Using Arbitration for a Medical Malpractice Claim

There are pros and cons to using arbitration to resolve a medical malpractice claim - and sometimes the patient may not have a choice.

By , J.D. · DePaul University College of Law

With the rising costs of health insurance, tort reformers are always looking for ways to reduce the burden that medical malpractice cases place on the health care industry. Some reformers argue that if the number of jury trials could be reduced, the overall costs of medical malpractice could be reduced. Jury trials are expensive, and the road to a trial is long and costly. For that reason, some reformers have suggested replacing jury trials with arbitrations as a way of resolving medical malpractice cases that don't reach an out-of-court settlement.

Other reformers point to astronomical jury awards as the real culprit when it comes to the high cost of medical malpractice, and some believe that a seasoned arbitrator may be less inclined to gouge doctors and their insurance carriers for millions of dollars. There you have the arguments for arbitration in medical malpractice cases. Read on to learn about the similarities and differences between trials and arbitrations, and when and why a case might go to arbitration.

Trials vs. Arbitrations

The most important similarity between the two processes is that (in most circumstances) they are both binding. At the conclusion of arbitration, the arbitrators will issue a decision, and the loser will not have an opportunity to reargue the case in court.

There is an exception to that rule. Some states have passed laws creating systems involving non-binding arbitration. In those states, both parties will have a right to reject an arbitrator's ruling, and proceed to trial. However, that is not the norm. You should assume that arbitration will be binding and will take the place of a trial unless told otherwise.

Another similarity between the two processes is the format. Like trials, arbitrations usually involve opening statements by both sides, the presentation of witnesses (including expert medical witness testimony) and closing arguments by both sides.

The primary difference in format is that there is no judge or jury in arbitration. Instead arbitrators (usually one or three) act as both judge and jury.

Another difference in format is that arbitration tends to be less formal than trials, though it's by no means an informal process. Many of the technicalities that courts follow with respect to rules of evidence and rules of procedure are not observed in arbitration. For example, hearsay testimony is usually allowed.

A major cost-saving difference involves the process leading up to arbitration. The parties and their lawyers generally need to spend less time preparing for arbitration than they do for trial. Also, whereas the road to a trial can be plagued with an endless stream of procedural and evidentiary motions, very few (if any) motions are appropriate prior to arbitration.

When and Why a Case Would Go to Arbitration

In the vast majority of situations, a medical malpractice case will go to arbitration instead of trial because the patient waived the right to a jury trial before the doctor even treated the patient. In fact, many health insurance plan agreements contain language in which the patient agrees beforehand that any medical malpractice claim will be heard by an arbitrator, not in court. For example, most Kaiser Permanente plans contain such a provision.

If a document discusses arbitration, waiver of a jury trial or "alternative dispute resolution," it is probably asking the patient to waive any right to a jury trial in advance, and to agree that any disputes will go to arbitration - or another alternative.

The validity of an arbitration clause can be challenged in court. Courts are somewhat skeptical about arbitration clauses in medical malpractice cases, but most courts generally enforce them, depending on the circumstances.

Circumstances that might lead a court to declare an arbitration clause invalid include clauses that are too one-sided. For example, an arbitration that would bind one side but not the other would likely be invalid. A clause that not only requires arbitration, but also limits the damages available to the patient might be invalid. A clause that requires the patient to file an arbitration claim within 30 days of the injury would also probably be deemed invalid.

Many states have passed laws dictating how arbitration should work in medical malpractice situations. Usually, when arbitration clauses comply with those laws, courts will find them to be valid and enforceable.

However, arbitration clauses that fail to comply with state medical malpractice laws are often unenforceable. For example, a state law might require an arbitration clause to clearly indicate that a patient does not need to sign the agreement in order to receive treatment. Any clause that fails to comply with that requirement would probably be unenforceable.

So, medical malpractice arbitrations are not limited to a particular type of case. Arbitration will occur in most cases in which the patient has signed a valid arbitration clause. In other words, the patient can usually control whether a case goes to arbitration (to a certain extent).

Check out Timeline of a Medical Malpractice Lawsuit to learn more about steps in a typical case.

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