Allied World Surplus Lines Ins. Co. v. Blue Cross & Blue Shield of S.C.

Allied World Surplus Lines Ins. Co. v. Blue Cross & Blue Shield of S.C.

Opinion

ORDER AND OPINION

This matter is before the Court on Defendant Blue Cross and Blue Shield of South Carolina's ("BCBS") motion to stay or dismiss this insurance coverage action. (Dkt. No. 20.) For the reasons set forth below, the Court grants the motion [*2]  and dismisses this action without prejudice.

I. Background

Allied World seeks a declaratory judgment under the Federal Declaratory Judgment Act of its obligations under policies of errors and omissions liability insurance and directors and officers liability insurance sold to BCBS for underlying civil actions against BCBS, the Blue Cross Blue Shield Association, and other Blue Plans. (Dkt. No. 1 ¶¶ 8-9.) The underlying actions were grouped into two tracks, the Provider Track and the Subscriber Track, and transferred to the United States District Court for the Northern District of Alabama for coordinated pretrial proceedings.

The insurance policies have an Alternative Dispute Resolution ("ADR") provision, requiring the parties to arbitrate or to mediate "all disputes which may arise under or in connection with this Policy," and allowing the parties to choose between arbitration and mediation. (Dkt. No. 5-4 at 23-24 (ADR requirement in errors and omissions policy); Dkt. No. 5-5 at 11-12 (ADR requirement in directors and officers policy).) Where mediation occurs, the ADR requirement provides that no judicial proceeding shall be commenced until at least 120 days has elapsed since the termination [*3]  of mediation. The parties have engaged in mediation before retired Judge Layn R. Phillips, but the parties dispute whether that mediation has satisfied the ADR provision. BCBS moves to stay or to dismiss this action, arguing Allied World has not satisfied the ADR requirement.

II. Legal Standard

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