Clients are often confused regarding the distinction between mediation and arbitration. Mediation is an informal process wherein the parties attempt to resolve a dispute through negotiation, with the assistance of a mediator.
For example, our firm has represented numerous persons who have been denied life insurance benefits or are involved in a dispute regarding the proper beneficiary of the life insurance. Such cases are filed in either state or federal court, in Texas or elsewhere. However, most such cases are mediated, either through referral from the court or through agreement. Often, the parties are able to resolve the case through agreement. If not, they can continue to pursue the case in court.
Arbitration, on the other hand, is essentially a substitution for going to court. Some, although not many, insurance policies require that a beneficiary contesting a denial pursue arbitration rather than litigating in court. Typically, the case is presented to a single arbitrator or a panel of three arbitrators. The decision of the arbitrator(s) is typically final and not appealable.
Our firm has experience in representating individuals in life insurance disputes throughout Texas, and even outside of the United States. Last year, we represented a family in Columbia who were challenging the Texas life insurance company's denial of benefits. The policy required arbitration in Texas. However, we scheduled a mediation in Austin and the case was resolved to our clients' satisfaction. Therefore, mediation can be an effective method to resolve a case whether it is in litigation or arbitration.