Ex parte Shelton

• Decision Date: 07 September 2001
• Citation: 814 So.2d 251
• Parties: Ex parte Billy SHELTON and Mae Clark. (Re Mae Clark v. Blue Cross and Blue Shield of Alabama).
• Court: Alabama Supreme Court

814 So.2d 251

Ex parte Billy SHELTON and Mae Clark.

(Re Mae Clark v. Blue Cross and Blue Shield of Alabama).

1990366.

Supreme Court of Alabama.

September 7, 2001.

Myron K. Allenstein of Allenstein & Associates, Gadsden, for petitioners.

Cavender C. Kimble and Teresa G. Minor of Balch & Bingham, L.L.P., Birmingham; and George P. Ford of Ford & Associates, P.C., Gadsden, for respondent.

JOHNSTONE, Justice.

We are now addressing Mae Clark's¹ second petition to this Court for a writ of mandamus directing the Etowah County Circuit Court to vacate its order compelling her to arbitrate her claims against Blue Cross and Blue Shield of Alabama ("Blue Cross"). See Ex parte Shelton, 738 So.2d 864 (Ala.1999)

("Shelton I"). In Shelton I, this Court denied the petition of Shelton and Clark for a writ of mandamus because the materials submitted in support of the first petition did not warrant relief.

Operative Facts Common to Shelton I and This Case ("Shelton II")

In 1991, Clark applied to Blue Cross for a Medicare supplement policy, referred to as a "C Plus Medicare Select Contract." Blue Cross issued a "C Plus" contract of insurance to Clark. The contract of insurance provided, in pertinent part:

"Contract Revisions

"By giving 30 days written notice to you, or your group, we may change the fees you pay for coverage under this Contract or any provision of this Contract. If you pay any fees after the notice, you accept the new fees or changes in the Contract.

"The Contract can only be changed by written amendments, endorsements, revisions signed by one of our officers and sent by us to you or your group. None of our officers, employees, or agents can make any oral changes, such as by telephone. Nor may anyone waive or vary any provisions of this Contract except in writing, signed by one of our officers."

(Emphasis added.)

"Effective July 1, 1992, [Blue Cross] amended its C Plus contracts to include a mandatory binding-arbitration provision. In the summer of 1992, it sent a newsletter entitled `C Plus UPDATE' to all C Plus insureds; that newsletter noted the amendment to the contract and stated that an insured's continued payment of premiums constituted acceptance of the arbitration provision. Thereafter, in November 1993, [Blue Cross] sent a revised contract containing the arbitration clause, along with a cover letter to all C Plus insureds."

Shelton I, 738 So.2d at 867.

In February 1997, Clark sued Blue Cross on the theory that Blue Cross had wrongfully sold her a worthless C Plus policy. Because Clark was eligible for Medicaid benefits, she was ineligible for Medicare benefits and for C Plus benefits. Blue Cross moved to dismiss or, in the alternative, to compel arbitration. Following arguments of counsel, the trial court granted the motion to compel arbitration filed by Blue Cross and stayed further proceedings. On February 4, 1998, Clark moved to alter, to amend, or to vacate the order compelling arbitration or, in the alternative, for a jury trial on the issue whether Clark had agreed to arbitration. On February 6, 1998, Blue Cross responded to Clark's motion. On February 10, 1998, Clark requested oral argument on her motion. On February 11, 1998, Clark petitioned this Court for a writ of mandamus.

On March 3, 1998, in the trial court, Clark filed an amended motion to alter, to amend, or to vacate the order compelling arbitration on the ground that the McCarran-Ferguson Act prohibited arbitration clauses in insurance contracts. On March 4, 1998, the trial court conducted a hearing "on Clark's request for oral argument; received submissions from Clark; and held the case in abeyance" until this Court ruled on Clark's petition for a writ of mandamus. Shelton I, 738 So.2d at 867. On March 12, 1998, Clark filed an amended petition for a writ of mandamus. On June 11, 1999, this Court denied Clark's petition. This Court addressed Clark's amendment to her petition with the following observation:

"Clark is not precluded from now raising in the trial court her McCarran Act issue as a defense to BCBS's motion to compel arbitration. Likewise, BCBS may now raise the issue whether 42 U.S.C. § 1395ss preempts state law by specifically authorizing the inclusion of arbitration provisions in Medicare Select policies. If the trial judge finds for Clark and holds that state law, not federal law, controls the arbitration issue, then BCBS may appeal from that order. A.G. Edwards & Sons, Inc. v. Clark, 558 So.2d 358 (Ala.1990). If the trial judge finds for BCBS and holds that federal law authorizes arbitration provisions in Medicare Select policies in Alabama, then Clark may again seek mandamus review of the trial judge's order. Ex parte Alexander, 558 So.2d 364 (Ala. 1990)."

