A federal district court in Alabama granted an insurer’s motion to compel arbitration based on a policy provision requiring arbitration in the United Kingdom that the court found not to be unfair because the plaintiff could participate by telephone. Laura A. Thompson v. Generali Worldwide Insurance Company, Ltd., Case No. 3:18-cv-1126 (N.D. Ala. Jun. 10, 2019).
An employee of a company insured under a long-term disability policy sued her employer’s insurer for wrongfully denying her claim for long-term disability benefits. The insurer filed a motion to compel arbitration based on the policy’s broad arbitration provision which required any claims arising out of the policy to be arbitrated in the U.K. The employee argued that the arbitration provision was unenforceable because it grossly favored the insurer, and because she had no meaningful choice of whether to accept or reject the terms of the provision given the expenses associated with participating.
The court disagreed, finding the arbitration provision to be enforceable as written under Alabama law. The court ruled that under Alabama law, a plaintiff must be party to the contract of insurance to establish that there was a lack of meaningful choice regarding an arbitration provision, that the provision was unreasonably unfavorable to an insured, or that there as unequal bargaining power between the insured and the insurer. The court found that the plaintiff could not meet this burden as an employee of the insured company and thus a third-party beneficiary to the policy. The court ruled that the costs were not excessive where the provision allowed for the plaintiff to participate telephonically and did not require that she hire counsel in the U.K.