Opinion
Civil Action No. 20-12069-PBS
2021-09-22
Adam BECK, M.D., Plaintiff, v. VISION SERVICE PLAN INSURANCE COMPANY and Geoffrey Reynolds, O.D., Defendants.
Adam P. Beck, Andover, MA, for Plaintiff. Brandon R. Clark, Pro Hac Vice, Brian Weinthal, Pro Hac Vice, Christopher E. Kentra, Pro Hac Vice, Burke, Warren, MacKay & Serritella, P.C., Chicago, IL, for Defendant Vision Service Plan Insurance Company.
Adam P. Beck, Andover, MA, for Plaintiff.
Brandon R. Clark, Pro Hac Vice, Brian Weinthal, Pro Hac Vice, Christopher E. Kentra, Pro Hac Vice, Burke, Warren, MacKay & Serritella, P.C., Chicago, IL, for Defendant Vision Service Plan Insurance Company.
MEMORANDUM AND ORDER
Saris, District Judge
INTRODUCTION
This case arises from Defendant Vision Service Plan Insurance Company's ("VSP") termination of Plaintiff Adam Beck, M.D. ("Beck"), an ophthalmologist, from its network of providers. Beck contests the termination, raising claims of breach of contract, breach of the convent of good faith and fair dealing, fraud, and violation of Mass. Gen. Laws ch. 93A, as well as a host of other state-law claims. He also challenges the case review conducted by Defendant Geoffrey Reynolds, O.D. ("Reynolds"), arguing that it was negligent and defamatory. VSP moves to compel arbitration under the Network Doctor Agreement ("Agreement"). Reynolds, who resides in Hawaii, moves to dismiss all claims against him for lack of personal jurisdiction. After hearing, the Court ALLOWS VSP's motion to compel arbitration (Dkt. 8) and ALLOWS Reynolds’ motion to dismiss for lack of personal jurisdiction (Dkt. 10).
Beck is a pro se plaintiff, but he is also a member of the bar.
FACTUAL BACKGROUND
The following facts are drawn from the record and are undisputed except where stated. Beck, a Massachusetts resident, operates his ophthalmology practice in Massachusetts. VSP is an insurance company with its principal place of business in California. It is registered in Massachusetts with the Division of Insurance. On or about August 22, 2016, Beck signed the Agreement to become a Network Provider with VSP. Beck used VSP to bill for his ophthalmology services for several years.
On August 9, 2019, VSP terminated Beck as a network provider. Beck objected, and the parties engaged in a series of communications. VSP based its termination on Beck's alleged failure to report to VSP certain restrictions on plaintiff's medical license imposed by the Massachusetts Board of Registration in Medicine pursuant to a consent order and four malpractice suits. See Dkt. 9-1 at 10 ("VSP may also terminate this Agreement immediately if [Network Doctor] ... has engaged/engages in any act of moral turpitude, professional misconduct, criminal or civil wrongdoing which, in VSP's sole discretion, is or may be detrimental to VSP, its plans and/or VSP Patients." (emphasis in original)). Two of the malpractice suits resulted in nonsuits, one in a verdict against Beck, and one in a settlement. Denying that he violated the agreement, Beck states that he immediately reported at least one of the disciplinary agreements.
Disputes over VSP's termination decisions are addressed through an internal Dispute Resolution Procedure ("DRP") provided by the Agreement. Under the DRP, a terminated provider has the right to seek (1) an independent review by a case reviewer of the case file, (2) a confidential Peer Review Hearing before a panel of practicing Network Doctors, and (3) arbitration. The Agreement's arbitration clause provides, in relevant part:
[U]nless expressly disallowed by state law, either party may request final determination and resolution of [disputes] by mandatory binding arbitration, pursuant to the Federal Arbitration Act, 9 U.S.C. Chp. 1-3, and in accordance with the [DRP] then in effect. The decision of the arbitrator shall be final and there shall be no further right to appeal.... This mechanism of binding arbitration ... shall be the sole method, in lieu of a jury or court trial, of resolving any dispute that may arise between [Network Doctor] and VSP. By this Agreement and agreeing to binding arbitration, [Network Doctor] hereby waives his/her right to a jury trial as to any dispute with VSP, including without limitation, disputes relating to the delivery of services and disputes relating to claims and billing under any VSP insurance plan.
