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Arbitration for Med Mal. One Sentence You Must Include in Your Agreements.

05/23/18 4:12 PM

Imagine you received a request for records from a medical malpractice attorney.

Not a good start to your day. But, the clock is ticking. The statute of limitations is about to run. If the clock runs out, you’re home free. (Actually, not always the case, since the statute of limitations is an affirmative defense. You can make the argument, but there are exceptions. Still, assume the clock running out is a good thing.)

You are now one month BEYOND the statute of limitations.

Then, you get a notice demanding arbitration.

You remember your patients sign arbitration agreements.

Arbitration is often a great solution to address medical malpractice claims. The venue is private. The verdict cannot be appealed. It is fast and less expensive than conventional litigation.

Now imagine, to your great surprise, your helpful arbitration agreement just neutralized the statute of limitations. You thought the clock had run. But, because you were using an arbitration agreement, the clock never expired.

Huh?

If the arbitration agreement is silent on how to address the statute of limitations, many courts will view that as one of the rules that is lost when deciding to arbitrate.

In NCR Corp. v. CVS Liquor Control, Inc., 874 F. Supp. 168, 172 (S.D. Ohio 1993), the court ruled found the statute of limitations did not apply to arbitration claims. It concluded the “statute of limitations is to bar an action at law, not arbitration.” Other analogous decisions on this issue prompted the court to say an arbitration is not an “action.” The opinion noted the parties could have included a provision in the arbitration clause limiting the time to bring an arbitration proceeding, but did not do so.

Not all states have reached the same conclusion. For example, the Florida Supreme Court has ruled the term “action” in the statute of limitations includes arbitration because arbitration is considered a “civil action or proceeding.”

Other courts in other states have ruled as Ohio has, nixing the statute of limitations bookend. These include California, Connecticut, Idaho, Indiana, Maine, Massachusetts, Michigan, Minnesota, and North Carolina.

To round out our list, these states have passed statutes which DO apply the statute of limitations to arbitration agreements. Georgia, New York, and Washington.

What to do?

The simplest way to avoid the ambiguity is to be explicit within the arbitration agreement itself.

Perhaps something like the following:

“Any demand for arbitration triggered by this Agreement must be made before the statute of limitations applicable to such a claim has run or will be considered void.”

You get the point.

If you have committed to a path of arbitration, the last thing you want is a surprise.

What do you think? Weigh in using the comments box below. And if you haven’t already, subscribe to our newsletter for weekly content.


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Posted by Medical Justice | in Legal | 5 Comments »

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Michael M. Rosenblatt, DPMEkkehard BonatzSteven B. Perlmutter, MD, JDGregory Laurence MD Recent comment authors
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Gregory Laurence MD
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Nice! I would like to hear a little bit more about arbitration for those docs who are in states who do specifically pre-scribe arbitration by statute. My understanding is that physicians do have some ability to arbitrate under federal law. Maybe you can clarify? As for me my state does specifically pre-scribe arbitration by statute. Colleagues might be interested to know the degree to which many on my team have tried to dissuade me from using binding arbitration. I have been very pleased with the process and with the results for the two occasions in which I did not set… Read more »

Gregory Laurence MD
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In my first paragraph: “prescribe” should be “proscribe” (prohibit)

Steven B. Perlmutter, MD, JD
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It might be prudent to check with your professional liability insurer before utilizing arbitration agreements for two reasons. First, the insurer may disfavor arbitration agreements in general. Second, the insurer may have a prototype agreement that it prefers.

Ekkehard Bonatz
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Ekkehard Bonatz

The addition of the statue of limitation is a great idea, and I just added it to my patient-physician contract. This has been the greatest tool in the armamentarium against litigious patients, and I am very grateful for Medical Justice for starting this movement a long time ago. Many med-mal insurance attorneys will balk at arbitration agreements. These take the litigation venue out of their standard procedural sue-defend-settle strategy. My informal discussions with plaintiffs’ and defense attorneys reveals that they (the legal parties) generally do not know how to handle these arbitrations, and “would not know what to do”, unless… Read more »

Michael M. Rosenblatt, DPM
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Michael M. Rosenblatt, DPM

I agree with Dr. Bonatz who states that attorneys on either side do no have arbitration skills and deeply distrust it. For that reason there is a great desire by the legal community to shelve it, whenever possible. Arbitration does not fulfill the Socratic method of argument, since the objective is to win, at all costs. Then there is the courts system itself: And arbitration eliminates it,taking away income opportunities for the excluded services. This is a money driven system. It is not designed for either physicians or aggrieved patients. Arbitration is a worthy process. Just don’t expect the courts… Read more »