R590. Insurance, Administration.R590-215. Permissible Arbitration Provisions for Individual and Group Health Insurance.
R590-215-1. Authority.
This rule is promulgated by the commissioner pursuant to Section 31A-2-201.
R590-215-2. Purpose and Scope.
(1) The purpose of this rule is to:
(a) recognize arbitration as an acceptable method of alternative dispute resolution;
(b) provide guidelines for disclosure of a contract arbitration provision; and
(c) comply with the requirements outlined in Subsection 29 CFR 2560.503-1.
(2) This rule applies to an individual insurance policy and a group insurance policy issued or renewed on or after July 1, 2002 for:
(a) income replacement insurance; and
(b) a health benefit plan.
(3) Long-term care and Medicare supplement policies are not considered health benefit plans.
R590-215-3. Definitions.
Terms used in this rule are defined in Sections 31A-1-301, 31A-22-629, and 29 CFR 2560.503-1(m). Additional terms are defined as follows:
(1) "Compulsory binding arbitration" means a contract provision requiring arbitration as an automatic and exclusive remedy for any dispute involving a contract of insurance to the exclusion of any otherwise available judicial remedy, provided that the claim or controversy exceeds the jurisdictional limit of the small claims court of the state where the action would be brought.
(2) "Compulsory non-binding arbitration" means a contract provision requiring an insured to exhaust a procedure of extra-judicial arbitration as a condition before the pursuit of an otherwise available judicial remedy.
(3) "Permissible arbitration provision" means an arbitration provision in an insurance policy that:
(a) allows for an action to be brought against an insurer;
(b) prohibits the insurance policy to be construed according to the laws of another jurisdiction, except as necessary to meet the requirements of compulsory insurance laws of the other jurisdiction;
(c) permits Utah courts of jurisdiction over an action against the insurer; and
(d) limits the right of action against the insurer to less than three years from the date the cause of action accrues.
(4) "Voluntary binding arbitration" means a contract provision that, at the election of the insured, requires an insurer to submit to arbitration, provided that the claim or controversy exceeds the jurisdictional limit of the small claims court of the state where the action would be brought.
R590-215-4. Permissible Arbitration Provisions.
(1) Compulsory binding arbitration is not a permissible arbitration provision.
(2) Compulsory non-binding arbitration is a permissible arbitration provision when used as an internal review of an adverse benefit determination under 29 CFR 2560.503-1(c)(4).
(3) Voluntary binding arbitration, at the election of an insured, is a permissible arbitration provision, and may only be used as a voluntary level of review under 29 CFR 2560.503-1(c)(3)(iii).
(4) A policy form containing a compulsory binding or a voluntary binding arbitration provision for the exclusive election of an insurer will be disapproved under Subsection 31A-21-201(3)(a)(iv), and these provisions in any previously filed form are declared not enforceable.
(5)(a) Each application for an individual or group health benefit plan or income replacement insurance policy that contains a voluntary arbitration provision shall include or have attached a prominent statement substantially as follows:
ANY MATTER IN DISPUTE BETWEEN YOU AND THE COMPANY MAY BE SUBJECT TO ARBITRATION AS AN ALTERNATIVE TO COURT ACTION PURSUANT TO THE RULES OF (THE AMERICAN ARBITRATION ASSOCIATION OR OTHER RECOGNIZED ARBITRATOR), A COPY OF WHICH IS AVAILABLE ON REQUEST FROM THE COMPANY. THE COMPANY SHALL BEAR THE COSTS OF ARBITRATION, FILING FEES, ADMINISTRATIVE FEES AND ARBITRATOR FEES. OTHER EXPENSES OF ARBITRATION, INCLUDING, BUT NOT LIMITED TO: ATTORNEY FEES, EXPENSES OF DISCOVERY, WITNESSES, STENOGRAPHER, TRANSLATORS, AND SIMILAR EXPENSES, WILL BE BORNE BY THE PARTY INCURRING THOSE EXPENSES. ANY DECISION REACHED BY ARBITRATION SHALL BE BINDING UPON BOTH YOU AND THE COMPANY. THE ARBITRATION AWARD MAY INCLUDE ATTORNEY'S FEES, IF ALLOWED BY STATE LAW, AND MAY BE ENTERED AS A JUDGMENT IN ANY COURT OF PROPER JURISDICTION.
(b) The statement described in Subsection (5)(a) shall be disclosed prior to the execution of the insurance contract between the insurer and the policyholder and shall be contained in the certificate of insurance or other disclosure of benefits.
(6) A voluntary binding arbitration provision may not preclude a dispute from being resolved through any small claims court having jurisdiction.
(7) Any arbitration provision contained in an insurance policy shall comply with Title 78B, Chapter 11, Utah Uniform Arbitration Act.
