James Isernia v. Danville Regional Medical Center
U.S. Court of Appeals for the Fourth Circuit
James Isernia v. Danville Regional Medical Center
Opinion
USCA4 Appeal: 22-2224 Doc: 39 Filed: 05/13/2024 Pg: 1 of 9
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 22-2224
JAMES MICHAEL ISERNIA,
Plaintiff - Appellant,
v.
DANVILLE REGIONAL MEDICAL CENTER; HSCGP, LLC,
Defendants - Appellees.
Appeal from the United States District Court for the Western District of Virginia, at
Danville. Thomas T. Cullen, District Judge. (4:21-cv-00045-FL)
Submitted: January 5, 2024 Decided: May 13, 2024
Before KING, GREGORY, and HARRIS, Circuit Judges.
Reversed and remanded by unpublished opinion. Judge Gregory wrote the opinion, in
which Judge King and Judge Harris joined.
ON BRIEF: Thomas E. Strelka, Brittany M. Haddox, STRELKA EMPLOYMENT LAW,
Roanoke, Virginia, for Appellant. Yvette Gatling, Laura Saracina, LITTLER MENDELSON,
P.C., Tysons Corner, Virginia, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
USCA4 Appeal: 22-2224 Doc: 39 Filed: 05/13/2024 Pg: 2 of 9
GREGORY, Circuit Judge:
Appellant Dr. James Michael Isernia filed suit asserting various claims under
Virginia state law against Danville Regional Medical Center and HSCGP, LLC
(“Appellees”). At the core of this case is an employment agreement between Dr. Isernia
and Martinsville Physicians Practices, LLC, which assigned Dr. Isernia to work at a
hospital owned and operated by Appellees. Although neither of the Appellees was party
to the agreement, Appellees moved below to compel arbitration pursuant to a provision in
the agreement. The district court granted Appellees’ motion but certified the matter for
interlocutory appeal asking us to determine who has jurisdiction over questions of
arbitrability where a non-signatory seeks to compel arbitration pursuant to an agreement
that delegates questions of arbitrability to an arbitrator.
Based on our decision in Rogers v. Tug Hill Operating, LLC, 76 F.4th 279 (4th Cir.
2023) *, we conclude that a court, not an arbitrator, must determine whether a non-signatory
to an agreement that contains an arbitration provision can enforce that provision against a
signatory to the agreement. The district court held that the arbitrator had jurisdiction to
determine questions of arbitrability between Dr. Isernia and Appellees without first
assessing whether Appellees, as non-signatories, were entitled to invoke the arbitration
provision under Virginia law. We therefore reverse the district court’s decision and remand
this case for further proceedings consistent with this opinion.
*
We recognize that the district court, when it decided this case, lacked the benefit
of our Tug Hill decision, rendered more than a year after its contested ruling.
2
USCA4 Appeal: 22-2224 Doc: 39 Filed: 05/13/2024 Pg: 3 of 9
I.
James Michael Isernia, M.D. is a physician with over twenty-five years of
experience. J.A. 8 ¶ 10. Danville Regional Medical Center, LLC and HSCGP, LLC own
Sovah Health-Martinsville (“Sovah Health”), a hospital Dr. Isernia worked at for several
years until he was terminated. Throughout that period, Dr. Isernia held several leadership
positions at Sovah Health, including Director of Cardiac Rehab, Director of Home Care,
Medical Director of Hospice for over ten years, President of the Medical Staff, and Director
of Peer Review.
In early 2020, Sovah Health conducted several staffing reassignments in response
to the severe staffing shortages caused by the onset of the Coronavirus pandemic. As a
part of this reassignment process, several members of Dr. Isernia’s team were assigned to
assist in other departments and at the hospital’s front entrance. Dr. Isernia did not support
the reassignment process. He repeatedly complained about the “lack of proper staffing”
that it caused and reminded hospital officials that properly trained staff were necessary to
ensure patient and employee safety. J.A. 9–10 ¶ 16. In response, he was told to “stick to
doctoring.” J.A. 9 ¶ 16. At some point before December 2020, Dr. Isernia also complained
that outsourcing “scanning duties” for patient and narcotics records resulted in those
records being “lost or scattered in different places.” J.A. 12 ¶ 30. Dr. Isernia therefore
kept his records in his office.
In August 2020, Dr. Isernia entered into a Physician Employment Agreement (the
“Agreement”) with Martinsville Physicians Practices, LLC. The Agreement, which
became effective on September 1, 2020, defined “Employer” as “Martinsville Physician
3
USCA4 Appeal: 22-2224 Doc: 39 Filed: 05/13/2024 Pg: 4 of 9
Practices, LLC,” and assigned Dr. Isernia to work at the “Affiliated Hospital,” defined as
“Sovah Health-Martinsville,” for a three-year term. J.A. 35. The Agreement refers to
Sovah Health several times, but was signed only by Dr. Isernia and Pamela J. Kane. J.A.
