Legal Question in Insurance Law in California
Mandatory Arbitration
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? 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.
2 Answers from Attorneys
Re: Mandatory Arbitration
Mandatory arbitration is generally allowed. But I
don't know if the procedure used by your insurer is authorized. Your basic rights and the insurer's obligations are set forth in the policy and any promotional/informational brochures incident thereto.
What did your policy say about conversions or transfers from one type of plan to another? What about the promotional brochures? The enrollment form itself may not be sufficient to "change" your agreement with the insurer.
As for the timing, it sounds like you paid two months of premiums - and the insurer accepted them - before being notified that the insurer did not really "agree" to your "note." If that is true, get copies of your cancelled checks. And what did the insurer do when you visited the PPO providers? Were any authorizations given, or any benefits paid? What are the details?
The insurer may not now be able to undo it agreement by acceptance and conduct. The current refusal to honor your claims may be a retaliatory "cancellation" which may be actionable.
Re: Mandatory Arbitration
Mandatory arbitration is one of the most controversial areas of modern insurance/health care law.
To answer your first question, the answer is generally yes. Most mandatory arbitration clauses -- even in health insurance contracts -- are enforceable. California law specifically recognizes that mandatory agreements, under which insureds give up their constitutional rights to a trial by jury, are enforceable, subject to some limited exceptions.
Your second question is less clear, but still probably a yes under current law. To my knowledge, the specific issue of whether the company can refuse coverage if you refuse to sign the arbitration agreement has not been addressed in a published legal opinion. Nevertheless, given the general enforceability of these provisions, it may be difficult to challenge the practice.
Please feel free to call me. I am interested in learning more about your situation. You may have the right type of case to bring a challenge against these unfair mandatory arbitration agreements.
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