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, however, also capped damages below what would be available in court and limited patients’ rights other ways.
Though medical binding mandatory arbitration has been in use 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 began the practice in 1994, and Florida’s largest medical liability insurer created its arbitration program as early as 2004.
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, except in cases of emergency. The lawmakers 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 formula – its contract included limits on non-economic and punitive damages. Doctors in its program agree to only treat patients who sign an arbitration agreement, and in the case of a lawsuit those patients will be limited to $250,000 for pain and suffering.
Even the American Arbitration Association, the country’s largest arbitration firm, thinks that forced arbitration should have no part in the relationship between a patient and her doctor. In 1997, they joined with the American Bar Association and the American Medical Association in saying that, “In disputes involving patients, binding forms of dispute resolution should be used only here the parties agree to do so after a dispute arises.”