With Arbitration’s Pros, Cons, What’s a Patient to Do?


Suppose you went to a new doctor’s office and were handed a form asking you to agree to arbitration should your treatment lead to a legal dispute. Would you sign? Would you understand what it meant?

This request, made at the same time you fill out insurance forms and medical histories, asks patients to relinquish their right to a jury trial. In the event of a dispute, an outside party hears evidence, renders a decision and sets damages, if any.

In such instances, the decision to limit future malpractice options is made before the doctor has even laid eyes--let alone hands--on the patient.

Charles Inlander, president of the People’s Medical Society, a national consumer advocacy group in Allentown, Pa., calls arbitration agreements coercive “because people don’t realize they have a choice. They don’t know what they’re signing.”


Opponents of the agreements worry that arbitration is weighted against the patient. Doctors’ attorneys are more likely to develop relationships with the arbitrators, they say, who, in turn, may give the plaintiff only a token award to get continued business from doctors.

“We tell patients not to sign them and not to go to any doctor who uses them,” he said. “I think it’s a negative connotation about the way they look at you . . . as a potential suit, not [as] a patient.”

But supporters of the agreements say they help both doctors and patients.

Susan Schmid, a Los Angeles malpractice attorney, has long worked to encourage arbitration. She said that more than 60% of the 5,300 California doctors who get their malpractice insurance through her company, the Cooperative of American Physicians/Mutual Protection Trust, use arbitration.

She added that the forms clearly say patients are giving up the right to a jury trial and that 95% of patients agree to it when the company’s doctors offer it.

The process is efficient, preserves confidentiality (because there is no court reporter), limits the doctor’s time away from the office and reduces legal defense costs because cases are wrapped up quickly, she said.

“What we have found in our practice is that it [saves] about a third the cost of Superior Court trials,” Schmid said. “The big savings is in defense attorney time. It’s three days instead of two weeks.”

Arbitration can cut the defense fees for attorneys and expert witnesses in a malpractice case from $30,000-$50,000 to $20,000-$33,000, she said.


Schmid noted that “interestingly, there are more awards for plaintiffs in the arbitration forum than in the Superior Court,” a statement that neglects to take into consideration that most medical malpractice cases are settled out of court.

Peter Lee, executive director of the nonprofit Center for Health Care Rights in Los Angeles, agrees that arbitration can have advantages for both doctors and patients.

“It can be a faster and less expensive process,” he said. “However, there have been some studies that have found that in arbitration, injured patients are apt to receive lower awards.”

Arbitration of malpractice cases began in the early 1970s, when claims were growing at an unexpected rate and premiums were also rising.


The process commonly involves three arbitrators: one selected by each side and a neutral arbitrator--frequently a retired judge--agreed to by both parties. The decision cannot be appealed by either side.

In both arbitration and court cases, medical malpractice damages for pain and suffering and disfigurement are limited by state law to $250,000.

There is no cap, however, on other types of damages, which include lost income and the cost of future medical care. In such cases, plaintiffs’ lawyers say, juries are more likely to award larger sums of money to defendants in medical malpractice cases than are judges or arbitrators.

The outcomes of both court cases and arbitrated cases are reported to the Medical Board of California, which licenses and disciplines the state’s physicians, said board spokeswoman Candis Cohen in Sacramento.


Nonetheless, although most large health plans, such as Kaiser Permanente, require patients to settle disagreements through arbitration, it’s hard to say how often patients enter such agreements with individual doctors.

According to a 1997 study from the Institute for Civil Justice at Rand, a think tank in Santa Monica, arbitration hasn’t caught on widely. The study found that only 9% of 369 California doctors who responded to a random survey asked patients to agree to arbitrate any dispute.

The study also asked doctors to list the reasons why they used arbitration agreements. The survey found that 57% said they were acting “on the recommendation of their insurer”; 31% said it was the policy of their practice group; and 34% believed arbitration offered a cheaper resolution.

Those doctors who didn’t use arbitration said it was because they weren’t familiar with the process, that it set the wrong tone with patients, or that they were following the policy of their group or insurer.


The California Medical Assn. supports patient choice on whether to arbitrate or meet the doctor in court, saying patients should not be required to sign arbitration agreements as a condition of medical care. Its literature notes that lack of voluntary consent has been used to invalidate some agreements.

Medical Underwriters of California, a malpractice insurer that covers 3,500 California doctors, is lukewarm about arbitration agreements, said Vice President Ron Neupauer.

So far, Neupauer said, he hasn’t seen “any reliable, credible statistics” convincing him that arbitration reduces dispute time and expenses. “I haven’t seen anything that would make an actuary light up.”

Because the malpractice insurance company is doctor-owned, he said, there are concerns about making arbitration the kickoff for a doctor-patient relationship.


“Maybe it falls into the same category as prenuptial agreement,” Neupauer said.

Once a patient signs on the line, he or she has only 30 days for a change of heart. After that, the document commits both sides to binding arbitration for an open-ended period.

Lee at the Center for Health Care Rights says patients shouldn’t agree to arbitration before a problem arises.

“You might want to opt in later, when you know what the implications are,” he said, “rather than when you don’t.”