Bad-Faith Insurance Claims Are Presumptively Arbitrable Under Broad Policy Clauses When the Claim Cannot Be Maintained Without Reference to the Policy or Insurer–Insured Relationship

Introduction

In U.S. Acute Care Solutions, L.L.C. v. Doctors Company Risk Retention Group Insurance Company, 2025-Ohio-5010, the Supreme Court of Ohio squarely addressed whether a tort claim for bad-faith insurance-claim handling must be arbitrated when the policy’s arbitration provision is broadly worded. The case centers on an insurer–insured dispute arising from settlement strategy disagreements in an underlying medical-malpractice action and the insured’s subsequent self-funded settlement. The insured (USACS) sued the insurer (TDC) for bad-faith claims handling. The insurer moved to compel arbitration under an arbitration clause that, via endorsement, applied to “any dispute between [USACS] and [TDC] relating to this Policy (including any disputes regarding [TDC’s] contractual obligations) ….”

The Fifth District Court of Appeals reversed the trial court’s order compelling arbitration, relying on Scott Fetzer Co. v. American Home Assurance Co., Inc., 2023-Ohio-3921, to conclude that a bad-faith claim, as a tort arising by operation of law, was “extracontractual” and therefore outside the clause. The Ohio Supreme Court unanimously reversed, clarifying the scope of arbitrability in Ohio: when an arbitration agreement is broad and the claim cannot be maintained without reference to the insurance policy or the insurer–insured relationship, the presumption of arbitrability applies—even if the claim sounds in tort.

Summary of the Opinion

Writing for a unanimous Court, Justice Hawkins held:

The policy’s arbitration clause—covering “any dispute … relating to this Policy”—is a broad clause, triggering Ohio’s strong presumption of arbitrability ({¶ 11}, {¶ 13}, {¶ 19}).
The presumption of arbitrability was not overcome because there was no express exclusion or other “forceful evidence” removing bad-faith claims from arbitration ({¶ 15}, {¶ 20}).
USACS’s bad-faith claim could not be maintained without reference to the policy or the insurer–insured relationship; therefore, it falls within the scope of the clause under the Aetna Health/Fazio test ({¶ 16}, {¶ 17}, {¶ 21}).
Scott Fetzer’s characterization of bad faith as a tort for choice-of-law purposes does not preclude arbitration of such claims when the parties agreed to arbitrate disputes “relating to” the policy ({¶ 18}, {¶ 21}).

Accordingly, the Court reversed the Fifth District and reinstated the trial court’s order compelling arbitration ({¶ 22}).

Detailed Analysis

Precedents Cited and Their Influence

Hayes v. Oakridge Home, 2009-Ohio-2054 and Ignazio v. Clear Channel Broadcasting, Inc., 2007-Ohio-1947: The Court reiterates Ohio’s strong public policy favoring arbitration and the principle that doubts should be resolved in favor of arbitration ({¶ 11}). This policy baseline frames the entire analysis, ensuring that once a broad clause is found, the presumption of arbitrability strongly guides outcomes absent clear exclusions.
ABM Farms, Inc. v. Woods, 1998-Ohio-612: Arbitration agreements are treated as “a contract within a contract,” and standard contract-interpretation principles apply ({¶ 12}). This anchors the Court’s textual approach to the change endorsement and the clause’s breadth.
Westfield Ins. Co. v. Galatis, 2003-Ohio-5849 and Beverage Holdings, L.L.C. v. 5701 Lombardo, L.L.C., 2019-Ohio-4716: The Court seeks to effectuate the parties’ intent as reflected in the contract’s plain language ({¶ 12}). This undergirds the key holding that “any dispute … relating to this Policy” is a paradigmatically broad provision.
Academy of Medicine of Cincinnati v. Aetna Health, Inc., 2006-Ohio-657: The Court relies on Aetna Health for two propositions:
- Classifying arbitration clauses as broad or narrow, with “arising out of or relating to” language deemed the paradigm of a broad clause ({¶ 13}).
- Adopting the Fazio test: whether a claim can be maintained without reference to the contract or the relationship at issue ({¶ 16}). These principles are dispositive here.
Mitsubishi Motors Corp. v. Soler Chrysler Plymouth, Inc., 473 U.S. 614 (1985): Supports the proposition that creative pleading cannot evade a broad arbitration clause; the key question remains whether the parties agreed to arbitrate the issue ({¶ 14}).
Council of Smaller Enterprises v. Gates, McDonald & Co., 1998-Ohio-172, drawing on AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643 (1986) and United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960): Establishes the presumption of arbitrability and the “positive assurance”/“forceful evidence” standard for concluding a dispute is not covered ({¶ 15}). The Court deploys this standard to reject USACS’s argument that deleting “extracontractual obligations” from the clause nullified arbitration of bad-faith claims.
Fazio v. Lehman Brothers, Inc., 340 F.3d 386 (6th Cir. 2003): Provides the “could the action be maintained without reference to the contract or relationship?” test, expressly adopted in Aetna Health and applied to encompass tort claims when they “touch matters” covered by the contract ({¶ 16}–{¶ 17}).
Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840 (2d Cir. 1987) and Alexander v. Wells Fargo Financial Ohio 1 Inc., 2009-Ohio-2962: Reinforce that “real torts” are arbitrable if their underlying allegations touch matters covered by the agreement ({¶ 17}).
Scott Fetzer Co. v. American Home Assurance Co., Inc., 2023-Ohio-3921: Clarifies that bad-faith claims are torts for choice-of-law purposes but does not bar arbitration of such claims where a broad arbitration clause exists and the claims relate to the policy/relationship ({¶ 18}). The Fifth District’s reliance on Scott Fetzer to avoid arbitration was therefore misplaced.

