Visiting Nurse Association of Florida, Inc., seeks review of the decision of the Fourth District Court of Appeal in Jupiter Medical Center, Inc. v. Visiting Nurse Ass'n of Florida, Inc., 72 So.3d 184 (Fla. 4th DCA 2011), on the ground that it expressly and directly conflicts with a decision of the Fifth District Court of Appeal in Commercial Interiors Corp. of Boca Raton v. Pinkerton & Laws, Inc., 19 So.3d 1062 (Fla. 5th DCA 2009), on a question of law. We have jurisdiction. See art. V, § 3(b)(3), Fla. Const. For the following reasons, we quash the Fourth District's decision holding that a court must determine whether a contract is legal prior to enforcing an arbitral award based on the contract.
I. FACTUAL AND PROCEDURAL BACKGROUND
After the conclusion of an arbitration proceeding resolving a contract dispute between Visiting Nurse Association, Inc. (VNA), a home health care agency, and Jupiter Medical Center, Inc. (JMC), a hospital, involving agreed-upon discharge planning procedures and VNA's lease of office space in JMC's hospital, the arbitration panel issued an "interim award," granting VNA damages, prejudgment interest on a portion of the damages, and reserving jurisdiction to consider attorney's fees and costs. In a "Final Award of Arbitrators," the arbitration panel granted VNA attorney's fees, administrative filing fees and expenses, and arbitrators' fees and expenses.
After the "interim award" was issued, JMC filed a motion for reconsideration and a motion to reopen the hearing, alleging that the arbitration panel construed the contract and the discharge planning procedures in violation of federal and state health care laws prohibiting kickbacks for referrals of Medicare patients. The panel summarily denied the motion by e-mail stating that it had already considered those arguments. Jupiter Medical Center
On appeal, the Fourth District noted that the trial court did not address the issue of the contract's legality prior to dismissing the action. The Fourth District ultimately reversed the dismissal of the motion to vacate the award and remanded for the trial court to consider the legality of the contract because "a Florida court cannot enforce an illegal contract" and must make that determination prior to enforcing an award based thereon. Visiting Nurse Association then filed a petition to invoke this Court's discretionary jurisdiction, and we granted review. The circumstances leading to the contractual dispute, the arbitration award, and this Court's review of Jupiter Medical Center are more fully set forth below.
B. Contractual Relationship and Breach
This action arises from the February 2005 purchase of a hospital-based home health care agency (HHA) by VNA from JMC. In 2004, VNA approached JMC to purchase JMC's in-house HHA believing that if it streamlined JMC's current operations, VNA could generate $1.5 million of revenue due to the volume of Medicare patients serviced by JMC. Visiting Nurse Association's purchase decision was based on the belief that it would receive forty-five to fifty Medicare referrals per month. Despite a purchase evaluation revealing significant competition from other HHAs, JMC concluded that its in-house HHA's fair market value was $639,000, which VNA ultimately agreed to pay in cash. In exchange for the $639,000, VNA was to obtain all rights and interests in JMC's HHA. The agreement also provided that VNA would have "access to the institution" and "work space" in the hospital. This portion of the agreement was then memorialized in a separate, contemporaneous "office lease" agreement that provided that VNA would occupy space in the discharge planning office until the "dissolution of [VNA]." Further, although VNA did not need the space, it agreed to take over 5,000 square feet of JMC's existing 10-year lease in Jupiter Farms at an expense of $375,000, to purchase "JMC's market share of HHA referrals." Shortly thereafter, VNA noticed a decline in Medicare referrals and attributed it to JMC not divulging information about the agreement's discharge procedures, specifically paragraph five of Exhibit "D" of the agreement, to JMC physicians. In Exhibit "D" of the agreement, the discharge planning procedures were outlined as follows:
(Some emphasis added).
Around November 2006, VNA suspected that a rotation system was being used where each patient who did not express a preference for a particular HHA was simply assigned to the next HHA on JMC's HHA list. Jupiter Medical Center denied there was a rotation system in place. At the evidentiary hearing, however, a former JMC discharge planner said a rotation system had indeed been implemented and VNA was only mentioned if the patient had previously been provided services by JMC's HHA prior to its sale to VNA. On June 4, 2007, VNA notified JMC that it would not renew the Jupiter Farms lease after its expiration. Approximately a week later, Chief Medical Officer Dr. Ketterhagen was hired, and he directed the discharge planning department to continue its rotation system to ensure equal distribution of HHA referrals. Pursuant to these directions, if a patient did not express a preference for a particular HHA, JMC referred the patient to the next HHA on JMC's list because Dr. Ketterhagen did not believe JMC was allowed to demonstrate a preference to any particular HHA.
