Litigation can eat up time and money, so it’s no surprise that arbitration is an attractive option for some healthcare providers and their patients. HRMR reports.
It is now common practice for long-term care facilities to request that residents sign an arbitration agreement before they are admitted to the facility. Such agreements stipulate that if a complaint arises, it will be resolved through arbitration rather than through costly—and unpredictable—litigation.
"More judges are becoming receptive and understanding that arbitration is a good alternative forum for people to resolve their disputes in a fair and efficient way.” Donna Fudge
In recent years arbitration agreements have appeared in the broader healthcare arena. Donna Fudge, an attorney at Fudge & McArthur, PA, explains: “It is now spreading into traditional doctors’ practices. The first type of practice I’m aware of where it took a hold was obstetrics/gynecology, because they were having a very difficult time getting insurance.
“Premiums on their policies were skyrocketing or insurers weren’t prepared to write policies for ob/gyn because there was such a risk. As a way to get the risk back under control, these practices went to arbitration agreements as a solution.”
Michelle Foster Earle, president of risk consultant OmniSure, believes that arbitration agreements can be useful in almost all healthcare settings with the exception of emergency care, where patients may not have the opportunity or ability to read and sign the documentation.
“There are very few settings where it wouldn’t be appropriate. Home health, hospice, medical facilities, surgery centers—all these could benefit, as could just about anywhere there is an enduring patient-provider relationship, and where the patient would have the opportunity to read, understand, think through and sign something that would govern that relationship should there be a grievance, a claim or an issue,” she says.
The benefits of arbitration are manifold: first, arbitration is a less expensive option. It is also much quicker, partly because if you arbitrate a case you do not have to go through the backlogged court system to wait for hearing and trial dates, or the jury selection process.
Fudge notes that lawsuits often become protracted due to discovery disputes, but in arbitration there seems to be less motivation to complicate or aggravate proceedings.
“Both sides know the arbitrator is going to be the one who has to resolve those discovery disputes, but they also know that he or she is going to decide the entire case. Nobody wants to look unreasonable in front of the person who is ultimately going to decide the fate for their client, and that tends to make the lawyers get along a little bit better than we do when we battle it out at the courthouse,” she says.
Fudge stipulates in many of the arbitration agreements she drafts that the whole process should be over and done with within 365 days. This is a particular benefit in long-term care, where clients’ life expectancy may be short.
It is also worth noting that in arbitration, both sides get to choose arbitrators who have knowledge and experience of the issues relating to their case, whereas in the court system the outcome is decided by a randomly picked jury who will likely have no relevant specialist knowledge.
Despite these benefits, some commentators are sceptical about the future of arbitration. Law professor Alex Stein, author of the e-journal Stein on Medical Malpractice, says that while a group health plan that obligates employees to arbitrate medical malpractice claims has been long recognized as valid and enforceable, the picture is very different for individual arbitration agreements.
In a number of individual medical malpractice cases, courts have viewed arbitration agreements as unfair contracts of adhesion that patients have no choice but to sign.
“Driven by this vision and the desire to protect patients against unfairness, courts refuse to compel arbitration on a patient,” he says.
He adds that court work is subsidized by the government rather than being paid for by the parties, whereas arbitrators need to obtain their remuneration from the parties.
“Consequently, they must deliver an attractive product that courts do not provide and give parties a credible assurance that they will get their money’s worth,” he says. “This incentive drives arbitrators towards making compromise decisions that split the disputed amount between the parties.
“As a result, arbitrators generally avoid making decisions that constitute a complete victory for one party and an unmitigated defeat for another party. For that reason, most doctors and some patients would rather go to court than arbitrate their dispute.”
Stein believes that arbitration has lost some of its appeal as a consequence of what he calls the National Arbitration Forum (NAF) “fiasco”.
Until recently, NAF was a designated arbitrator in thousands of nursing home agreements. When a nursing home resident complained about medical malpractice or other mistreatment, her complaint had to be arbitrated before NAF and according to NAF’s rules.
