DENIAL OF ARBITRATION OF STOP-LOSS INSURANCE DISPUTE AFFIRMED UNDER STATE INSURANCE LAW
The president of a corporate administrator of a trust appealed the denial of his motion to compel arbitration against a company that sued him individually in a case seeking benefits and other relief for disputed medical stop-loss coverage. The appellate court initially held that, although the president was a non-signatory to the underlying agreements, the president could enforce the arbitration provisions based on agency and the plaintiff’s allegations, which treated the president and his corporation as one and the same. The court concluded, however, that arbitration could not be compelled under state insurance law, which prohibits arbitration involving certain insurance agreements. The court found that under the McCarran-Ferguson Act, the state insurance law was not preempted by the FAA or the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The court held that the state law regulated insurance, and the agreement at issue provided “indemnity” and was therefore properly subject to the state insurance law as a contract of “insurance.” Scott v. Louisville Bedding Co., No. 2012-CA-000252-MR (Ky. Ct. App. July 12, 2013).
This post written by Michael Wolgin.
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