36. Dr. Isernia signed on behalf of himself and Kane signed on behalf of Martinsville
Physician Practices, LLC. Id. Dr. Isernia began working at Sovah Health under the
Agreement on September 1, 2020, although, as noted above, he had worked there for
several years prior.
Around December 2020, Sovah Health audited Dr. Isernia’s prescribing practices.
As part of that review, “Compliance and Pharmacy/Quality team members” randomly
selected ten patients from a list of “printed/faxed prescriptions” from September and
October 2020. J.A. 10 ¶ 17. Neither Dr. Isernia nor his staff were included in or consulted
during the audit. Rather, the auditors obtained information from individuals who lacked
medical knowledge and knowledge of Dr. Isernia’s recordkeeping or prescribing practices.
J.A. 11 ¶ 26. Sovah Health concluded that the results of the audit indicated that Dr. Isernia
did not adhere to management’s earlier recommendations regarding his prescribing
practices, and that he failed to comply with best practices of chronic opioid management
per federal, state, and practice-specific standards.
In February 2021, an internal Sovah Health corporate group met to review the
results of the audit. The next month, the group issued a final warning to Dr. Isernia,
although Dr. Isernia claims that he never received any previous warnings regarding his
work or prescribing practices. In April 2021, a Sovah Health employee filed a complaint
with the Department of Health Professions (“DHP”), as required by state law, informing
4
USCA4 Appeal: 22-2224 Doc: 39 Filed: 05/13/2024 Pg: 5 of 9
DHP that Sovah Health had taken disciplinary action against Dr. Isernia. The DHP
complaint noted that the action taken against Dr. Isernia included a final written warning
“as a result of conduct that may cause injury to patients.” J.A. 13 ¶ 31.
At some point Sovah Health conducted a follow-up audit of Dr. Isernia’s practices. In
December 2021, Dr. Isernia received notice of the results of the follow-up audit, which alleged
continued violations and non-compliance with various policies and procedures. Dr. Isernia
was placed on administrative leave later that month and was terminated in January 2022.
After he was terminated, Sovah Health informed Apogee Physicians, (another hospital in
Martinsville, VA where Dr. Isernia worked as a hospitalist) that Dr. Isernia was no longer
allowed to work at Apogee Physicians.
II.
Dr. Isernia filed a complaint in federal court in April 2022, asserting claims under
Virginia state law for defamation per se, tortious interference, tortious interference with
business expectancy/prospective economic advantage, and illegal retaliation against an
employee. Appellees moved to compel arbitration, contending that they were third-party
beneficiaries and thus entitled to enforce the arbitration provision in the Agreement. They
also argued that Dr. Isernia was equitably estopped from refusing to arbitrate his claims
against them. Dr. Isernia opposed the motion asserting that neither theory was applicable
to his claims because he did not have any agreement with Appellees.
The district court identified the operative question before it as “whether the parties
clearly and unmistakably committed disputes over arbitrability to arbitration.” Isernia v.
5
USCA4 Appeal: 22-2224 Doc: 39 Filed: 05/13/2024 Pg: 6 of 9
Danville Reg’l Med. Ctr., LLC, 615 F. Supp. 3d 434, 439 (W.D. Va. 2022), reconsideration
denied, 2022 WL 4076113 (W.D. Va. Sept. 6, 2022). The district court concluded that the
parties had agreed to arbitrate issues of arbitrability because the Agreement incorporated
the American Health Lawyer’s Association’s (“AHLA”) arbitration rules. Id. The AHLA
rules state:
If the filing party (Claimant) produces a document that arguably requires
arbitration of the claim under the Rules, the Administrator will appoint an
arbitrator pursuant to the process described in this Section. After receiving
appropriate evidence and argument, the arbitrator, once appointed, shall have
the power to determine his or her jurisdiction and any issues of arbitrability.
AHLA’s decision to accept a claim has no bearing on the arbitrator’s
determination regarding jurisdiction.
AHLA Section 3.1 Criteria: J.A. 52.
Applying that rule to the parties’ dispute, the district court held that an arbitrator
must determine whether Dr. Isernia agreed to arbitrate his claims against Appellees.
Isernia v. Danville, 615 F. Supp. 3d at 440. The district court granted Appellees’ motion
to compel arbitration and stayed the case pending resolution of the arbitration. Id.
Dr. Isernia moved for reconsideration. He argued that courts must determine a non-
signatory’s entitlement to enforce a contract before the non-signatory can enforce an
arbitration provision. He also argued that an agreement by signatory parties to arbitrate
arbitrability, without more, does not grant any rights to a non-signatory. Appellees
opposed the motion and provided several bases for the district court to consider them third-
party beneficiaries of the Agreement. The district court denied Dr. Isernia’s motion for
reconsideration without determining whether Appellees qualified as third-party
beneficiaries. Isernia v. Danville Reg’l Med. Ctr., LLC, 2022 WL 4076113, at *5 (W.D.