Dkt. 11-1 at 15-16 (emphasis in original). Beck appealed his termination under the DRP.
Reynolds, an optometrist who resides and operates a practice in Hawaii, conducted an independent case review. Reynolds and Beck have never met, nor have they communicated. Reynolds has never been to Massachusetts. His review culminated in a report he sent to VSP in California ("April 8 Letter") and VSP then sent to Beck. Reynolds concluded that the termination should be upheld. Beck asserts that this review was negligent and that Reynolds’ report contains libelous statements.
On April 9, 2020, Beck sent a letter to VSP disagreeing with the conclusions in the April 8 Letter, claiming damages in excess of $4,000,000, and requesting one of several remedies, including a stay of his termination and "arbitration once the COVID-19 crisis is over and permits safe cross-country travel by me to fly to Sacramento, CA or in the alternative, suit in a Massachusetts Court." Dkt. 9-7 at 6. In subsequent exchanges by letter and email with VSP's Dispute Resolution Administrator, Beck demanded an in-person Peer Review Hearing. VSP stayed Beck's termination, but it informed him that it was not conducting in-person hearings due to the COVID-19 pandemic.
On August 3, 2020, Beck filed suit against VSP and Reynolds in Lawrence Essex Superior Court. Defendants removed it on November 19, 2020. VSP moves to compel arbitration, and Reynolds moves to dismiss all claims against him for lack of personal jurisdiction.
Since the filing of those motions, VSP has formally terminated Beck as a network doctor. A Peer Review Hearing via video conference took place on June 17, 2021. In a written decision issued on July 1, 2021, the Peer Review panel upheld Beck's termination. Beck argues that the panel was not composed on independent network doctors because two members served on VSP's Board of Directors. Beck then requested arbitration, "if the Court ... orders arbitration of the dispute" in response to VSP's motion, which he has opposed. Dkt. 60. at 2.
MOTION TO COMPEL ARBITRATION
I. Legal Standard
Under the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 et seq., a written provision in a contract to settle a controversy by arbitration "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." Id. § 2; see also Biller v. S-H OpCo Greenwich Bay Manor, LLC, 961 F.3d 502, 508 (1st Cir. 2020). To succeed on a motion to compel arbitration, the moving party must demonstrate (1) that a valid agreement to arbitrate exists, (2) that the moving party is entitled to invoke the arbitration clause, (3) that the other party is bound by that clause, and (4) that the claim asserted comes within the clause's scope. Grand Wireless, Inc. v. Verizon Wireless, Inc., 748 F.3d 1, 6 (1st Cir. 2014).
II. Analysis
A. Validity of the Arbitration Clause
Beck argues that the arbitration clause is invalid because (1) the Agreement is a contract of adhesion and (2) the arbitration clause contains a class action waiver that is against Massachusetts public policy. Neither argument has merit.
First, courts evaluate the validity of an arbitration clause separately from the validity of the contract as a whole. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 449, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006). That the arbitration Agreement is a contract of adhesion, without more, cannot serve to invalidate the arbitration clause as unconscionable. See McInnes v. LPL Fin., LLC, 466 Mass. 256, 994 N.E.2d 790, 798 (2013). To prevail, Beck must meet the heavy burden of showing both the procedural and substantive unconscionability of the Arbitration Agreement. Bekele v. Lyft, Inc., 199 F. Supp. 3d 284, 299 (D. Mass. 2016). He argues that the contract is unconscionable because it contains a one-sided provision giving VSP a security interest in his practice if he owes it money at termination and he was not provided with an in-person peer review hearing prior to arbitration. The security provision does not involve the terms of the arbitration clause, and Beck provides no evidence that VSP intended to deprive him of an in-person peer review hearing at the time of contracting. VSP explained that the COVID-19 pandemic made in-person peer review proceedings difficult, and it has since provided Beck with a peer review hearing via video conference.
Second, the Supreme Court has held that arbitration clauses containing class action waivers are enforceable under the FAA, regardless of whether they violate a state's public policy. AT&T Mobility, LLC v. Concepcion, 563 U.S. 333, 351-52, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011). Beck's reliance on state caselaw is misplaced because it was overruled. Feeney v. Dell, Inc., 466 Mass. 1001, 993 N.E.2d 329, 330-31 (2013). The Agreement's arbitration clause is valid.
