The Eye of the Beholder
In 2005, the American Medical Association identified 20 states — up from 12 in 2001 — as being in “full-blown medical liability crisis,” with skyrocketing liability insurance rates forcing doctors to close their practices, and patients rapidly losing access to healthcare (1). While legislation has proven effective in helping to curb similar crises in other states, all too often, efforts to pass reform are met with legal challenges.
Fortunately, there may be another solution to help bring spiraling liability rates back down to Earth. Binding arbitration has proven to be superior to litigation in efficiency, cost, and fairness (2). And trained and experienced arbitrators can effectively reduce skyrocketing “pain and suffering” awards, the most commonly implicated culprit in the malpractice crisis.
With these advantages, it would seem that doctors, especially those in crisis states, would avail themselves more of the benefits of arbitration. But, surprisingly, they don’t.
The Medical Malpractice Crisis
Medical malpractice insurance premiums continue to escalate in states that have not implemented malpractice tort reform. Rate hikes are partly due to decreases in the number of insurance companies providing malpractice coverage and to increases in the number of lawsuits. But a larger issue is that the size of jury awards has grown exponentially, exceeding actual increases in medical damages and economic inflation (3,4).
As a result, consumers are increasingly in danger of losing access to healthcare. In 2002, the only level one trauma center in Las Vegas, serving four states, closed when surgeons walked out after concluding they could no longer afford their liability premiums. Florida, West Virginia, and New Jersey have suffered similar walkouts in recent years (5).
In the meantime, the number of people 65 or older is projected to double over the next 30 years, while the number of caregivers is expected to grow only 7 percent. States will face providing medical care for a growing elderly population with fewer doctors, especially in high-risk specialties or in rural areas that already have difficulties attracting physicians (6).
Binding Arbitration in Medical Malpractice Disputes
Arbitration is confidential, quick, cost-effective, and usually much less stressful than litigation. Because arbitration is contractual, parties can develop their own rules and format, hearings are held at their convenience, and they can select either one or several experienced and impartial arbitrators.
Arbitration also involves less discovery than litigation and is not dependent on overloaded court dockets, so there is much more flexibility over the timing of cases. It also saves time by preventing appeals, except in cases in which a party questions an aspect of the arbitration process itself (7).
Although arbitration agreements are becoming more common between doctors and patients, they are far from being the norm. Medical malpractice arbitration statutes exist in less than one third of states and vary in scope and protection provided. Only six states — Alaska, California, Colorado, Louisiana, South Dakota, and Utah — have statutory “pre-treatment” arbitration agreements.
Arbitration: An Attractive, but Neglected, Alternative
Physicians often fear that requesting arbitration agreements might have a “chilling effect” on relationships with their patients. They worry patients may feel pressured to give up certain rights, or that the request is a red flag that a doctor has had many prior lawsuits.
Doctors are less likely to broach the subject of arbitration if they practice in states with malpractice caps, do not perform high-risk procedures, are not sued frequently, or some combination of these factors. The more often a doctor faces the risk of lawsuit, the more amenable he or she might be to a less-taxing form of dispute resolution.
Survey of Doctors' Perceptions Regarding Binding Arbitration
A survey (8) of doctors in San Diego County supports the hypothesis that those who practice high-risk specialties are more likely to use binding arbitration than their colleagues in lower-risk specialties. Those who used arbitration were more likely to have been sued and have their malpractice insurance premiums increase.
More than half of doctors not using arbitration did not know whether or not their carriers offered the option, and one-third said they did not use arbitration because they did not know about it. The data suggests, however, that this knowledge would not have affected their choices.
Most doctors don’t use arbitration because the threat of litigation is not high enough to overcome the perceived negatives associated with a request for arbitration. Doctors believed that even if patients had a reasonable explanation of arbitration, there would still be negativity in patient perception of the issue. Still, nearly all doctors recognize the benefits of arbitration and would be willing to request an agreement if they thought their patients would see such a request positively.
Patient Survey
A survey (9) of 200 patients revealed that a comprehensive understanding of arbitration does make a big impact in patient perception. Patients were surveyed both before and after an overview of the arbitration process. Two-thirds believed they knew what binding arbitration was. However, significant changes in responses before and after reading about it suggest otherwise.
Survey respondents viewed arbitration much more favorably after having it explained to them. The feeling of being “coerced or pressured” dropped from 56 percent to 6 percent simply after reading a few short paragraphs defining arbitration! The trust in the doctor-patient relationship also became a smaller issue once patients better understood how arbitration works.
Most significantly, 77 percent of patients who understood the benefits of arbitration did not feel that broaching the subject of an agreement would add a negative element into the relationships with their doctors.
Conclusion
Binding arbitration is an efficient, economical, and fair method of resolving medical malpractice claims. Doctors recognize the obvious benefits of arbitration, but most will consider asking patients to sign binding arbitration agreements only if they believe patients will see the request in a neutral or positive light. Given an appropriate presentation, patients will often view binding arbitration as a proactive attempt by their physicians to achieve a better outcome for both parties should a dispute arise.
References
- Anderson R.E., Effective Legal Reform and the Malpractice Insurance Crisis, Yale Journal of Health Policy, Law, and Ethics, V:1 2005, 343-355, 343.
- 4 Pepp. Disp. Resol. L.J. 1.
- http://www.iii.org/media/hottopics/insurance/medicalmal, March 2006.
- Anderson RE., Effective Legal Reform, Yale Journal of Health Policy, Law, and Ethics, at 349.
- Pate, R.W., The Heritage Foundation, 2006.
- Who Will Take Care of an Older Generation Dennis Cauchon, USA Today, October 24, 2008.
- Weiss, Steven A., A Litigator’s Perspective, 8-APR Business Law Today 30 (1999).
- Author Survey, 2006. 375 San Diego Physicians, Plastic Surgery, Otolaryngology, Dermatology, Ophthalmology, Ob-Gyn.
- Author Survey, 2006. 200 Patients, Plastic Surgery and Ob-Gyn.