On September 10, 2007, Dr. Ketterhagen informed VNA that due to a shortage of office space, VNA could not continue to maintain office space in the hospital. In this notice, Dr. Ketterhagen also informed VNA that JMC would no longer notify patients of its relationship with VNA. In September 2007, in accordance with its previous notice to JMC, VNA did not make a rent payment for the Jupiter Farms office space. Jupiter Medical Center filed suit in circuit court and VNA instituted arbitration proceedings on November 1, 2007. Neither party argued that the contractual arrangement itself was illegal during the arbitration proceedings.
C. Arbitration Awards
The arbitration panel issued an "interim award" in which the panel found that JMC breached the contract in two material respects. First, JMC never made its staff aware of the discharge planning procedures outlined in Exhibit "D" of the agreement; the closest JMC ever came to complying with provision 5 of Exhibit "D" was informing former patients of JMC's HHA that VNA had purchased the HHA. Further, the facts demonstrated that JMC continued its use of a rotation system, which deprived VNA of "what it had paid $639,000 for: the ability to subtly `nudge'
Second, JMC breached the agreement by terminating VNA's lease agreement that provided VNA with office space inside JMC and access to the discharge planning staff. The panel concluded that the office space gave VNA visibility and access to doctors and other referrers in the hospital; without the space, VNA was on equal footing with other HHAs, which was not the benefit VNA purchased.
Regarding damages, the panel noted that calculation of damages was difficult because the evidence presented showed a drop in Medicare referrals, increased competition from other HHAs, and that VNA's business plan failed to account for loss of referrals due to patient choice or doctor referral to a competitor. Further, the evidence showed that VNA lost a substantial amount of business because of referrals by two surgeons to a competing HHA and the termination of a popular admissions coordinator, which upset many doctors. The panel also recognized that VNA failed to account for the work it would take to establish the relationships that JMC's HHA had acquired with hospital staff over the course of twenty years. Moreover, VNA experienced a similar decline in revenue at another hospital and did not demonstrate that JMC itself would not have experienced the same drop in referrals had it not sold the HHA to VNA. Thus, based on the above, the arbitration panel concluded that VNA's damages should be reduced from VNA's projected revenue of $1.5 million per year to $1.125 million due to the historical 25% drop in Medicare census that would have occurred even if VNA received all of the Medicare referrals. Further, the damages were reduced by the approximately 60% loss of referrals to competitors for a total of $450,000 for three years, which, when reduced to present value, totals $1,251,213.
Shortly thereafter the panel issued a "Final Award of Arbitrators" in which it granted VNA $214,047.50 in attorney's fees; $16,550 in administrative filing fees and expenses; and $71,780.07 in arbitrators'
D. Jupiter Medical Center's Challenges to the Arbitration Award
After the "interim award," JMC filed a motion for reconsideration arguing that the arbitration panel did not have a factual basis to reach its decision and did not base its conclusions on the four corners of the agreement. Jupiter Medical Center then filed a formal application and request to reopen the arbitration hearing contending that the proceeding needed to be reopened to allow for testimony and evidence concerning the illegality and serious regulatory concerns resulting from the panel's proposed construction and interpretation of the contract. Specifically, JMC argued that the arbitration panel issued the award based on an erroneous construction of the parties' purchase agreement as an unlawful agreement to make, influence, and steer future patient referrals to VNA in exchange for remuneration in direct violation of multiple state and federal healthcare laws and regulations, including Florida's Anti-Kickback Statutes (§§ 456.054 and 395.0185, Fla. Stat. (2009)); the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)); Medicare Hospital Condition of participation; Discharge planning (42 C.F.R. § 482.43); Florida's Patient Brokering Act (§ 817.505, Fla.Stat.(2009)); and the Federal Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a). Jupiter Medical Center cited examples of how the award construed the contract in an illegal manner, to wit: the arbitration panel found that VNA based its decision to purchase on receiving a certain amount of referrals; VNA agreed to take over the remaining three years of JMC's lease to purchase JMC's market share of referrals; and the damage award was based on a calculation solely involving illegally promised future Medicare patient referrals from JMC. The panel issued an order via e-mail denying JMC's motion to reopen the hearing because the panel "considered the matters stated in the motion in its deliberations."
