Benton v. Vanderbilt University

Blue Cross and Blue Shield of Tennessee (Blue Cross) and Vanderbilt University Medical Center (Vanderbilt) (defendant) had a pricing contract for medical services that Vanderbilt provided to Blue Cross members. Under this contract, Vanderbilt agreed to accept what Blue Cross paid on a bill as full payment and to not charge a Blue Cross member for any unpaid bill amount. The contract also contained an arbitration provision requiring arbitration of any dispute that (1) was between the parties to the agreement and (2) involved the parties’ contractual rights or obligations. Larry Benton (plaintiff) was insured by Blue Cross when he was injured in a car accident. Vanderbilt treated Benton for his injuries and billed around $31,500 for the treatment. Blue Cross paid approximately $16,700 of this bill, leaving roughly $14,800 unpaid. Later, Benton sued the driver who had caused the accident. Vanderbilt sought to recover its unpaid $14,800 from any judgment that Benton might get from the driver, including filing a lien against the possible future judgment. Benton filed a lawsuit against Vanderbilt. Benton argued that Vanderbilt had contractually agreed to accept Blue Cross’s payment on the bill as the full payment and, therefore, that Vanderbilt had no right to continue to seek the unpaid bill portion. Vanderbilt moved to compel Benton to arbitrate the contractual dispute. The trial court denied the motion. The appellate court reversed, ruling that Vanderbilt could compel Benton to arbitrate the dispute even though he was only a third-party beneficiary of the contract and not a contractual party. The Tennessee Supreme Court agreed to review the issue.