State Legislation: SB 538 (Monning) - Hospital Contracts

State Legislation: SB 538 (Monning) - Hospital Contracts

Hospital contracts unfairly discriminates against arbitration agreements and subjects businesses to costly litigation. The arbitration provisions in SB 538 undermines the national policy favoring arbitration and freedom to contract for arbitration, violate the Federal Arbitration Act (FAA), and deny businesses a cost effective and less time-consuming method of resolution of claims. 

This measure creates obstacles to the formation and execution of arbitration agreements and therefore, has a disproportionate impact on arbitration versus litigation which violates the FAA and therefore preempts the anti-arbitration provisions.

Arbitration is a cost effective and expeditious process of fairly resolving disputes. SB 538, if enacted, would likely lead to many legal challenges regarding its validity, which will only result in more litigation tying up the court system and driving up litigation cost and businesses out of business.  Eliminating arbitration in health care contracts will only increase health care costs and lead to confusion, uncertainty and costly litigation for such contracts.  


STATUS: Passed Senate. Now in Assembly Health Committee.


Questions? Please contact Victor Cuauhtémoc Gomez, Sr. Director of Public Policy at

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