Impact of Arbitration Ruling in Norwood v. Tacoma Anesthesia Associates: A Public Policy Perspective

May 22, 2024


By: Kelsey Shewbert

Patricia Norwood v. MultiCare Health Systems, Slip Opinion No. 57865-6-II (May 21, 2024)

Dr. Patricia Norwood, an anesthesiologist, appealed a trial court’s decision that required her to arbitrate her claims against Tacoma Anesthesia Associates (“Tacoma”), Rainier Anesthesia Associates (“Rainer”), MultiCare Health System, and MultiCare Connected Care, LLC (collectively, “MultiCare”). These entities, despite not being signatories to her contract with LT Medical, LLC (“LT”), invoked the arbitration clause from that contract.

LT provides temporary medical professionals to facilities. Norwood entered into a Service Agreement with LT, in which Norwood agreed to provide professional medical services to LT’s clients or a client’s assigned facility as an independent contractor of LT. LT agreed to offer Norwood’s services to its clients, consistent with the Client Agreements with those clients. LT also agreed to pay Norwood for the services she provided to LT’s clients. The agreement stated that Norwood at all times would be acting as LT’s independent contractor and nothing in the agreement was intended to create an employer/employee relationship. The Services Agreement with LT also included an arbitration clause mandating arbitration in Atlanta, Georgia for any disputes related to the agreement and likewise held that the laws of the state of Georgia would apply.

LT entered into Client Agreements with Tacoma and Rainer. The agreements related to LT’s provision of temporary medical providers to Rainier and Tacoma.  LT agreed to use its best efforts to present acceptable providers, and Rainier and Tacoma agreed to pay LT specified fees for the providers. Similar to the Services Agreement, the Client Agreements stated that providers were independent contractors. The Client Agreements also included an arbitration provision nearly identical to the arbitration provision included in the Services Agreement. LT did not enter into any agreements with MultiCare. However, MultiCare entered into agreements with Tacoma and Rainier to provide medical services.

Norwood alleged that during her temporary assignments at Tacoma and Rainier facilities, she witnessed unsafe medical practices and was forced to resign from Tacoma and was terminated by Rainier after reporting these practices. MultiCare requested that Norwood not be assigned to any MultiCare hospitals after a finding that there were discrepancies in her documentation. Norwood alleged that the reasons that Rainier gave for her termination were pretextual.

She sued these entities for tortious interference, wrongful constructive discharge, wrongful discharge, and intentional infliction of emotional distress. Rainier subsequently filed a motion to compel binding arbitration. The trial court granted the motion to compel arbitration in Atlanta, finding that Norwood’s claims were intertwined with her Services Agreement with LT, thus making arbitration appropriate. The court also ruled that arbitration in Atlanta would not necessarily contravene Washington public policy, even though Georgia law was referenced in the agreement.

The Washington State Court of Appeals affirmed the trial court’s decision. They held that equitable estoppel applied because Norwood’s claims were deeply intertwined with the Services Agreement, despite the fact that Tacoma, Rainier, and MultiCare were not signatories to it. Thus, the arbitration provision was enforceable, and the arbitration could proceed in Atlanta. The court did not address alternative arguments that the entities were third-party beneficiaries of the Services Agreement or that the arbitrability decision should be delegated to the arbitrator.

Public Policy Impact of this Decision

Promotion of Arbitration as a Dispute Resolution Mechanism: The ruling reinforces the strong public policy favoring arbitration as a means to resolve disputes. By compelling arbitration based on an agreement’s provisions, the Court upheld the principle that parties should adhere to the dispute resolution mechanisms they have contractually agreed upon, which can lead to more efficient and specialized handling of disputes compared to traditional litigation.

Extension of Arbitration Clauses to Nonsignatories: The decision highlights the use of equitable estoppel to compel arbitration involving nonsignatories to the original contract. This holding confirms that parties indirectly involved in a contract, but whose claims are intertwined with the contract’s terms, can be bound by its arbitration clause. This can influence how contracts are drafted and how third-party relationships are managed, promoting broader applicability of arbitration clauses.

Jurisdictional Considerations and Public Policy: The decision to uphold arbitration in Atlanta, despite the parties being based in Washington, reflects jurisdictional enforcement of arbitration provisions. This could impact public policy debates on the fairness and accessibility of arbitration locations, particularly for employees or contractors who might be required to arbitrate in distant jurisdictions. It emphasizes the necessity for parties to be aware of and consider the implications of jurisdictional clauses in their contracts.

Overall, this decision has significant implications for contractual relationships, the enforceability of arbitration agreements, and the implication of intertwined claims estoppel where the claims asserted by the party opposing arbitration are intertwined with the underlying contract obligations.

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