Legal Reasoning

Contractual text and clause classification. The policy’s endorsement states: “Any dispute between [USACS] and [TDC] relating to this Policy (including any disputes regarding [TDC’s] contractual obligations) will be resolved by binding arbitration ….” The Court classifies this as a broad clause, consistent with Aetna Health’s benchmark for “arising out of or relating to” language ({¶ 13}, {¶ 19}). Broad clauses sweep in not only contract claims but also related torts.
Presumption of arbitrability and the “forceful evidence” requirement. With a broad clause established, Ohio law applies a presumption of arbitrability. A court must compel arbitration unless it can say with “positive assurance” that the clause is not susceptible to an interpretation covering the dispute, or unless there is an express exclusion or other forceful evidence the parties carved the claim out ({¶ 15}). USACS identified no such express exclusion in the endorsement ({¶ 20}).
Interpreting the change endorsement. The original clause referenced disputes over TDC’s “extra-contractual obligations,” which could be read as expressly encompassing bad-faith claims. The change endorsement deleted “extra-contractual” and substituted “contractual obligations,” but retained the gateway phrase “Any dispute … relating to this Policy.” The Court holds the retention of the broad “relating to” language is decisive: the endorsement does not expressly exclude bad-faith disputes, and the inclusive term “including” signals examples, not limitations ({¶ 20}). Without an explicit carve-out, the presumption stands.
Applying the Aetna Health/Fazio test to the bad-faith claim. The Court asks whether USACS’s bad-faith action “could be maintained without reference to the [insurance] contract or [insurer–insured] relationship.” It could not. The claim necessarily turns on duties rooted in and measured against the policy and the insurer–insured relationship (e.g., defense, settlement, coverage limits, risk of excess verdict). Therefore, the claim “touches matters” covered by the policy and falls within the arbitration clause ({¶ 16}–{¶ 17}, {¶ 21}).
Distinguishing Scott Fetzer. Scott Fetzer treated bad faith as a tort for choice-of-law analysis, but the Supreme Court clarifies that tort characterization does not immunize such claims from arbitration where the contractual language is broad and the claim relates to the policy/relationship ({¶ 18}, {¶ 21}). Creative pleading cannot avoid arbitration under a broad clause ({¶ 14}).

