Healthcare ADR Comes Of Age: Arbitration And Other ADR Methods Meet The Distinct Challenges Raised By Healthcare Disputes

Wednesday, August 1, 2007 - 01:00

Editor: Mr. Maurer, can you give us some background information on the
National Arbitration Forum?

Maurer: The FORUM has become an international leader in developing and
delivering the most efficient and effective alternative dispute resolution (ADR)
systems and services. As a provider of arbitration, mediation and other
alternatives to lawsuits that save time and money, the FORUM has established an
impressive track record, administering large programs (like the New Jersey
No-Fault Personal Injury Protection program) and handling thousands of cases
where parties have contracted for arbitration.

Today, the FORUM is headquartered in Minneapolis, Minnesota and has offices
located in New Jersey and Los Angeles. FORUM services and expert neutral
arbitrators and mediators are available across the nation.

Editor: In general, what is the value of ADR as applied to healthcare
disputes?

Maurer: ADR, and arbitration in particular, provides parties with a
low cost and efficient alternative to expensive and prolonged litigation.
Lowering the cost of resolving healthcare disputes produces several very
desirable outcomes.

First, it increases access to justice for patients, employees and smaller
medical practices. Trial attorneys know firsthand the delays and expense often
associated with court litigation and simply cannot accept cases where the amount
in controversy does not justify the time that will be required to resolve the
case in court. ADR changes that calculus such that parties with smaller value
claims can access a forum in which to get their dispute resolved.

Second, ADR drives down healthcare costs. When disputes go to court they
enter a system that is notoriously slow, adversarial and expensive, and leads
directly to escalating premiums and runaway legal costs. Dispute resolution
costs are exactly the type of administrative burden that we should be looking to
drive out of our healthcare system.

Finally, arbitration's flexible and tailored procedures allow parties to
select an expert decision maker who is comfortable with applicable laws,
standards, and practices. This increases the outcome predictability, which can,
in turn increase the probability of settlement. Decision maker expertise also
further increases dispute resolution speed and efficiency.

Editor: What kinds of healthcare disputes are good candidates to be
resolved using ADR methods?

Maurer: ADR has a strong track record of success with all of the major
types of disputes that arise in the healthcare context, including medical
malpractice, negligence, billing, insurance, employment, contractual disputes,
and others. It is important to understand that arbitration agreements and
arbitration rules that adhere to best practices make available all remedies that
would be available had the parties taken their dispute to court.

In fact, the FORUM goes one step further and requires its arbitrators to
decide cases according to the applicable substantive law. The goal is to provide
parties with the same outcome they would have received in court, but provide it
more quickly and less expensively in arbitration. Application of substantive law
also adds an element of predictability and rationality, because the parties know
which standards will be applied to their arguments and to the ultimate decision
and award.

Editor: What impact has arbitration had on the growing trend of
consumer-centered, "patient friendly" healthcare billing?

Maurer: Changes to America's healthcare system have placed more
responsibility on patients for paying their own medical bills. And as patients
take on more financial responsibility for their healthcare, disputes between
patients and providers - especially billing disputes - are inevitable.

In this context, healthcare providers in particular find themselves in a
delicate position: desiring to pursue unpaid balances without sacrificing their
reputations as nurturing, trustworthy caregivers. Providers who follow
adversarial collection methods and lawsuits jeopardize not only their public
image, but also future revenue and patient relationships.

Arbitration serves as a much more patient-friendly alternative, because it
provides patients with access to a system that is much easier to navigate and
understand for the lay person. Arbitration's simplified procedural rules mean
that parties will not get tripped up by formal pleading requirements or obscure
rules of evidence, for example. The most onerous elements of the litigation
system simply do not exist in arbitration, and that enables arbitration to
complement "patient friendly" billing initiatives quite well.

Editor: What is the best way for parties to ensure that any disputes will
be channeled to arbitration instead of litigation?

Maurer: The most effective way for parties to make sure that disputes
will be mediated or arbitrated, rather than litigated, is by agreeing to do so
at the outset of their relationship through patient admission documents and
contracts, before disputes arise. A number of commentators have noted that it is
very unlikely that parties will agree to use ADR after a dispute arises. At that
stage, one party or the other will perceive that litigation offers some
advantage, an advantage they will not choose to relinquish by agreeing to ADR.
Moreover, the relationship between the parties may already be strained as a
result of the dispute itself, making it less likely that they would agree to
ADR.