6
USCA4 Appeal: 22-2224 Doc: 39 Filed: 05/13/2024 Pg: 7 of 9
Va. Sept. 6, 2022). In the district court’s view, Dr. Isernia “delegated the resolution of . . .
third-party enforcement questions to an arbitrator” by entering into the Agreement. Id. at
*9. However, because the court recognized that there was “conflicting authority” and
“substantial grounds for difference of opinion” on the issue, as evinced by a split among
our sister circuits, it certified the following question for Fourth Circuit review:
Whether a non-signatory to an arbitration provision that clearly and
unmistakably incorporates arbitral rules delegating questions of
“arbitrability” and “jurisdiction” to an arbitrator can move to compel
arbitration of a third-party enforcement issue such that an arbitrator – and not
a court – determines whether the non-signatory is entitled to enforce the
arbitration provision against the signatory.
Id. at *11.
Although we had not yet opined on the issue at the time of the district court’s
decision, we clarified our position months later in Rogers v. Tug Hill Operating, LLC, 76
F.4th 279(4th Cir. 2023), cert. denied,2024 WL 674823
(U.S. Feb. 20, 2024). In Tug Hill,
the plaintiff filed a Fair Labor Standards Act suit against a gas company for whom he had
worked for approximately a year and a half. Id. at 282. He alleged that he qualified as an
employee (though the company classified him as an independent contractor) and thus was
owed overtime wages for time worked over forty hours per week. Id. at 282, 284. The
plaintiff had contractually agreed to arbitrate all claims relevant to his agreement with
RigUp, the parent of a company that helped him secure the gas company job. Id. at 282–
83. The gas company, however, was not a party to that agreement. Id. at 282.
RigUp moved to intervene and the gas company moved to dismiss the action and
compel arbitration based on the agreement between the plaintiff and RigUp. Id. at 284.
7
USCA4 Appeal: 22-2224 Doc: 39 Filed: 05/13/2024 Pg: 8 of 9
The district court granted both motions – allowing RigUp to intervene and compelling
arbitration. Id. at 284–85; see also Rogers v. Tug Hill Operating, LLC, 598 F. Supp. 3d
404, 417, 421 (N.D. W. Va. 2022). The district court held that the gas company’s non-
signatory status was irrelevant because the contract’s delegation clause assigned all
questions regarding arbitrability to an arbitrator. Id. at 425. It alternatively concluded,
based on an incorrect application of West Virginia law, that the gas company was permitted
to enforce the contract as a third-party beneficiary. Id. at 427.
We reversed, concluding that the district court erroneously granted the motion to
compel without first evaluating whether the gas company was entitled to enforce the
agreement. Tug Hill, 76 F.4th at 288. In doing so, we recognized the longstanding
principle that because “arbitration obligations are grounded in contract law” they are “as
enforceable as other contracts, but not more so.” Id. at 286 (citations omitted). As such, a
litigant who was not party to an arbitration agreement may only compel arbitration pursuant
to the agreement and the Federal Arbitration Act “if the relevant state contract law allows
him to enforce the agreement.” Id. at 287 (citation and emphasis omitted). Thus, we said,
“as a precondition to granting [the gas company] the right to enforce any portion of an
arbitration clause to which it was not a party,” the district court was required to determine
whether the relevant state contract law allowed the gas company to enforce the underlying
agreement. Id. at 288.
That brings us to this case. The district court granted Appellees’ motion to compel
arbitration based on its mistaken belief that the incorporation of the AHLA rules in the
Agreement automatically delegated all questions of arbitrability between the parties in this
8
USCA4 Appeal: 22-2224 Doc: 39 Filed: 05/13/2024 Pg: 9 of 9
case to an arbitrator. J.A. 82. The district court was mistaken. In fact, the inclusion of the
AHLA rules in the Agreement has no bearing on the parties’ dispute here unless Appellees
can show that they are entitled to enforce the Agreement. Absent such a showing, an
arbitrator would have no authority to make any determinations in this matter because a
party who cannot demonstrate its entitlement to enforce an agreement cannot be entitled to
any of the agreement’s provisions. See id. at 287 (stating that nothing in the Federal
Arbitration Act or Supreme Court jurisprudence allows such a “counterintuitive” result as
permitting “a party with no contractual right to compel arbitration”). Thus, as in Tug Hill,
the district court was required to determine whether Appellees were entitled to enforce the
Agreement under Virginia law before compelling arbitration. Because “[w]e are a court of
review, not first view,” Est. of Van Emburgh by & through Van Emburgh v. United States,
95 F.4th 795 (4th Cir. 2024), we remand the case to permit the district court to evaluate
Appellees’ entitlement to enforce the contract in the first instance.
III.
For the foregoing reasons, we reverse the district court’s grant of Appellees’ motion
to compel arbitration and remand for the district court to determine whether Appellees are
entitled to enforce the agreement between Dr. Isernia and Martinsville Physicians
Practices, LLC under Virginia law. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials before this court and argument
would not aid the decisional process.
REVERSED AND REMANDED
9
Reference
- Status
- Unpublished