Arbitration vs. Jury Trial

Are there times when a physician would prefer a case be presented to a jury rather than an arbitrator?

Yes. Actually, most of the time.

Jurors need to trust doctors. They have their own health concerns, and most rely on physicians to treat them in their time of need. While jurors are instructed to judge without sympathy, passion, or prejudice, those are three of the most deeply ingrained and enduring human tools, and jurors use them all the time in their decision-making. So if a physician appears honest, conscientious, and caring, they are more likely to gain the favor of the twelve. The converse is true too though, that jurors can award large verdicts when they become enraged by the pompous denial of a “guilty” physician, or by a sympathetic plaintiff, or both. But the former is more likely than the latter; doctors typically prevail 70–80 percent of the time in jury trials.

Arbitrators, on the other hand, are more dispassionate than jurors. It’s not that they’re less human. They’ve seen many, many severe injuries over the course of their careers. They’re less inclined than jurors to forgive a physician’s minor technical omission because they like the physician. Plus, arbitrators are employed and typically paid by both sides. It’s hard to rule outright in favor of one side to the detriment of the other. And, most arbitrators don’t. Arbitrators too are entrusted with the ability to make equitable decisions, decisions based on principles of fairness rather than law. Fairness often equates to giving a little to both sides in the dispute. So, while arbitrators’ decisions/awards may be more tempered than jurors, they tend to “split the baby” too, which means arbitrators are more likely to rule in the plaintiff/patient’s favor than jurors.

The MICRA $250,000 cap on pain and suffering damages applies equally in civil jury trials and in arbitrations, and plays a much more pivotal role in limiting verdicts and awards in cases against doctors.

A Difficult Informed Consent to Obtain

Repeated studies have shown the manner in which a physician communicates with a patient is much more determinative in identifying which doctors will be sued when a patient suffers an untoward outcome. Doctors would be wise to consider whether an interruption in their communication relationship with their patient such as might be created by initiating an arbitration policy is outweighed by the benefits of arbitration.

California Code of Civil Procedure section 1295 requires that a contractual arbitration agreement start with the following paragraph:
“It is understood that any dispute as to medical malpractice, that is as to whether any medical services rendered under this contract were unnecessary or unauthorized or were improperly, negligently or incompetently rendered, will be determined by submission to arbitration as provided by California law, and not by a lawsuit or resort to court process except as California law provides for judicial review of arbitration proceedings. Both parties to this contract, by entering into it, are giving up their constitutional right to have any such dispute decided in a court of law before a jury, and instead are accepting the use of arbitration.”

Informing a patient you wish them to waive their constitutional right to a jury trial so you can save in malpractice premiums frequently causes patients to wonder what malpractice history you may be hiding from them. What risks and benefits of arbitration versus jury trials do you provide patients prior to their signing such an agreement? Do you inform them — as you would when obtaining an informed consent for any medical procedure — that there are alternatives to arbitration? Namely, you cannot refuse to provide care solely because of the patient’s refusal to sign an arbitration agreement.

No Appeal

While putting a case in front of a jury can feel like rolling the dice, what happens if the arbitrator gets the decision wrong (or decides it would be more fair to award the plaintiff a little bit for their suffering even though the breach of the standard of care was minimal and did not likely cause the harm suffered)? You’re stuck. Runaway jury verdicts frequently are reduced by judges immediately following the verdict — or on appeal — for insufficient evidence or legal bases. On the other hand, arbitration decisions are, except under extraordinary circumstances, final, binding, and unappealable. In those BIG cases, having everything riding on one decision-maker can be scary.

Arbitration Myth: They Are Less Expensive

One of the platitudes cited by arbitration advocates is that arbitration is much less expensive than the civil justice system. It’s not clear exactly what these over-generalizations are based on.

Arbitrators are paid judges. Initiating an arbitration requires up-front payment to retain the arbitrator. These up-front deposits for arbitration greatly surpass the initial cost in civil court, known as the first appearance fee. More often than not, plaintiffs file suit in civil court and the defendant is forced to answer there and pay the first appearance fee — and then make a motion to compel the case to arbitration. And, the court continues to hold status-update meetings and maintains jurisdiction over the dispute through judgment (more on this below, but this means the amount of any arbitration award becomes public through this process.)

Does preparation for an arbitration require less attorney time/fees?

The first point to keep clear: Most cases are fought and settled prior to hearing. If your attorneys prepare less, it costs less. And you — the client — risk more. The costs of litigation and arbitration must be balanced at some level against the importance of winning, including the intangible factors of maintaining a professional reputation and clean record in addition to obtaining the correct result. These intangible benefits may or may not be proportionate to the amount of money at stake.

Do attorneys prepare less in arbitration?

Not substantially. In practice, discovery is conducted in arbitrations of medical malpractice cases the same as if the matter were in California state courts. Written interrogatories, document exchange, depositions of parties and witnesses, expert discovery, and basic trial preparation are essentially the same under either system. Some savings in arbitration can be realized because the formalized discovery and motion practices in court practice can be substituted with more informal contact directly with the arbitrator. But the perception of flexibility in arbitration is largely unavailable in practice with medical malpractice cases.

Another one of the major costs of medical malpractice cases is the cost of medical experts. Medical experts are required in arbitration just as they would be in court, with the patient’s side presenting medical expert testimony of a breach in the standard of care causing harm to the patient, and the defense medical experts providing contrary testimony.

To be sure, there are efficiencies to be had within the arbitration hearing itself. The arbitration hearing may tend to be less expensive if the case gets that far (of course, the great majority of cases settle prior to trial or arbitration). Arbitrators are more flexible with their time, so the scheduling of witnesses can typically be condensed. Plus, arbitrations usually involve less wrangling about admissibility of evidence as the arbitrators feel they can deconstruct the admissible and inadmissible evidence themselves.

Myth About Arbitration: They Are More Private

The arbitration hearing itself is usually confidential, and members of the public cannot view the proceedings. But, the reality is that most malpractice cases do not make good fodder for television news shows. Unless your case contains allegations of fraud or other intentional misconduct, you are not likely to be seen on television cameras in court for malpractice cases.

As far as impacting your physician practice, the difference between arbitrations and jury trials is smaller than the arbitration advocates make it out to be. Arbitration awards — which, remember, are more frequent though perhaps more tempered — must be reported to the California Medical Board (MBC), and the amount of the award becomes public information through posting on MBC’s website. Arbitration awards of any amount mandate investigation by MBC or Osteopathic Medical Board. An arbitration award of any amount must also be reported to the National Practitioner Databank. Most insurance plans require you to disclose any civil judgment or arbitration award on renewal applications or sooner, often triggering an investigation by the plans. These reports can lead to actions with severe consequences for your practice, such as: enforcement actions seeking discipline against your license; restrictions on your ability to practice; or being dropped from insurance panels.

Conclusion

Arbitration has been an available alternative in California since the 1920s. Still, a relatively low percentage of practitioners utilize arbitration agreements. Why? Primarily because doctors prevail in 70–80 percent of medical malpractice cases taken to trial before a jury. That rate of victory, to most practitioners, outweighs any perceived benefits of arbitration in flexibility, timeliness, or expense.