This is a method of settling a claims dispute in lieu of taking the dispute to a court a law. Through arbitration, a third party person or panel of persons renders an opinion as to the responsibility for, or the etent of a loss caused by, a health insurance medical claim. Although health insurance policies are detailed contracts that eplain the insurance company's policies as to what types of medical treatments they will cover, and the etent to which they provide benefits for these covered epenses, there will often be disagreements on the interpretations of this contract between the insured plan member and the insurance company. Disputes over interpretations most commonly occur when a plan member is denied benefits or compensation for medical services rendered.  For medical services that require pre-authorization from the insurance company, a dispute may arise over the terms of the contract if the insurance company denies treatment during the pre-authorization process. When you purchase health insurance your application acts as the legally binding contract between you and the insurance company. Most applications will state that any disputes are to be settled through arbitration. The arbitration process is much quicker and less costly, for both parties, than taking a dispute to a court of law. Arbitrators are familiar with legal contracts, as well as the industry for which they are conducting arbitrations. Medical Insurance Claims Arbitrators must be appointed by the State Department of Insurance and prove that they have the knowledge and understanding of the medical claims process and contractual law. They must also prove to be unbiased and may not be representatives of any insurance carrier. Arbitration usually usurps the authorities of the courts and must be the primary source for settling a dispute. Decisions made by the arbitration, although legally binding on both parties, may be appealed to a higher court. It is the responsibility of the arbitrator to prevent this occurrence, if possible. Disputes often arise from the insured member not fully understanding the terms of the contract or the legal rights of the insurance company to apply and enforce these terms. The arbitrator will make every effort to help the insured member understand the logic behind these terms and the legal rights of the insurance company to deny a medical claim under these terms. The decisions made by arbitrators are legally binding on both parties. If either party fails to meet the obligations set forth under arbitration, the dispute must then be taken to a court of law for resolution and enforcement of the decision made through arbitration.