National Fidelity Life Ins. Co. v. Lane, A90A1206

• Decision Date: 30 October 1990
• Docket Number: No. A90A1206,A90A1206
• Citation: 398 S.E.2d 775,197 Ga.App. 423
• Parties: NATIONAL FIDELITY LIFE INSURANCE COMPANY v. LANE.
• Court: Georgia Court of Appeals

Page 775

398 S.E.2d 775

197 Ga.App. 423

NATIONAL FIDELITY LIFE INSURANCE COMPANY v. LANE.

No. A90A1206.

Court of Appeals of Georgia.

Oct. 30, 1990.

Carter & Ansley, H. Sanders Carter, Jr., Anthony J. McGinley, Atlanta, for appellant.

Alan W. Connell, Thomaston, for appellee.

BEASLEY, Judge.

Defendant National Fidelity Life Insurance Company appeals the judgment entered on a $50,000 jury verdict for plaintiff Lane. He had sued for breach of a disability insurance contract and nonpayment of a claim. The insurer contends that the trial court erred by failing to stay the suit and enforce an "arbitration" provision in the contract.

Lane was an airline captain insured under a contract of disability with National Fidelity. The policy provided for a single lump sum payment of $50,000 if Lane became permanently disabled from pursuing his occupation as an airline pilot. Lane would be entitled to the payment if after twelve months of continuous and uninterrupted medical suspension from flight status it was determined that he was permanently prevented from carrying on this occupation as a result of his disability. After disability occurred, the insured was to notify the insurer, which then had a right to investigate the claim and interview the insured's physicians. The insurer could then accept the decision of the insured's medical advisor and pay the claim. Or it could choose its own medical advisor, who could examine the medical records and the insured. If the two agreed, the claim would be paid. If they did not, the policy as amended provided that the two "shall choose a third medical advisor to act as a referee." This so-called "referee" was to also examine the medical records and the insured and, after consulting with the others, break the tie. The three medical advisors were then to give a written opinion to the insured and insurer, and the contract provided that it be final and binding. The insurer's medical advisor and the third medical advisor were to be experts in the field. Thus it was contemplated that physicians, a maximum of three, would decide whether the claimant was disabled or not, as defined by the policy.

The parties also agreed in the policy that no action at law or in equity would be brought to recover prior to the expiration of sixty days after determination of disability, actually non-disability, in accordance with the policy requirements.

Lane filed the present action prior to such a determination. Insurer responded and moved to stay the proceedings pending arbitration. The trial court denied the stay, concluding that the policy did not clearly make arbitration a condition precedent to the right to bring suit. It further concluded that even if it did, the insurer's actions in failing and refusing to institute the arbitration procedures after Lane's numerous requests to do so, together with the insurer's delays which caused Lane's claim to remain unresolved for two years after its initial filing, constituted a jury question as to whether or not the insurer had waived or abandoned arbitration. Reconsideration was denied and the case proceeded to trial.

The insurer maintains that the case is governed by the Federal Arbitration Act, 9 USC §§ 1-13, specifically § 2, and thus, the policy's arbitration provision was valid, irrevocable, enforceable and constituted a condition precedent to Lane's right to bring a civil action.

We assume arguendo that the policy does require "arbitration" as a condition precedent to suit by requiring a medical tie-breaker in case the parties' own medical advisors disagree, that the case involves interstate commerce so that the Federal Arbitration Act applies, and that such application in this case does not conflict with state law. See West Point-Pepperell v. Multi-Line Indus., 231 Ga. 329, 331, 201 S.E.2d 452 (1973); Gresham v. Ga. Dept. of Human Resources, 257 Ga. 747, 748(1), 363 S.E.2d 544 (1988). The Act does not as a matter of law mandate a stay of legal action in the context of this case.

Under the Act, "[a]n arbitration clause of a contract may be repudiated, waived, or abandoned, by either or both parties to a contract. [Cits.] An agreement to arbitrate is waived by any action of a party which is inconsistent with the right of arbitration. [Cits.]" McCormick-Morgan v. Whitehead Elec. Co., 179 Ga.App. 10, 12-13, 345 S.E.2d 53 (1986). Section 2 itself expressly states a broad exception encompassing the circumstances here. At trial, the court instructed the jury on the principles of waiver, abandonment, or repudiation of an agreement to arbitrate. The...