Online Insurance Application Constitutes “Writing” for Purposes of Waiving Insurance Coverage for Medical Benefits–Barwick v. GEICO

By John Ottaviani

Barwick v. Government Employee Insurance Co., Inc., 2011 Ark. 128 (March 31, 2011) [link]

Although 47 states, the District of Columbia, Puerto Rico and the Virgin Islands have adopted the Uniform Electronic Transaction Act (UETA), we have had very few cases discussing or interpreting UETA. Here, we have a case where the court is asked whether a waiver in an online insurance application is a “writing” for purposes of a state insurance law that requires coverage waivers to be in writing.

The facts are fairly simple. In 2009, a woman (who subsequently married the plaintiff) purchased automobile insurance coverage online at GEICO’s website. In the online application, the woman rejected coverage for medical benefits as permitted under Arkansas law. The online form bore the woman’s electronic signature. In a discovery deposition, the woman also acknowledged that she completed the form on the website, that she did not select the coverage for medical benefits, and that she signed the application electronically.

The lower state court granted summary judgment to GEICO and dismissed the husband’s claim for medical benefits. On appeal, the husband argued that the electronic application containing his wife’s electronic signature did not meet the requirement that a rejection of coverage be “in writing” under the terms of Arkansas Code Annotated Section 23-89-203 (Repl. 2004). The husband argued that because a general statute does not apply when a specific one governs the subject matter, the insurance statute requirement that the waiver of coverage be “in writing”, takes precedence over the more general provisions in the UETA. He also argued that pressing a computer button did not constitute a “writing” for purposes of waiving coverage.

The Arkansas Supreme Court reviewed the history of UETA and noted that Arkansas had adopted UETA in 2001 to facilitate electronic transactions. The court found that the online application was an “electronic record” under UETA. The Court also found that there was no conflict between the insurance statute and UETA, and that the two provisions can be read “harmoniously” to mean that an electronic record can fulfill the requirement of written rejection for coverage. As a result, the Arkansas Supreme Court affirmed the lower court’s grant of summary judgment to GEICO.

A few thoughts:

• The court’s analysis is straightforward and correct. One would think that the legal issue is obvious, but there have been very few cases interpreting UETA to date (perhaps because the statute is so simple?). UETA was drafted so that the state legislators did not have to amend the numerous statutory requirements for “writings” in each statute. Instead, UETA provides a global approach that a record or signature may not be denied legal effect or enforceability solely because it is in electronic form, and a contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation. But it’s nice to now have a case to point to when a client questions the validity of online agreements.

• GEICO also argued that the plaintiff should be estopped from questioning the validity of the electronic waiver of coverage, because he is also seeking to benefit from the insurance policy obtained throughout the online application. Because the court dismissed the appeal on the UETA grounds, it did not need to address the estoppel argument.

• There do not seem to be any evidence issues in this case. The woman in question did not deny that she completed the online application and affixed an electronic signature. She also gave a deposition testimony that she completed the form on the website, that she and did not select coverage for medical benefits, and that she signed the application electronically. Query whether or not the court would have denied summary judgment if any of these facts had been in dispute.

• Unlike the court in Colorado last year, the Arkansas Supreme court correctly determined that EUTA, and not the federal Electronics Signatures In Global and National Commerce Act (commonly known as “E-Sign”), applies to this case. E-Sign has a peculiar “reverse preemption”. E-Sign governs in the absence of a state law or in states that made modifications to UETA that are inconsistent with E-Sign. In effect, Congress forces a state to adopt UETA in a uniform manner, by providing that the state version of UETA controls over E-Sign if UETA is adopted without modification. Here, Arkansas appears to have adopted UETA without any significant modifications, so UETA’s provisions should govern questions of contract formation and enforceability in Arkansas.

See also this brief post on a Federal Circuit UETA case.