If the resident or her successors were to sue the nursing home in court, the court would have to stay the proceeding and compel arbitration, as mandated by Section 2 of the Federal Arbitration Act (FAA) that deems written arbitration agreements “valid, irrevocable, and enforceable.”
“Five years ago, things changed dramatically,” says Stein. “In July 2009, the Minnesota Attorney General filed a complaint against NAF and related entities, accusing them of violations of the Minnesota Prevention of Consumer Fraud Act.
“The complaint alleged that NAF held itself out to the public as an independent arbitration company, while at the same time working against consumers’ interests and that it ‘earns revenue when it convinces companies to place mandatory pre-dispute arbitration agreements in their customer agreements and then to appoint the forum to arbitrate any future disputes’.
“Shortly thereafter, the parties entered into a consent judgment under which NAF agreed that it would not administer, process, or participate in any consumer arbitration filed on or after July 24, 2009.”
Broaching the subject
Stein believes that for doctors, making an arbitration proposal to a patient can be awkward.
“It communicates to the patient that the doctor wants to steer away from the regular course of business and create a special litigation arrangement,” he says. “The doctor’s proposal would thus make the patient think that he is being short-changed. I estimate that most doctors would rather risk going to court than create this suspicion in the patient.”
On the other hand, Foster-Earle believes that if the agreement is presented and explained adequately, most patients would see the sense in signing.
“A good admissions counselor can go over the paperwork with the patient or responsible party and explain it in a way that makes sense to the patient. They can talk about the benefits to the patient, and most of the time they are agreeable—everybody wants to keep frivolous lawsuits and unnecessary legal fees to a minimum,” she says.
She adds that no patient should be compelled to sign—and that if they refuse to do so, they should still be admitted.
“Our recommendation is that they do not make signing the agreement a condition of admission,” she says. “If the patient refuses to sign then they won’t have that on file and the facility and the patient may end up taking the case to court instead.”
She emphasizes that it is important to make sure that it is a balanced agreement, so that both parties benefit.
Weighing it up
Ultimately a patient’s or provider’s attitude towards arbitration will depend on the individual case, and on what they want as a resolution.
There is no doubt that if a speedy resolution is desired, arbitration is a sensible option.
“A case that goes to court could go on for years and the patient might not get anything in the end,” says Foster-Earle. “But if the patient has agreed to arbitration then within a few months they could sit down at a table, talk through the responsibilities of both parties and generally receive an agreeable resolution.
“With arbitration both parties tend to benefit in some way whereas if it goes to court one party might not get anything. The patient may walk away with nothing and have to pay legal fees. That’s not likely in arbitration.”
While Stein is keenly aware of the potential shortcomings of arbitration and believes it is unlikely to take over in the medical malpractice arena in general, he concedes: “I can still see it adopted for some specific medical malpractice disputes, for example disputes over IVF treatments and over the quality of nursing home care.”
Fudge, on the other hand, predicts a changing attitude towards arbitration from all parties—the courts, the providers and the patients.
“I think arbitration is going to continue to spread and become more popular in healthcare,” she says. “I also believe that people are going to understand its benefits better and I predict that courts are going to also become more supportive of arbitration agreements in healthcare.
“More and more judges are becoming receptive and understanding that arbitration is a good alternative forum for people to resolve their disputes in a fair and efficient way.”
Guide to arbitration
A new publication released by OmniSure Consulting Group features a state-by-state guide to rules on arbitration agreements in long-term care facilities. Risk managers will be able to determine where their state stands on the issue of arbitration and how that compares to other states across the nation. The publication also provides tips for successful execution and enhancing the enforceability of agreements.
The publication, Reducing Risk Through Arbitration Agreements in Long-Term Care, is available on the OmniSure website
www.OmniSure.com. The document can be downloaded from the Senior Living page within the Specialties section of the website.
Donna Fudge, Fudge & McArthur, Michelle Foster Earle, OmniSure, US