Divided Appellate Court Holds That Arbitration Administrator’s Protocols Regarding Arbitrability Must Be Referred To An Arbitrator For Interpretation And Enforcement

By a 2-1 vote, a sharply divided panel of the Sixth Circuit reversed a trial court’s decision refusing to compel arbitration, based upon an American Arbitration Association administrative determination that the parties failed to satisfy the AAA’s Healthcare Due Process Protocol and Healthcare Statement. Under the Protocol and Statement, healthcare providers and their patients must sign an arbitration agreement after a dispute arises in certain cases. When the claimant refused to sign the required agreement, the AAA determined the case was not arbitrable. The district court agreed.

The appellate panel, in Ciccio v. SmileDirectClub, LLC, reversed, in what the majority characterized as a “narrow” decision, that “say[s]nothing about whether the underlying dispute is arbitrable, only that the Agreement requires that an arbitrator make that determination.”

The dissenting judge rejected the view that the case presented a typical gateway question that required the arbitrator’s determination. As he framed the issue, “the parties were bound by the rules of the American Arbitration Association (“AAA”), which were incorporated into the agreement and governed when the parties would be required to submit their disputes to arbitration. The question before us is whether those AAA rules may be ignored or will be considered essential terms of the contract.”

At this juncture, the question of arbitrability presumably will be decided by an arbitrator, who may determine that the AAA Protocols and Statement should be enforced. However, if the arbitrator were to disagree with AAA and determine the case to be arbitrable, it will lead to the question of whether a tribunal such as AAA can be effectively compelled to administer disputes that it determines are violative of its protocols.

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