Voluntary Arbitration for Insurance Consumers Act
SECTION 1. SHORT TITLE
This Act shall be called the “Voluntary Arbitration for Insurance Consumers Act.”
SECTION 2. MANDATORY ARBITRATION CLAUSES UNENFORCEABLE
After section, paragraph XXX, the following new paragraph XXX shall be inserted:
Any contract or agreement between an insurance carrier and the beneficiary of such contract or agreement, or a third party acting on the beneficiary’s behalf, that contains any clause or provision providing for an adjustment by arbitration shall not preclude any party or beneficiary under the contract or agreement from instituting a suit or legal action on the contract at any time, and the compliance with the clause or provision shall not be a condition precedent to the right to bring or recover in the action. A party is bound by an arbitration provision only when the agreement to arbitrate is entered into knowingly and voluntarily by the parties involved after the dispute has arisen, or exists pursuant to the terms of a collective bargaining agreement.
SECTION 3. EFFECTIVE DATE
This Act shall take effect on July 1, 2005.
Preservation of Class Action Remedies Act
SECTION 1. SHORT TITLE
This Act shall be called the “Preservation of Class Action Remedies Act.”
SECTION 2. RESTRICTIONS ON CLASS ACTION REMEDIES UNENFORCEABLE
After section, paragraph XXX, the following new paragraph XXX shall be inserted:
Every contract, or restriction contained in any contract, that waives or has the practical effect of waiving a party’s right to resolve a dispute by obtaining class-wide relief is void and unenforceable, unless the parties agree to such a waiver after the dispute has arisen.
SECTION 3. EFFECTIVE DATE
This Act shall take effect on July 1, 2005.
Arbitration Reform Act
SECTION 1. SHORT TITLE
This Act shall be called the “Arbitration Reform Act.”
SECTION 2. FAIR ARBITRATION OF CONSUMER CONTRACTS
After section XXX, the following new section XXX shall be inserted:
(A) DEFINITIONS—In this section:
1. “Consumer arbitration” means an arbitration conducted under a predispute arbitration provision where: the contract is with a consumer party; the contract was drafted by or on behalf of the nonconsumer party; and the consumer party was required to accept the arbitration provisions in the contract. “Consumer arbitration” does not include arbitration proceedings conducted under or arising out of public or private sector labor relations laws, regulations, or agreements.
2. “Consumer party” means a party to an arbitration agreement who, in the context of that arbitration agreement, is any of the following:
a. An individual who seeks or acquires, including by lease, any goods or services, including but not limited to financial services and insurance, primarily for personal, family, or household purposes.
b. An individual who is an enrollee, subscriber or insured under a health care plan or health care insurance, or an individual with a medical malpractice claim; or
c. An employee or applicant for employment, in a dispute arising out of or relating to the employee’s employment or the applicant’s prospective employment that is subject to the arbitration agreement.
3. “Financial interest” means holding a position in a business as officer, director, trustee or partner or holding any position in management; or ownership of more than five percent interest in a business.
(B) FAIR DISCLOSURE BY ARBITRATION COMPANIES
1. Any private arbitration company that administers or is otherwise involved in 50 or more consumer arbitrations a year shall collect, publish at least quarterly, and make available to the public in a computer-searchable format, which shall be accessible at the Internet Web site of the private arbitration company, if any, and on paper upon request, all of the following information regarding each consumer arbitration within the preceding five years:
a. The nonconsumer party, if the nonconsumer party is a corporation or other business entity that is a party to the arbitration, specifying the posture of the nonconsumer party as claimant or respondent;
b. The type of dispute involved, including goods, banking, insurance, health care, employment, and, if it involves employment, the amount of the employee’s annual wage divided into the following ranges: less than $100,000, $100,000 to $250,000, and over $250,000.
c. Whether the consumer or nonconsumer was the prevailing party.
d. On how many occasions, if any, the nonconsumer has previously been a party in an arbitration or mediation administered by the private arbitration company.
e. Whether the consumer party was represented by an attorney.
f. The date the private arbitration company received the demand for arbitration, the date the arbiter was appointed, and the date of disposition by the arbiter or private arbitration company.
g. The type of disposition of the dispute, if known, including withdrawal, abandonment, settlement, award after hearing, award without hearing, default, or dismissal without hearing.
h. The amount of the claim, the amount of the award, and any other relief granted, if any.
i. The name of the arbitrator, his or her total fee for the case, fees assessed by the private arbitration company, and the percentage of the arbiter’s fee allocated to each party.
2. If the required information is provided by the private arbitration company in a computer-searchable format at the company’s Internet Web site and may be downloaded without any fee, the company may charge the actual cost of copying to any person who requests the information on paper. If the information required is not accessible by the Internet, the company shall provide that information without charge to any person who requests the information on paper.
3. A private arbitration company that administers or conducts fewer than 50 consumer arbitrations per year may collect and publish the information required by paragraph (1) semiannually, provide the information only on paper, and charge the actual cost of copying.
4. No private arbitration company shall have any liability for collecting, publishing, or distributing the information in accord with this section.
(C) LIMITS ON COST SHIFTING
1. All fees and costs charged to or assessed upon a consumer by a private arbitration company in a consumer arbitration, [exclusive of arbiter fees] shall be waived for any person having a gross monthly income that is less than 300 percent of the federal poverty guidelines.
2. Nothing in this section shall affect the ability of a private arbitration company to shift fees that would otherwise be charged or assessed upon a consumer party to another party.
3. Prior to requesting or obtaining any fee, a private arbitration company shall provide written notice of the right to obtain a waiver of fees in a manner calculated to bring the matter to the attention of a reasonable consumer, including, but not limited to, prominently placing a notice in its first written communication to a consumer and in any invoice, bill, submission form, fee schedule, rules, or code of procedure.
4. Any consumer requesting a waiver of fees or costs may establish eligibility by making a declaration under oath on a form provided by the private arbitration company for signature stating his or her monthly income and the number of persons living in the household. No private arbitration company may require a consumer to provide any further statement or evidence of indigence.
5. Any information obtained by a private arbitration company about a consumer’s identity, financial condition, income, wealth, or fee waiver request shall be kept confidential and may not be disclosed to any adverse party or any nonparty to the arbitration, except a private arbitration company may not keep confidential the number of waiver requests received or granted, or the total amount of fees waived.
(D) NEUTRALITY OF ARBITER
1. No arbiter or private arbitration company shall administer a consumer arbitration under any agreement or rule requiring that a consumer who is a party to the arbitration pay the fees and costs incurred by an opposing party if the consumer does not prevail in the arbitration, including, but not limited to, the fees and costs of the arbiter, provider organization, attorney, or witnesses.
2. No private arbitration company may administer a consumer arbitration or provide any other services related to such a consumer arbitration, if:
a. the private arbitration company has, or within the preceding year has had, a financial interest in any party or attorney for a party; or
b. any party or attorney for a party has, or within the preceding year has had, any type of financial interest in the private arbitration company.
SECTION 3. SEVERABILITY
The provisions of this Act shall be severable, and if any phrase, clause, sentence or provision is declared to be invalid or is preempted by federal law or regulation, the validity of the remainder of this Act shall not be affected.
SECTION 4. EFFECTIVE DATE
This Act shall take effect on July 1, 2005.