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COMMENTARY: Arbitration Contract Takes Away Patient Rights

Physicians Demand Patients Waive Trial by Jury in Malpractice Claims; What Protections Exist for Patients?

by Thomas J. Williams, J.D.

July 7, 2008

The New York Times Magazine’s column “The Ethicist” featured a question from a reader regarding a new practice by her physician. The patient was asked to sign a waiver of her right to sue the physician and accept binding arbitration of any dispute. Essentially, she was asked to give up her legal right to a trial by jury in exchange for health care. After leaving that physician to find one who did not require the waiver, she learned that all of the doctors in her area were making the same demand.

The use of these agreements should be resisted. It is unconscionable for a doctor to suggest such an arrangement on at least two levels. First, the waiver calls into question whether the doctor is committed to the highest possible quality of care. Doctors fear malpractice suits that can tarnish the reputation and raise malpractice insurance premiums. In some instances, the malpractice insurance carrier requires the doctor to obtain arbitration agreements.

Second, the waiver exploits the patient’s lack of bargaining power. A patient comes to a doctor’s office in need of medical care. The physician holds that care hostage to the patient’s agreement that if the doctor should act in a negligent fashion, there will be no recourse to the courts of law. The civil tort system has been established to address grievances resulting from the failure to provide service to a certain standard of care. Arbitration awards tend to be smaller than those awarded by juries. And arbitration awards do not establish a legal precedent that can serve to protect patients in similar circumstances.

The consumer is not without remedies; some states have laws that regulate this type of agreement. An Ohio statute provides that medical treatment may not be withheld if a patient refuses to sign an arbitration agreement and mandates that the patient must be informed of this right before signing. According to the statute, if the agreement is signed, the patient has 30 days to rescind it without penalty. Consumers should research local laws to determine their legal rights. The state’s attorney general or consumer affairs department is a good place to start. If your state does not have protective laws, ask your legislative representative to introduce a bill creating them.

Congress has proposed legislation to provide consumer protections for binding arbitration agreements in a number of areas. The Arbitration Fairness Act of 2007 would prevent the type of agreement between doctor and patient that must be entered into before any dispute. The act preserves the right of the parties to decide to have the matter arbitrated voluntarily. If enacted, this law would provide protections similar to those in the Ohio statute.

If no federal or state law is in place, these agreements may be nullified by a court as a contract of adhesion. An adhesion contract is one in which the consumer does not have any bargaining power and is placed in a “take it or leave it” position. A 1992 case in Arizona declared an arbitration agreement between a physician and patient unenforceable as a contract of adhesion. The obstetrician in this case demanded the patient sign a binding arbitration agreement requiring that the arbitrators of any case be obstetricians themselves. Failure to sign meant no medical care.

The consumer can refuse to sign the agreement at the outset. Although some physicians have insurance requirements, they might not refuse treatment even though the agreement is not signed. A 1999 study by the Rand Institute for Civil Justice found that 80 percent of physicians would provide treatment even without an arbitration agreement. The survey also indicated that if a patient declined, the physician would pursue no further discussion. This remedy is not as easy as having a law in place; it requires that the patient engage in a potential conflict with the doctor. Still, asking what happens if the agreement is not signed might at least prompt a physician to consider avoiding it.

Tort-reform legislation has become the rage at both the federal and state levels. There is nothing wrong with placing constraints on what remedies are available in a court of law, but there is a big difference between such legislation and these arbitration agreements. Legislation is done in the open. Citizens can voice their opinions, and legislators are subject to influence by their constituents. Arbitration agreements are done privately with no real opportunity for patients to discuss, modify or even reject the agreement unless they are willing to walk out without medical care. These agreements ought to be vigorously rejected and rendered legally ineffective.

Thomas J. Williams is a writer, political scientist and attorney in Columbus, Ohio. He specializes in constitutional rights and civil liberties.

References

American Association for Justice. Mandatory Arbitration News.

Binding Arbitration Is Not Frequently Used to Resolve Health Care Disputes. RAND Institute for Civil Justice, 1999.

Broemmer v. Abortion Services of Phoenix, LTD. 840 P.2d 1013 (Ariz. 1992).

Cohen, Randy. “Doctor, Bully.” The Ethicist. The New York Times Magazine, March 30, 2008.

Ohio Rev. Code Ann. § 2711.01.

U.S. Congress, House. Arbitration Fairness Act of 2007. HR 3010, § 1710.

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