Mandatory Arbitration Struck Down in Washington

Some insurers include mandatory arbitration clauses in their policies. Today, in WSDOT v. James River Ins. Co. (.pdf), the Washington Supreme Court ruled that those provisions are unenforceable because they violate RCW 48.18.200(1)(b). The statute states that an insurance contract delivered or issued in Washington cannot deprive Washington courts of “the jurisdiction of action against the insurer.” In reaching its holding, the Court rejected James River’s argument that the legislature merely intended the statute to keep coverage disputes venued within the State of Washington. The Court also held that the Federal Arbitration Act does not preempt RCW 48.18.200 because the statute regulates the “business of insurance” such that there is “reverse preemption” under the McCarran-Ferguson Act.