ARBITRATION CLAUSE CONSIDERATIONS IN HEALTH CARE SERVICE AGREEMENTS

By: Teresa M. Spina, Esq.
April, 2014

Many health insurance plan agreements contain language in which the patient agrees, by virtue of their participation in the plan, that any medical malpractice claim will be heard by an arbitrator rather than in court by a jury. In other instances, medical providers and facilities have arbitration clauses contained in the paperwork the patient signs at the beginning of treatment or as part of the intake process to a facility. Further, some malpractice insurers may offer premium discounts if arbitration clauses are contained in patients' forms. Some agreements have a two-step process: an initial mediation and, if the parties cannot come to a meeting of the minds, a subsequent binding arbitration by a single or multiple arbitrators.

In general, the majority of jurisdictions across the country enforce agreements to arbitrate. In medical malpractice, however, public policy and patients' rights issues have made enforcement more complicated as the courts balance the rights of patients with the traditional concept of contractual obligation. These arbitration agreements or clauses must comply with statutory requirements in the particular state where executed. They will be set aside if deemed a contract of adhesion or unconscionable. In other words, the medical malpractice arbitration clause cannot be over-reaching and must be fair. Courts of review will look at whether the patient was overtly alerted to the agreement and its consequences; whether the patient understood they were waiving their right to the court system and a jury; and whether medical treatment was contingent on signing the clause.

Certain states, understanding the cost-benefit of arbitration clauses, have enacted laws to safeguard patients' rights and the equities. Statutory protections vary from requirements as to the visibility and size of the type to giving patients a period of time to rescind the agreement. New York, historically concerned with rising malpractice premiums, does not view contractual healthcare arbitration clauses as violative of public policy per se but, at a minimum, these clauses must clearly inform the patient that they are waiving their right to trial by jury.

The confidential nature of arbitration proceedings is attractive to medical providers and facilities whose reputations are tantamount to continued success or failure. In the same vein, patients may seek the privacy of the arbitration setting when it comes to sensitive issues regarding their health status or the circumstances that led to the alleged malpractice?issues they would be embarrassed or hesitant to discuss in open court with possible media coverage.

Similar to arbitration, mediation is a cost-effective alternative to resolving healthcare malpractice claims. It is ideal for discussing and resolving sensitive issues, without the risk of a binding decision. Mediation can also promote the parties' interests in keeping the matter confidential. If the parties are unable to reach an agreement at mediation, they can explore arbitration later. Often, disagreements as to the economic value of a claim or the apportionment of damages benefit from the review and input of an impartial mediator or a review and determination by a neutral arbitrator. In either scenario, the litigants save thousands of dollars in litigation costs, minimize the emotional stress of a protracted trial and secure a speedier resolution.

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Teresa M. Spina, Esq., is a member of NAM's (National Arbitration and Mediation) Hearing Officer Panel and is available to hear arbitrations and mediations throughout the New York Metro area. Ms. Spina is the former Assistant Vice-President of Staff Counsel for a national insurance company, overseeing counsel in the Western United States.

Click here to view Teresa Spina's resume.

For any questions or comments, please contact Jacqueline I. Silvey, Esq. / NAM General Counsel, via email at jsilvey@namadr.com or direct dial telephone at 516-941-3228.