Boundaries for Arbitrators

It’s been nearly three years since the American Arbitration Assn., the American Medical Assn. and the American Bar Assn. jointly recommended that legislators prohibit managed care companies from forcing members to settle health care disputes through private judges or arbitrators. This week lawmakers began taking sensible steps toward that goal. On Tuesday the American Arbitration Assn. announced it would begin barring its members from settling disputes unless both judges and patients voluntarily agreed to the out-of-court process. Since then, legislators introduced six bills to eliminate secrecy, financial conflicts and excessive fees from mandatory arbitration.

Lawsuits are not the most efficient way of resolving medical disputes. The desire to unclog the court system was what prompted the move to alternative dispute resolution methods like arbitration in the ‘80s. Today the courts are even more hard-pressed, lacking the resources to handle the thousands of arbitration requests that managed care companies receive from their members each year.

But the arbitration system in California is unfairly rigged against health care consumers. While California businesses, employers and health plans continue to require employees, consumers and patients to agree to have private arbitrators handle health care disputes, the arbitration industry, ranging from individual arbitrators operating out of their houses to large national corporations, is largely unregulated.

That’s why both HMO leaders and Sacramento legislators should embrace a package of bills introduced this week that would clarify that private judging corporations are not entitled to absolute immunity for any wrongdoing in mandatory consumer arbitrations and would require private judging corporations to report the results of arbitration proceedings.

HMOs, legislators and managed care patients have a common interest: By improving the credibility, accountability and objectivity of arbitration, they can guarantee basic due- process rights for HMO patients, while quieting the clamor for expensive court trials.