If you have ever looked at the boilerplate you signed with your streaming carrier or when you bought your dryer you probably saw that you were limited to settling any disputes through arbitration, and perhaps you have thought about setting up a similar situation in your office so that patients could not sue you if there was a problem.

However, you should consider whether such an agreement will hold up.

Let’s start with the fact that if a patient who is now a plaintiff challenges the agreement it will be in front of a judge, an official who is sworn to the idea that people are entitled to have their day in court.  On a practical basis, judges like alternative dispute resolution methods like arbitration because they are efficient and shorten dockets, but they have to be assured that the plaintiff is not being stripped of meaningful rights.

The first issue that will be looked at, since an arbitration agreement is a contract, is whether there really was “a meeting of the minds” such that the patient knowingly and freely waived their right to go to court.

The next issue will be whether the agreement is inherently “unconscionable”, which basically means grossly unfair, even if the patient did agree to it.

Unconscionability has two aspects: procedural unconscionability and substantive unconscionability.

Procedural unconscionability refers to one side is being powerless as compared to the other or the contract being sprung on them without notice and barring negotiation. If so, it is a “contract of adhesion” and will not be enforced.

Substantive unconscionability exists when the contractual terms are so one-sided that agreement is only to the benefit of one party.

These will actually overlap because overweening or one-sided substantive terms are themselves evidence of procedural domination.

These are the basics, but you will then have an even higher bar because you are a doctor and the law presumes that you, likely smarter and better-educated than your patient and definitely in the position to control their access to care, have the dominant role in the relationship.  The law will therefore frankly presume a degree of procedural unconscionability.

To overcome that, you will need to be able to show that you were actually extremely fair under the particular circumstances within which the agreement was signed.

Let’s take a look at how that plays out.

To begin with, the less elective the care is the more the imbalance in the relationship will matter to an evaluating court. The dermatology patient having a benign nevus removed will likely be held to their agreement but the atrial fibrillation patient urgently referred to your cardiology practice by the internist who could not manage them medically will be less likely to have the agreement enforced against them, and a patient in need of an emergency appendectomy will not be held to it.

The practical limitations will also matter.  If you are the only one in your area who offers a type of care or who takes the patient’s coverage it is more likely that the patient will be later seen to have had no meaningful choice other than to sign.

Finally, the timing of the proffer of the agreement to the patient will be looked at and the shorter the time before treatment needs to be commenced the less likely it is that the agreement will be enforced.

You should therefore make sure that patients have a chance to evaluate what they are signing and to seek alternative care, and that you did not foist the agreement on a patient who was in serious medical need at the moment.

Now let’s now look at some specific points to make it more likely that your arbitration agreement will be held to be enforceable if it is challenged, bearing in mind that as the drafter you will be held to have meant what you said, and the fact that the judge will not “blue pencil” the agreement to fix it.

The Text of the Agreement

It should use normal language like “doctor” and “patient” instead of “designated practitioner” and “claimant”. Colloquial coversheets over pages of legalese will not show a judge that an average person actually understood what they were signing.

It should be in a readable font and in short paragraphs. A judge who has to squint at what you drafted is going to be very receptive to a plaintiff’s complaint that they could not really make out what they signed.

It should be distinct from any other agreements with the patient, such as those that cover payment. It should actually be labeled in boldface as “Agreement to Arbitrate”.  This will preclude a plaintiff from later claiming that they signed it unintentionally while just going through a batch of forms.

It should be individually initialed on every page that is not formally signed because this will be proof that the plaintiff actually looked at every page of a document in which they waived an important right.

It should include a clear statement such as “If you sign this agreement you are giving up your right to bring a lawsuit. You should therefore take this agreement home with you, consider it carefully and, if you feel that such is necessary, consult an attorney before you sign it”, and ideally that should be in boldface.

It should define what arbitration means in a statement such as “Arbitration is a process in which an appointed arbitrator hears the case. It is not mediation.  That allows a lawsuit to still take place. Arbitration is conducted instead of a lawsuit. It is not conducted in the court system and there is no judge or jury. Both sides present their cases to the arbitrator, who then makes the decision. This will be binding arbitration, which means that the arbitrator’s decision cannot be appealed and usually cannot be set aside by a judge.” This will prevent the plaintiff from later claiming that they did not really understand what they were agreeing to.

It should include a clear revocation procedure that actually allows the patient enough time to reconsider the agreement, while also making it clear that already-rendered care will still be covered under the agreement, such as “You have 30 days from signing this agreement to change your mind.  You must inform us of that in writing. This agreement will still apply to any care that you already received.”

The Arbitration-Specific Elements of the Agreement

It should show actual neutrality. For example, reserving the right to pick the arbitrator to yourself will be a red flag of substantive unconscionability but a provision that the arbitrator will be selected at random from the American Arbitration Association or that each party will pick its own arbitrator and then those two arbitrators will jointly select a third should pass judicial muster easily.

It should not try to get what you could not have gotten through litigation.  For example, we do not have a “loser pays” system in malpractice cases so a requirement that the loser must pay the costs of the arbitration rather than each side paying its own costs would be seen as excessive by an evaluating judge.

It would advisably be limited to matters that exceed the monetary cap of small claims court because forcing a patient with a low-value claim to spend far more than that claim to go to arbitration or just give up that claim would likely be read as substantively unconscionable to a judge.

It should not overreach. Courts tend to look very unfavorably on attempts to bar every legal door against the plaintiff, as in an arbitration agreement that prohibits them from being part of a class action, and so a judge evaluating your agreement would likely see unconscionability because of a clause that you are actually extremely unlikely to ever need.  This also goes to attempts to bind spouses and children. Many arbitration agreements include that it is “the intention of the parties” that all those with claims that “arise from” any alleged malpractice should also have to arbitrate those claims even though those people, including those not yet born, never actually agreed to give up their rights to litigate.  However, it is hardly likely that any patient actually intends that as far as their family.  Further,  the “arise from” aspect would include not just actions by an estate for damages that a deceased patient could have sought while still alive (survival statutes) but also wrongful death claims that are intended to compensate the decedent’s family, including minor children, for their future losses. Such a clause is therefore more likely to be allowed if it is limited to the survival action.

These are all some basic points but the actual agreement should be drawn up by an experienced healthcare attorney who is familiar with the Federal Arbitration Act, state arbitration statutes, and state contract law. There are many excellent template forms that can be downloaded but they should be only the first step and the actual agreement that you present to your patients should be professionally reviewed for compliance issues that may impinge on its enforceability.

The Logistics

You cannot start treating the patient at the same point that you present the arbitration agreement.  That would be held to be inherently procedurally unconscionable because they are thereby put in a position where they have to refuse care unless they sign. You therefore either have to send the agreement to the patient sufficiently before their first appointment to allow them to meaningfully review it or must inform them that the first appointment is only for the purpose of evaluating whether they will be accepted into your practice and then present the agreement at that time for them to take home and review.

You also want to have a provable (such as in your office manual) protocol that shows that these agreements are always dealt with in an above-board manner, such as having them reviewed with the patient either by you or by your office manager.

In summary:  

For a court to enforce an agreement to arbitrate instead of bringing a lawsuit in a malpractice claim the judge will have to be convinced that the process was procedurally and substantively fair to the patient. These agreements should be drafted with that goal in mind.