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Mandatory Arbitration

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I wanted to move from an HMO to a PPO with the same insurance company in my school district. The enrollment form required me to accept an arbitration clause. The clause forces me to give up the right to have any dispute decided in a court of law before a jury. I signed it, but wrote a note underneath stating: "I was told by the representative that if I didn't sign this section I would not be covered. I was forced to sign this section." Now (two months later) the insurance company has refused to switch me to a PPO because I added that note. Thus I have two questions: (1) Is it legal to have such an arbitration clause in a health insurance enrollment form that removes all right to a court trial? (2) Can they deny my right to switch plans on the basis of the note I wrote even though I still signed the form with the arbitration clause included? I am paying part of my premium on the PPO plan and I've already signed up with PPO doctors. They still have me listed under the HMO plan. The insurance company is not allowing me to have the freedom of choosing a health plan my district makes available to me. I will incur financial burdens because I already have seen PPO doctors and the insurance says they won’t cover this. Any help will be greatly appreciated.



Dear egobunny,

It probably is legal, especially if we are dealing with employer group coverage. It probably doesn't really affect your rights that much since most employer group is subject to administrative law, in those cases: (1)the judge does not decide if your claim is covered, he rules on whether or not the claims administrators decision was "arbitrary and capricious"; that is without any reasonable basis. If they have some basis...you lose (generally).

This is why many believe that arbitration might even benefit insured employees since the arbitrator has some discretion and his duty is to try to resolve and compromise the claim, whereas an administrative law judges' duty doesn't allow that.

They can deny your enrollment because you are not allowed to change the terms of the plan....you must take it or leave it.

The most important thing about an arbitration clause is where the arbitration is to occur and you want to make sure that it takes place in the jurisdiction where you live, so that THEY have to do the traveling. Next is the cost, and usually each party must bear their own cost of arbitration.

NOTE: We are not attorneys and don't give legal advice and our opinions should not be regarded as such. Our response is an opinion based on 25 years of claims management experience.

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