April 29th, 2020

Louisiana Supreme Court Opinions
Donelon v. Shilling

Docket: 2019-C-00514
Opinion Date: April 27, 2020
Judge: Crain
Areas of Law: Arbitration & Mediation, Civil Procedure, Contracts, Government & Administrative Law, Insurance Law, Professional Malpractice & Ethics

The Louisiana Supreme Court granted review in this case to determine whether the Louisiana Commissioner of Insurance was bound by an arbitration clause in an agreement between a health insurance cooperative and a third-party contractor. The Louisiana Health Cooperative, Inc. (“LAHC”), a health insurance cooperative created in 2011 pursuant to the Patient Protection and Affordable Care Act, entered an agreement with Milliman, Inc. for actuarial and other services. By July 2015, the LAHC was out of business and allegedly insolvent. The Insurance Commissioner sought a permanent order of rehabilitation relative to LAHC. The district court entered an order confirming the Commissioner as rehabilitator and vesting him with authority to enforce contract performance by any party who had contracted with the LAHC. The Commissioner then sued multiple defendants in district court, asserting claims against Milliman for professional negligence, breach of contract, and negligent misrepresentation. According to that suit, the acts or omissions of Milliman caused or contributed to the LAHC’s insolvency. Milliman responded by filing a declinatory exception of lack of subject matter jurisdiction, arguing the Commissioner must arbitrate his claims pursuant to an arbitration clause in the agreement between the LAHC and Milliman. The Supreme Court concluded, however, the Commissioner was not bound by the arbitration agreement and accordingly could not be compelled to arbitrate its claims against Millman. The Court reversed the appellate court's judgment holding to the contrary, and remanded the case for further proceedings.

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