Should I use predispute binding arbitration?

January 1, 2008
David J. Goldberg, M.D., J.D.

Dr. Goldberg is Director of Skin Laser & Surgery Specialists of New York and New Jersey, Director of Mohs Surgery and laser research, Mt. Sinai School of Medicine, and Adjunct Professor of Law, Fordham Law School.

Dr. Suit has a large dermatology practice in the Sunbelt. He has seen countless numbers of malignant melanoma patients over the past 20 years. Unfortunately, he has been sued four times on the issue of misdiagnosis of melanoma. Three cases went to court, and in the two cases in which the patient died, he lost multimillion-dollar lawsuits because of sympathetic juries.

Dr. Suit has a large dermatology practice in the Sunbelt. He has seen countless numbers of malignant melanoma patients over the past 20 years. Unfortunately, he has been sued four times on the issue of misdiagnosis of melanoma. Three cases went to court, and in the two cases in which the patient died, he lost multimillion-dollar lawsuits because of sympathetic juries.

Dr. Suit, his expert witnesses and attorneys have always been convinced he did nothing wrong. However, his malpractice premiums have now skyrocketed.

Dr. Suit wants to terminate his medical malpractice premiums and have new patients sign an agreement that mandates binding arbitration in case of new claims of negligence. He has decided that if patients refuse to sign such an agreement, he will refuse to see them. Can he go this route? What is the status of arbitration agreements in the medical office?

Such pre-dispute binding arbitration agreements are contracts in which both patients and physicians waive the right to a jury trial and irrevocably commit to an arbitration process before any dispute has arisen.

Instead of a trial by jury, the malpractice complaint is resolved by anywhere from one to three arbitrators. The selected arbitrators' decision is final.

There is absolutely no available appeal process through any court system. The entire process of the arbitration hearing - including the final judgment - is solely governed by the terms of the arbitration hearing.

It should be noted that pre-dispute binding arbitration agreements are appearing in a wide range of pre-printed form contracts, and are quite common in credit card agreements and a wide range of other service and sales agreements. Arbitration use in medical malpractice conflicts is relatively recent and not yet common.

Advocates of the process promote the great benefits for all parties in the conflict in the forms of greater efficiency, more cordial relations and avoidance of irrational jury judgments.

It should come as no surprise that the move toward binding arbitration and pre-conflict agreements is being championed primarily by physicians and the insurance industry, and challenged primarily by both consumer protection groups and plaintiffs' lawyers.

Medical Economics has lauded the use of arbitration agreements as a way of cleaning up the "malpractice mess." The Florida Medical Association promotes their use through statewide CME programs and even provides a sample contract for implementation.

In 1999, only 1 percent of United States physicians employed pre-dispute binding arbitration agreements. Newer evidence shows that number has greatly increased over the last decade.

In California, for example, a rapidly growing number of patients have signed arbitration agreements either through a physician or when they sign their health insurance coverage agreements. Evidence suggests that the use of such agreements is increasing in most parts of the country.

Dr. Suit may be right in looking for alternative methods of dealing with potential medical malpractice claims. He should discuss the concept of pre-conflict binding arbitration agreements with both his healthcare attorney and his medical malpractice insurance provider. It is a concept that all physicians should consider.

Dr. Goldberg is the director of SkinLaser & Surgery Specialists of New York and New Jersey; director of Mohs surgery and laser research, Mount Sinai School of Medicine; and adjunct professor of law, Fordham Law School.

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