[Cite as U.S. Acute Care Solutions, L.L.C. v. Doctors Co. Risk Retention Group Ins. Co., 2024-Ohio-605.]
COURT OF APPEALS STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT
U.S. ACUTE CARE SOLUTIONS, LLC. JUDGES: Hon. Patricia A. Delaney, P.J. Plaintiff-Appellant Hon. W. Scott Gwin, J. Hon. John W. Wise, J. -vs-
THE DOCTORS COMPANY RISK Case No. 2023 CA 00084 RETENTION GROUP INSURANCE COMPANY
Defendant-Appellee OPINION
CHARACTER OF PROCEEDING: Civil Appeal from the Court of Common Pleas, Case No. 2023 CV 00510
JUDGMENT: Reversed and Remanded
DATE OF JUDGMENT ENTRY: February 15, 2024
APPEARANCES:
For Plaintiff-Appellant For Defendant-Appellee
CRAIG G. PELINI ANECA E. LASLEY PELINI, CAMPBELL & RICHARD ICE MILLER LLP Bretton Commons - Suite 400 250 West Street 8040 Cleveland Avenue NW Suite 700 North Canton, Ohio 44720 Columbus, Ohio 43215-7509
ANTHONY F. STRINGER K. JAMES SULLIVAN CALFEE, HALTER & GRISWOLD LLP 1405 East Sixth Street Cleveland, Ohio 44114-1607 Stark County, Case No. 2023 CA 00084 2
Wise, J.
{¶1} Appellant U.S. Acute Care Solutions, LLC, appeals the July 12, 2023,
decision of the Stark County Court of Common Pleas granting a Motion to Stay
Proceedings and Compel Arbitration filed by Appellee The Doctors Company Risk
Retention Group Insurance Company.
STATEMENT OF THE FACTS
{¶2} This action arises out of claim for insurance bad faith claims handling.
{¶3} The facts and procedural history relevant to this appeal are as follows:
{¶4} Appellant U.S. Acute Care Solutions, LLC (USACS), is a Delaware
company, with its principal place of business in Canton, Ohio. USACS provides
emergency care services to health care systems across the United States. Appellee, The
Doctors Company Risk Retention Group Insurance Company (TDC), is an insurance
company located in Napa, California.
{¶5} From October 1, 2017, through October 1, 2019, TDC was USACS' medical
malpractice insurer.
{¶6} In January, 2020, David Klein filed a medical malpractice lawsuit in
Stamford, Connecticut Superior Court against Emergency Medicine Physicians of New
Haven County, LLC and Dr. Lyncean Ung (collectively, USACS’ Insureds). The
Complaint generally alleges that Mr. Klein went to the emergency room at Stamford
Hospital complaining of chills, fever and shaking. While at the hospital, he developed
gangrene on his feet and fingers from a bacterial infection. Approximately one month
later, Mr. Klein left the hospital with both legs amputated below the knee and nine of his
fingers partially amputated. Specifically, Mr. Klein alleged that Dr. Ung "failed to timely Stark County, Case No. 2023 CA 00084 3
and properly evaluate, diagnose, and treat Mr. Klein's sepsis, which was allowed to
progress unchecked and untreated for an unreasonable period of time, resulting in DIC
and related sequelae, including amputations of Mr. Klein's legs and portions of his fingers"
and "failed to properly and timely ensure that David Klein received timely treatment with
antibiotics."
{¶7} USACS, whose insured parties had been sued in the medical malpractice
case, had a malpractice insurance policy with TDC with a policy number of 1519815.
USACS tendered the lawsuit to TDC, which accepted coverage. TDC then opened a claim
and assigned a claims specialist to handle the claim process, including attending a
mediation.
{¶8} In December, 2022, after two years of litigation, Mr. Klein reduced his
settlement demand to an amount within policy limits, with the caveat that it expired on
December 31, 2022.
{¶9} After initial and repeated attempts at resolution of the underlying medical
malpractice claim were unsuccessful, allegedly due to extra-contractual bad faith actions
by TDC, USACS’ insured parties were forced to self-fund a settlement of the malpractice
claim or else face the potential risk of a verdict in excess of the limits of coverage under
the malpractice insurance policy.
{¶10} On March 17, 2023, USACS filed a Complaint in the Stark County Court of
Common Pleas alleging a single count of Bad Faith Claims Handling against TDC to
recover the amount of its settlement payment.
{¶11} On April 20, 2023, TDC moved to stay this action and compel arbitration
pursuant to an arbitration endorsement in its insurance policy. USACS opposed the Stark County, Case No. 2023 CA 00084 4
motion arguing that its tort claim does not fall within the scope of TDC's arbitration
endorsement.
{¶12} By Judgment Entry filed July 12, 2023, the trial court granted the motion.
