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Taboada A. v. Amfirst Insurance Co.

United States District Court, S.D. Mississippi, Northern Division

August 6, 2019




         Plaintiff Jose Evenor Taboada A. has brought this action pursuant to 9 U.S.C. § 4 to compel arbitration of his claims against defendant AmFirst Insurance Company (AmFirst) relating to its alleged breach of a policy of hospitalization insurance alleged to have been issued by AmFirst in 2004 and thereafter renewed annually through 2018. Plaintiff has now filed a motion to compel arbitration. AmFirst has responded in opposition to his motion. The court, having considered the memoranda of authorities, together with attachments, submitted by the parties, concludes that plaintiff's motion should be granted in part and denied in part.

         According to the complaint, in 2004, plaintiff purchased a hospitalization policy from AmFirst covering him and his wife. The policy was assigned Certificate Number 9215. By its terms, the policy was renewable annually upon payment of the renewal premium.[1] Plaintiff alleges that yearly, from 2005 through 2018, he was notified of the renewal premium and of any modifications to the policy (which, he states, were only minor and mostly improvements to benefits), and that each year, he remitted the renewal premium, thereby continuing his coverage. He states that his premiums were accepted and each renewal was acknowledged to be a renewal of his original policy, Certificate Number 9215.

         Plaintiff alleges that in 2017, his wife required a liver transplant. He states that although his policy provided coverage of $150, 000 for organ transplantation, when her providers sought confirmation of coverage under the policy, AmFirst, through its policy administrator, denied coverage on the basis that plaintiff's policy had been amended and/or replaced by a policy which contained exclusions for “[a]ny claim of treatment related to organ transplantation....” and for “[i]llnesses and diseases as a result of Alcoholism, Drug abuse or addiction to any substance, however caused and consequences or variations thereof.” Plaintiff thus paid the full costs of the transplant (in excess of $500, 000) out of pocket.

         Plaintiff asserts that in communications with the policy administrator regarding the denial, he learned for the first time that AmFirst had purported, without his knowledge, to have substituted his policy with one issued by an off-shore company located in Bermuda, AmFirst Ltd., which substitute policy supposedly contained “many new exclusions of which he was never made aware and to which he never consented or agreed.” Plaintiff alleges that despite extensive communications with AmFirst, through its administrator and/or counsel, AmFirst has continued to deny the claim, maintaining that the policy in effect for plaintiff and his wife during 2017 was not the policy he purchased in 2004 and renewed annually since then but rather was an entirely different policy with terms he had never seen and a company of which he had never heard.

         Plaintiff submitted to the American Arbitration Association (AAA) a demand for arbitration pursuant to the following arbitration provision in his 2004 policy:

DISPUTES AND REMEDIES: The parties agree that any and all disputes, claims or controversies that may arise from or in relation to this policy, or its alleged infringement, which the contracting parties do not resolve, shall be submitted to final and binding arbitration. Such arbitration shall be conducted in the City of Jackson, Mississippi, USA, pursuant to the Rules of Commercial Arbitration of the American Arbitration Association and the judgment or any concession rendered in such arbitration may be filed in any state or federal court in said city. Such arbitration shall be the only remedy for any dispute, claims or controversies relating to the policy. ...
GOVERNING LAW: Any issue relating to the interpretation of this policy, including matters relating to the information of the Insured on the request for insurance, [or] the issuance of this policy, shall be resolved pursuant to the contractual laws of the State of Mississippi.

         The AAA notified AmFirst of plaintiff's demand, and advised that since the arbitration arose out of a consumer agreement, then the Consumer Arbitration Rules would apply. It further advised that before it would proceed with administration of the arbitration, AmFirst would be required to waive certain provisions of the agreement that were non-compliant with AAA's Consumer Arbitration Rules and/or Protocols, including a limitation-on-damages provision, and would be required to submit its arbitration agreement for expedited review at a cost of $250. AmFirst declined, advising of its position that plaintiff was seeking to arbitrate against the wrong party under the wrong policy and wrong arbitration agreement and that the AAA's determination that the Consumer Arbitration Rules applied was contrary to the parties' agreement in any event. The AAA, in turn, declined to administer the case, following which plaintiff brought the present action to compel arbitration and has now moved to compel arbitration. In response, AmFirst takes the position that plaintiff's motion to compel arbitration should be denied as he is “seeking to compel arbitration against the wrong party, under the wrong health insurance policy, and under the wrong arbitration agreement.” AmFirst maintains that while it did issue the original 2004 policy, thereafter, AmFirst Ltd. assumed that policy, and from that point on, AmFirst Ltd., and not AmFirst, has been the insurer. AmFirst Ltd., it argues, has issued each of the renewal policies, including the policy in effect in 2017, when plaintiff's wife had the liver transplant; and while that policy also contains an arbitration provision (with somewhat different terms), the proper party to direct any complaint to compel arbitration is AmFirst Ltd., not AmFirst.

         Arbitrability is for the Arbitrator

         Section 2 of the Federal Arbitration Act states:

A written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2. Under Section 4 of the FAA, “a party ‘aggrieved' by the failure of another party ‘to arbitrate under a written agreement for arbitration' may petition a federal court ‘for an order directing that such arbitration proceed in the manner provided for in such agreement.'” Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 67, 130 S.Ct. 2772, 177 L.Ed. 2D 403 (2010) (quoting 9 U.S.C. § 4). The court must order arbitration “upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue.” 9 U.S.C. § 4.

         “Under the Act, arbitration is a matter of contract, and courts must enforce arbitration contracts according to their terms.” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S.Ct. 524, 529, 202 L.Ed.2d 480 (2019) (citing Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 67, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010)). As a matter of contract, “parties may agree to have an arbitrator decide not only the merits of a particular dispute but also ‘“gateway” questions of “arbitrability, ” such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.'” Id. (quoting Rent-A-Center, 561 U.S. at 68-69, 130 S.Ct. 2772). “[A]n ‘agreement to arbitrate a gateway issue is simply an additional, antecedent agreement the party seeking arbitration asks the federal court to enforce, and the FAA operates on this additional arbitration agreement just as it does on any other.'” Id. (quoting Rent-A-Center, 561 U.S., at 70, 130 S.Ct. 2772). Where there is clear and ...

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