Jupiter Medical Center then filed a motion to vacate the arbitration award in the United States District Court for the Southern District of Florida asserting that the award should be vacated because the award impermissibly construed the parties' contract in a manner that violated multiple federal laws, regulations, and specific, well-defined public policy; and the panel exceeded its powers by contravening the express contractual limitations imposed by the parties' contract and by issuing an award in violation of federal laws, rules, and regulations. The federal district court issued an order granting VNA's motion to dismiss for lack of subject matter jurisdiction, in which the court noted that JMC's right to relief was not dependent on resolution of federal law, but rather only whether the panel properly interpreted and construed the agreement.
While the motion was pending in federal court and before the panel issued the "Final Award of Arbitrators" and the subsequent clarification order, JMC filed a motion to vacate the arbitration award in the Fifteenth Judicial Circuit Court in and for Palm Beach County. Shortly thereafter JMC filed an amended motion to vacate the arbitration award in the circuit court alleging that the arbitration panel interpreted the contract to be an unlawful agreement and that the panel exceeded its powers. The circuit court dismissed the motion to vacate and granted the motion to
On appeal, the Fourth District began its analysis by noting that illegality of a contract is a compelling reason not to enforce a contract, citing several cases from Florida courts indicating a refusal to enforce illegal contracts. The district court then acknowledged that section 682.13(1), Florida Statutes (2009), clearly does not include illegality of a contract as a basis to vacate an arbitral award. Nevertheless, the Fourth District held that "[w]hen the issue of a contract's legality is raised, the trial court must make that determination prior to deciding whether to enforce an arbitral award based thereon." Jupiter Med. Ctr., 72 So.3d at 187. The Fourth District reasoned that the arbitral award was based on a breach of contract and that a prior arbitration would not prevent the court from vacating an award based on an illegal contract. Visiting Nurse Association then filed a petition to invoke this Court's discretionary jurisdiction arguing that the Fourth District's decision in Jupiter Medical Center expressly and directly conflicts with the Fifth District's decision in Commercial Interiors.
In Commercial Interiors, an arbitrator presided over a dispute involving two subcontracts between Commercial Interiors Corporation of Boca Raton (Commercial Interiors) and Pinkerton & Laws, Inc. (Pinkerton). Commercial Interiors, 19 So.3d at 1063. As part of the subcontracts, which contained an arbitration provision, Commercial Interiors agreed to provide interior painting and other extra work on a hotel being constructed by Pinkerton. Id. Commercial Interiors eventually brought suit claiming that Pinkerton had failed to pay it $51,209 for work done according to the subcontracts. Pinkerton filed a motion to compel arbitration and the case moved to arbitration. Id.
Once the arbitration proceedings were initiated, Pinkerton filed a motion to dismiss the claim alleging that Commercial Interiors was not entitled to payment because the subcontracts were illegal — Commercial Interiors did not have a contractor's license. The arbitrator ruled that although Commercial Interiors may have violated a local ordinance, it had not violated section 489.128, Florida Statutes (2002), which is titled "Contracts performed by unlicensed contractors unenforceable." Further, the arbitrator ruled that Pinkerton had waived its right to assert the subcontracts were illegal. Id. Pinkerton then filed a motion to set aside or vacate the order in the trial court. The trial court entered an order setting aside the arbitrator's order and dismissed the case with prejudice. Id. The trial court held that, although it accepted the arbitrator's findings of fact, the subcontracts were not enforceable, and the arbitrator had misapplied section 489.128. Id.
On appeal, the Fifth District stated that the issue presented was limited to the standard a trial court should use in reviewing an arbitrator's ruling on illegality. Id. at 1064. The Fifth District then noted that if a party failed to establish one of the five grounds for vacating an award provided in section 682.13(1), Florida Statutes (2007), "neither a circuit court nor a district court of appeal has the authority to
Visiting Nurse Association argues before this Court that the Fourth District erred in holding that the trial court must determine whether a contract is legal prior to enforcement of an arbitration award because section 682.13(1) sets forth the only grounds on which a court shall vacate an arbitration award. Jupiter Medical Center argues that contract illegality is an exception to the statute,
A. Standard of Review
Visiting Nurse Association contends that it is the arbitrator's role to decide the legality of the contract; JMC, however, contends that a court must decide whether a contract is legal prior to enforcement of an arbitral award. Further, JMC contends that the arbitrators exceeded their powers within the meaning of section 682.13(c). Thus, the issues presented are pure questions of law, subject to de novo review. See Shotts v. OP Winter Haven, Inc., 86 So.3d 456, 461 (Fla.2011) (citing Aills v. Boemi, 29 So.3d 1105, 1108 (Fla. 2010)). We now turn to the merits.
