A healthcare provider's arbitration agreement that lacked Texas notice provisions was held to be invalid under the McCarran-Ferguson Act (15 U.S.C. § 1012(b)) which prohibits federal laws from preempting state insurance laws. In re Sthran, No. 05-10-01176-CV (Tex. App.-Dallas Oct. 29, 2010).
The Texas Court of Appeals, Fifth District, held that the McCarran-Ferguson Act "reverse preempted" the Federal Arbitration Act (FAA), and therefore the provisions of Tex. Civ. Prac. & Rem. Code Section 74.451 were applicable to a healthcare provider's patient arbitration agreement. The Texas law provides that healthcare providers may not request or require a patient to arbitrate a healthcare liability claim unless the agreement also is signed by an attorney of the patient's choosing.
The court found that the McCarran-Ferguson Act preempted the arbitration provision because the notice requirement of section 74.451 was contained within the malpractice reform provisions of Texas law which regulates the business of insurance. Following earlier Texas decisions, the court concluded that Texas' medical malpractice reform act, including its notice provision, was a law enacted to regulate the business of insurance because it possessed the end, intention or aim of adjusting, managing or controlling the business of insurance, e.g., the relationship between malpractice insurers and their insured (health providers).
Therefore, healthcare providers should evaluate the validity of their arbitration agreements and consider adding backstop provisions to address concerns which may arise in judicial proceedings, such as a jury waiver agreement.