Blue Cross Blue Shield of Alabama v. Rigas

• Decision Date: 09 September 2005
• Docket Number: 1040173.
• Citation: 923 So.2d 1077
• Court: Alabama Supreme Court
• Parties: BLUE CROSS BLUE SHIELD OF ALABAMA v. Elaine M. RIGAS.

923 So.2d 1077

BLUE CROSS BLUE SHIELD OF ALABAMA v. Elaine M. RIGAS.

1040173.

Supreme Court of Alabama.

September 9, 2005.

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Forrest S. Latta and Chad C. Marchand of Bowron, Latta & Wasden, P.C., Mobile, for appellant.

Kenneth J. Riemer, Mobile; and Patrick B. Collins, Daphne, for appellee.

SEE, Justice.

Blue Cross Blue Shield of Alabama appeals from the order of the Mobile Circuit Court denying its motion to compel arbitration of claims brought by Elaine M. Rigas in an action against it. We reverse the trial court's order denying arbitration and remand the case.

Facts and Procedural History

In 1995, Blue Cross Blue Shield of Alabama ("Blue Cross") and the Utilities Board of the City of Daphne ("the Board") entered into a contract pursuant to which Blue Cross was to provide the Board's employees, as a fringe benefit of employment, group major-medical insurance coverage. The contract incorporated by reference the Board's application for insurance, the "Utilities Board City of Daphne Group Health Insurance Plan" ("the Plan"), and any future amendment to or revision of the contract or the Plan. In 1997, Blue Cross amended the Plan to add an arbitration provision. Blue Cross provided the group with an insert to be distributed to its members informing them of the addition of the arbitration provision. In 1998, and in each year thereafter, the application for renewal of the contract signed by the Board contained the arbitration provision. The contract and the Plan relevant to this dispute are the contract effective October 1, 1999, and the Plan effective October 6, 2000.

The arbitration provision contained in the Plan appears following the provision describing the procedures for an insured to request a review of a claim and reads as follows:

"ARBITRATION

"IF YOU ARE STILL NOT SATISFIED WITH THE RESOLUTION OF YOUR COMPLAINT, WE WILL SETTLE THE DISPUTE THROUGH BINDING ARBITRATION UNDER THE FEDERAL ARBITRATION ACT AND ACCORDING TO THE RULES AND PROCEDURES IN THE AMERICAN ARBITRATION ASSOCIATION'S DISPUTE RESOLUTION PROGRAM FOR ARBITRATION OF INSURANCE CLAIMS DISPUTES. IF YOU REQUEST ARBITRATION, YOU WILL BE PROVIDED A COPY OF THE RULES AND PROCEDURES OF THE AMERICAN ARBITRATION ASSOCIATION, OR YOU MAY REQUEST A COPY AT ANY TIME BY WRITING TO U.S. AT OUR BIRMINGHAM ADDRESS. YOU HAVE AGREED TO SUBMIT ALL CLAIMS OR GRIEVANCES YOU HAVE THAT ARISE OUT OF, OR ARE IN ANY WAY RELATED TO, THE CONTRACT, INCLUDING ANY CLAIMS YOU MAY HAVE AGAINST PREFERRED OR PARTICIPATING HEALTH CARE PROVIDERS FOR MEDICAL CARE RENDERED PURSUANT TO YOUR CONTRACT, FOR FINAL AND BINDING RESOLUTION BY ARBITRATION. SUBMITTING ALL SUCH CLAIMS TO BINDING ARBITRATION IN EXCHANGE FOR THE INCREASED COVERAGE AND BENEFITS AVAILABLE UNDER THE PREFERRED OR OTHER PARTICIPATING HEALTH CARE PROVIDER CONTRACT PROHIBITS YOU FROM FILING ANY ACTION IN LAW OR EQUITY FOR BREACH OF CONTRACT OR TORT BEFORE THE ARBITRATION AWARD IS MADE. WE WILL PAY ALL COSTS OF ARBITRATION EXCEPT THE COST OF YOUR REPRESENTATION. BUT, IF THE ARBITRATOR FINDS THAT YOU ASKED FOR ARBITRATION WITHOUT A GOOD REASON, HE OR SHE MAY RULE YOU HAVE TO PAY ALL COSTS. THE ARBITRATION WILL BE SET IN THE COUNTY WHERE YOU LIVE UNLESS YOU AND WE AGREE TO ANOTHER PLACE. THE ARBITRATION WILL BEGIN WITHIN 60 DAYS AFTER NOTICE OF ARBITRATION FROM YOU TO

U.S. OR U.S. TO YOU. ONCE THE ARBITRATION AWARD IS ENTERED, JUDGMENT UPON THE AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF. WHILE BLUE CROSS AND BLUE SHIELD OF ALABAMA HAS MADE THIS BINDING ARBITRATION PROCEDURE AVAILABLE TO THE PARTIES, BLUE CROSS AND BLUE SHIELD HAS NO RESPONSIBILITY FOR YOUR SELECTION OF A HEALTH CARE PROVIDER, NOR FOR THE QUALITY OF CARE RENDERED. ANY AWARD MADE AT ANY STAGE OF THE ARBITRATION PROCEEDING IS THE RESPONSIBILITY OF THE HEALTH CARE PROVIDER AND NOT OF BLUE CROSS AND BLUE SHIELD. UNDER THE FEDERAL ARBITRATION ACT, AWARD SHALL NOT BE SET ASIDE EXCEPT UPON THE GROUNDS IN THE FEDERAL ARBITRATION ACT."

