Clark v. Blue Cross & Blue Shield of Alabama

Citations: 814 So. 2d 251; 2001 Ala. LEXIS 323Docket: 1990366

Court: Supreme Court of Alabama; September 7, 2001; Alabama; State Supreme Court

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Mae Clark has submitted a second petition to the Court seeking a writ of mandamus to direct the Etowah County Circuit Court to vacate its order that requires her to arbitrate her claims against Blue Cross and Blue Shield of Alabama. In a previous case, identified as Ex parte Shelton, the Court had denied a similar petition from Shelton and Clark due to inadequate supporting materials. Clark had applied for a "C Plus Medicare Select Contract" in 1991, which included terms specifying that only written amendments signed by an officer could change the contract. In July 1992, Blue Cross added a mandatory binding-arbitration provision to its contracts and notified insureds that continued premium payments would indicate acceptance of this change. Clark later sued Blue Cross in 1997, claiming the policy was worthless because she was ineligible for Medicare benefits due to Medicaid eligibility. Blue Cross sought dismissal or to compel arbitration, and the trial court ruled in favor of arbitration, staying further proceedings. Clark subsequently filed multiple motions to alter or vacate this ruling and argued that the McCarran-Ferguson Act prohibited arbitration clauses in insurance contracts. The trial court held her case in abeyance pending the Court's decision on her mandamus petition. Ultimately, the Court denied her petition but noted that she could still raise her McCarran Act argument in the trial court as a defense against the arbitration motion, while Blue Cross could argue that federal law preempts state law regarding arbitration provisions in Medicare Select policies. If the trial court rules in Clark's favor, Blue Cross may appeal.

In A.G. Edwards. Sons, Inc. v. Clark, the court addressed whether federal law permits arbitration provisions in Medicare Select policies in Alabama. If the trial judge rules in favor of BCBS and affirms the validity of such arbitration provisions, Clark may seek mandamus review of that decision. Following prior attempts to contest arbitration, Clark filed various legal documents in the Etowah County Circuit Court, including a memorandum against arbitration and a motion to strike a supplemental affidavit from a Blue Cross employee. Clark argued that the 1992 and 1993 documents adding arbitration provisions to the original 1991 insurance contract were ineffective due to the lack of a signature from a Blue Cross officer, as explicitly required by the 1991 contract. Blue Cross acknowledged this lack of signature but contended that the issue of the “policy amendment” had already been settled and should not be reconsidered. The trial court subsequently reasserted its order mandating arbitration, dismissing Clark's arguments related to the McCarran-Ferguson Act as previously rejected by the Alabama Supreme Court. Clark's current petition maintains that no valid arbitration agreement exists, citing Blue Cross's failure to adhere to its contractual amendment procedures, which necessitate written amendments signed by an officer. Blue Cross has not produced a signed amended policy and has not addressed Clark's assertion regarding the ineffectiveness of the 1992 and 1993 documents in their brief.

Blue Cross contends that Clark's challenge to the effectiveness of the policy amendment is not suitable for reconsideration, as it was previously determined by Judge Stewart in January 1998, with the decision affirmed by this Court in June 1999. Blue Cross asserts that the Court in Shelton I did not affirm the trial judge’s ruling on the arbitration provisions; instead, it stated that Clark lacked a clear legal right to have the arbitration order set aside. Furthermore, the denial of a mandamus petition does not prevent a party from asserting claims in subsequent petitions, and Clark can still argue that the 1992 and 1993 contracts are invalid due to lack of proper signatures. A writ of mandamus is an appropriate method for challenging a trial court's arbitration order. The review standard for arbitration disputes requires a de novo determination of whether the trial court erred on factual or legal grounds. Arbitration is fundamentally a contractual matter, and parties cannot be compelled to arbitrate disputes they have not consented to. Courts should apply state law principles in determining the existence of arbitration agreements, and any doubts regarding the agreement should be resolved by a jury unless there is no factual dispute. The court's role in assessing arbitration agreements is similar to that in ruling on summary judgment motions. The issue at hand was also examined in a recent case involving Blue Cross.

The validity of the 1992 and 1993 C Plus contracts, which included arbitration provisions but lacked a signature from a Blue Cross officer, is questioned regarding their ability to serve as binding arbitration agreements. In prior rulings, specifically Ex parte Caver, it was established that the burden of proof lies with the party seeking to compel arbitration to demonstrate the existence of a valid contract that implicates interstate commerce. Once a prima facie case is made, the opposing party must provide evidence disputing the existence of such an agreement. If a genuine issue of material fact arises, it must be resolved by the trial court or jury.

Blue Cross must prove the existence of a valid arbitration agreement, and any ambiguities in the arbitration clause are to be interpreted in favor of arbitration, as dictated by the Federal Arbitration Act, which limits the application of general contract construction rules that may disfavor arbitration. However, the determination of whether the parties agreed to arbitrate is governed by state contract formation principles.

In the case of Premiere Chevrolet Inc. v. Headrick, an arbitration clause was present in a buyer's order signed by Headrick but not by any representative of Premiere Chevrolet, raising questions about the enforceability of the arbitration agreement. Headrick's claims, which included fraud and breach of contract, led to a motion to compel arbitration by Premiere Chevrolet. The trial court initially granted the motion but later reversed its decision, citing the lack of a fully executed agreement as Headrick argued that the buyer's order was void due to the absence of a dealer signature.

The trial court upheld a denial of arbitration based on the lease agreement's stipulation that it was the sole agreement binding the parties, requiring any modifications to be in writing and signed by both parties. The buyer’s order explicitly stated it was invalid unless accepted and signed by Premiere, emphasizing that signature and acceptance were conjunctive. The court interpreted the document strictly against the drafter, necessitating Premiere's signature in addition to acceptance. 

Regarding Blue Cross, the court concluded it failed to demonstrate compliance with a 1991 contract requiring amendments to be signed by its officers for validity. Despite assertions of signed amendatory documents, Blue Cross did not present them at trial, which was crucial since the burden to prove a valid arbitration agreement rested with Blue Cross. The absence of evidence of proper signatures for the 1992 and 1993 revisions led to the trial court's determination that no arbitration provisions were validly added to the original contract. Thus, the court granted a writ of mandamus to vacate the order compelling arbitration, affirming that without proof of a valid agreement, the motion to compel would be denied. Additionally, Billy Shelton, holding power of attorney for the mentally incapacitated Mae Clark, acted as an additional plaintiff. An amendment to the rules now allows appeals from orders regarding motions to compel arbitration.