We are all accustomed to page after page of legal jargon in every contract we sign.  It doesn’t make any difference if you are buying a rug, a cell phone, or health insurance or healthcare from a provider, you are now faced with a mountain of words that virtually no one ever reads because it is long, drawn out, and in language that is designed to confuse and cloud what you are signing.  It is also usually in small type that makes it difficult or impossible to read.  The effect being most people ignore it and sign away their rights!

Please take a look at the disclaimer used on the Website for individual and family health insurance in Pennsylvania:

In addition, I understand that, if I select a health plan that uses mandatory binding arbitration to resolve disputes, I may be agreeing that any dispute between myself, my heirs, relatives or other associated parties on the one hand and the health plan, any contracted health care providers, administrators, or other associated parties on the other hand, including any claim for medical or hospital malpractice or relating to the coverage for, or delivery of, services or items, irrespective of legal theory, must be decided by binding arbitration and I agree to give up the right to a jury trial. I understand that the full arbitration provision is in…

The information about the binding arbitration clause is in a document that cannot be found on that website and is particular to each insurer.  Even if you are signing up for a plan directly through the insurer that clause is not easily found.  Why does this make a difference to you?  Binding arbitration means that a private arbitrator, agreed to by you and the insurer or provider is selected.  There will be no jury trial.  You have to wonder who is going to have more power in that selection process? This clause is stating that you give up the right to a jury trial relating to malpractice, and other offenses, and so do your family members and their heirs.

By signing a binding arbitration clause, you essentially waive your right to choose to go to court if something goes wrong. Encountering one of these clauses isn’t necessarily a reason not to use a doctor, or sign with an insurance company for a health plan that  otherwise meets your needs. But it’s worth understanding what binding arbitration means for you, and what to look for, and ask, before putting pen to paper.

“This is a contractual agreement by which two parties, maybe more, agree to waive the opportunity to go to court and appear before a judge and jury.

“This is a contractual agreement by which two parties, maybe more, agree to waive the opportunity to go to court and appear before a judge and jury. Instead, you resolve any dispute by a private arbitrator,” explains Ramona L. Lampley, associate dean of academic affairs and professor of law at St. Mary’s University School of Law. Many times, binding arbitration also prohibits multiple people from combining claims into a single lawsuit, adds Judith Resnik, the Arthur Liman Professor of Law at Yale Law School.

It’s not clear how many insurers and providers make patients sign binding arbitration clauses, but experts say they’re increasingly common. One likely factor is the growing number of healthcare practices owned by liability insurance providers or health systems. Binding arbitration is thought to be a way to lower providers’ legal fees and reduce payouts to patients who sue for malpractice. (Although some legal experts argue that arbitration doesn’t actually save providers money.)

What binding arbitration means for patients

While the people or companies who own medical practices and insurers may benefit from binding arbitration, that’s not necessarily the case for patients. When you use arbitration to resolve a dispute, you go before one or a panel of arbitrators instead of a judge and jury. Arbitrators might be lawyers or former judges, and they’re supposed to be impartial. Most contracts designate an arbitrator.

First, “look to see if a reputable, unbiased service [such as JAMS] is designated,” Lampley says. She advises patients to research the company that is being suggested as the arbitrator and see what their affiliations are.

If the designated arbitration service doesn’t seem reputable, carefully consider whether or not to sign your name. The same advice is also very important if the clause either doesn’t specify who chooses the arbitrator or says something like, “The arbitrator will be unilaterally selected by the drafter of the agreement.”  What does that mean to you?

Being more proactive but it is often worth the time and effort to make sure your case is fairly treated.

“If the arbitrator is a person to whom the provider regularly sends business, one might argue the arbitrator has an unconscious incentive, or bias, to rule in that party’s favor, in order to keep getting the business,” Lampley says. If you suspect bias, you can ask the provider to explain who the designated arbitrator is and what sort of relationship they have.  Again this means that you have to be more proactive but it is often worth the time and effort to make sure your case is fairly treated.

Arbitration tends to be quicker than a trial. But that’s partly because it involves a more limited discovery process, meaning the period when a plaintiff and defendant share information that’s relevant to the case. Sometimes, an arbitration clause spells out the discovery rules; other times the designated arbitrator posts the rules on their website. Yet in other instances, discovery rules aren’t established until a case begins. These variations are another reason to read paperwork closely.

As for the cost to patients, arbitration is often, but not always, cheaper than going to court. “In a high-damage medical malpractice case, you can find an attorney who will represent you on a contingency fee, usually 25 to 30 percent of your total recovery,” Lampley says. “So there’s no out-of-pocket at the outset, and if you lose, there’s no payment, generally.” Plus, arbitration payouts tend to be lower. On the other hand, for low-value claims that aren’t worth the cost of suing in court, arbitration can provide a useful alternative pathway to recovering damages, says Lampley, adding that you often don’t need a lawyer to arbitrate a claim that’s only a couple thousand dollars.

Also know that, with arbitration, you have a limited right to appeal, if you have any right.

Lastly, many companies prefer arbitration because it shields them from public scrutiny. While some patients also see this relative privacy as a plus, others want their day in court. “There is power in having a case heard by a jury,” says Lampley. “It’s a cathartic experience.” Also know that, with arbitration, you have a limited right to appeal, if you have any right.”

Knowing what you have signed, and demanding clearer, less verbose, and easier to understand clauses that are stated in the beginning of any signature process may shine a light on “binding arbitration clauses”.