Arbitration a growing trend in health care

Doctors say it will hold down medical costs, but patients say they fear giving up the right to sue.

By Stacey Burling
Inquirer Staff Writer

Within the space of two weeks late last year, Michael and Hedy Cohen, who happen to be experts on medical errors, each encountered what they saw as a disturbing development in the modern doctor-patient relationship.

They were asked by two groups of suburban doctors to sign away their right to a jury trial in the interest of reducing malpractice costs.

Legal experts say such attempts to channel potentially unhappy patients away from the court system and into arbitration are becoming increasingly common in health care. Agreements to settle future disputes with binding arbitration, in which an appointed individual or small panel decides the case instead of a judge or jury, are now pervasive in contracts involving many other things we buy, including credit cards, cell phones and cars.

Proponents say arbitration is faster, cheaper and fairer than trials, but critics say the secretive system can be weighted against consumers and makes it harder to track complaints or build legal precedents.

Eugene Rosov, who runs two malpractice-insurance companies that advise doctors to use arbitration agreements, said he thought they ultimately would reduce the cost of insurance and defensive medicine – tests ordered primarily to protect against lawsuits. “This agreement is better for doctors and for patients,” said Rosov, whose companies have 35 subscribers in New Jersey and Pennsylvania. “The only person it’s bad for is the plaintiffs attorneys.”

But Temple University law professor Bill Woodward thinks the growth of a private judicial system “is a pretty nasty legal development, I think, and it’s just crying out for correction from Congress.”

A bill introduced last year by Sen. Russ Feingold (D., Wis.) aims to do that. It would prohibit pre-dispute arbitration clauses involving employment, consumer, franchise and civil rights disputes.

Michael Cohen was handed an arbitration agreement when he visited his longtime primary-care doctor in Bucks County. Cohen said he was not the suing kind, but the thought of being asked to give up his right to sue “stopped me in my tracks.”

He said no, and his doctor saw him anyway.

Then Hedy Cohen, who has had a kidney transplant, was mailed a similar form by a group of kidney specialists she planned to see for the first time. The form from Hypertension-Nephrology Associates in Willow Grove insisted on binding arbitration and said she would have to pay the doctors’ legal fees if she filed a complaint and lost.

Hedy Cohen said no and was told to find another nephrologist.

That was fine with Cohen, a nurse with a master’s degree in health-care administration. “I couldn’t have a relationship with this person because they had already set the tone,” she said. “We’re adversaries before we even know each other.”

Jerry Dolchin, the nephrologists’ attorney, said the doctors began using the forms at the height of Pennsylvania’s malpractice crisis in 2003, when doctors, he said, were being “hit pretty hard by overzealous plaintiffs’ lawyers.” Since then, he said, “hundreds and hundreds and hundreds” of patients have signed the form.

Ruth Schulze, a North Jersey gynecologist, started asking patients to sign an arbitration agreement last year after she bought malpractice protection from Obstetricians & Gynecologists Risk Retention Group of America Inc., one of Rosov’s companies. She gave up obstetrics two years ago after she was told she would have to pay more than $120,000 for insurance.

Schulze said she won each of the three times she was sued, but left the trials disenchanted. “It is not really a trial of your peers,” she said. “It’s theater.”

Her patients have largely embraced the new approach, she said. She will not do surgery on anyone who refuses to sign the form, which limits pain and suffering payments.

For her, the arbitration agreement sets the groundwork for a more trusting doctor-patient relationship. Patients need to understand that bad things happen in spite of doctors’ best efforts. “Medicine is not guaranteed perfection,” she said.

Steven Barrer, a Montgomery County neurosurgeon, says he thinks he was the first in his area to start using an arbitration agreement around 2003. Barrer wanted to “somehow create malpractice reform for myself since it wasn’t coming from the courts and it wasn’t coming from the legislature.”

He got the idea for an arbitration agreement from his cell phone contract. “I figured if they can do it, why can’t I?” he said.

Out of thousands of new patients, only about 10 have refused to sign the form. He does not ask patients with emergencies.

No one knows how many doctors here use such agreements, but the practice does not appear widespread. It is common on the West Coast, and legal experts say it is spreading nationally. Many nursing homes ask residents to sign arbitration agreements, experts said. Golden Living, a national chain that operates 40 nursing homes in Pennsylvania, says about half of its residents agree to arbitration.

Doctors who join Medical Justice, another group trying to reduce malpractice expenses, do not require patients to agree to arbitration, but do ask them to sign contracts saying they will not file “frivolous” lawsuits and will use only board-certified specialists as medical experts in court.

In a project set to start next month in Montgomery County, the local medical society, bar association, and Abington Memorial are working together to solve medical disputes with mediation. While an arbitrator decides a case, a mediator shuttles between the two sides to help them reach an agreement. If they fail, the patient can still file a lawsuit.

The Rothman Institute, one of the largest and best-known surgical practices in the region, is currently mulling whether to ask patients to sign statements saying they will try arbitration or mediation.

Trial lawyers say mediation raises far fewer ethical concerns than binding arbitration, but critics of mediation say it often fails, becoming just another step to a lawsuit.

Legal experts say courts have been mixed on upholding the agreements. Barrer said two patients had tested his contract. It was upheld in one case and shot down in the other. Lawyers said requirements hidden in fine print, particularly arbitration systems that require consumers to travel long distances, are legally shaky.

John O’Donnell, senior counsel for Temple Health System, said Temple considered asking patients to sign agreements but feared most would not read them and worried that those who did would be upset. They also thought the agreements were likely to be unenforceable. The system decided instead to work harder to avoid mistakes and do a better job of dealing with mistakes that still occurred.

John O’Brien, a health-care defense lawyer, said he thought the agreements should give patients time to think and should clearly say that patients were giving up their constitutional right to a jury trial.

Critics of arbitration say it tends to benefit companies that frequently need arbitrators. It makes sense, they argue, that arbitrators would be more interested in pleasing “repeat users” than a consumer involved in one dispute.

“There are certainly companies that have their favorite arbitrators . . . and they use them and use them and use them,” said William Callaham, a Sacramento lawyer who is president of the American Board of Trial Advocates, a group seeking to protect jury trials. “Let’s face it. They use them because they get the results they want.”

Doctors have far fewer disputes than cell phone companies, but Alan Schwartz, a plaintiffs’ lawyer, still thinks malpractice victims do better in court. The arbitration system rules, he said, work against him.

“I have to play my game in their stadium with their refs.”
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