Take the Lawyers Out of the Loop -- Help Yourself and Your Patients
By Michael J. Schroeder, Esq.
It is never pleasant to think about being faced with a malpractice claim. When a claim metastasizes into a civil lawsuit, this unpleasant prospect turns into a nightmare. Nightmare is the operative word if you are the defendant in a civil lawsuit.
Not only can such a suit go on for several years; you are also faced with the discovery process, with the patient's attorneys poring through your otherwise confidential records and forcing you to spend days out of your office in lengthy, emotionally tense (and often pointless) depositions.
The discovery process is followed by a public trial, during which the patient's attorney could air every aspect of the dirty laundry on the claim in a way calculated to do the most damage to your reputation. After the trial is over, appeals can drag on for another 3-5 years. If errors are found in the original trial, you can be forced to go back through the trial process yet again.
The process is no more appealing to the patient, who is also forced to go through the discovery process and public trial. The patient is also required to pay up-front court costs that usually exceed $10,000 for court reporter fees, expert witness fees and filing fees. Most attorneys will not front these fees; in fact, some states prohibit attorneys from doing so. As you and the patient go through this process, and as the patient is forced to front ever-increasing sums of money, feelings can harden, and chances for a reasonable settlement wither and die.
There Is Another Way - Arbitration
What is arbitration? A doctor and patient can agree to use a private, confidential and expedited arbitration rather than a public, lengthy, costly courtroom jury trial to decide a malpractice claim. In arbitration, a mutual arbitrator (usually a retired judge) decides the case. Each side has the same rights to bring forth all relevant evidence in their possession as they would in a public trial. Witnesses can be called, and documents can be introduced. However, lawyers are not permitted to engage in the procedural motions and discovery gamesmanship that drives up the cost of civil litigation.
Once the neutral arbitrator has handed down a decision, either party can take that decision to the local courthouse and have it recorded as a judgment of the local court. It has the same enforceability as if it had been tried and decided at the local courthouse. The arbitrator's decision may not be appealed unless the losing party can show that the arbitrator was either bribed or had an improper personal relationship with one of the parties.
Advantages to Arbitration
Advantages to the doctor. The two main advantages for the doctor are: (a) dramatic savings on malpractice insurance rates and (b) peace of mind. The savings can be startling. Over a five-year period using an arbitration-based malpractice program with the American Acupuncture Council (AAC), an acupuncturist can save over $5,000 compared to what he or she would pay with a non arbitration-based program. The reasons for these savings are well-documented. AAC has conducted an arbitration-based malpractice insurance program since 1986, and has kept statistics comparing arbitration and non arbitration-based malpractice insurance programs. AAC found that 99.75% of patients will sign an arbitration agreement. The fraction of 1% that refused to agree to arbitration account for 80% of all malpractice claims. This is why non arbitration-based programs have a claims rate 800% higher than AAC.
The second reason why malpractice insurance costs are dramatically reduced is the savings that come from substantially reducing the amount paid to lawyers. It costs between $50,000-$100,000 in attorney's fees to defend a malpractice suit brought in civil court. It costs between $15,000-$45,000 to defend a doctor in arbitration. This occurs because the procedural motions and bickering between lawyers over discovery are largely eliminated, and because the average arbitration period is five months, not five years.
In addition, because of the dramatically lower legal fees, nuisance claims do not have to be "bought off" in arbitration-based programs. If an acupuncturist has non arbitration-based malpractice coverage, an unscrupulous attorney can bring a frivolous nuisance claim against the doctor knowing that the carrier is faced with the unpleasant choice of either spending a minimum of $50,000 to defend the claim or buying it off for $10,000. Non-arbitration malpractice carriers regularly keep peace this way, which damages your reputation and assures future meritless claims.
Arbitration also takes the emotion out of deciding malpractice claims and ensures that a dispassionate, neutral expert will decide the case based on its merits rather than its emotional appeal. The four largest awards against non-medical doctors in history were all stroke cases in which the practitioner was never found by the jury to be negligent. Nonetheless, these doctors suffered the following judgments: $1.8 million in California; $2 million in California; $5.4 million in Kansas; and the current record holder, $10 million in Connecticut. Unfortunately, none of these doctors were in an arbitration-based program. By contrast, there has never been an arbitration award against a non-medical doctor in excess of $100,000.
Finally, trials and hearings in civil court are not scheduled at a particular time. An acupuncturist may be forced to sit in court waiting literally days or weeks until a courtroom is available. The trial itself can drag on for days. In contrast, the arbitration hearing is scheduled for a specific time and date to decide your claim. The hearings are also much shorter.
Benefits to the patient. There are two dramatic advantages for patients in an arbitration-based program. First, patients with meritorious claims receive their money much sooner. The average arbitration is over, and an award is made in five months, rather than the 3-5 years the patient can face in civil court. The patient could also be forced to wait even longer if you were to appeal a civil court judgment - something that cannot happen in arbitration.
The patient also benefits by receiving a scheduled, streamlined, private hearing. The patient saves dramatically on court costs since attorneys are prohibited from engaging in much of the procedural wrangling that drives up these costs.
How Is Arbitration Raised with the Patient?
Keep in mind that while many acupuncturists are not familiar with arbitration-based programs, most patients are. The reason is that every HMO in California already requires arbitration of disputes, and 55% of the medical malpractice carriers for medical doctors are now arbitration-based programs. Thus, any patient who has been hospitalizes or is enrolled in an HMO is familiar with arbitration. Most patients are used to seeing an arbitration form in the packet of forms they fill out and sign on their first patient visit. Most medical doctors and acupuncturists do no more than include an arbitration form in the group of forms handed to the patient, and they answer questions only if asked.
Why Do Some Malpractice Insurance Companies Oppose Arbitration-Based Programs?
The reason is simple: these companies do not have their own arbitration-based program. Once these companies begin to offer their own arbitration-based program, it will no longer argue against such an obvious cost-saving measure.
Arbitration programs bring you peace of mind and save you a great deal of money. There is no reason to continue subsidizing the status quo by paying higher insurance premiums for something that simply does not benefit the acupuncture profession.
Michael Schroeder has formed more than 300 chiropractic-medical practices since 1982. He is the current vice president and general counsel for the American Acupuncture Council, and for the last twelve years has been the vice president of the National Association of Chiropractic Attorneys (NACA). In 1995, NACA honored Mr. Schroeder as their "Attorney of the Year."