Three decades ago, some insurance companies began requiring patients sign forced arbitration agreements before receiving treatment. Billed as way to cut down on legal fees, these agreements kept patients out of the courtroom in the event of medical malpractice. Some of the agreements also capped damages below what would be available in court, or limited patients’ rights in other ways.
Though mandatory arbitration in the medical field has been used in California since the 1970s, it was not until the 1990s that the practice began gaining ground in other parts of the country. Duke University Health System adopted the practice in 1994, and Florida’s largest medical liability insurer created its arbitration program in the early 2000s.
In 2003, Utah began a disastrous one-year experiment with forced arbitration when it passed a law allowing physicians to turn away patients who refused to sign a predispute arbitration agreement, except in cases of emergency. The legislature rolled back the law in 2004 after the state’s largest health care provider sent out tens of thousands of letters informing patients that they would be required to sign arbitration agreements.
In 2007, a risk retention group based in Montana added a twist to the conventional forced arbitration formula – its contract included limits on non-economic and punitive damages. Doctors in its program agreed to treat only those patients who signed the agreement, and those patients would be limited to an award of $250,000 for pain and suffering for any claim they might make.
Even the American Arbitration Association (AAA), the country’s largest arbitration firm, has recommended that forced arbitration should have no part in the relationship between a patient and her doctor. In 1997, the company joined with the American Bar Association (ABA) and the American Medical Association (AMA) to form a specialized commission on health care dispute resolution. One of the Commission’s unanimous recommendations was that “[i]n disputes involving patients, binding forms of dispute resolution should be used only here the parties agree to do so after a dispute arises.” Unfortunately, despite its own recommendation, the AAA continues to hear the very sort of cases it once said it would refuse to arbitrate.