Binding arbitration is often discussed as one way to reform our medical malpractice tort system, and the movement towards binding arbitration has been gathering steam for the past few years.
Many physician groups have formed medical malpractice insurance risk-retention groups. These groups require that patients sign an arbitration agreement before receiving care and treatment. The agreement states that any lawsuit brought against a group member must be decided by binding arbitration, before a private arbitrator, rather than by a jury. If a patient won't sign the agreement, they cannot see a physician from that group. Even large medical professional insurance companies are now running pilot programs that involve binding arbitration.
Arbitration appeals to health practitioners and hospitals because of the belief that an arbitrator is less likely than a jury to base a decision on emotion and more likely to rely on medical testimony and the law. Arbitration is also typically less costly to both parties. However, one possible hitch is that these signed written agreements may not be enforceable because they deny an individual the right to a jury trial. In an early test of the agreements, a New Jersey trial court decided in favor of an obstetrician's risk-retention group, ordering that a case filed in court needed to be transferred to arbitration. The case is currently being appealed and may well find its way to the Supreme Court for a final decision.
Many states are incorporating clear language into laws that are clearly intended to address criticism that patients are not sophisticated enough to understand the full scope and consequences of signing these agreements and how they may affect patients’ rights. Another issue related to not signing the agreement involves an unborn child. Although parents typically have the ability to sign away their children's rights, courts have not decided whether that ability extends to waiving a fetus's rights to an unknown, potential future lawsuit.
Other challenges to binding arbitration agreements include questions related to whether patients sign binding arbitration agreements under “duress” because they are at an inherent disadvantage when their physician asks that they sign these forms before treatment is rendered. Also, these agreements may be contrary to public policy because they place undue pressure on a patient to waive the right to a jury trial.
Despite all of these issues, many practices are still utilizing binding arbitration agreements. However, physicians and their group practices need to do some basic legwork to first ensure that their malpractice insurance carrier permits these agreements. Some policies may disallow these agreements under the policy language, while some carriers may claim that binding arbitration agreements interfere with their ability to properly defend a case and may either deny coverage or even void the policy. Physicians should scrutinize all insurance coverage provisions and policy language, including the definition of a ”claim,” before moving forward.
Some major medical malpractice insurers have taken steps toward arbitration, ranging from simply soliciting opinions from legal experts, to testing pilot programs, to implementing full-blown arbitration programs. Other companies oppose the alternative dispute process, maintaining that arbitration makes it too easy and inexpensive for plaintiffs to sue and will therefore increase the number of lawsuits.
Physicians need to properly vet carriers that allow arbitration agreements. Some may be newcomers promoting arbitration merely to differentiate themselves from more established companies, but perhaps they are less financially sound. Whether the promise of substantial savings will prove true remains to be seen.
In the interim, doctors who still want patients to sign binding arbitration agreements should be sure to explain all of the ramifications to their patients, in detail, before they sign. The agreements should describe, in plain English, the specific limitations of binding arbitration, including elimination of the right to a jury trial. And it would probably be wise for physicians to include language that advises patients to consult their attorneys before signing, and lay out alteratives to the agreements. Patients should also be provided with sufficient time to rescind them.
Until binding arbitration is expressly approved in any given state, doctors interested in pursuing this alternative dispute resolution system need to set up as many safeguards in the process as possible to enhance the likelihood that these agreements will be upheld.
Excerpts from MedScape, BS Kern, 2010
