The plaintiff County of Passaic contracted with defendant Horizon Healthcare Services, Inc. to manage the County’s self-funded health plan. That relationship ended in December 2019. The County filed a lawsuit against Horizon in 2021, claiming, among other things, that Horizon breached their contract by failing to implement certain modified reimbursement rates. Horizon successfully moved to compel arbitration based upon a provision in the 2009 written agreement that disputes between parties shall be submitted to binding arbitration under the commercial roles of the American Arbitration Association. The issue in County of Passaic v. Horizon Healthcare Services, Inc., d/b/a Horizon Blue Cross Blue Shield of New Jersey, 2023 N.J. Super. LEXIS 10 (App. Div. Feb. 8, 2023) was whether the arbitration provision was unenforceable because it lacked the explicit waiver of access to the courts as set forth in the Supreme Court’s landmark decision in Atalese v. U.S. Legal Services Group, 219 N.J. 430 (2014).
In this published decision by the Appellate Division, the Court rejected this argument and affirmed the trial court’s decision to enforce the arbitration provision. It found that even though the arbitration provision did lack an explicit waiver of the right to seek relief in a court of law, the County was a sophisticated contracting party and not, as in Atalese, an employee or consumer lacking sufficient bargaining power to resist the extraction of an agreement to arbitrate.
The Court noted that both the Federal Arbitration Act and the New Jersey Arbitration Act both express a general policy favoring arbitration “as a means of settling disputes that otherwise would be litigated in a court.” Under the federal statute, a written arbitration provision “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract period.”
The Appellate Division distinguished the Atalese decision because, in that case, it involved a consumer contract. Atalese, as well as other decisions from the New Jersey Supreme Court, “focus on the unequal relationship between the contracting parties or the adhesional nature of the contract when holding that an arbitration agreement could not be enforced without an express waiver of the right to seek relief in a court of law.”
In reviewing the cases that relied upon the Atalese decision, they were all in the context of employment and consumer contracts. As the Appellate Division pointed out in this case, the Court’s “concern for those not versed in the law or not necessarily aware of the fact that an agreement to arbitrate may preclude the right to sue in a court or invoke the inestimable right of trial by jury, on the other hand, vanishes when considering individually – negotiated contracts between sophisticated parties – often represented by counsel at the formation stage – possessing relatively similar bargaining power.” Hence, the Court was satisfied that an express waiver of the right to seek relief in a court of law to the degree required by Atalese was unnecessary when dealing with parties to a commercial contract who were sophisticated and possessed comparatively equal bargaining power.
In this case, the parties were represented by counsel at all relevant stages of their negotiations and during the formation of the relevant contract documents over the course of their 17 year relationship. Further, the Court found that the parties understood the difference between the right to seek relief in a court of law and being relegated to arbitration under AAA’s commercial rules. Thus, the Appellate Division agreed with the trial judge that the arbitration provision was enforceable, notwithstanding its lack of an express waiver of the County’s right to seek relief in a court of law.