Fortunately, properly drafted pre-dispute agreements to arbitrate are
overwhelmingly endorsed by reviewing courts. And drafting arbitration agreements
is made simpler when the parties agree to invoke a well established set of
arbitration rules that serves to fill in numerous procedural details that the
parties would otherwise need to create from scratch in their contract. The FORUM
provides an arbitration agreement drafting guide on our website and this
provides a good starting point for parties considering arbitration.

Editor: What are your thoughts on the recent bill in Congress aimed at
promoting the idea of specialized "health courts?"

Maurer: We applaud the impulse behind proposals such as these.
Healthcare disputes clearly present particular challenges in terms of complexity
and time sensitivity. However, parties do not have to wait for the federal
government or state governments to create specialized programs tailored to the
demands of healthcare disputes. Existing federal and state laws encourage
parties to agree to arbitrate disputes and require courts to enforce well
constructed arbitration agreements. With a little bit of guidance, parties and
their counsel can draft an arbitration provision that will provide all of the
benefits that they might see in a future "health court" forum and more.

Editor: What are some of the most important considerations for parties
drafting healthcare arbitration agreements to keep in mind?

Maurer: Let me give you a short list of important considerations that
should provide a good starting point.

Mutuality. All contracting parties should be agreeing to resolve any
resulting disputes using arbitration. This is especially important if one of the
parties is an individual patient or employee.

Low costs. Arbitration fees and costs, especially those borne
by an individual patient or employee should be kept as low as possible.

All remedies. All remedies available in court should also be
available in arbitration. This includes statutory remedies and
equitable/injunctive relief.

Full information. All arbitration agreements should be readily
available for patient or employee review and, where helpful, supplementary
documentation further explaining arbitration should be made available.

Reputable administrator. Professional administrators provide
legally-tested arbitration rules and clear procedures to ensure
that parties spend their time contesting the substance of
their dispute, rather than procedural matters.

Flexible hearings. Smaller disputes are often best handled through
"document hearings" where neither party physically attends a hearing. More
complex disputes may require extensive in-person evidentiary hearings.

Follow the law. Parties should require that their arbitrators use the
applicable law to decide cases to ensure consistency and avoid compromise
awards.

Expert arbitrators. Parties may choose an arbitrator with
specific experience resolving healthcare billing disputes.

Invoke the FAA. Invoking the Federal Arbitration Act promotes uniform
enforcement of the agreement across jurisdictions.

Editor: Given the benefits of arbitration for healthcare disputes, are
there any healthcare disputes that should not be arbitrated?

Maurer: Arbitration is appropriate for the vast majority of disputes.
However, part of the efficiency benefit of arbitration is that appellate review
is less searching than it is for judicial decisions. With that in mind, parties
facing "bet the company" or other extremely high-stakes disputes may want to
maximize their opportunities for appeal regardless of the cost and delay.
Alternatively, they could take the dispute before an expert arbitrator or panel
of arbitrator and contract for "second-level" appellate arbitration before a
second expert panel. Arbitration's inherent procedural flexibility makes options
like this possible.

Editor: What are the hallmarks of the National Arbitration Forum's
particular approach to administering arbitrations?

Maurer: First on the list is the fact that FORUM arbitration awards
are decisions that are based on the substantive law that governs the underlying
transaction or relationship rather than some subjective conception of fairness.
The FORUM Arbitration Code of Procedure expressly limits the power of
arbitrators such that they are required to apply the law in deciding cases.
Concerns that parties may have about compromise or "split the baby" awards
should be allayed by this feature of the FORUM's arbitration rules.

Next is the administrative efficiency that the FORUM is able to achieve. This
efficiency is produced by our best practices arbitration rules and our
innovative technology such as a proprietary case management application and high
speed scanning that enables paperless operations. Administrative efficiency
drives down costs and eliminates mistakes and errors by enabling systematic
procedural auditing and error checking.

When it comes to resolving disputes, time is quite literally money. Efficient
administration prevents unnecessary delays and gets cases resolved much more
quickly and less expensively. This permits healthcare entities to spend their
time and resources providing care and services instead of contesting claims.

Last, but not least, is the quality of our panel of healthcare neutrals. The
FORUM is affiliated with over 1,600 expert neutrals from across the United
States and provides parties with a panel of healthcare arbitrators and mediators
with deep experience resolving these
disputes.