Litigation Support
Mar 28

Patient Arbitration Pacts Are Alarming Attorneys

Binding arbitration agreements between doctors and patients — in which patients waive their right to a jury trial — are becoming more common, a trend that could put patients at a disadvantage if medical malpractice disputes surface, attorneys warn.

A growing number of physicians, nursing homes and health care institutions are asking consumers to sign these agreements before offering services, said Stuart Ratzan of Miami’s Ratzan & Rubio.

"Without a dispute pending, without any wrongdoing, but with patients suffering and in need of medical care, they are crafting a way to escape responsibility ahead of time that most patients will go along with only to find out later there was a granting away of their constitutional rights," Ratzan said. "The tide has not yet totally risen on it, but it’s rising now and it’s something that needs to be addressed."

Lawyers and officials in the health care industry said they did not have statistics on these arbitration agreements, but a number of them said they are becoming more common.

STATES TAKE ACTION

Some states have started tackling the issue.

In Utah, a law passed in 1999 allowing doctors to use arbitration agreements was modified in 2004 to say that doctors may use them but can’t deny treatment if a patient declines to sign them.

In the District of Columbia, an act on arbitration is awaiting congressional approval. It aims to enhance regulation of arbitration organizations and to require that a party drafting a consumer arbitration agreement disclose the costs associated with arbitration.

In Florida, a bill has been proposed in the Legislature this year that aims to make the arbitration process fairer and more transparent, said Frank Petosa of Petosa & Associates in Boca Raton, Fla., who is also president of the Tallahassee-based Florida Justice Association, formerly the Academy of Florida Trial Lawyers. For example, the bill states that an arbitrator may be removed if he or she has financial or personal interest in the outcome of the proceeding.

The Washington and Florida proposals are aimed at both general and medical arbitration. The goal is not to eliminate arbitration but to ensure both sides have equal knowledge and power if a dispute arises, Petosa said. "What’s happening right now is very one-sided arbitration provisions," he said.

Some agreements seek caps on damages that are smaller than those allowed by the states and require patients to pay the cost of arbitrators, he said.

Petosa also said such agreements are becoming more common in Florida.

The director of communications for the Florida Medical Association did not return messages seeking comment.

An American Medical Association official said that the organization did not have a policy on the issue, and that the only information it had was a 2003 report discussing arbitration as one method of medical liability reform.

Matthew Fenwick, a spokesman for the American Hospital Association, said his organization also does not follow the issue or keep any statistics on it.

Kenneth J. Kelly at Epstein Becker & Green, who co-chairs the firm’s national litigation practice from its New York office, said the issue could generate more litigation and legislation. "I can see this happening here because there is some type of an imbalance between patients and doctors," he said. "Then the courts will come around to meet their concerns and the legislators also get involved."

Kelly believes that the trend could mimic what happened in the employment field about 20 years ago, when managers became concerned about jury verdicts. Arbitration agreements became more common as a result, he said. Court rulings and legislative action that followed attempted to address any imbalances, he said.

Todd Wahlquist of Salt Lake City’s Wahlquist Law Firm cited a number of problems with arbitration agreements, such as patients signing them along with many other forms so they are not aware of what rights they are giving up.

Also, he noted, patients must pay for arbitrators, whereas they don’t have to pay for judges and juries. In addition, patients don’t have the institutional knowledge about arbitrators that doctors’ insurance companies do, putting them at a disadvantage. Furthermore, arbitration proceedings are confidential, so they don’t contribute to the body of law, Wahlquist said.

"I hope we can get to the point where we only enter into these agreements after an injury arises," said Wahlquist, who estimated that, at any given time, he has about five cases involving doctor-patient arbitration agreements.

About a half of the 10,000 members of the Los Angeles-based Cooperative of American Physicians, which provides risk reduction and liability protection for its members, voluntarily use arbitration agreements with their patients, said Gordon Ownby, the organization’s general counsel.

Ownby said about 90 percent of patients sign the agreements. He said arbitration has a number of advantages over litigation: It typically costs 30 percent less, takes up less time and is more convenient for both parties.

As for the criticism that patients often don’t know what they are signing, Ownby said California agreements are governed by state statutes, which ensure they are written in plain English. Also, information about giving up a jury trial must be written in bold, capital letters.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →