If you want to sue your health insurance company in federal court because they denied your claim or they're not paying your medical bills in a timely fashion, chances are you can't. But some Democrats want to change that.
Many of the major health insurance companies have what are called mandatory arbitration clauses in their contracts, which require patients to settle disputes using a private dispute resolution method called arbitration. These clauses also typically block consumers from joining class action suits.
Consumer advocates argue that arbitration is far less transparent than the federal court system and denies consumers the opportunity for a trial by a jury of their peers. The outcome of these cases is rarely public and there are typically fewer options to appeal.
Rep. Katie Porter, D-Calif., introduced a new bill on Thursday, Justice for Patients Act, that would block health insurance companies from including provisions in group health plans or individual coverage agreements that force them to arbitrate disputes. Instead, patients would be able to bring lawsuits against health insurance companies and join class-action lawsuits, as well as go through arbitration, if they chose.
"Right now, health insurance giants are using mandatory arbitration to escape accountability when they cheat patients and deny them coverage of the care the law requires," Porter said in a statement. "When families don't have access to the justice system, it's the corporate special interests that win."
Companies typically contend they use arbitration because it saves everyone involved time and money. But whether consumers actually fare better is disputed. The Economic Policy Institute found that consumers only won monetary relief in 9% of the arbitration cases it studied.
Arbitration agreements are widespread. A 2019 academic study found that 81 of the biggest 100 companies in the U.S. have put legal clauses in the fine print of their customer agreements that bar consumers from suing them in federal court.
More than half, or about 60 million American workers, were required to use arbitration to settle disputes as of 2017, including when fighting against serious claims such as discrimination, civil rights violations and sexual harassment, EPI found. If nothing changes, the nonprofit predicts about 80% of workers will be covered by arbitration agreements by 2024.
Yet Porter's bill would only provide protection against health insurers. More comprehensive legislation, the Forced Arbitration Injustice Repeal Act, or FAIR Act, was passed by the House of Representatives passed in September 2019, but the legislation never got a vote in the Senate.
The FAIR Act would eliminate companies' ability to use forced arbitration clauses in any employment, consumer or civil rights cases, and would allow Americans to fight their lawsuits in federal court. If consumers and employees did want to use arbitration, they still could, but it would be a voluntary process, as opposed to their only option.
Rep. Hank Johnson, D-Ga., re-introduced the legislation in February. It has been referred to the Subcommittee on Antitrust, Commercial, and Administrative Law. Currently, the bill has only an 8% chance of being enacted, according to Skopos Labs.