{¶13} It is from this decision Appellant now appeals, raising the following errors
for review:
ASSIGNMENTS OF ERROR
{¶14} “I. THE TRIAL COURT ERRED BY GRANTING APPELLEE'S MOTION TO
STAY PROCEEDINGS AND COMPEL ARBITRATION BASED ON ITS
CONSTRUCTION OF AN ARBITRATION ENDORSEMENT TO APPELLEE'S
INSURANCE POLICY.”
I.
{¶15} In its sole assignment of error, Appellant argues the trial court erred in
granting Appellee’s motion to stay the proceedings and compel arbitration. We agree.
{¶16} Appellant’s assignment of error focuses upon the interpretation and
application of an arbitration clause contained within the insurance policy. When reviewing
a challenge to an arbitration clause, the appropriate standard of review depends on “the
type of questions raised challenging the applicability of the arbitration provision.”
McCaskey v. Sanford-Brown College, 8th Dist. Cuyahoga No. 97261, 2012-Ohio-1543,
2012 WL 1142880, ¶ 7. Whether a controversy is arbitrable under an arbitration provision
of a contract is a question of law for the court to decide; therefore, the standard of review
on those issues is de novo. Church v. Fleishour Homes, Inc., 5th Dist., 172 Ohio App.3d
205, 2007-Ohio-1806, 874 N.E.2d 795, ¶ 9. “Under a de novo standard of review, we give Stark County, Case No. 2023 CA 00084 5
no deference to a trial court's decision.” Hedeen v. Autos Direct Online, Inc., 8th Dist.,
2014-Ohio-4200, 19 N.E.3d 957, ¶ 9 (Citations omitted).
{¶17} “Ohio courts recognize four principles that guide arbitrability[.]” Entire
Energy & Renewables, LLC v. Duncan, 2013-Ohio-4209, 999 N.E.2d 214, ¶ 17 (10th
Dist.), quoting Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d
185, 2006-Ohio-657, 842 N.E.2d 488, ¶ 10-14. They are:
(1) that arbitration is a matter of contract and a party cannot be
required to so submit to arbitration any dispute which he has not agreed to
so submit; (2) that the question whether a particular claim is arbitrable is
one of law for the court to decide; (3) that when deciding whether the parties
have agreed to submit a particular claim to arbitration, a court may not rule
on the potential merits of the underlying claim; and (4) that when a contract
contains an arbitration provision, there is a presumption of arbitrability in the
sense that [a]n order to arbitrate the particular grievance should not be
denied unless it may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers the asserted
dispute.
{¶18} In the instant case, the insurance policy contained the following change
endorsement:
“Any dispute between you and us relating to this Policy (including
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[Cite as U.S. Acute Care Solutions, L.L.C. v. Doctors Co. Risk Retention Group Ins. Co., 2024-Ohio-605.]
COURT OF APPEALS STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT
U.S. ACUTE CARE SOLUTIONS, LLC. JUDGES: Hon. Patricia A. Delaney, P.J. Plaintiff-Appellant Hon. W. Scott Gwin, J. Hon. John W. Wise, J. -vs-
THE DOCTORS COMPANY RISK Case No. 2023 CA 00084 RETENTION GROUP INSURANCE COMPANY
Defendant-Appellee OPINION
CHARACTER OF PROCEEDING: Civil Appeal from the Court of Common Pleas, Case No. 2023 CV 00510
JUDGMENT: Reversed and Remanded
DATE OF JUDGMENT ENTRY: February 15, 2024
APPEARANCES:
For Plaintiff-Appellant For Defendant-Appellee
CRAIG G. PELINI ANECA E. LASLEY PELINI, CAMPBELL & RICHARD ICE MILLER LLP Bretton Commons - Suite 400 250 West Street 8040 Cleveland Avenue NW Suite 700 North Canton, Ohio 44720 Columbus, Ohio 43215-7509
ANTHONY F. STRINGER K. JAMES SULLIVAN CALFEE, HALTER & GRISWOLD LLP 1405 East Sixth Street Cleveland, Ohio 44114-1607 Stark County, Case No. 2023 CA 00084 2
Wise, J.
{¶1} Appellant U.S. Acute Care Solutions, LLC, appeals the July 12, 2023,
decision of the Stark County Court of Common Pleas granting a Motion to Stay
Proceedings and Compel Arbitration filed by Appellee The Doctors Company Risk
Retention Group Insurance Company.
STATEMENT OF THE FACTS
{¶2} This action arises out of claim for insurance bad faith claims handling.
{¶3} The facts and procedural history relevant to this appeal are as follows:
{¶4} Appellant U.S. Acute Care Solutions, LLC (USACS), is a Delaware
company, with its principal place of business in Canton, Ohio. USACS provides
emergency care services to health care systems across the United States. Appellee, The
Doctors Company Risk Retention Group Insurance Company (TDC), is an insurance
company located in Napa, California.
