What is an arbitration?

Arbitration is a legal mechanism used to resolve disputes through the aid of a neutral third party who is given the authority to make a legally binding decision. These cases are resolved outside the court system. The Kaiser Foundation Health Plan (one of the largest health plans in the nation) requires arbitration for all claims against its doctors or hospitals. The requirement for arbitration is contained in the contract between the Health Plan and employers who offer Kaiser as an option for health coverage. Most Kaiser members are unaware that when they sign up for Kaiser Health Plan coverage they are forever waiving their rights to sue Kaiser doctors or hospitals in court and, therefore, must proceed through a private arbitration proceeding without a jury. As a result of several court decisions that criticized the manner in which Kaiser managed its arbitration procedures, Kaiser has established a policy that requires patients who file claims against Kaiser to choose an arbitrator from a random list of arbitrators. However, many of the attorneys who are registered as possible arbitrators in this procedure have little or no experience with medical malpractice cases and some are actually defense attorneys.

An arbitration hearing is generally less time consuming than a jury trial, and some cases may be decided in favor of a patient who might not win before a jury. When an arbitrator decides against Kaiser, the damages awarded are usually much less than the amount a jury would award for a similar case. Clearly, the financial savings Kaiser receives is the main reason that Kaiser has enforced the use of arbitration for all of their claims.

The requirement for arbitration under the Kaiser contract has been held to apply to spouses, unborn children or any heirs of a Kaiser member, even if they never agreed to such a contract. In addition to Kaiser, many individual physicians have their patients sign arbitration agreements when they first visit their office/clinic. These arbitration agreements are even more cumbersome since they require a three- member arbitration panel, which increases the cost of an arbitration proceeding and can make it more difficult for each side to agree on a neutral arbitrator.