H E A L T H L A W In Consideration of Binding Arbitration Agreements ■ JOHN SHUFELDT, MD, JD, MBA, FACEP W ho can forget the following erudite exchange that forever and irrevocably links medicine and the law? Otter: Hoover: Otter: Boon: Otter: Otter: Point of parliamentary procedure! Don’t screw around, they’re serious this time! Take it easy, I’m pre-law. I thought you were pre-med. What’s the difference? Ladies and gentlemen, I’ll be brief. The issue here is not whether we broke a few rules, or took a few liberties with our female party guests—we did. In contrast to the dispute resolution procedure regarding the Delta house’s double-secret probation status, pre-dispute binding arbitration agreements are legal contracts in which both patients and physicians waive access to a jury trial and irrevocably commit to an arbitration process before either party has been harmed or any dispute has arisen. As opposed to a trial by jury, one arbitrator or a panel of arbitrators decides the disputed matter. These agreements are irrevocable because the arbitration agreement precedes the actual conflict. Arbitration has been defined as “an affirmative risk man- agement [tool] that anticipates sources of conflict and puts in place systems to control costs and exposure to liability.” 1 This process is very different from mediated settlements and other forms or alternative dispute resolution. Despite the fact that only approximately 9% of physicians in the United States currently use pre-dispute arbitration agreements, their use is expected to increase dramatically, John Shufeldt is the founder of the Shufeldt Law Firm, as well as the chief executive officer of NextCare, Inc., and sits on the Editorial Board of JUCM. He may be contacted at JJS@shufeldtlaw.com. w w w. j u c m . c o m particularly given the litigious climate in which we practice. And despite their increasing popularity, these agree- ments are not necessarily guaranteed to prevent substantial medical malpractice judgments. For example, juries find in favor of the physician in ap- proximately 70% to 80% of the suits. However, in the 20% to 30% of cases that physicians lose, the average plaintiff’s award continues to increase. Data from the Kaiser system is particularly illuminating. In 2005, Kaiser plaintiffs who arbitrated claims won 42.5% of the time, far greater than the 20% to 30% of the time ju- ries award damages to plaintiffs in traditional civil litigation. However, according to some estimates, arbitrator awards tend to average 40% to 50% less than the awards given by a panel of jurors. One commonly accepted explanation is that juries are typ- ically biased in favor of physicians but tend to be irrationally punitive once they are convinced of the physician’s negligence. There are a number of strategies used by plaintiff’s lawyers to attack pre-dispute binding arbitration agreements. Despite the veracity of these attacks, pre-dispute binding arbitration agreements will most likely be upheld if the legal status quo is maintained. Repeated, consistent losses by litigants employing a wide range of theories challenging binding arbitration agree- ments will certainly have an impact on those who must de- cide whether to accept or challenge the document. If you decide to use a pre-dispute binding arbitration agreement, ask your counsel to consider the following when drafting the arbitration agreement: Ⅲ Present a clear, non-legalese, and unambiguous arbi- tration agreement. The agreement should define the mechanics of the arbitration process, selection of arbitrators, the waiver of the parties’ right to a jury trial, and the areas or sub- jects to which arbitration will apply. Ⅲ Offer the agreement upon patient presentation to your clinic. JUCM T h e J o u r n a l o f U r g e n t C a r e M e d i c i n e | J a n u a r y 2 0 0 8 33