Health Care Authority for Baptist Health v. Dickson – Ala. Jan. 15, 2021

In May 2017, the plaintiff in Health Care Authority for Baptist Health v. Dickson brought claims against a health care authority (HCA) operating a hospital and sought to certify a class for claims against the HCA and an entity that was the HCA’s predecessor. The HCA moved to dismiss or, alternatively, transfer the case to Autauga Circuit Court. The motion was pending for over a year, and the parties engaged in discovery in the interim. The trial court eventually granted the alternative motion to transfer. After transfer, the HCA filed an answer. In its answer, the HCA did not raise arbitration as an affirmative defense. The parties then engaged in extensive class-related discovery. In June 2019, the HCA finally moved to compel arbitration. The Autauga Circuit Court summarily denied the motion. The instant appeal followed.

The HCA asserted the trial court erred in denying its motion to compel arbitration. The plaintiff, on the other hand, argued the HCA waived its right to arbitrate the claims by failing to assert the defense in its answer and delaying in raising the issue earlier. The Alabama Supreme Court quickly disposed of the argument that failing to raise arbitration in the answer was dispositive. It held that waiver of the right to arbitration is not “lightly inferred” and must be determined from the particular facts of the case. A waiver is only found if the party’s actions, when taken “as a whole,” demonstrate that it has “substantially invoked the litigation process,” and secondly, the engagement in litigation prejudiced the party opposing arbitration.

The Court found that the HCA had substantially invoked the litigation process by waiting over two years before invoking arbitration and engaging in substantial litigation during those two years. The HCA attempted to explain the delay by claiming that it had not been aware of its right to arbitrate because the right was derivative of the plaintiff’s health insurance policy, which the HCA claimed not to have access to until later. Invoking Georgia Power Co. v. Partin, 727 So. 2d 2 (Ala. 1998), the HCA asserted the obligation to seek arbitration is only triggered when a party is aware of the right. The Court was not persuaded. It distinguished Georgia Power as involving claims that were not arbitral until the complaint was amended to bring the claims within the terms of the arbitration agreement. The Court noted, by comparison, the instant claims were arbitral from the very beginning of the suit in 2017. As to the argument that the HCA did not have access to the insurance policy, the Court was likewise unsympathetic. It held the HCA had no excuse for not subpoenaing or otherwise obtaining from plaintiff a copy of his health insurance policy sooner.

Having found the HCA substantially invoked the litigation process, the remaining question was whether plaintiff was prejudiced by the delay. The Court found that the plaintiff had incurred substantial litigation costs that would have otherwise been avoided had the HCA invoked arbitration earlier. It was such unnecessary litigation expense that arbitration was designed to avoid, and the wasted expense and delay prejudiced the plaintiff. As a result, the Court affirmed and held that the HCA had waived its right to arbitration.

HELD: A defendant who extensively litigated a case over a two-year period before moving to arbitrate prejudiced the plaintiff and waived the right to arbitration.