B. Federal Arbitration Act
Neither party noted whether the Federal Arbitration Act (FAA) or the Florida Arbitration Code (FAC) applied to this case. Although the FAA controls when a transaction involves interstate commerce, "[i]n Florida, an arbitration clause in a contract involving interstate commerce is subject to the [FAC], to the extent the FAC is not in conflict with the FAA."
1. Whether a Court Can Consider the Claim that a Contract Containing an Arbitration Provision is Void for Illegality
The United States Supreme Court has repeatedly observed that "Congress enacted the FAA to replace judicial indisposition to arbitration with a `national policy favoring [it] and plac[ing] arbitration agreements on equal footing with all other contracts.'" Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443-44, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006)). Section 2 of the FAA "makes contracts to arbitrate `valid, irrevocable, and enforceable,' so long as their subject involves `commerce.'" Id. at
In Buckeye, the respondents entered into various deferred-payment transactions with the petitioner, in which they received cash in exchange for a personal check in the amount of the cash plus a finance charge. For each separate transaction they signed a "Deferred Deposit and Disclosure Agreement" (Agreement), which included arbitration provisions. Id. The respondents brought a putative class action, alleging that the petitioner charged usurious interest rates and that the agreement violated various Florida lending and consumer-protection laws, rendering it criminal on its face. The petitioner moved to compel arbitration. The trial court denied the motion, holding that a court rather than an arbitrator should resolve a claim that a contract is illegal and void ab initio. The Fourth District Court of Appeal reversed, holding that because the respondents did not challenge the arbitration provision itself, but instead claimed that the entire contract was void, the agreement to arbitrate was enforceable, and the question of the contract's legality should go to the arbitrator. The respondents appealed, and this Court reversed "reasoning that to enforce an agreement to arbitrate in a contract challenged as unlawful `could breathe life into a contract that not only violates state law, but also is criminal in nature.'" Id. at 443, 126 S.Ct. 1204 (quoting Cardegna v. Buckeye Check Cashing, Inc., 894 So.2d 860, 870 (Fla. 2005) rev'd, 546 U.S. 440, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006), and opinion withdrawn, 930 So.2d 610 (Fla.2006)). The United States Supreme Court then granted certiorari review.
The Supreme Court began its analysis by noting that Congress enacted the FAA to overcome judicial resistance to arbitration. Id. It then observed that challenges to the validity of arbitration agreements can be divided into two types: challenges to the validity of the agreement to arbitrate within the contract; and challenges to the contract as a whole, either on a ground that directly affects the entire agreement, or on the ground that a provision is illegal, which renders the whole contract invalid. Id.
The claim brought by the respondents was identified as one of the second type of challenges. The Supreme Court noted that it previously addressed the question of "who — court or arbitrator — decides these two types of challenges" in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), where it held that federal courts are not permitted to consider challenges to the contract as a whole. Buckeye, 546 U.S. at 444, 126 S.Ct. 1204. Further, in Southland Corp. v. Keating, 465 U.S. 1, 12, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984), it held that the FAA created a body of substantive law applicable in state and federal courts. Thus, Prima Paint and Southland answered the question presented by establishing three propositions: "First, as a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract. Second, unless the challenge is to the arbitration clause itself, the issue of the contract's validity is
Jupiter Medical Center, however, argues that the Supreme Court's use of the phrase "in the first instance" indicates that it anticipated a subsequent proceeding by a court to decide the claim that a contract containing an arbitration provision is void for illegality.