B. Enforceability of the Arbitration Clause
Beck argues that he cannot be compelled to arbitrate because he falls under the exception in § 1 of the FAA, which states that "nothing herein" may be used to compel arbitration in disputes involving the "contracts of employment" of certain transportation workers "engaged in foreign or interstate commerce." 9 U.S.C. § 1. In New Prime Inc. v. Oliveira, ––– U.S. ––––, 139 S. Ct. 532, 202 L.Ed.2d 536 (2019), the Court held that § 1 applied to a class of truck drivers who were engaged in interstate commerce even though they were independent contractors rather than employees. Id. 542–44. The Court also stated that "a court should decide for itself whether § 1 ’s ‘contracts of employment’ exclusion applies before ordering arbitration." Id. at 537.
At hearing, Beck asserted that New Prime controls because he is an independent contractor and has, on occasion, hand-delivered eyeglasses to patients across state lines. The problem with Beck's argument is two-fold. First, Beck has not presented evidence that he delivered eyeglasses as a worker employed by VSP. See Dkt. 9-1 at 14 (stating that "[n]othing in this Agreement shall be construed to make [Beck] an employee, agent, partner or joint venturer of VSP") Beck is a member of the VSP network of providers and bills VSP for care provided to patients enrolled in VSP insurance policies. He owns and operates his own ophthalmology business. Second, Beck has presented no evidence (other than vague statements at hearing regarding occasional hand-delivery of eyeglasses) that he is engaged as a transportation worker in interstate commerce. New Prime does not apply. No matter what lens you use, even if Beck made rare deliveries of eyeglasses, an ophthalmologist is not a "transportation worker" within the meaning of the statute. Cf. New Prime, 139 S. Ct. at 543–44.
C. Applicability of the Arbitration Clause
Plaintiff raises multiple claims in his complaint challenging the procedures used by VSP, negligence, defamation, the failure to pay for services and the fairness of the termination. He argues that some of these claims are not covered by the Arbitration Agreement. Where the parties have "clearly and unmistakably agreed that the arbitrator should decide whether an issue is arbitrable," the Court honors that agreement. Awuah v. Coverall N. Am., Inc., 554 F.3d 7, 10 (1st Cir. 2009) (cleaned up).
Here, the arbitration clause states that arbitration will be subject to the Streamlined Arbitration Rules & Procedures of Judicial Arbitration and Mediation Services, Inc. ("JAMS"). Under Rule 8(b), "[j]urisdictional and arbitrability disputes, including disputes over the formation, existence, validity, interpretation or scope of the agreement under which arbitration is sought ... shall be submitted to and ruled on by the Arbitrator." Streamlined Arbitration Rule 8(b), https://www.jamsadr.com/rules-streamlined-arbitration/#Rule8. The resolution of Beck's claims involve "disputes relating to the delivery of services" and "claims and billing" under the VSP plan and fall within the broad scope of the mandatory arbitration clause. The Court dismisses all claims against VSP and compels arbitration.
MOTION TO DISMISS
I. Legal Standard
On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of proving that the court has personal jurisdiction over the defendant. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50 (1st Cir. 2002). Courts apply the "prima facie" standard when deciding motions to dismiss for lack of personal jurisdiction without an evidentiary hearing. United States v. Swiss Am. Bank, Ltd. ("Swiss Am. Bank III"), 274 F.3d 610, 618 (1st Cir. 2001). The prima facie standard "permits the district court to consider only whether the plaintiff has proffered evidence that, if credited, is enough to support findings of all facts essential to personal jurisdiction." Daynard, 290 F.3d at 51 (cleaned up). The court "(properly documented) evidentiary proffers as true," and "construe them in the light most congenial to the plaintiff's jurisdictional claim." Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007) (cleaned up). The facts put forward by the defendants "become part of the mix only to the extent that they are uncontradicted." Id.
II. Analysis
To establish personal jurisdiction over Reynolds, Beck must show "both that the Massachusetts long-arm statute authorizes jurisdiction, and that ‘the exercise of personal jurisdiction under the circumstances is consistent with due process under the fourteenth amendment.’ " Mullane v. Breaking Media, Inc., No. CV 18-12618-PBS, 2019 WL 5588961, at *5 (D. Mass. Aug. 13, 2019) (quoting Lorelei Corp. v. Cnty. of Guadalupe, 940 F.2d 717, 720 (1st Cir. 1991) ).