{¶5} From October 1, 2017, through October 1, 2019, TDC was USACS' medical
malpractice insurer.
{¶6} In January, 2020, David Klein filed a medical malpractice lawsuit in
Stamford, Connecticut Superior Court against Emergency Medicine Physicians of New
Haven County, LLC and Dr. Lyncean Ung (collectively, USACS’ Insureds). The
Complaint generally alleges that Mr. Klein went to the emergency room at Stamford
Hospital complaining of chills, fever and shaking. While at the hospital, he developed
gangrene on his feet and fingers from a bacterial infection. Approximately one month
later, Mr. Klein left the hospital with both legs amputated below the knee and nine of his
fingers partially amputated. Specifically, Mr. Klein alleged that Dr. Ung "failed to timely Stark County, Case No. 2023 CA 00084 3
and properly evaluate, diagnose, and treat Mr. Klein's sepsis, which was allowed to
progress unchecked and untreated for an unreasonable period of time, resulting in DIC
and related sequelae, including amputations of Mr. Klein's legs and portions of his fingers"
and "failed to properly and timely ensure that David Klein received timely treatment with
antibiotics."
{¶7} USACS, whose insured parties had been sued in the medical malpractice
case, had a malpractice insurance policy with TDC with a policy number of 1519815.
USACS tendered the lawsuit to TDC, which accepted coverage. TDC then opened a claim
and assigned a claims specialist to handle the claim process, including attending a
mediation.
{¶8} In December, 2022, after two years of litigation, Mr. Klein reduced his
settlement demand to an amount within policy limits, with the caveat that it expired on
December 31, 2022.
{¶9} After initial and repeated attempts at resolution of the underlying medical
malpractice claim were unsuccessful, allegedly due to extra-contractual bad faith actions
by TDC, USACS’ insured parties were forced to self-fund a settlement of the malpractice
claim or else face the potential risk of a verdict in excess of the limits of coverage under
the malpractice insurance policy.
{¶10} On March 17, 2023, USACS filed a Complaint in the Stark County Court of
Common Pleas alleging a single count of Bad Faith Claims Handling against TDC to
recover the amount of its settlement payment.
{¶11} On April 20, 2023, TDC moved to stay this action and compel arbitration
pursuant to an arbitration endorsement in its insurance policy. USACS opposed the Stark County, Case No. 2023 CA 00084 4
motion arguing that its tort claim does not fall within the scope of TDC's arbitration
endorsement.
{¶12} By Judgment Entry filed July 12, 2023, the trial court granted the motion.
{¶13} It is from this decision Appellant now appeals, raising the following errors
for review:
ASSIGNMENTS OF ERROR
{¶14} “I. THE TRIAL COURT ERRED BY GRANTING APPELLEE'S MOTION TO
STAY PROCEEDINGS AND COMPEL ARBITRATION BASED ON ITS
CONSTRUCTION OF AN ARBITRATION ENDORSEMENT TO APPELLEE'S
INSURANCE POLICY.”
I.
{¶15} In its sole assignment of error, Appellant argues the trial court erred in
granting Appellee’s motion to stay the proceedings and compel arbitration. We agree.
{¶16} Appellant’s assignment of error focuses upon the interpretation and
application of an arbitration clause contained within the insurance policy. When reviewing
a challenge to an arbitration clause, the appropriate standard of review depends on “the
type of questions raised challenging the applicability of the arbitration provision.”
McCaskey v. Sanford-Brown College, 8th Dist. Cuyahoga No. 97261, 2012-Ohio-1543,
2012 WL 1142880, ¶ 7. Whether a controversy is arbitrable under an arbitration provision
of a contract is a question of law for the court to decide; therefore, the standard of review
on those issues is de novo. Church v. Fleishour Homes, Inc., 5th Dist., 172 Ohio App.3d
205, 2007-Ohio-1806, 874 N.E.2d 795, ¶ 9. “Under a de novo standard of review, we give Stark County, Case No. 2023 CA 00084 5
no deference to a trial court's decision.” Hedeen v. Autos Direct Online, Inc., 8th Dist.,
2014-Ohio-4200, 19 N.E.3d 957, ¶ 9 (Citations omitted).
{¶17} “Ohio courts recognize four principles that guide arbitrability[.]” Entire
Energy & Renewables, LLC v. Duncan, 2013-Ohio-4209, 999 N.E.2d 214, ¶ 17 (10th
Dist.), quoting Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d
185, 2006-Ohio-657, 842 N.E.2d 488, ¶ 10-14. They are:
(1) that arbitration is a matter of contract and a party cannot be
required to so submit to arbitration any dispute which he has not agreed to
so submit; (2) that the question whether a particular claim is arbitrable is
one of law for the court to decide; (3) that when deciding whether the parties
have agreed to submit a particular claim to arbitration, a court may not rule
on the potential merits of the underlying claim; and (4) that when a contract
contains an arbitration provision, there is a presumption of arbitrability in the
sense that [a]n order to arbitrate the particular grievance should not be
denied unless it may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers the asserted
dispute.
