Panel Would End Forced Arbitration

A report by an influential group representing the medical, legal and private arbitration professions has recommended scrapping the practice of requiring mandatory arbitration of patients’ health-care disputes in favor of a voluntary system.

The report, coming amid a national debate on managed-care industry reforms, is expected to heighten pressure on health insurers to change the way they resolve patient disputes.

Congress is considering reforms backed by both Republicans and Democrats that would give consumers with a grievance against their health plan the right to a review by an independent party. Arbitration is one form of independent review.

The panel recommended that health plan members no longer be required to agree to arbitration as a condition of enrollment. Instead, a member could choose arbitration--or opt to pursue their claim in court--only after a dispute arose.

The report, released Friday, is the result of a yearlong effort by a joint committee of the American Arbitration Assn., the nation’s largest dispute-resolution service; the American Bar Assn.; and the American Medical Assn. The recommendations are expected to carry clout with regulators and legislators considering various “patients’ rights” reforms.

The panel also calls for other consumer protections. They include strict timetables, usually from 30 to 60 days, for health plans to answer members in disputes over emergency services, requests for medical second opinions, access to alternative medical treatments such as acupuncture, and experimental treatments.

Mandatory arbitration is used by many health insurers, including the nation’s largest HMO, Kaiser Permanente. It requires consumers to give up the right to have legal disputes resolved in a courtroom. Arbitration is a system of private justice in which disputes are resolved in hearings behind closed doors by hired arbitrators, usually retired judges.

Proponents of arbitration say the system helps unclog crowded courtrooms, providing a faster and less expensive means of resolving disputes. Critics say the system isn’t always as fast or impartial as claimed, and they particularly question arbitration that is forced on patients as a condition of enrolling in a health plan.

The California Supreme Court last year blasted Kaiser’s unusual, self-administered arbitration system as prone to “delay for [Kaiser’s] own benefit and convenience.”

The court said the family of a Kaiser patient who died of lung cancer could take its case to a lower court because Kaiser had deliberately delayed arbitrating his claim, possibly to save hundreds of thousands of dollars.

In January, Kaiser announced that it would no longer administer its arbitration itself but would instead seek an independent organization to do so.

A Kaiser spokeswoman said the HMO is close to selecting an administrator.

The group drew a distinction between medical-treatment disputes and those in other fields, such as the purchase of stock, auto insurance or real estate, where mandatory arbitration is also used.

“In every health-care dispute, you are dealing with, at a minimum, someone’s health,” said Friedman. “And in some cases, you are dealing with a life-or-death decision.”

Cliff Palefsky, a San Francisco lawyer who is critical of mandatory arbitration, praised the report.

“Arbitration is being misrepresented to the public as an equal form of justice that is cheaper and quicker, but it is not,” Palefsky said. “Mandatory arbitration is an invitation to abuse.”