Shelton I, 738 So.2d at 872.

Operative Facts after Shelton I

Following our denial of her petition for a writ of mandamus, Clark filed in the Etowah County Circuit Court, among other additional things, "a memorandum against arbitration"; a motion to strike the supplemental affidavit of Melissa Brisendine, an employee of Blue Cross; a memorandum regarding the McCarran-Ferguson Act; and an affidavit from Billy Shelton. In her memorandum against arbitration, Clark asserted that the 1992 and 1993 documents purporting to add arbitration provisions to the 1991 contract of insurance were ineffective because they were not signed by an officer of Blue Cross as required by the 1991 contract of insurance. Blue Cross moved to strike an affidavit by Billy Shelton and submitted a "second" brief in support of the motion to compel arbitration. Blue Cross did not dispute Clark's assertion that the 1992 "amended contract" and the 1993 "revised contract" were not signed by an officer of Blue Cross. Likewise, Blue Cross did not dispute Clark's claim that the 1992 "amended contract" and the 1993 "revised contract" were invalid because of the absence of a Blue Cross officer's signature. Rather, Blue Cross argued that the effectiveness of the "policy amendment" had already been decided and that "there is no reason to reopen the issue." Following oral arguments by counsel, the trial court entered an order stating, in pertinent part:

"Based upon the briefs and supporting materials submitted by the parties and the arguments made at the September 24, 1999 hearing, the Court hereby reaffirms its previous order sending all of [Clark's] claims to arbitration. [Clark's] arguments regarding the McCarran-Ferguson Act, 15 U.S.C. § 1011 et seq., have been rejected by the Alabama Supreme Court in American Bankers Insurance Co. v. Crawford, [757 So.2d 1125 (Ala.1999)]. Moreover, the decision in Crawford effectively moots Blue Cross's contentions regarding 42 U.S.C. § 1395ss...."

In her present petition, Clark asserts, among other theories, that no valid agreement to arbitrate exists inasmuch as:

"Blue Cross did not comply with its own contract provisions for amending the policy. The written contract provides a provision for changing any provision of the policy with 30 days notice with the written signed amendment being sent to the insured:

"`Contract Revisions. By giving 30 days written notice to you, or your group, we may change the fees you pay for coverage under this Contract or any provision of this Contract. If you pay any fees after the notice, your accept the new fees or changes in the Contract.

"`The Contract can only be changed by written amendments, endorsements, revisions signed by one of our officers and sent by us to you or your group. None of our officers, employees, or agents can make any oral changes, such as by telephone. Nor may anyone waive or vary any provisions of this Contract except in writing, signed by one of our officers.' (Emphasis added.) (Ex. 2, p. 10.)

"The contract does not provide for changing the terms of the contract by mailing an amended policy which has not been `signed.' The policy itself requires a written amendment signed by an officer. (Ex. 2, p. 10.) There is no provision in the policy for a presumption of receipt by mail or a provision for changing the contract by newsletter or an unsigned amended policy.

"[Blue Cross] did not follow its own procedure. [Blue Cross] has never produced a signed amended policy. The process utilized to amend the contract was not in accord with the contract of insurance and not in accord with Alabama law."

Petition, pp. 11-12. In its brief to this Court, Blue Cross does not dispute that the 1992 "amended contract" and the 1993 "revised contract" were not signed by an officer of Blue Cross. In fact, Blue Cross never addresses Clark's claim that the 1992 and 1993 documents were ineffective to add arbitration provisions to the 1991 insurance contract because they lacked a Blue Cross officer's signature. Instead, Blue Cross asserts that

"Clark's argument to the effectiveness of the policy amendment was not ripe for reconsideration by Judge Stewart. This issue was decided initially by Judge Stewart in January, 1998, and Judge Stewart's holding that the policy amendment was effective was affirmed by this Court in its June 11, 1999 opinion. See Shelton, 738 So.2d at 870-872

. Therefore, this aspect of Clark's second mandamus petition is without merit."

Brief, p. 17. Blue Cross argues that this Court in Shelton I, supra, "affirmed" "Judge Stewart's holding that the policy amendment was effective."

Analysis and Conclusions

First, we observe that this Court did not "affirm" the holding of the trial judge that the arbitration provisions in the 1992 "amended contract" and the 1993 "revised contract" were effective. In Shelton I, we said "[b]ased on this sparse record, we cannot hold that Clark has a clear legal right to have the trial judge's arbitration order set aside." 738 So.2d at 870. Second, this Court has held, "the denial [of a petition for a writ of mandamus] does not operate as a binding decision on the merits." R.E. Grills, Inc. v. Davison, 641 So.2d 225, 229 (Ala.1994). "[T]he denial of relief by mandamus does...