What is “Binding Arbitration”?

From time-to-time we review a health insurance policy for a client who has been denied medical treatment, services, or benefits and we find that their policy contains a binding arbitration provision. Oftentimes our clients are surprised to hear this and need help understanding what this means for them and their case.

Arbitration is an out-of-court proceeding in which a neutral third party, called an arbitrator, hears evidence and then makes a binding decision. Arbitration is the most commonly used method of Alternative Dispute Resolution. Indeed, if you look closely enough, you may find an arbitration clause in the fine print of all kinds of contracts these days.

As an alternative to judges or courts settling disputes between consumers and businesses, binding arbitration works out a deal through an independent, third-party – the arbitrator. Binding arbitration may save time, money, and energy when two parties disagree over a contract, the performance of a service, or the exchange of goods. The arbitrator’s decision is final and cannot be disputed or appealed.

A binding arbitration hearing is set up much like a court hearing: all parties may choose whether or not to hire an attorney and each party is given time to present evidence and call on witnesses. After hearing from everyone involved, the arbitrator makes a final and binding decision; while this decision is legal and usually immediately enforced, it cannot be disputed to the arbitrator or challenged in court, except under extraordinary circumstances.

Some of the controversy surrounding binding arbitration revolves around people’s rights with respect to mandatory versus voluntary arbitration. With mandatory arbitration, a borrower or consumer must agree to use an arbitrator, rather than the courts, to resolve any issues. In voluntary arbitration, after a disagreement arises, both the consumer and the company can agree that they find it mutually beneficial to let a third party intervene.

Consumers waive their constitutional rights to sue as an individual or with a class action suit when they sign a mandatory binding arbitration clause as part of a contract. Often, people do not even realize that by signing a binding arbitration clause, they have denied themselves certain valuable rights. And, more often than not, consumers don’t even have a choice, if they want the services they are contracting for.

If your health insurance claim has been denied, and you have questions about binding arbitration, or any questions about your legal rights, please do not hesitate to contact our office for a no-cost consultation.

We understand, and we can help.
www.kantorlaw.net (877) 783-8686

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