Impact and Implications

This decision materially clarifies Ohio arbitration law at the intersection of insurance and tort:

Bad faith claims are presumptively arbitrable under broad clauses. When policy language uses “any dispute … relating to this Policy,” bad-faith handling claims will ordinarily be compelled to arbitration if the claim cannot be litigated without reference to the policy or the insurer–insured relationship.
Textual precision is paramount for carve-outs. If parties intend to exclude “extracontractual” or bad-faith claims from arbitration, they must do so expressly. Merely replacing “extra-contractual obligations” with “contractual obligations” in an illustrative parenthetical, while retaining a broad “relating to” lead-in, is insufficient “forceful evidence” of exclusion.
Limits on “creative pleading.” Plaintiffs cannot avoid arbitration by styling disputes as torts. The focus remains on the relationship to the policy and whether the claim requires reference to that relationship or instrument.
Uniformity and predictability. The Court’s reaffirmation of Aetna Health and Fazio promotes consistent application across Ohio courts, reducing forum-dependent uncertainty about arbitrability of insurance-related torts.
Drafting and litigation strategies. Insurers and insureds should:
- Audit arbitration provisions for breadth and any necessary carve-outs (e.g., express exclusion of “bad faith,” “extra-contractual,” or specific statutory claims) if that is the parties’ intent.
- Anticipate more motions to compel arbitration in bad-faith contexts, including disputes over defense and settlement strategy.
- Recognize that endorsements modifying examples in a clause do not impliedly narrow a sweeping “relating to” gateway absent explicit exclusionary language.
Lower court guidance. Courts should:
- Classify the clause as broad or narrow.
- Apply the presumption of arbitrability and the “positive assurance/forceful evidence” standard.
- Use Aetna Health/Fazio to determine whether the claim can be maintained without reference to the policy or relationship.
- Avoid conflating choice-of-law classifications (tort vs. contract) with arbitrability.

Complex Concepts Simplified

Presumption of arbitrability: When a contract contains an arbitration clause—especially a broad one—courts assume disputes are arbitrable unless there is clear, explicit evidence they are not. Courts must compel arbitration unless they can say with “positive assurance” that the clause cannot be read to cover the dispute ({¶ 15}).
Broad vs. narrow arbitration clauses: Clauses with “arising out of or relating to” language are “broad,” capturing a wide range of disputes connected to the contract, including related torts ({¶ 13}). Narrow clauses are limited to specific categories (e.g., “claims for breach of this Agreement”) and may exclude related non-contract claims.
Aetna Health/Fazio test: To decide if a claim falls within a clause, ask: Can the claim be maintained without referring to the contract or the parties’ contractual relationship? If not, it is likely arbitrable under a broad clause ({¶ 16}–{¶ 17}).
“Touch matters” standard: Even “real torts” are arbitrable when their underlying allegations touch matters covered by the agreement—i.e., they are intertwined with rights and obligations the contract creates or governs ({¶ 17}).
“Express exclusion” or “forceful evidence”: To defeat arbitrability under a broad clause, a party must point to express contractual carve-outs or other strong textual/structural evidence that a particular claim type is excluded ({¶ 15}, {¶ 20}).
Change endorsement: An endorsement that modifies policy provisions. Here, it replaced a parenthetical example (“extra-contractual obligations”) with another (“contractual obligations”), but retained the broad “any dispute … relating to this Policy” gateway. Because “including” is illustrative, the change did not expressly exclude bad-faith claims ({¶ 20}).
Bad-faith insurance-claim handling: In Ohio, such claims are torts that arise by operation of law (Scott Fetzer). But their tort character does not prevent arbitration when the parties broadly agreed to arbitrate disputes relating to the policy or their relationship ({¶ 18}).

Conclusion

U.S. Acute Care Solutions v. Doctors Company Risk Retention Group Ins. Co. provides a clear and practical rule for Ohio arbitration jurisprudence: a bad-faith insurance-handling claim is subject to arbitration when the policy contains a broad “relating to” clause and the claim cannot be maintained without reference to the policy or the insurer–insured relationship. The decision robustly applies Ohio’s presumption of arbitrability and the Aetna Health/Fazio framework, rejects attempts to avoid arbitration through tort framing, and instructs that only explicit carve-outs or “forceful evidence” will suffice to exclude such claims.

For drafters, the message is straightforward: if the intent is to keep bad-faith or other extra-contractual claims in court, say so expressly. For litigants and courts, the decision promotes predictability, aligns Ohio law with federal arbitration principles, and ensures that broadly worded clauses are enforced as written. The Court’s reversal of the Fifth District and reinstatement of the order compelling arbitration underscores that the breadth of the agreed-upon clause—not the label attached to the claim—controls.