UO > Feature > Keep it Out of the Courtroom

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While arbitration has in the past few years started gaining greater acceptance in settling health-care liability disputes, some private arbitration associations don’t advocate pre-injury agreements. For example, the American Arbitration Association (AAA), one of the largest providers of alternative dispute resolution services in the country, will only provide arbitration services in patient malpractice claims if an agreement to arbitrate is entered into by the parties in writing after the alleged injury occurred. AAA maintains that pre-injury agreements are fundamentally unfair.

The American Health Lawyers Association (AHLA) also has a similar policy in place. Nevertheless, it can provide arbitration services if the parties agree to this type of dispute resolution system after the injury occurred. The AHLA Web site offers a detailed description of these services. Go to www.healthlawyers.org (click on health law resources).

Agreeing to arbitration after an unexpected adverse outcome is not particularly beneficial to physicians because they end up having to pay a significant amount of money even if they win. According to Wheeler, “When parties agree to arbitration after an event occurs, the plaintiff’s attorney generally insists on a ‘high-low’ arrangement.” This means that if the physician wins, they will have to pay a low amount, which generally covers the attorney’s expenses. Wheeler’s colleagues who have gone through this have paid as much as $250,000 to the other side when the physicians actually won the case. On the high end, the plaintiffs agree to cap the amount they might recover if they prevail, again resulting in a substantial loss to the physicians.

The lack of endorsement for pre-injury arbitration by AAA and AHLA doesn’t worry Utah physicians, says Fotheringham. “It’s a rather cutting-edge system we have here so we are not surprised that some might be resistant. We expect the process to spread to other parts of the country when people realize how much time and money it is saving for both sides in a liability dispute.”

Arbitration is a process where a neutral third person or a panel of three hears evidence and makes a final binding decision. With three-way arbitration, the patient and physician each select their own arbitrator from a list of pre-qualified professionals. Then those two arbitrators select a third independent arbitrator, who acts as the judge and jury. Arbitrators are usually retired judges or practicing attorneys. Under binding arbitration, both sides in a dispute must accept the decision.

Kaiser’s process is overseen by an independent administrator, the Los Angeles-based law offices of Sharon Oxborough, a neutral, third party. Under the contract with the Arbitration Oversight Board, the office of the independent administrator maintains a listing of approximately 300 neutral arbitrators qualified to hear Kaiser cases. It independently administers arbitration cases brought by members of Kaiser health plans. Kaiser arbitrators must have practiced law at least 10 years and have substantial litigation experience.

Kaiser says a neutral arbitrator is typically appointed within 69 days and most claims are resolved within 11 months. Patients can select any neutral arbitrator, not just those on Kaiser’s list. During the arbitration, the patient and Kaiser present witnesses, including medical experts.

Arbitration does involve costs for patients, unless arbitrators agree to represent the patient on a contingency basis so that a fee is charged only if the case is successful and money is recovered. Some attorneys will agree to this.

Arbitrators generally earn from $100 to $600 an hour. According to Kaiser’s Office of the Independent Administrator, the average total fee charged by neutral arbitrators was $3,290 in 2004. It is also important to point out that patients who decide to go to arbitration are responsible for the cost of calling their own expert witnesses.

With Kaiser, the cost is shared jointly by Kaiser and the patient. In a three-way arbitration, each side pays the entire cost of its arbitrator, plus one half of the neutral arbitrator’s cost.

Many physicians are concerned about asking patients to sign arbitration agreements. They worry that doing so will undermine patient confidence, but Ownby says in CAP-MPT’s experience, most patients sign the agreements. If they decline, the physician still cares for the patient. Fotheringham estimates that in Utah, 99 percent of the patients who are offered an arbitration agreement are signing them.

When presenting the agreements, providers must take time to give patients proper information about the process. Obstetrician Wheeler agrees. “Initially, some of my patients are put off by the agreement, but once I explain what is involved in arbitration, most readily accept it,” she says. She lets them know that if something goes wrong while she is caring for them and they decide to sue, it may take up to five years to reach the end of a lawsuit.

Physicians who would like to try arbitration should make sure that their insurance carriers as well as their state laws don’t prohibit arbitration. Once that hurdle is cleared, they can start by getting a copy of an agreement from the state medical association or an attorney.

Most experts agree that the best time to present the agreement is during new patient registration, but it is also possible to ask existing patients to sign these agreements.

Arbitration experts advise physicians to explain why they are asking patients to sign the agreements. Presenting the process in a favorable light, emphasizing the quickness of a decision and the confidentiality of the process are important, says attorney Anders.

In addition, be sure that the written agreement clearly states the terms of arbitration. Anders points out that when patients sign these agreements they are agreeing to give up the right to a trial by jury, so this must be an informed decision. It is important to provide explanatory materials. The agreement should be freestanding and not buried in another document or hidden among other paperwork.

It’s possible to further explain the arbitration agreement by attaching a letter to patients in registration material, saying that the agreement indicates the physician and the patient are agreeing that any dispute arising out of the medical services received is to be resolved in binding arbitration rather than a suit in court.

In addition, it’s a good idea to tell patients that by signing the agreement, the parties are changing the place where a claim will be presented, but that it is still possible to call witnesses and present evidence. Patients should also know that an arbitrator is able to award them as much money as they could receive in court.

While arbitration is not expected to solve the medical liability crisis in this country, it remains one way to help alleviate some of the problems associated with today’s legal system. According to Wheeler: “The bottom line is our current tort system is causing a decrease in patient access to care, less safe care, and frivolous expense that would be better spent on providing care.” g

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