Washington Supreme Court Invalidates Commercial Carrier's Mandatory Arbitration Contract Clause
We'd like to bring to your attention a Washington Supreme Court decision issued today, which is likely to directly affect your facility's contractual and dispute resolution rights with commercial payors in Washington State. In Kruger Clinic Orthopaedics v. Regence Blueshield, Docket No. 76719-0 (filed 07/13/2006), the Court unanimously ruled that Regence's mandatory arbitration clause, which required arbitration with only limited judicial review thereafter, was invalid. In so ruling, the Court reversed the lower court decisions in Regence's favor, concluding that the Federal Arbitration Act did not preempt WAC 284-43-322(4) and RCW 48.43.055, which prohibit health insurance carriers from requiring providers to engage in "alternative dispute resolution to the exclusion of judicial remedies" and require the carriers to afford health care providers "a fair review" of disputed issues. The Court also concluded that the Regence alternative dispute resolution clause, which permitted only limited judicial review of the arbitration provision pursuant to Washington's Arbitration Act, RCW Ch. 7.04 RCW, was contrary to the requirements of WAC 284-43-322 and RCW 48.43.055 because it impermissibly limited judicial remedies available to the provider.

The decision is an important development for health care providers in Washington State, and should be taken into account when entering into future contracts or pursuing dispute resolution with your payors. Please note, however, that the regulation and statute enforced in the decision are specific to licensed health carriers in Washington state, as defined in RCW 48.43.005(18), so the protections set forth in those provisions may not apply to all commercial payors with which you contract (such as networks that are not licensed health carriers). If you have any questions regarding this decision, or if we can assist you in reviewing how this decision affects your current contracts or any pending disputes with a Washington health carrier, please feel free to contact Sandy Pitler.

Bennett Bigelow & Leedom, P.S.
1700 Seventh Avenue, Suite 1900
Seattle, Washington 98101