(Capitalization in original.)

In 1995, Rigas's father, an employee of the Board, applied for family coverage under the Plan. His application acknowledges:

"My application is subject to terms and conditions of the agreement between my Group (my employer or other organization through which I am applying for coverage) and you (Blue Cross and Blue Shield of Alabama)."

Blue Cross accepted Rigas's father's application for family coverage, and Rigas was enrolled as her father's dependent under the Plan from February 1, 1995, until September 1, 2001, when she was no longer eligible for dependent coverage. At that time, Rigas's father applied for continuation of coverage for Rigas pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). The COBRA coverage was subject to all of the terms and conditions of the Plan.¹ Rigas was covered by the Plan through COBRA from September 1, 2001, until February 1, 2003.

In January 2002 Rigas underwent two surgeries. Blue Cross denied claims for payment for the surgeries. In September 2003, the medical bills related to Rigas's surgeries remained unpaid, and Providence Hospital sued Rigas for the unpaid medical bills. When Rigas answered Providence Hospital's complaint,² she also filed a third-party complaint asserting claims against Blue Cross, as well as claims against her health-care providers.

Blue Cross moved to compel arbitration of Rigas's claims against it and to stay the litigation pending arbitration. Rigas opposed the motion. After a hearing, the trial court denied Blue Cross's motion to compel arbitration. Blue Cross appeals.

Issues

Blue Cross argues that the trial court erred in denying its motion to compel arbitration because, it argues, Blue Cross proved the existence of a contract calling for arbitration and Rigas did not show that the arbitration provision in that contract is not valid or does not apply in this case. Rigas argues that Blue Cross did not prove the existence of a contract calling for arbitration and, alternatively, that the arbitration provision is not valid.

Standard of Review

"`[T]he standard of review of a trial court's ruling on a motion to compel arbitration at the instance of either party is a de novo determination of whether the trial judge erred on a factual or legal issue to the substantial prejudice of the party seeking review.' Ex parte Roberson, 749 So.2d 441, 446 (Ala.1999). Furthermore:

"`A motion to compel arbitration is analogous to a motion for summary judgment. TranSouth Fin. Corp. v. Bell, 739 So.2d 1110, 1114 (Ala.1999). The party seeking to compel arbitration has the burden of proving the existence of a contract calling for arbitration and proving that that contract evidences a transaction affecting interstate commerce. Id. "After a motion to compel arbitration has been made and supported, the burden is on the non-movant to present evidence that the supposed arbitration agreement is not valid or does not apply to the dispute in question."'

"Fleetwood Enters., Inc. v. Bruno, 784 So.2d 277, 280 (Ala.2000) (quoting Jim Burke Auto., Inc. v. Beavers, 674 So.2d 1260, 1265 n. 1 (Ala.1995) (emphasis omitted))."

Vann v. First Cmty. Credit Corp., 834 So.2d 751, 752-53 (Ala.2002).

Discussion

Blue Cross, in moving to compel arbitration, had the burden of proving the existence of a contract calling for arbitration and proving that that contract evidences a transaction affecting interstate commerce.³ See Vann v. First Cmty. Credit Corp., 834 So.2d at 752-53.

In First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995), the Supreme Court of the United States held that courts should enforce an arbitration agreement when there is "`clear[] and unmistakabl[e]' evidence that" the parties agreed to arbitrate their dispute. The Federal Arbitration Act creates a strong presumption in favor of arbitration. "The [Federal] Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). While, "as with any other contract, the parties' intentions control, . . . those intentions are generously construed as to issues of arbitrability." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985).

Blue Cross argues that the Plan under which Rigas seeks payment of medical-insurance benefits undisputedly contains an arbitration provision. Blue Cross points to the arbitration provision quoted above, which is contained in the Plan and which was effective at the time of Rigas's surgeries and under which Rigas seeks benefits. Rigas, on the other hand, argues that the Plan does not clearly call for arbitration. She points to the following sentence, which is included in the Plan:

"If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court."

The single sentence to which Rigas points appears in the following paragraph, which is located in the section of the Plan entitled "Statement of ERISA Rights":⁴

"In addition to creating rights of plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employees benefit plan. The people who operate your plan, called `fiduciaries' of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA. If your claim for a welfare...