Avoiding court may offer best outcome for everyone

A column that answers questions on ethical issues in medical practice

The Ethics Group provides discussions on questions of ethics and professionalism in medical practice. Readers are encouraged to submit questions and comments to [email protected], or to Ethics Group, AMA, 515 N. State St., Chicago, IL 60654. Opinions in Ethics Forum reflect the views of the authors and do not constitute official policy of the AMA. Posted March 1, 2004.

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Are mandatory arbitration agreements an appropriate alternative to the current malpractice system?


Malpractice is a tort. The major objective in a malpractice action is to shift responsibility for damages incurred from the patient to the person or persons responsible for the damages. The tort system needs to function properly so that in cases of negligent behavior the responsibility for damages that cause injuries is transferred from those who are injured to those whose acts are negligent.

The current malpractice litigation system performs poorly when compared to this ideal. As discussed in a recent New England Journal of Medicine, a large, peer-reviewed study of medical injuries has been published every decade since the 1970s demonstrating that: those who are negligently injured typically do not sue; those who sue typically were not negligently injured; and jury awards correlate with disability, not with negligence.

The results of the current malpractice litigation system are not aligned with the system's purpose of compensating injured patients.

Very few injured patients sue for malpractice. There are many reasons for this. Some patients, however, who want to initiate a malpractice action find that they cannot because access to the court system is limited by lack of access to an attorney.

Attorneys agree to represent patients when the award expected in the event of a win multiplied by the probability of a win exceeds the expected litigation cost by a sufficient margin. Injured patients must overcome this economic hurdle to access the court system. It is not in society's best interest to ration access to justice based on an attorney's business decision.

Because the potential payoff for an egregious malpractice case is so large, and jury awards correlate with perceived disability, attorneys will often gamble on a case that has good theatrical potential. In these cases an attorney may be able to win a sizeable judgment -- even if there was no, or minimal, negligence on the part of the health care professional.

Such "wild cat" jury verdicts are increasingly common and create a lottery system out of the tort system. When awards are given, more than 40% is consumed by the cost of litigation and attorney's fees, diverting compensation from injured patients.

Given the failure of the current malpractice litigation system to produce results that are in society's best interest, it is reasonable to look for an alternative. Arbitration is one alternative that can substantially improve the match between the goals and the results of the malpractice tort system.

There are many reasons that arbitration may produce a better outcome than litigation.

One reason is that arbitration is less expensive than litigation, lowering the economic hurdle for injured patients and making attorneys more likely to take a given case. This offers more injured patients access to justice. (I believe that the empirical evidence supports this idea, but it is worthy of more detailed examination.)

Second, it is more likely to result in a reasoned and measured decision. Arbitrators tend to be more knowledgeable about issues of factual and legal complexity than are juries. Thus, both a decision to award damages and the amount awarded are likely to be more appropriate. (Some argue that arbitrators are tempted to align their views with physicians since physicians are more likely to be repeat customers. This argument is speculative, but impartiality should be monitored.)

Arbitration may in fact be a superior alternative to the current system of malpractice litigation. Given the miserable performance of the current system, it is hard to imagine that it could be worse. With arbitration, an injured patient is more likely to see justice, and a physician is more likely to be judged on compliance with the standard of care rather than on the patient's disability. Moreover, when an injured patient is offered compensation, the amount that actually reaches the patient is likely to be increased.

Should a physician make treating a patient contingent upon an arbitration agreement? That depends upon how strongly the physician believes the patient (or the physician) will be harmed by unfair treatment in the current malpractice litigation system if a negligent injury should occur.

No doctor is obligated to provide nonemergency medical care under circumstances deemed to be unfair. As taken from the AMA's Principles of Medical Ethics, physicians are "free to choose whom to serve ... and the environment in which to provide medical services."

I am not necessarily advocating making the decision to treat patients contingent upon an agreement to arbitrate cases of negligent injury, but I cannot fault a physician for making such a choice. This choice adheres to the principles of professional ethics and arguably is a choice that is in society's best interest.

