The U.S. Court of Appeals for the Fourth Circuit has remanded a high-stakes arbitration dispute involving health insurance service providers and Employers’ Innovative Network LLC, citing unresolved questions surrounding the application of the Federal Arbitration Act (FAA).
In its published decision, the three-judge panel highlighted confusion over whether Chapter 1 or Chapter 2 of the FAA governs the case — a distinction that determines which standards apply for challenging arbitration awards. The court remarked that the FAA is “not a triumph of legislative draftsmanship” and emphasized the need for further fact-finding by the district court.
The dispute centers on an arbitral award issued in favor of Bridgeport Benefits Inc., Capital Security Ltd., Universal Risk Intermediaries Inc., and Voluntary Benefit Specialists LLC. Employers’ Innovative Network, which initially sued the companies over alleged fraud and breach of contract, moved to vacate the award citing an arbitrator’s alleged conflict of interest. The arbitration was conducted in Bermuda under a clause in one of the contracts.
The Fourth Circuit concluded that the record lacked clarity on whether Capital Security, incorporated under Bermudian law but claiming operations in both Florida and Bermuda, triggers international arbitration rules under Chapter 2 of the FAA. The determination could impact whether the company can assert “evident partiality” — a key defense under Chapter 1.
“The outcome of this case turns on complex and fact-intensive questions that went unaddressed by the district court,” the court stated, underscoring its role as a court of review.
The case, Employers’ Innovative Network LLC v. Bridgeport Benefits Inc., case number 24-1350, is now remanded to the U.S. District Court for further proceedings.
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