Doctors order mandatory arbitration for patients

The argument against binding arbitration, now common in consumer agreements such as cell phone and credit card contracts, is that it denies access to courts. In health care disputes, the use of mandatory arbitration is not as widespread, but the stakes are much higher, consumer advocates say—in part because patients seeking treatment are likely to sign anything a medical provider puts in front of them.

Some individual doctors, health care facilities, HMOs, and doctors’ insurers routinely ask patients to sign predispute mandatory arbitration agreements. Although some can be revoked later, critics argue that these agreements have no place in medicine.

“Health care isn’t like other goods and services,” said Clark Newhall, a lawyer and physician in Utah, where predispute agreements in health care have been common for years. Consumers usually have access to information on the quality, effectiveness, price, and safety of a good or service they’re choosing, he explained, “but you have less information about your doctor than about a bar of soap.” With predispute mandatory arbitration agreements, Newhall said, “You go forth blindly out of necessity, and you are limited thereafter to one remedy in the event your choice is misguided. There is no appeal.”

Consumer groups fighting to eliminate mandatory arbitration across the board say there is nothing wrong with arbitration itself. But because consumers are asked to sign these agreements before a dispute arises, and the arbitration clause often is buried in a longer document, people don’t understand that they’re signing away their right to a jury trial. Other concerns are that arbitrators are biased and do not have to follow court precedent, some agreements cap damages, and the process lacks transparency and can cost more than a trial.

“In medical malpractice, this is a dangerous road to go down,” said Valkyrie Hanson, campaign organizer for Give Me Back My Rights, a Washington, D.C.-based coalition of public-interest groups fighting against mandatory arbitration.

“They say arbitration is faster, fairer, and cheaper, but it’s not,” said Todd Wahlquist, a Salt Lake City lawyer. Just paying the arbitrator for a simple two-day arbitration can cost $15,000, he said.

“People are handed a stack of papers about insurance, medical history, arbitration—nobody reads them. They trust their doctors,” Wahlquist said. “We assume they’re looking out for our best interests.”

The likelihood that a patient will encounter an arbitration agreement in a medical setting varies widely across the country. A Pennsylvania hospital recently made headlines when it started asking patients to sign these agreements, but patients in California and Utah have been dealing with them for years. Some states have passed laws governing the use of these agreements in health care.

In 1999, the Utah legislature passed a law allowing doctors to use arbitration agreements; it was amended in 2003 to let doctors turn away patients who refused to sign them, although it made an exception for emergency treatment. That law was repealed in 2004; now, health care providers can use these agreements, but they can’t deny treatment because the patient won’t sign. But providers may simply cite other reasons for denying care, Wahlquist said.

Newhall said that some of the people who signed these agreements during the period in which doctors could turn patients away have since filed malpractice suits, and some judges have allowed the arbitration agreements to stand.

Because the two companies that dominate Utah’s health care industry both use mandatory arbitration, patients in the state have a hard time finding doctors who do not use these agreements. When Wahlquist himself refused to sign one at a doctor’s office, he was essentially told that “only people who intend to file frivolous lawsuits don’t sign it,” he said.

In Pennsylvania, such agreements are less common. When attorney David Saba of Kingston discovered that Kindred Hospital, in Wyoming Valley, was asking patients to sign them, it was the first time in 30 years of practice that he had seen them used in health care. “It’s rife with all sorts of problems,” the biggest of which may be the potential for abuse, he said. “We don’t know what patients are being told, if anything.”

Saba noted that once a dispute arises and a client approaches him, he may advise the client to arbitrate, depending on the situation. “Alternative dispute resolution is appropriate if there’s equal status and sophistication” between the parties, but that’s not the case with a hospital and a patient who signs a predispute agreement, he said.

If a pregnant mother signs an arbitration agreement and her child is injured, is the child bound by the agreement? In a wrongful death case, is the heir bound? Can a minor consent to arbitration? Can someone who signs an agreement for a spouse be bound to arbitrate? Courts have gone in different directions on these issues.

The Colorado Supreme Court held in 2003 that although a man’s arbitration agreement with his HMO extended to his surviving spouse and her wrongful death action, the agreement was unenforceable because it did not comply with the Colorado Health Care Availability Act. The court held that the McCarran-Ferguson Act prevented the Federal Arbitration Act from preempting that state law. (Allen v. Pacheco, 71 P.3d 375 (Colo. 2003).) A Texas appeals court relied on that decision in 2005 in denying a nursing home’s motion to compel arbitration. (In re Kepka, 178 S.W.3d 279 (Tex. App. 2005).)

In March, a California appeals court denied a nursing home’s petition to compel arbitration against a woman whose husband had signed an arbitration agreement as part of her admission. (Flores v. Evergreen, 55 Cal. Rptr. 3d 823 (Cal. App. 2007).) The court held, “Although the legislature has specifically conveyed authority over medical decision-making and enforcement of rights to family members, it has not conveyed authority over the arbitration decision to family members.”