Richard J. Sperry, MD, PhD, professor of anesthesiology, Gov. Scott M. Matheson Professor of Health Policy and Management, adjunct professor of economics and political science, The University of Utah, Salt Lake City; former president of the Utah Medical Assn.


Mandatory arbitration agreements are not an appropriate alternative to the current system for malpractice dispute resolution in the courts for a number of highly significant and practical reasons.

First, when patients are compelled to sign arbitration agreements, many, if not all, of the psychological benefits associated with arbitration are minimized. The fact that both parties participate in the process by mutual consent is one of the primary reasons arbitration often works well.

Such voluntary assent by all participants to the course of action means that everyone views the experience with a sense of "buy-in," resulting in a particular willingness to work together without duress. This cooperative conduct makes it more likely that the process will succeed rather than be bogged down in contentious procedural disputes or attempts to obtain unfair advantage.

In many areas of the country patients do not have many choices about which physician to see or what hospital to go to because of insurance plan limitations or perhaps geographic isolation from larger metropolitan centers that offer more physician and facility options.

In effect, many patients have only a single option for particular and necessary care.

If and when that care is further limited because of an organization's ultimatum that the patient sign a mandatory arbitration agreement in advance of any incident or go without care, intimidation if not desperation governs the relationship; the desired "buy-in" cannot be accomplished.

Experts in arbitration suggest that without meaningful choice, the process lacks the sincere commitment of both parties to resolve the dispute, and ironically, forced arbitration looks and feels more like traditional litigation. Forced arbitration thus becomes more formal, slower, and deliberate, which is illustrated in the increasing rules of arbitration that mirror the courtroom.

Second, some have claimed that forced arbitration will save all parties money, but a number of studies designed to ascertain the validity of this claim have been at best inconclusive and have even suggested that those rather passionately held assumptions are not well researched. The studies have produced mixed results and cannot be generalized to suggest that arbitration is the most rapid and least expensive method of dispute resolution and therefore the best solution.

Third, in many instances mandatory or forced arbitration is inappropriate because the terms of agreement forced on the patient are inherently balanced in favor of the hospital or doctor. In cases of arbitration between a large corporation and an individual, it is increasingly common to limit the corporation's ability to dictate the terms of arbitration.

In fact, the most successful challenges to arbitration agreements in the courts are based on their unconscionability, meaning no reasonable person would sign such an agreement. Courts have held that these do not reflect real consent on the individual's part.

Red flags suggesting that the agreement fails a fairness test are:

  • Limited or nonexistent opportunities for appeals or review.
  • Processes designed to be prohibitively expensive for the party consenting under duress.
  • Rosters which limit the number of truly neutral panel members.
  • Provisions limiting damage awards.
  • General withholding of any right for the consenting party that is preserved for the corporation, hospital, doctor or health care organization.

Any of these flaws in an arbitration agreement can invite litigation and expense, the very things that hospitals and physicians are anxious to avoid.

Finally, in addition to psychological, practical, and legal considerations in mandatory arbitration agreements, there exists a fundamental ethical issue concerning whether or not a citizen, without the advice of counsel, is ever in a position to give up the due process provisions of the U.S. Constitution.

Under certain conditions it is not appropriate for a citizen to give up his or her constitutional right to the nation's court system. Among them is signing an agreement prior to a dispute, under duress, and when the citizen lacks choice.

Bryant J. McConkie, third-year law student, Hamline University, St. Paul, Minn.; arbitrator, Better Business Bureau of Minnesota and North Dakota

James W. McConkie, attorney, Salt Lake City

The Ethics Group provides discussions on questions of ethics and professionalism in medical practice. Readers are encouraged to submit questions and comments to [email protected], or to Ethics Group, AMA, 515 N. State St., Chicago, IL 60654. Opinions in Ethics Forum reflect the views of the authors and do not constitute official policy of the AMA.

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