St. Mary's Law Journal


Arbitration is a process which allows parties voluntarily to refer their disputes to an impartial third person, an arbiter, selected by them to determine the parties’ rights and liabilities. Initially, arbitration was encouraged between corporate entities with equal bargaining power. But, due to federal policy favoring arbitration, the use of predispute arbitration agreements have increased dramatically, and such clauses can now be found in many noncommercial consumer contracts, especially those in the health care industry. The strong federal policy favoring arbitration originated with Congress’ passing of the Federal Arbitration Act (FAA). Under the FAA, an arbitration agreement is enforceable if it is written, involves interstate commerce, and can withstand scrutiny under traditional state contract law defenses. Chapter 74 of the Texas Civil Practice and Remedies Code contains mandatory notice provisions for arbitration agreements which are required to bind health care liability claims to arbitration. Yet, due to the Supremacy Clause, state and federal courts assert the FAA preempts such state law requirements. The McCarran-Ferguson Act is a federal law passed for the purposes of restoring state supremacy in the area of insurance. This applies to prevent federal preemption of conflicting state law where the state law is enacted for the purpose of regulating insurance. Specifically, in the health care field, proponents claim arbitration is more favorable than litigation, asserting arbitration allows parties to choose arbitrators who understand the factual intricacies of the case. Notwithstanding these arguments there are multiple reasons for opposition. Some of the disadvantages asserted include the lack of full range of discovery, the potential for unqualified arbitrators, the differences in bargaining strength, and the perceived bias in favor of physicians.


St. Mary's University School of Law