A financial services lawyer appeared today at a hearing on Capitol Hill to defend contract provisions that require consumers to take disputes to arbitration, but other witnesses blasted the provisions.
The House Judiciary Committee’s commercial and administrative law subcommittee organized the hearing to review complaints about the clauses, which are used in many insurance industry contracts, including contracts between insurers and brokers and between insurers and reinsurers, as well as between insurers and policyholders.
One witness, Mark Levin, a partner in the Philadelphia office of Ballard Spahr Andrews & Ingersoll L.L.P. who has helped write financial services companies’ arbitration clauses, said studies show that the arbitration system is working well.
When an arm of the U.S. Chamber of Commerce commissioned a survey of 609 arbitration participants, researchers found that 74% believed arbitration was faster than going to court and 51% thought it was cheaper; that 66% would use arbitration again; and that 40% of the consumers who lost were moderately to highly satisfied with the fairness of the process, Levin said, according to a written version of his testimony posted on the Judiciary Committee Web site.
Another witness said mandatory arbitration clauses in mortgage loan documents are hurting Texas home buyers, and a third witness, a Wisconsin law school professor, reviewed research suggesting that consumers and other individuals often fare poorly in arbitration.
F. Paul Bland Jr., a staff attorney for Public Justice, Washington, a group backed by trial lawyers, said many managed care companies, doctors and nursing homes require patients to agree to mandatory arbitration clauses.
“I even recently saw such a clause in a contract providing for an organ transplant,” Bland said.