The publication Legal Intelligencer poses the hypothetical question quite directly, to wit: As either an insured party or insurance company that has tried unsuccessfully to resolve a legal matter via nonbinding mediation, is it now better to seek resolution through binding arbitration or in a court of law?
Although some people might deem that a coin toss, the authors of a well-reasoned article contend that, in most instances, the answer is quite clear. We noted their strong view in our February 17 blog post that "if a dispute is marked by significant complexity, it can far more often be effectively resolved via the courtroom and not by an arbitration panel."
And here is why, they assert.
For starters, the costs to litigants often turn out to be less when they secure the services of a proven insurance attorney and proceed to court. If a matter spirals beyond what was originally envisioned, the fees owed an arbitration panel will correspondingly increase.
Conversely, note the Intelligencer writers, "there is no added cost imposed upon litigants that correlates to the intensity with which they avail themselves of the court's services."
And then there's this: Although arbitration panels often take a "compromise" approach in complex matters, a court has no motivation for doing so. In some cases, the law clearly demands a specific outcome, regardless of how helpful or hurtful it is to a specific party, and a court's unequivocal ruling (e.g., fully grant coverage or, conversely, fully deny it) buttresses certainty and accountability.
Predictability is comparatively fostered through formal adversarialism in court, state the authors. A coverage dispute can be rendered problematic in arbitration because, unlike judges, arbitrators often feel it unnecessary to strictly comply with policy language or settled points of law that would guide a judge.
And review of a decision can be more effectively evaluated following a court outcome rather than an arbitrated result, maintain the writers, because court outcomes far more often contain fully fleshed out findings of fact and the stated rationale for decisions made. That can make it easier for a litigant to assess whether a mistake of law was committed that is grounds for an appeal.
Of course, the authors' views are subjective and not applicable in every case. An individual with questions or concerns regarding a complex insurance dispute might reasonably want to contact a proven attorney for answers and assistance.