Arbitration Clause Whistleblower Law Public Policy Tort Claims Contract Claims

Saltzman v. Thomas Jefferson Univ. Hosp., Inc., PICS Case No. 17-1039 (Pa. Super. June 30, 2017) Moulton, J. (24 pages

Trial court erred in finding that there was no enforceable arbitration agreement between appellee and hospital because there was no blanket prohibition on the arbitration of whistleblower claims, a public forum was not necessary to preserve the deterrent function of that law and the broad language of the clause applied to all claims relating to or arising from the parties' contractual relationship, not just claims arising from an alleged breach of the agreement. Reversed.

Appellee worked for medical practice at appellant hospital under physician service agreement that contained an arbitration clause. She asserted that she was terminated after she reported that hospital was holding forth a chiropractor as a licensed doctor of medicine and delegating medical responsibilities to him. She sued alleging retaliation in violation of the whistleblower law and common law wrongful termination. Hospital filed preliminary objections seeking to compel arbitration and the trial court overruled the objections because hospital was not a party to the physician service agreement, the agreement was an unconscionable contract of adhesion and that compelling arbitration was incompatible with the functions of the whistleblower law. Hospital appealed.

The court noted that a nonsignatory to an arbitration agreement could enforce the agreement if there was an obvious and close nexus between the nonsignatory and the contract or the contracting parties. Appellee conceded on appeal that the arbitration provision was not an unconscionable contract of adhesion but did argue that under the whistleblower law, she had significantly greater remedies than in arbitration and that the arbitration clause was unenforceable because it effectively precluded her from vindicating her statutory rights. The court disagreed because an arbitrator had the authority to award the same remedies as available in court. The court also found that appellees' claims were not exempt from arbitration for public policy reasons. There was no blanket prohibition on the arbitration of whistleblower claims and litigation in a public forum was not necessary to preserve the remedial and deterrent function of the law. In refusing to enforce the arbitration agreement solely on the "nature" of appellee's claims, the trial court failed to apply the liberal policy favoring arbitrations under both federal and Pennsylvania law.

The court looked to the arbitration provision and found that it applied to all claims relating to or arising from the parties' contractual relationship, not just claims arising from an alleged breach of the agreement. Appellee relied on Hazleton Area Sch. Dist. v. Bosak, 671 A.2d 277, to argue that her claims were not subject to arbitration because they sounded in tort, not contract. The court had expressly disapproved the reasoning in Hazleton and found that broad and unlimited arbitration clause language compelled arbitration of tort claims arising from a contractual relationship.