Sutcliffe v. Mercy Clinics, Inc. (Summary)

CONTRACT CLAIM

Sutcliffe v. Mercy Clinics, Inc., No. 13-1974 (Iowa Ct. App. Sept. 17, 2014)

A district court had denied a health care system’s motion to compel arbitration on a breach of contract action. On appeal, the Court of Appeals of Iowa reversed and remanded this decision.

The plaintiff is a licensed family practitioner who had worked for the health care system involved for many years. Upon the construction of a new clinic, the health care system made an oral agreement with the practitioner, offering him compensation in addition to the existing terms of his written agreement. As a part of this oral agreement, the practitioner was to work at the health care system’s newly constructed clinic. The practitioner agreed, but did not receive the promised additional compensation. The practitioner then sued for breach of contract.

The court found that the arbitration clause in the practitioner’s written agreement was enforceable under the Federal Arbitration Act (“FAA”). Although both parties were in Iowa and medical services were provided in Iowa, the practitioner treated Medicare patients at the clinic. The court found that the interstate commerce involved in federal Medicare reimbursements was sufficient to invoke the application of the FAA.