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Grimes v. Government Employees Insurance Co.

United States District Court, M.D. North Carolina

July 30, 2019

CRYSTAL GRIMES, on behalf of Herself and others similarly Situated, Plaintiff,
v.
GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

          THOMAS D. SCHROEDER, CHIEF DISTRICT JUDGE.

         Plaintiff Crystal Grimes, owner of a personal automobile insurance policy issued by Defendant Government Employees Insurance Company (“GEICO”), alleges that GEICO systematically underpays claims for medical payments coverage on North Carolina automobile insurance policies. (Doc. 1 at 1-2, 4.) Grimes seeks damages, for herself and others similarly situated, based on breach of contract, breach of the implied covenant of good faith and fair dealing, violation of the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. §§ 75-1.1, et seq. (“UDTPA”), and aggravated bad faith/tortious breach of contract in violation of Chapter 1D of the North Carolina General Statutes. (Doc. 1.) Before the court is GEICO's motion to dismiss the complaint and to compel arbitration pursuant to Federal Rule of Civil Procedure 12(b)(3), and alternatively to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 12.) The motion is fully briefed and ready for decision. For the reasons set forth below, the motion to dismiss and to compel arbitration pursuant to Rule 12(b)(3) will be DENIED and the motion to dismiss pursuant to Rule 12(b)(6) will be GRANTED.

         I. BACKGROUND

         Grimes owns a personal automobile insurance policy issued by GEICO that includes coverage for medical payments (“MedPay”) up to $5, 000 per person per accident. (Doc. 1 ¶¶ 10, 15.) Her policy was in effect when she was injured in a car accident. (Id. ¶¶ 11, 15, 27-28.) Grimes received medical treatment for her injuries from several medical providers, including WakeMed, Wake Emergency Physicians, PA, and EmergeOrtho. (Id. ¶ 29.) The gross total charge for her medical treatment was $4, 436.97: WakeMed charged Grimes $1, 835.42, Wake Emergency Physicians, PA charged her $570, and EmergeOrtho charged her $2, 031.55. (Id. ¶¶ 31, 35.) Grimes submitted claims to GEICO for $4, 436.97 in medical expenses and sought reimbursement under the MedPay coverage provision. (Id. ¶ 34.)

         The MedPay provision states, in relevant part:

INSURING AGREEMENT
We will pay reasonable expenses incurred for necessary medical and funeral services because of bodily injury:
1. Caused by accident; and
2. Sustained by an insured.
We will pay only those expenses incurred for services rendered within 3 years from the date of the accident.
. . .
Expenses are reasonable only if they are consistent with the usual fees charged by the majority of similar medical providers in the geographical area in which the expenses were incurred for the specific medical service.
Services are necessary only if the services are rendered by a licensed medical provider within the scope of the provider's practice and license and are essential in achieving maximum medical improvement for the bodily injury sustained in the accident.
We have the right to make or obtain a utilization review of the medical expenses and services to determine if they are reasonable and necessary for the bodily injury sustained.
* * *
ARBITRATION
The amount due under this coverage shall be decided by agreement between the insured and us. If there is no agreement, the amount due shall be decided by arbitration upon written request of the insured or us. Each party shall select a competent and impartial arbitrator. These two shall select a third one. If unable to agree on the third one within 30 days, either party may request a judge of a court of record in the county in which the arbitration is pending to select a third one. The written decision of any two arbitrators shall be binding on us, the insured, any assignee of the insured and any person or organization with whom the insured expressly or implied contracts for the rendition of medical services. The arbitrators' decision shall be limited to whether or not the medical expenses were reasonable and the services were necessary, with the amount due being equal only to the reasonable expenses for necessary services. The arbitrators shall not award punitive damages or other noncompensatory damages.
* * *

(Doc. 1-2 at 6-8.)

         GEICO found that Grimes's injuries were caused by the car accident, necessary, and not subject to any exclusions. (Doc. 1 ¶¶ 36-38.) GEICO also found that Grimes's medical charges had been discounted by the providers in the amount of $2, 461.70 because of “health insurance contractual allowances, ” and GEICO reimbursed Grimes for the difference - $1, 975.27. (Id. ¶¶ 39, 45; see Docs. 1-4, 1-5, 1-6.)

         Grimes alleges that GEICO has no right to reduce the medical expenses she incurred “on account of any adjustment made by any health insurer” and that by doing so breached the MedPay coverage in her policy. (Doc. 1 ¶¶ 44-46.) In response, GEICO timely requested arbitration (Doc. 13-1), but Grimes refused (Doc. 13-2).

         II. ANALYSIS

         A. Motion to Dismiss for Improper Venue and to Compel Arbitration

         Arbitration clauses are a subset of forum-selection clauses, which are enforced in this circuit pursuant to a Rule 12(b)(3) motion to dismiss for improper venue. Gold Mine Jewelry Shoppes, Inc. v. Lise Aagaard Copenhagen, A/S, 240 F.Supp. 3D 391, 394 (E.D. N.C. 2017) (citing Aggarao v. MOL Ship Mgmt. Co., Ltd., 675 F.3d 355, 365 n.9 (4th Cir. 2012)). The court may examine evidence outside the pleadings when considering the motion. Id. A plaintiff need only make a prima facie showing of proper venue, and in assessing whether there has been such a showing the court draws all reasonable inferences in the light most favorable to the plaintiff as the non-moving party. Id.

         GEICO argues that the MedPay provision contains a clear and unequivocal arbitration clause that applies to Grimes's claims. (Doc. 13 at 2.) Consequently, it contends, the court should dismiss the case and compel arbitration pursuant to Rule 12(b)(3). (Id.) It also argues that because the arbitration provision does not authorize class arbitration, only Grimes's individual claims are arbitrable. (Id.) Grimes responds that GEICO's arbitration provision is expressly limited to whether expenses are “reasonable” and ...


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