Patients Lose Out with Arbitration Clause

In the last 50 years, we have been witness to massive changes in nearly every phase of our lives.

From the way we communicate to the paying of a bill, life just isn’t the same as we knew it watching "Ozzie and Harriet."

For instance, I recall a time when my brother was sick. He was running a fever, and my mom had other small children to whom to tend. She called the pediatrician, and he came to the house to check on my brother, took his temperature and handed her a prescription that my dad ran to the corner drugstore to get filled.

Today, medicine has become a big business evolving to where the latest phenomenon is private practitioners refusing to treat patients unless they sign a "mandatory arbitration" agreement that waives their right to sue if a dispute arises.

It was one thing getting used to no more house calls. Then it was HMOs dictating what physicians can do, and soon we saw surgeons walking picket lines for lower malpractice premiums. It’s quite another when a doctor, in essence, holds his services for ransom in exchange for an agreement that if he is negligent, the patient’s right to a remedy is severely restricted.

The patient is forced to accept all of the risk. Either the doctor is so good that he will have enough patients who will sign that agreement and still want to see him, or he is so bad that he wants to limit his malpractice claims for the unsuspecting.

Either way, such an agreement has no place in a health-care setting. An agreement like th is reflects no meaningful choice for the patient. How does a patient with a brain tumor negotiate such a contract with the only neurosurgeon in town? How does a mother of a child with a rare disease refuse to sign the agreement with one of the few infectious disease specialists familiar with the illness?

When agreements are entered into on a take-it-or-leave-it basis, they become contracts of adhesion, and terms including such waivers of a right to litigation may even be beyond the patient’s reasonable expectations.

To make a real choice, however, such terms and their implications must be fully explained or, at the very least, pointed out to make the patient aware of what he or she is getting into. The notion of mandatory arbitration contradicts freedom of contract, and it limits a consumer’s civil rights.

Such clauses generally mean the health consumer loses the right to a judge and jury. Discovery is limited, proceedings are held in private and the outcome provides no precedential value because the deals are sealed and not subject to appeal. the arbitrator may not have a law degree nor even be properly trained to decide complex legal and medical issues involved.

Too often, arbitrators base their decisions on their own sense of justice or on industry or community norms rather than the law. Such a solution also smacks or hurting lower-income consumers who often find themselves with dwindling choices and greater infringements on their civil liberties.

Nor has it been proven that arbitration is a less expensive solution. A study from the respected Rand Institute concluded that arbitration does not save time when compared to court. James S. Kakalik, et al., "An evaluation of Judicial Case Management Under the Civil Justice Reform Act." 87 93, Rand Institute for Civil Justice (1996).

In many business settings, there is a place for such alternative dispute resolutions, which may provide a cost-saving, efficient system for resolving contractual disputes. Procedural methods and evidentiary rules are relaxed, and the environment may be less hostile or intimidating than a courtroom situation.

But that generally occurs when the parties are on equal footing. Such mandatory arbitration contracts may be common involving credit card disputes, website purchasing problems and auto sales, but the private practice of medicine is not dealing with a hotel reservation gone awry or a used car that turns into a lemon.

In a doctor-patient relationship, it is the patient who enters the room with the problems and the need. The doctor has the expertise and the control. Certainly, he should be paid for that. But he also should be held accountable if a mistake occurs and not be able to weasel out of it through a clause in an agreement that the patient may not have fully understood. The parties must both know for what they are intending to contract and enjoy individual bargaining power.

California courts have taken the lead in developing a strong public policy favoring arbitration, so long as an agreement to voluntarily arbitrate has been openly and fairly entered into by the parties and rules governing contracts are followed. Benyon v. Garden Grove Medical Group, 100 Cal.App.3d 698, 704, (1980).

In Saika v. Gold, 49 Cal.App.4th 1074, 56 Cal.Rptr.2d 922 (1996), a patient and doctor entered into an arbitration agreement whereby the physician had the right to a trial de novo if a malpractice claim was determined to be more than $25,000. When an arbitrator awarded the plaintiff $325,000 following chemical skin peel that badly burned her, the physician asked for a new trial, and the patient appealed to the courts on the basis that the contract was illusory.

The court reinstated the $325,000 in arbitrated damages on the basis that the playing field was tilted in favor of the doctor to the point where there was virtually no conclusiveness when the patient wins.

"For the plaintiff, the clause meant the worst of both worlds: no jury, but additional cost and delay inflicted by her opponent at will." Id., at 1081.

While rarely used, Illinois law permits arbitration in medical malpractice cases by virtue of the Health Care Arbitration Act, 710 ILCS 15/1, et seq. (2003). Courts here have embraced arbitration so long as it is not unconscionable, which is defined as "where there is an absence of a meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party." In re Gibson-Terry v. Terry, 325 Ill.App.3d 317, 758 N.E.2d 459 (1st Dist.2001).

Doctors are not heroes; they are human. Too often, though, their decisions are impacted by the dictates of insurance companies, managed care organizations or health maintenance organizations. It is clear physicians are looking for ways to take control of their practices.

Mandatory arbitration clauses between a private physician and his patient are an exercise in power. Doctors are trying to regain some of their power and autonomy in patient care without fear that insurance companies are going to second guess their treatment or diagnoses or even refuse to settle legitimate claims when mistakes are made.

But bearing this business dilemma on the backs of patients is misguided and unfair. Better that doctors and others turn their attention to the insurance industry and its practices, the crux of where the real problem lies.