{¶18} In the instant case, the insurance policy contained the following change
endorsement:
“Any dispute between you and us relating to this Policy (including
any disputes regarding our contractual obligations) will be resolved by
binding arbitration in accordance with the Commercial Arbitration Rules and
Mediation Procedures of the American Arbitration Association. ***” Stark County, Case No. 2023 CA 00084 6
{¶19} Prior to this change endorsement, the original policy contained the following
arbitration clause:
{¶20} “Any dispute between you and us relating to this Policy (including any
disputes regarding our extra-contractual obligations) will be resolved by binding
arbitration in accordance with the Commercial Arbitration Rules and Mediation
Procedures of the American Arbitration Association.”
{¶21} Appellee argues that because the parties agreed to arbitrate any dispute
that “relat[es] to” the policy and because Appellant is arguing that Appellee breached its
duty of care owed to it, the only source of the duty must be the policy. Therefore, the bad
faith claim is a dispute which relates to the policy and as such, is subject to binding
arbitration.
{¶22} Appellant herein argues that its bad faith claims handling claim does not fall
within the scope of the arbitration endorsement contained in the Policy because it is not
based upon, nor relies upon, any language in the insurance policy.
{¶23} In its decision, the trial court found:
Plaintiff and Defendant's relationship arises out of the insurance
policy at issue and there is no duty to act in good faith, or claim for bad faith
for that matter, in the absence of the insurance policy. Given the nature of
Plaintiff's single claim against Defendant, the Court therefore cannot
conclude that Plaintiff's bad faith insurance claim exists in a vacuum without
reliance upon the underlying contractual insurance policy relationship.
{¶24} (7/12/2023, Judgment Entry at 6). Stark County, Case No. 2023 CA 00084 7
{¶25} On November 1, 2023, subsequent to the filing of the briefs in this matter,
the Ohio Supreme Court decided Scott Fetzer Co. v. Home Assur. Co., Inc., Slip Opinion
No. 2023-Ohio-392.
{¶26} In Scott Fetzer, the issue before the Court was which choice-of-law rule
applies to an insurance bad faith claim. The insurer argued that a bad faith claim is
inseparable from an insurance contract because the contract creates the claim.
Therefore, a bad faith claim is one of the "rights created thereby" under Section 193. Id.
at 19-20. In Scott-Fetzer, Traveler’s Insurance also contended that a bad-faith claim
should be viewed as arising out of a contract because, unlike a typical tort claim, a bad-
faith claim can be brought only by one contracting party against another.
{¶27} The insured argued that an insurer's duty to act in good faith is not one of
the "rights created thereby," because a bad faith claim is a tort, which arises by operation
of law. ld. at 21. The Court agreed stating:
We disagree with Travelers' argument that a bad-faith claim is one of the
"rights created thereby." That a bad-faith claim can be litigated only between the
parties to an insurance contract does not mean that the contract creates it.
Importantly, a bad-faith claim is not rooted in any particular text of the contract.
Instead, as we explained in Hoskins [ v. Aetna Life Ins. Co., 6 Ohio St.3d 272, 452
N.E.2d 1315 (1983)], it arises by operation of law:
The liability of the insurer [on a bad-faith claim] does not arise from its mere
omission to perform a contract obligation, for it is well established in Ohio that it is
no tort to breach a contract, regardless of motive. * * * Rather, the liability arises
from the breach of the positive legal duty imposed by law due to the relationships Stark County, Case No. 2023 CA 00084 8
of the parties. * * * This legal duty is the duty imposed upon the insurer to act in
good faith and its bad faith refusal to settle a claim is a breach of that duty and
imposes liability sounding in tort.
(Emphasis added.) Hoskins at 276, 452 N.E.2d 1315. Consequently, the
existence of an insurance contract is what causes the common-law rule to apply
to particular entities.
{¶28} (Scott-Fetzer at 5, ¶23)
{¶29} Based on the holding of Scott-Fetzer, supra, we find that an insurance bad-
faith claim is not rooted in any particular text of the contract; instead, it arises by operation
of law. We therefore find that Appellant’s bad faith handling tort claim is an extra-
contractual matter to which the arbitration endorsement in the insurance contract is not
applicable.
{¶30} Appellants’ first assignment of error is sustained.
{¶31} For the reasons stated in the foregoing opinion, the judgment of the Stark
County Court of Common Pleas is reversed and remanded to the trial court for further
proceedings consistent with the law and this opinion.
By: Wise, J. Delaney, P. J., and Gwin, J., concur.
JWW/kw 0213