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (emphasis added). As First Options makes clear, the Supreme Court's determination that an arbitrator "should consider the claim that a contract containing an arbitration provision is void for illegality" limits a party's right to the circumscribed court review provided in 9 U.S.C. § 10. Buckeye, 546 U.S. at 442, 126 S.Ct. 1204. Thus, we cannot read Buckeye as establishing a subsequent de novo court review for contract illegality claims in this context. Such a reading would be inconsistent with the Supreme Court's efforts to avoid interpretations of the FAA that would "`rende[r] informal arbitration merely a prelude to a more
Despite this apparent legislative limitation on the authority of the courts to vacate an arbitral award, JMC argues that a court cannot enforce an arbitration panel's interpretation of a contract if it results in the violation of some well-defined, dominant public policy that is to be ascertained by "reference to the laws and legal precedents and not from general considerations of supposed public interests," citing to authority from various federal courts and the Supreme Court of Connecticut. See United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 42, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987) (explaining that "[a] court's refusal to enforce an arbitrator's award ... because it is contrary to public policy is a specific application of the more general doctrine, rooted in common law, that a court may refuse to enforce contracts that violate law"); W.R. Grace & Co. v. Local Union 759, Int'l Union of the United Rubber, Cork, Linoleum & Plastic Workers, 461 U.S. 757, 766, 103 S.Ct. 2177, 76 L.Ed.2d 298 (1983) ("If the contract as interpreted by [the arbitrator] violates some explicit public policy, we are obliged to refrain from enforcing it."); Delta Air Lines, Inc. v. Air Line Pilots Ass'n, Int'l, 861 F.2d 665 (11th Cir.1988); Mercy Hosp., Inc. v. Mass. Nurses Ass'n, 429 F.3d 338, 343 (1st Cir.2005) (noting that an exception to the general rule that the arbitrator has the "last word" is that courts may refuse to enforce illegal contracts); I.U.B.A.C. Local Union No. 31 v. Anastasi Bros. Corp., 600 F.Supp. 92, 94-95 (S.D.Fla.1984) ("While there are sound reasons for requiring parties to adhere to the procedures governing arbitration, it is also well-established that a court may not enforce a contract that is illegal or contrary to public policy ... the legality of the contract clause at issue here must be determined before the arbitration award can be enforced."); State v. AFSCME, Council 4, Local 2663, 257 Conn. 80, 777 A.2d 169, 178 (2001) (explaining that Connecticut recognizes a public policy exception to section 52-418, Connecticut General Statutes, which mirrors the FAA, because "[w]hen a challenge to the arbitrator's authority is made on public policy grounds... the court is not concerned with the correctness of the arbitrator's decision but with the lawfulness of enforcing the award."). However, these cases did not involve arbitration under the FAA and are thus inapplicable to the question of whether extra-statutory grounds for invalidating an arbitration award survived the decision in Hall Street in cases, such as this one, that are governed by the FAA.
In Hall Street, petitioner Hall Street Associates, L.L.C., and respondent Mattel, Inc., initiated litigation in the United States District Court for the District of Oregon, but soon reached an impasse on the parties' indemnification portion of the dispute. The parties offered to submit to arbitration and the District Court was amenable. As a result, the parties drafted an arbitration agreement, approved by the District Court and entered as an order, providing the District Court with the authority to vacate, modify, or correct any award where the arbitrator's findings of fact were not supported by substantial evidence or where the conclusions of law were erroneous. Hall St., 552 U.S. at 579, 128 S.Ct. 1396.
Arbitration proceedings took place and the arbitrator ruled that Mattel was not obligated to indemnify Hall Street. Hall Street subsequently filed a motion to vacate, modify, or correct the arbitration decision on the ground that the arbitrator's decision constituted legal error. The District Court vacated the award based on the standard of review provided in the parties'
On appeal to the Ninth Circuit Court of Appeals, Mattel argued that the arbitration agreement's provision for judicial review of legal error was unenforceable. The Ninth Circuit reversed in favor of Mattel, instructing the District Court to consider the original decision of the arbitrator pursuant to the grounds allowable under 9 U.S.C. § 10, or modified or corrected under 9 U.S.C. § 11. After the District Court again held for Hall Street, reasoning that the arbitration award rested on an implausible interpretation of the lease and thus exceeded the arbitrator's powers, the Ninth Circuit reversed, holding that implausibility is not a valid basis for vacatur. Thus, the Supreme Court granted certiorari review to consider whether the grounds for vacatur and modification provided by §§ 10 and 11 of the FAA are exclusive or whether the statutory grounds may be supplemented by contract. Id. at 581, 128 S.Ct. 1396.
Title 9 U.S.C. § 10(a) provides in part:
And Title 9 U.S.C. § 11 provides:
Hall St., 552 U.S. at 582 n. 4, 128 S.Ct. 1396.
The Supreme Court began its analysis by recognizing that "[t]he Courts of Appeals have split over the exclusiveness of these statutory grounds when parties take the FAA shortcut to confirm, vacate, or modify an award, with some saying the recitations are exclusive, and others regarding them as mere threshold provisions open to expansion by agreement." Id. at 583, 128 S.Ct. 1396. Hall Street first argued that "expandable judicial review authority"
The Supreme Court then discussed "whether the FAA has textual features at odds with enforcing a contract to expand judicial review following the arbitration." Hall St., 552 U.S. at 586, 128 S.Ct. 1396. It ultimately concluded that the
Id. It further reasoned that "it makes more sense to see the three provisions ... as substantiating a national policy favoring arbitration with just the limited review needed to maintain arbitration's essential virtue of resolving disputes straightaway." Id. at 588, 128 S.Ct. 1396. It then concluded that any other reading "opens the door to the full-bore legal and evidentiary appeals that can `rende[r] informal arbitration merely a prelude to a more cumbersome and time-consuming judicial review process,'... and bring arbitration theory to grief in post arbitration process." Id. (citations omitted). Accordingly, the Supreme Court held that the statutory grounds were exclusive and could not be supplemented by contract. Id. at 584, 128 S.Ct. 1396.