Another problem with these agreements, Wahlquist said, is that nonsignatory defendants can sometimes join in the arbitration: “All providers in a dispute can join, even if only one doctor had an arbitration agreement.” Also, a plaintiff can end up in arbitration with one defendant and in court against another—leaving him or her basically “empty-chaired in both places,” with each defendant pointing a finger at the other, Wahlquist explained.

The arbitrators
Arbitrators are ostensibly neutral, but critics say the system is inherently unfair. “Individuals are not repeat users of arbitration—doctors are,” said John Bowman, associate director of legislation for AAJ Public Affairs. “If an arbitrator finds for the plaintiff every time, the doctors won’t hire him or her again,” he said, adding that arbitration providers advertise to health care providers.

In 1998, the American Arbitration Association (AAA), American Bar Association, and American Medical Association (AMA) jointly released a Health Care Due Process Protocol that recommended that “in disputes involving patients, binding forms of dispute resolution should be used only where the parties agree to do so after a dispute arises.”

According to a 2002 press release announcing the AAA’s policy not to arbitrate in cases involving individual patients without a postdispute agreement, the organization’s senior vice president, Robert Meade, said, “Although we support and administer predispute arbitration in other case areas, we thought it appropriate to change our policy in these cases since medical problems can be life-or-death situations and require special consideration.”

Now, the AAA follows those policies but does administer some arbitrations involving predispute agreements, in cases “where a court has ordered a dispute to arbitration, or where medical treatment is not conditioned upon a knowing and voluntary agreement to arbitrate any future disputes and the agreement to arbitrate is revocable by the individual,” according to Wayne Kessler, the association’s vice president of corporate communications. These cases include health care disputes with Duke University, he said.

“The AAA agreed not to administer medical cases with predispute agreements because they’re not fair, but they made an exception for Duke because the agreements are voluntary,” said Erin Jennings, a lawyer in Dunn, North Carolina. She added that from the information the AAA has made public, “everyone would think that they don’t administer these cases.”

Jennings represents Bennie Holland, who sued Duke and other defendents after having spinal surgery. He alleges he suffered a severe infection due to a well-publicized incident in which Duke hospital staff mistakenly washed surgical instruments in used hydraulic fluid. (Holland v. Automatic Elevator Co., No. 07CVS00306 (N.C., Durham Co. Super. amended complaint filed Feb. 9, 2007).) Because Holland had signed a predispute arbitration agreement, Duke moved to compel arbitration. In April, the court granted that motion.

“If they can lock patients in arbitration, they’re going to. It’s a growing trend, at least for Duke, because they know they can get away with it,” Jennings said. She added that after the hydraulic fluid incident, Duke started asking all patients to sign predispute arbitration agreements for all past and future claims.

Jennings pointed out that the incident was a case of blatant error; patients could not have anticipated hydraulic fluid contamination as one of the risks of surgery. About 3,800 patients were affected.

The medical community
Hanson of Give Me Back My Rights noted that insurance companies are pushing doctors to use mandatory arbitration. In response to rising malpractice insurance rates, doctors in some specialties have banded together to self-insure in so-called risk retention groups, and some of these groups require patients to sign predispute agreements.

One of them is the Obstetricians & Gynecologists Risk Retention Group of America, Inc. (OGRRGA). According to a letter telling patients that their doctor has joined the group, one of the group’s goals is “to protect you, as a reasonable patient, from the cost, problems, and mistrust caused by patients who want to ‘win the lottery’ off the doctor through a jury trial lawsuit.”

A document titled “The Top Twelve Reasons to Implement OGRRGA Binding Arbitration in Your Ob-Gyn Offices” touts knowledgeable arbitrators: “The list of arbitrators consists only of retired and semiretired ob-gyns. . . . This replaces a jury of driver’s license holders who know nothing about medicine.” Another OGRRGA document notes that “where state provisions could potentially create an issue,” the agreements include waivers “to abnegate state law.”

Eugene Rosov, who is president of OGRRGA, said that “what constitutes the notion of standard of care is quite specific to the [medical practice] area” and that “it’s not fair to expect jurors to really understand the conflicting views of experts.” He pointed to Kaiser Permanente as one company that has succeeded in using mandatory arbitration widely.

The AMA frowns on predispute arbitration agreements. Information on alternative dispute resolution from the AMA’s Office of General Counsel, posted on its Web site, says: “To be used to settle disputes between physicians and patients, arbitration must typically be voluntarily agreed to after a dispute arises, as opposed to being a mandatory prerequisite to treatment (i.e., predispute binding arbitration).”

Although mandatory arbitration agreements are still less pervasive in health care than in other areas, a high-profile judicial decision could trigger a change, Bowman said—or “the AMA could jump on board and encourage the use of mandatory arbitration.”

A bill is expected to be introduced in Congress to prohibit the use of mandatory arbitration agreements in all contracts or agreements involving health care.

“People have an understanding that there may be conflicts with a bank, for example, but when people go to a doctor, they don’t anticipate malpractice,” Wahlquist said. “They don’t consider how they’d resolve that.”



Doctors order mandatory arbitration for patients