The Massachusetts Long Arm Statute provides that a court "may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action in law or equity" arising from certain enumerated grounds. Mass. Gen. Laws ch. 223A, § 3. The requirements of the Massachusetts Long Arm Statute are similar to but may be more restrictive than those imposed by the Due Process Clause. See A Corp. v. All Am. Plumbing, Inc., 812 F.3d 54, 59 (1st Cir. 2016) ; SCVNGR, Inc. v. Punchh, Inc., 478 Mass. 324, 85 N.E.3d 50, 55 (2017). The Court thus begins with the issue of whether the Massachusetts statute authorizes jurisdiction.
Beck argues that this Court has personal jurisdiction over Reynolds because he was an agent of VSP. Even if Reynolds is an agent of VSP, personal jurisdiction over a corporation does not automatically attach to its agent. See Kleinerman v. Morse, 26 Mass.App.Ct. 819, 533 N.E.2d 221, 225 (1989). Beck must establish jurisdiction over Reynolds through Reynolds’ own contacts with Massachusetts.
Beck asserts four bases for jurisdiction over Reynolds under the Massachusetts Long Arm Statute: transacting business under § 3(a) ; contracting to provide services or things under § 3(b) ; "causing tortious injury by an act or omission in the commonwealth" under § 3(c) ; and insuring a risk in the commonwealth under § 3(f). See Mass. Gen. Laws ch. 233A, § 3. The first, second, and fourth bases fail. Beck has not pled any facts to support his argument that Reynolds transacted business in Massachusetts, contracted to provide services in Massachusetts, or insured a risk in Massachusetts.
The third basis for jurisdiction, however, presents a more difficult question. Beck argues that, under § 3(c), he suffered tortious injury caused by an act or omission of Reynolds in Massachusetts. Beck's claims against Reynolds are Count VII (negligence in reviewing Beck's termination), Count VIII (tortious interference as a result of Beck's termination), Count IX (libel arising from statements in Reynolds’ April 8 Letter), and Count XI (negligent infliction of emotional distress related to Beck's termination). In support of jurisdiction, he alleges that Reynolds "knew, or reasonably should have known" that Beck was a Massachusetts resident when Reynolds authored the April 8 Letter, which contained allegedly false statements about Beck's conduct and fitness as a provider, and that Reynolds certainly knew the statements would cause injury in Massachusetts because it would lead to plaintiff's termination from the provider network. Dkt. 18 at 14.
In construing the Massachusetts Long Arm Statute in Ticketmaster–New York, Inc. v. Alioto, 26 F.3d 201 (1st Cir. 1994), the First Circuit recognized the possibility that "an allegedly tortious act committed outside the borders of Massachusetts, purposefully directed at the state and intended to cause injury there, could constitute an in-forum act within the meaning of section 3(c)." Id. at 205. But it declined to decide the issue – instead assuming arguendo that the state statute would authorize jurisdiction – because, even if authorized under § 3(c), the exercise of jurisdiction would not pass constitutional muster. See id.
Given conflicting case law on the issue, compare Lin v. TipRanks, Ltd., No. 1:19-cv-11517-ADB, 2019 WL 6211246, at *3 (D. Mass. Nov. 21, 2019) (finding jurisdiction under Section 3(c) for defamatory material on a website which was accessed in Massachusetts), appeal docketed, No. 20-1001 (1st Cir. argued Oct. 5, 2020); Walker v. Adams, 2016 Mass. App. Div. 143, 2016 WL 7496412, at *3 (Dist. Ct. 2016) (concluding that "a defamatory Internet communication originating outside of Massachusetts" may "be considered as having occurred in Massachusetts for the purposes of" § 3(c) if "the Massachusetts resident harmed was specifically targeted, the publisher knew that such person lived in Massachusetts, and the defendant intended to harm that individual's reputation in Massachusetts"), with SCVNGR, Inc. v. Punchh, Inc., No. SUCV201600553BLS1, 2018 WL 6492729, at *4 (Mass. Super. Sept. 17, 2018) ("[T]he plain language of § 3(c) ... bases jurisdiction on where the tortious act was undertaken, not where its effect was felt, even when the defendant knew that the plaintiff was located in Massachusetts."), and given the Court's subsequent conclusion that jurisdiction does not comport with due process, the Court opts to follow the path of the First Circuit in Ticketmaster–New York and sidestep the issue for the time being. See also Brown v. Dash, No. CV 20-10980-FDS, 2020 WL 6806433, at *7 (D. Mass. Nov. 18, 2020) ("[T]he First Circuit has held that a district court can ‘sidestep the statutory inquiry and proceed directly to the constitutional analysis.’ " (quoting Daynard, 290 F.3d at 52 )). It accordingly will assume arguendo that Beck has alleged a prima facie case authorizing personal jurisdiction under the Massachusetts Long Arm statute by pleading that Reynolds knew he lived in Massachusetts and would feel any injury there and turn to the constitutional analysis. Ticketmaster–New York, 26 F.3d at 205.
The First Circuit applies a three-part test to determine whether exercising personal jurisdiction over a defendant comports with due process: (1) the claim(s) must directly arise out of, or relate to, the defendant's forum-state activities; (2) the defendant's in-state contacts must "represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable"; and (3) the exercise of jurisdiction must, in light of the "gestalt factors," be reasonable. Noonan v. Winston Co., 135 F.3d 85, 90 (1st Cir. 1998)
To satisfy the purposeful availment prong, Beck must show that Reynolds purposely availed himself of the privilege of conducting activities in Massachusetts. In Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), the Supreme Court found that a newspaper had purposefully availed itself of California as a forum where it had a circulation of 600,000 copies in that state and published a libelous story about a celebrity who lived there. Id. at 788-90, 104 S.Ct. 1482. Here, in contrast, although the effects of the alleged defamation were felt in the forum state, Reynolds sent his letter to VSP in California as part of a confidential peer review process, and there are no allegations that he ever contacted plaintiff or anyone else in Massachusetts or that he engaged in any activities in Massachusetts. See Noonan, 135 F.3d at 91 ("[T]hin distribution may indicate a lack of purposeful contact."). Unlike the defendant in Calder, in other words, Reynolds did not "expressly aim[ ]" any of the allegedly defamatory or false information at Massachusetts. Brown, 2020 WL 6806433, at *7 (quoting Calder, 465 U.S. at 790, 104 S.Ct. 1482 ); cf. Farquharson v. Metz, No. CIV.A. 13-10200-GAO, 2013 WL 3968018, at *2 (D. Mass. July 30, 2013) (no purposeful availment where out-of-state defendant posted allegedly defamatory content on Facebook about Massachusetts-based plaintiff because, although that content was accessible to any of the defendant's Facebook friends residing in Massachusetts, defendant "did not take any additional steps to specifically aim content at any Massachusetts residents").
Even if Reynolds could be said to have purposefully availed himself of Massachusetts, however, Beck has nonetheless failed to establish that it would be reasonable to hale Reynolds into court in Massachusetts. In assessing the constitutionality of jurisdiction, "courts must consider a panoply of other factors which bear upon the fairness of subjecting a nonresident to the authority of a foreign tribunal," including:
(1) the defendant's burden of appearing, (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies.
See United Elec., Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1088 (1st Cir. 1992). These factors are called the "gestalt factors."
Reynolds has no actual contacts with Massachusetts. He is a citizen of Hawaii, not Massachusetts, and his only related contact in this case was with VSP in California. The burden of appearing in Massachusetts, furthermore, would be substantial for a resident of Hawaii, and plaintiff's intent in obtaining effective relief in Massachusetts is lessened by the fact that the dispute will likely be resolved by the arbitration. In sum, considering the balance of the gestalt factors, the Court concludes that it would violate Reynolds's due process rights to exercise jurisdiction over him here, where he lacks any meaningful contact with the forum state.
ORDER
For the reasons stated above, VSP's motion to compel arbitration (Dkt. 8) and Reynolds’ motion to dismiss (Dkt. 10) are ALLOWED . Beck's claims are dismissed as to Reynolds and dismissed without prejudice to refiling after arbitration as to VSP.
SO ORDERED.