The Supreme Court's decision in Hall Street, which addressed the parties' ability to expand the statutory bases for vacating an award by contract, but focused on the exclusivity of the categories listed, has led to a federal circuit court split regarding whether Hall Street prohibits all extra-statutory grounds for vacating an award, including judicially created grounds.
The Second and Ninth Circuits, on the other hand, treat manifest disregard of the law as a judicial interpretation of the district court's power under section 10(a)(4) where the arbitrator "exceeded [his] powers" or "so imperfectly executed them that a mutual, final, and definite award ... was not made." See Comedy Club, Inc. v. Improv W. Assoc., 553 F.3d 1277, 1290 (9th Cir.) (concluding that "manifest disregard of the law remains a valid ground for vacatur" because it is "shorthand for a statutory ground under the FAA ...."), cert. denied, 558 U.S. 824, 130 S.Ct. 145, 175 L.Ed.2d 36 (2009); Stolt-Nielsen v. AnimalFeeds Int'l Corp., 548 F.3d 85, 94 (2d Cir.2008) (same), cert. granted, Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 557 U.S. 903, 129 S.Ct. 2793, 174 L.Ed.2d 289 (2009).
Like the Fifth, Seventh, Eighth, and Eleventh Circuit Courts of Appeals, we are of the view that the FAA bases for vacating or modifying an arbitral award cannot be supplemented judicially or contractually after Hall Street. As the Supreme Court noted in Hall Street, "it makes more sense to see the three provisions... as substantiating a national policy favoring arbitration with just the limited review needed to maintain arbitration's essential virtue of resolving disputes straightaway."
2. Whether the Arbitrators Exceeded their Powers
In Oxford Health Plans LLC v. Sutter, ___ U.S. ___, 133 S.Ct. 2064, 186 L.Ed.2d 113 (2013), the question presented was whether an arbitrator "exceeded [his] powers" pursuant to 9 U.S.C. § 10(a)(4) by finding that the parties' contract provided for class arbitration. The Supreme Court noted at the outset that "[a] party seeking relief under [9 U.S.C. § 10(a)(4)] bears a heavy burden. `It is not enough ... to show that the [arbitrator] committed an error — or even a serious error.'" Oxford Health, 133 S.Ct. at 2068 (quoting Stolt-Nielsen, 559 U.S. at 671, 130 S.Ct. 1758). It further noted that an arbitral decision "`even arguably construing or applying the contract' must stand, regardless of a court's view of its (de)merits" because the parties "`bargained for the arbitrator's construction of their agreement.'" Id. (quoting Eastern Associated Coal Corp. v. Mine Workers, 531 U.S. 57, 62, 121 S.Ct. 462, 148 L.Ed.2d 354 (2000) (quoting Steelworkers v. Enter. Wheel & Car Corp., 363 U.S. 593, 599, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960); Paperworkers v. Misco, Inc., 484 U.S. 29, 38, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987); (internal quotation marks omitted))). Thus, a court has the power to overturn an arbitrator's determination only if "`the arbitrator act[s] outside the scope of his contractually delegated authority' — issuing an award that `simply reflect[s] [his] own notions of [economic] justice'
The Supreme Court also determined whether an arbitrator exceeded his powers in Stolt-Nielsen. There, it found that an arbitrator did exceed his powers by ordering a party to submit to class arbitration. The Supreme Court reasoned that the parties had entered into a stipulation stating that they had never reached an agreement on class arbitration, which made clear that the panel's decision could not have been based on the parties' intent. Stolt-Nielsen at 673 n. 4, 676, 130 S.Ct. 1758 ("Th[e] stipulation left no room for an inquiry regarding the parties' intent."). The Supreme Court concluded that "the panel simply imposed its own conception of sound policy" and thus exceeded its powers. Id. at 675, 677, 130 S.Ct. 1758.
Here, JMC argues that the arbitrators exceeded their powers because the panel interpreted the purchase agreement in a manner that would violate state and federal laws, regulations, and rules resulting in both civil and criminal penalties. Specifically, JMC points to sections 20, 24, and 28 of the purchase agreement, which expressly state that the parties were not to construe the discharge planning procedures, the purchase price of the home health care agency (HHA), and either of the leases as an illegal agreement to make, influence, and steer future patient referrals to VNA. In short, the parties were to interpret the requirements of the contract in a manner consistent with state and federal health care laws. Thus, JMC essentially argues that the arbitrators exceeded their powers because they interpreted the contract in a manner allegedly inconsistent with the contract's terms. It is clear from JMC's argument that it simply disagrees with the panel's construction of the contract rather than alleging that the panel "imposed its own conception of sound policy." Accordingly, the arbitration panel did not exceed its powers pursuant to 9 U.S.C. § 10(a)(4).
