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Mandatory Arbitration for Employee Benefits Disputes

By Craig C. Martin, William L. Scogland and Amanda S. Amert

Thanks to the well-publicized rising cost of litigation and the growing availability of alternative dispute resolution options, mandatory arbitration provisions are more popular than ever among would-be litigants. The employee benefits realm is no exception.

Indeed, there is a trend toward using arbitration in the benefits context that is fueled by a growing sense among practitioners that a well-crafted policy mandating arbitration of employee benefits disputes can be a useful tool to save an employer time and money. Meanwhile, recent cases indicate that a poorly-crafted policy with weak or inadequate arbitration provisions can be held unenforceable, or even put the employer in a worse position than if there were no arbitration policy at all. Moreover, because of the unique nature of the Employee Retirement Income Security Act of 1974 (ERISA), form arbitration language is likely to be a poor fit in the employee benefits context.

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