any *1283 redundant, immaterial, impertinent, or scandalous matter” 5 was clearly wrong. 6

ANALYSIS

1. M3 timely notified FPA of its contention that the arbitration award should be vacated or modified by raisiny the issue in its answer — an answer filed within ninety days of the arbitration award.

The Vice Chancellor concluded that M3’s “affirmative defenses” did not constitute an “application” within the meaning of 10 Del. C. §§ 5713, 5714(b), and 5715(a) and the Court of Chancery Rules. The Uniform Arbitration Act instructs a court to confirm an arbitration award upon complaint made within one year of its delivery to the party “unless within the time limits hereinafter imposed grounds are urged for vacating or modifying or correcting the award....” 7 The UAA requires a party urging the court to vacate, modify or correct an arbitration award to file a complaint or application with the court within 90 days after delivery of a copy of the award. 8 Although the UAA does not define “complaint or application,” Delaware’s liberal pleading standard permits a party to timely move, answer, or otherwise responsively plead to a complaint.

The UAA specifies that the “law or rule of Court in any civil action” shall govern actions described in § 5701. 9 Thus, Court of Chancery Rule 56, which allows a party to present a defense in “pleadings, depositions, answers to interrogatories and admissions on file,” establishes the notice pleading standard. The initial question here is whether the undefined “application” must be by complaint or motion, or can the “application” be raised in an answer to a complaint to confirm an award— as any “subsequent pleading.”

We hold that the application may be raised in an answer to a complaint to confirm an award.

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996 A.2d 1279, 2010 Del. LEXIS 242, 2010 WL 2163882, Counsel Stack Legal Research, https://law.counselstack.com/opinion/m3-healthcare-solutions-v-family-practice-associates-pa-del-2010.