Based on the foregoing, JMC's claim that the arbitration panel construed the contract to be an unlawful agreement is not grounds for review pursuant to 9 U.S.C. § 10, and the arbitration panel did not otherwise exceed its powers pursuant to 9 U.S.C. § 10(a)(4). Our review of the provisions of the FAC leads us to the same conclusion.
C. Florida Arbitration Code
1. Whether a Court Can Consider the Claim that a Contract Containing an Arbitration Provision is Void for Illegality
"When construing a statute, this Court attempts to give effect to the Legislature's intent, looking first to the actual language used in the statute and its plain meaning." Trinidad v. Fla. Peninsula Ins. Co., 121 So.3d 433, 439 (Fla.2013) (citing Daniels v. Fla. Dep't of Health, 898 So.2d 61, 64 (Fla.2005)). "`Where the statute's language is clear or unambiguous, courts need not employ principles of statutory construction to determine and effectuate legislative intent.'" Trinidad, 121 So.3d at 439 (quoting Fla. Dep't of Children & Family Servs. v. P.E., 14 So.3d 228, 234 (Fla.2009)).
§ 682.13(1), Fla. Stat. (2009). The unambiguous language of section 682.13(1) does not include the term "illegality" or require a court to vacate an arbitrator's "illegal construction of the underlying contract." Further, the list of circumstances set forth in section 682.13(1) is directed at arbitral misconduct or lack of authority, and not mere errors of law, or errors of construction or interpretation of a contract. Accordingly, although Florida courts are wont to refuse to enforce an illegal contract as noted by the Fourth District, the plain language of the statute constrains the courts' authority to vacate awards to the five grounds set forth in section 682.13(1). See Jupiter Med. Ctr., 72 So.3d at 186 (noting case law indicates that Florida courts will not enforce an illegal contract). Indeed, we have previously held that section 682.13(1) sets forth the only grounds upon which an award of an arbitrator may be vacated.
In Schnurmacher, 542 So.2d at 1328, a commercial lessor filed a motion to vacate an arbitrator's award finding that the commercial lessor rather than the lessee was obligated to pay sales tax on rental payments. The circuit court confirmed the award and the Third District Court of Appeal reversed. This Court held that "in the absence of one of the five factors set forth in [section 682.13], neither a trial court nor a district court of appeal has the authority to overturn the award" despite the arbitrator's erroneous interpretation of the statutes governing sales tax obligations. Id. This Court specifically observed that "it is well settled that `the award of arbitrators in statutory arbitration proceedings cannot be set aside for mere errors of judgment either as to the law or as to the facts; if the award is within the scope of the submission, and the arbitrators are not guilty of the acts of misconduct set forth in the statute, the award operates as a final and conclusive judgment.'" Id. (quoting Cassara v. Wofford, 55 So.2d 102, 105 (Fla.1951); and citing District School Bd. v. Timoney, 524 So.2d 1129 (Fla. 5th DCA 1988), Prudential-Bache Sec., Inc. v. Shuman, 483 So.2d 888 (Fla. 3d DCA 1986), McDonald v. Hardee Cnty. School Bd., 448 So.2d 593 (Fla. 2d DCA), rev. denied, 456 So.2d 1181 (Fla. 1984), and Newport Motel, Inc. v. Cobin Rest., Inc., 281 So.2d 234 (Fla. 3d DCA 1973)); see also Felger v. Mock, 65 So.3d 625,
Jupiter Medical Center, however, argues that there is a public policy exception to the statute. We decline to adopt a public policy exception to the statute. In reaching this conclusion, we are mindful of the hypothetical possibility that an arbitration panel could erroneously determine that an agreement is lawful and not void for illegality. Indeed, it was this concern in part that led us to determine in Cardegna v. Buckeye Check Cashing, Inc., 894 So.2d 860 (Fla.2005) rev'd and remanded, 546 U.S. 440, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006) and opinion withdrawn, 930 So.2d 610 (Fla.2006), that a claim that a contract was void for illegality should be decided by the courts and not arbitrators. See Cardegna, 894 So.2d at 862 (quoting Party Yards, Inc. v. Templeton, 751 So.2d 121, 123 (Fla. 5th DCA 2000) (indicating a concern with submitting a claim that a contract is void for illegality to arbitration because it "could breathe life into a contract that not only violates state law, but also is criminal in nature")).
