Face-Off in Assembly Over Health-Care ADR

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While Kaiser defends mandatory arbitration to lawmakers, attorneys and nurses disagree.

Daily Journal

SACRAMENTO – Consumer advocates urged members of two state legislative committees Tuesday to pass legislation banning mandatory arbitration in health care disputes, contending it is unfair and biased against patients.

“Consumers have no idea what arbitration is about,” said Sharon Arkin, a lawyer representing the plaintiffs bar group Consumer Attorneys of California. “The arbitration system has no checks or balances.”

Dozens of nurses packed a large hearing room where the Assembly Health and Judiciary Committees met, sometimes disrupting the proceedings and urging committee members not to believe testimony by representatives of Kaiser Foundation Health Plans.

J. Michael Hawkins, a legislative representative for Kaiser, said Kaiser would oppose any legislative attempt to eliminate mandatory arbitration or to give public access to details of its private arbitration hearings.

He insisted Kaiser‘s arbitration system is fair, better than public trials that result in “disproportionate” awards for patients, and that the privacy of arbitration protects Kaiser doctors who have agreed to arbitrate malpractice complaints against them.

SB458, by Sen. Martha Escutia, D-Whittier, which was passed by the Senate last year and awaits a hearing before the Assembly Health Committee, would void mandatory arbitration agreements when a health care plan has failed to provide medically necessary services to its subscribers.

Professor J. Clark Kelso, of McGeorge School of Law, told the joint committee hearing that he believes it is important for arbitration to be voluntary. He said mandatory arbitration has had a negative impact on the public court system because the best judges leave for private arbitration firms and more complex cases get settled privately.

“It leaves the court system with an unbalanced view of the world,” Kelso said. “You don’t get to see a whole range of business and complex disputes. You may be removing from the courts entire subject matter areas so that the cases just don’t arise, and that means the courts will not have the opportunity to develop the law in that particular area.”

Escutia’s bill, however, would not ban mandatory arbitration in cases involving medical malpractice. Instead, it would apply only to
disputes over access to medical care – about 15 to 20 cases a year, according to Arkin, the plaintiffs’ lawyer.

Still, consumer advocates, such as Jamie Court, of the Foundation for Taxpayer and Consumer Rights, said passing the legislation would have a larger impact.

“Hopefully there’s a deterrent effect,” he said during a break in the hearing. “Patient choice is a concept that has to start somewhere.”

Walter Zelman, president of the California Association of Health Plans, said he believes consumers know they are giving up their right to a jury trial when they sign pre-dispute arbitration agreements but are willing to do so to pay lower premiums. Giving patients the option of paying a bit more for health insurance premiums in order to preserve their right to go to trial may be impossible because insurers would have a hard time gauging their risk, he said.

Assemblywoman Ellen Corbett, new chairwoman of the Assembly Judiciary, said she believes there were ways for insurers to deal with that risk. Former chairman Assemblyman Darrell Steinberg, D-Sacramento, said that at least one major health plan, Blue Shield, does not require mandatory arbitration but still offers competitive premiums.

Hiram Ash, a Kaiser patient who arbitrated a dispute with the health provider, complained that the arbitrator who Kaiser had provided had frequent ex parte communications with Kaiser and frequently broke protocol rules for proceedings.

He said he complained to the State Bar but was told that the bar only reviews complaints that arise from public courts of law.

Also testifying before the committee was Robert Meade, senior vice-president of the American Arbitration Association, which announced Monday that it would no longer arbitrate cases in which a patient objects to arbitration after signing a pre-dispute mandatory arbitration agreement.


Meade readily acknowledged that the AAA does very little arbitration in health care. He said the association had only 31 cases in California last year, and 15 of those were withdrawn before arbitration got under way.

“Wasn’t that more of a business decision, since you only had 16 of 31 cases?” asked Health Committee Chairwoman Helen Thomson, D-Davis.

“It’s really based on the implementation of a protocol [that an AAA committee] adopted three years ago,” Meade said.

However, in answer to a question by Steinberg, Meade said AAA had no intention of changing its policy of accepting cases involving pre-dispute arbitration clauses in employment or consumer disputes, because the courts have determined such clauses are legal.


© 2002 Daily Journal Corporation. All rights reserved.

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