Arbitration Agreements: Don’t Let Them Get Away

Since the mid-1980s, CAP physicians have led the field in offering their patients the option to resolve any future dispute over the quality of their health care in a private, binding arbitration. Now, half of all Members use arbitration in their offices, resulting in some 40 percent of all CAP claims being subject to arbitration instead of a jury trial.

Crucial to the enforcement of the arbitration contract, however, is timely notification to the plaintiff’s attorney that the lawsuit must be arbitrated. Judges are averse to moving a case into arbitration if too much activity has already occurred in the court system.

Dr. O is an obstetrician who treated a 30-year-old woman for pregnancy at the hospital clinic where his medical group had an exclusive contract to provide services. Dr. O and his partners saw the patient at various stages for the woman’s pregnancy. The course of the pregnancy included several visits to the emergency room for passed blood clots. As the EDC approached, Dr. O had some concern that the patient’s small height, 4’11,” and large fetus might complicate the delivery.

In fact, during the vaginal delivery, Dr. O had to apply a vacuum extractor to the fetus before the delivery completed. Though the delivery was otherwise unremarkable, the infant began experiencing dusky episodes 45 minutes later. The infant was discharged after four days. On re-admission four months later, however, the infant was noted to have a large head and hydrocephalus. A neurosurgeon examining the child noted that she suffered “acquired hydrocephalus, perhaps related to neonatal event.”

In a subsequent lawsuit, the plaintiff’s attorney criticized Dr. O’s actions during the patient’s labor and delivery.

Because of the critical decisions inherent in a complicated delivery, arbitration is a particularly good forum for the evaluation of the care rendered. The arbitrators listening to testimony and evaluating all the evidence are usually attorneys (and in the case of the neutral arbitrator, retired judges) with many years of experience evaluating contentious medical cases. Arbitration saves some 30 percent in the costs of defending a matter to completion.

In Dr. O’s case, the patient had signed an arbitration agreement at her first visit to the clinic. The patient signed another agreement with the hospital on the day of the delivery. As it turned out, however, Dr. O had left the clinic following a disability and retirement and did not have ready access to the clinic’s medical records. In fact, it was not until the case had proceeded for nearly a year was Dr. O’s attorney able to gather the evidence to show the court that the case should be more properly tried in arbitration.

The court denied the request. In doing so, the judge noted that the arbitration agreement signed at the clinic carried neither Dr. O’s name nor the name of his medical group. Second, the court found that the passage of time between the initiation of proceedings to Dr. O’s attorney’s petition to compel arbitration constituted a “waiver” of Dr. O’s right to enforce the contract.

Plaintiff eventually dismissed Dr. O when further examination of the child’s illness revealed congenital abnormalities. But the dismissal came only shortly before the trial date – after considerable expenses related to trial preparation had been incurred.

Fortunately, such cases are rare and the success rate of compelling medical malpractice disputes into arbitration is exceptionally high. Nevertheless, the case demonstrates the need to have the name of the actual physician or medical group on the face of the agreement and the need to have ready access to the signed arbitration agreement should a dispute later develop.


Gordon Ownby is CAP-MPT’s general counsel. Comments on Case of the Month may be directed to gownby@cap-mpt.com.