Parties to an agreement containing an arbitration provision, however, specifically bargained for an arbitrator's construction and interpretation of the agreement as an alternative to litigation in the courts system, as opposed to an additional step in the process. See B.L. Harbert Int'l, LLC v. Hercules Steel Co., 441 F.3d 905, 907 (11th Cir.2006) (noting that the "laudatory goals of [arbitration] will be achieved only to the extent that courts ensure arbitration is an alternative to litigation, not an additional layer in a protracted contest"). This characteristic of arbitration — finality — is perhaps its most prized feature. For instance, in Schnurmacher, this Court stated:
Schnurmacher, 542 So.2d at 1328-29 (emphasis added). Here, the parties to the agreement received the benefit of their bargain — arbitral construction of the agreement as opposed to litigation in the courts system.
Likewise, we find that the circumstances presented here do not merit relief pursuant to section 682.13(1)(c), Florida Statutes (2009), because the arbitrators did not exceed their powers.
2. Whether the Arbitration Panel Exceeded its Powers
As noted above, JMC argues that the arbitrators exceeded their powers because the panel interpreted the purchase agreement in a manner that would violate state and federal laws, regulations, and rules resulting in both civil and criminal penalties. Because the phrase "exceeded their powers" in section 682.13(1)(c), Florida Statutes (2009), does not encompass misinterpretations of contractual provisions or other errors of law, but is jurisdictional in nature, we disagree.
In Schnurmacher, this Court discussed the meaning of "exceeded their powers" as follows:
Schnurmacher, 542 So.2d at 1329 (emphasis added); see also Nucci v. Storm Football Partners, 82 So.3d 180, 183 (Fla. 2d DCA 2012) (noting that an arbitrator exceeds his power only when he exceeds the authority the parties granted him in their agreement to arbitrate and stating that an arbitrator may very well exceed his authority when he decides an issue that is not pertinent to resolving the issue submitted to arbitration).
The 2009 version of the statute, applicable here, provides that a court shall vacate an award when "[t]he arbitrators or the umpire in the course of her or his jurisdiction
In Soler v. Secondary Holdings, Inc., 832 So.2d 893 (Fla. 3d DCA 2002), the Third District considered the appellant's claim that an arbitrator exceeded the scope of his jurisdiction, which was limited to a determination of whether a joint venture existed between the parties. Id. at 894. In holding that the arbitrator exceeded his authority because both the arbitration agreement and the trial court's order limited the arbitration proceeding to a determination of whether a partnership was formed, the Third District noted that "[a]n Arbitrator exceeds his or her power when he or she goes beyond the authority granted by the parties and decides an issue not pertinent to the resolution of the matter submitted to arbitration." Id. at 895.
In Edstrom Industries, the Seventh Circuit Court of Appeals held that "the arbitrator cannot disregard the lawful directions the parties have given them. If they tell him to apply Wisconsin law, he cannot apply New York law." Edstrom Indus., 516 F.3d at 552 (holding that manifest disregard of the law is not a ground on which a court may reject an arbitrator's award under the FAA). Thus, Edstrom stands for the proposition that an arbitrator exceeds his or her powers if the arbitration clause directs the arbitrator to apply a particular state's laws and the arbitrator chooses to apply a different state's laws, which would be acting outside the scope of authority provided by the parties to the contract.
Here, the parties' arbitration clause authorized the arbitration panel to preside over "[a]ny dispute, controversy or claim arising out of or related to this Agreement or the breach hereof" — the clause did not contain any other limiting language of authority. The arbitration panel presided over a claim for breach of the agreement, awarding damages and attorney's fees and costs. Thus, by awarding damages based on a breach of contract, the arbitration panel "did what the parties had asked" and did not "decide an issue not pertinent to the resolution of the issue submitted to arbitration."
Based on the foregoing, the claim that an arbitration panel construed a contract containing an arbitration provision to be an unlawful agreement is an insufficient basis to vacate an arbitrator's decision pursuant to the FAA or the FAC. Further, the arbitration panel did not exceed its powers. Accordingly, we quash the Fourth District's decision in Jupiter Medical Center, Inc. v. Visiting Nurse Ass'n of Florida, Inc., 72 So.3d 184 (Fla. 4th DCA 2011), because the district court below erred in holding that a court must determine whether a contract is legal prior to enforcing an arbitral award based on the contract.
It is so ordered.
PARIENTE, LEWIS, QUINCE, and PERRY, JJ., concur.
CANADY and POLSTON, JJ., concur in result.