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Gordon v. Reserve National Insurance Co.

United States District Court, Tenth Circuit

August 10, 2013

Kurt L. Gordon, Plaintiff,
v.
Reserve National Insurance Company and William Linton, Defendants.

OPINION AND ORDER DENYING PLAINTIFF'S MOTION FOR RELIEF

ALAN B. JOHNSON, District Judge.

Kurt Gordon bought a health insurance policy containing an arbitration agreement from William Linton. Reserve National Insurance Company underwrote and issued the policy. After Reserve National denied coverage for medical expenses related to Mr. Gordon's emergency bypass surgery, Mr. Gordon sued Mr. Linton and Reserve National. In a previous order, this Court stayed this action and compelled the parties to mediation/arbitration under the policy's arbitration agreement and the Federal Arbitration Act. Mr. Gordon has now filed a motion asking for relief from that order and for permission to pursue his claims against Mr. Linton and Reserve National in this Court. The Court DENIES Mr. Gordon's motion.

FACTS

Kurt Gordon bought a health insurance policy from William Linton that was underwritten and issued by Reserve National Insurance Company. Before buying the policy, Mr. Linton allegedly told Mr. Gordon that the policy would cover medical expenses related to Mr. Gordon's heart. The policy contained an arbitration agreement stating that if a dispute arose under the policy between Mr. Gordon and Reserve National it would be resolved through mediation or binding arbitration if the mediation failed.

The arbitration agreement provides that either party may request mediation or arbitration. In the event of mediation, it states that Reserve National is wholly responsible for the cost of the mediator and any experts the mediator consults. In the event of arbitration, the agreement contains the following provisions:

• Either party may request arbitration.
• The arbitration will be administered by the American Arbitration Association (AAA).
• The arbitration must take place no further from Mr. Gordon's residence than the nearest United States District Court.
• Each party bears its own expenses of arbitration, each party is bound by the AAA's rules and procedures, and each party is responsible for half the arbiter's fee.
• Unless a prevailing-party statute applies, each party bears its own attorney's fees.
• Each party is bound by the arbiter's decision.

After purchasing the policy, Mr. Gordon suffered symptoms of heart failure and underwent emergency bypass surgery. His healthcare providers submitted claims to Reserve National based on his hospital stay and charges associated with the surgery, but Reserve National denied those claims on the ground that they weren't covered by the policy. Mr. Gordon then sued Mr. Linton and Reserve National, alleging Reserve National had wrongfully denied coverage and asserting claims for breach of contract, breach of the duty of good faith and fair dealing, and fraud.

Defendants then filed a motion asking the Court to stay this action and compel mediation/arbitration under the policy's arbitration agreement and the Federal Arbitration Act. Mr. Gordon opposed Defendants' motion on the ground that the arbitration agreement was unenforceable because the entire policy was the result of fraud and thus void under Wyoming law.

This Court granted Defendants' motion. The Court took its major premise from the Supreme Court's decision in Buckeye Check Cashing, Inc. v. Cardegna, where the Court held that a challenge to the validity of a contract containing an arbitration agreement goes to the arbitrator unless the challenge is to the arbitration agreement itself and not the contract as a whole. 546 U.S. 440, 445-46 (2006). Because Mr. Gordon challenged the validity of the policy generally and not its arbitration agreement specifically, this Court applied ...


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