Liability Reform Discussed at President Obama’s Health Care Summit

By Holly Hayes Bovio

On Feb. 23, the American Medical Association and 76 other medical societies wrote a letter to President Barack Obama and congressional leaders asking them to adopt legislation to reduce unnecessary medical lawsuits. “‘Defensive medical procedures, prompted by the threat of litigation, add substantial costs for individuals, private and public payers,” the letter stated (read the letter here).

At President Obama’s health care summit on Feb. 25, Dr. Coburn, an obstetrician-gynecologist cited estimates by Thompson-Reuters, that the “U.S. health system wastes at least $600 billion a year because of poorly coordinated care, fraud, frivolous lawsuits and a lack of preventive care.”

Right after the summit, on March 3, President Obama outlined a revised version of his comprehensive health care reform proposal (read article by the American Medical News here) . The plan includes a section specifically on medical liability calling for expanding medical liability alternatives by adding $50 million to a $23 million state pilot project managed by Health and Human Services Secretary Kathleen Sebelius (see our post on this pilot project here ).

We welcome your comments on the continuing discussion of health care reform and
medical liability.

Technorati Tags: Healthcare, ADR

Tags: tort reform

We came across an interesting article from the landmark symposium Transatlantic Perspectives on Alternative Dispute Resolution. The piece is entitled Teaching Comparative Perspectives in Mediation: Some Preliminary Reflections, 81 St. John’s L. Rev. 259 (2007) and was written by professor Jacqueline Nolan-Haley (pictured right).

Here is an excerpt:

Introduction

Mediation is no longer the stepchild of international dispute resolution practice. Scholars and practitioners recognize its enormous potential as a confidential, cost-saving, time-saving, relationship-enhancing process that gives control over disputes to the affected parties and often results in greater levels of satisfaction than litigation. Whether its appeal has peaked because of growing disenchantment with commercial arbitration or the perception that international arbitration has become like U.S. litigation, ¹ mediation is beginning to blossom on the international dispute resolution landscape.

The growing interest in mediation at the international level is reflected in numerous international and regional organizations, laws and protocols. Notable examples include organizations such as the Commercial Arbitration and Mediation Centre of the Americas (”CAMCA”), ² the CPR International Institute for Conflict Prevention & Resolution, ³ and the International Chamber of Commerce (”ICC”) that offer rules and procedures to resolve private commercial disputes through mediation. The World Trade Organization’s (”WTO”) dispute settlement system offers mediation as one method of resolving trade disputes between members. ⁴ And, a primary example of legislation is the Model Law on International Commercial Conciliation that was developed by the United Nations Commission on International Trade Law (”UNCITRAL”). ⁵ The Model Law, which was recommended by the United Nations for adoption by member states in 2002, suggests an international consensus on the value of mediation as a mainstream method of resolving disputes. ⁶

While mediation programs are developing rapidly across the globe, given the transatlantic focus of this conference Transatlantic Perspectives on ADR-and its London location, it is useful to consider some recent examples of mediation’s growth in Europe. In 2002, the European Commission issued a Green Paper that identified ADR as a “political priority” for all “European Union institutions, whose task it is to promote these alternative techniques, to ensure an environment propitious to their development and to do what it can to guarantee quality.”7 The purpose of the paper was to encourage use of ADR as a means of increasing access to justice in cross-border disputes.8 The paper initiated a wide-spread consultation with Member States and interested parties on possible measures to promote the use of mediation.9

Read the full article here. More articles by Professor Nolan-Haley are here.

Technorati Tags:
ADR, law,  arbitration

Tags: Mediation

By Holly Hayes Bovio

The New York Times posted last week an interview with Dr. Howard Brody (pictured left), professor of family medicine and director of the Institute for the Medical Humanities at the University of Texas Medical Branch in Galveston, discussing a proposal for health care reform involving physicians.

Physicians, Dr. Brody says, are not “innocent bystanders” to increasing health care costs but have made little effort to limit future medical costs. In an editorial in The New England Journal of Medicine, he writes “If physicians seized the moral high ground, we just might astonish enough other people to change the entire reform debate for the better.”

The New York Times spoke with Dr. Brody about his “Top Five” solution:

Q. You write that doctors have an ethical responsibility to advocate health care reform. Why?
A. Doctors have two responsibilities. First, they have a moral duty as an individual advocate. A doctor has a responsibility to his or her individual patients to make them healthier and to help them live longer.

But doctors have a second moral duty: they have an obligation to the general public to be prudent stewards of scarce resources. Doctors only get about 10 percent of health care costs in their pockets, but they control about 80 percent. That isn’t our money — it’s someone else’s — and the public has entrusted us to spend it as wisely as possible.

Q. How does your “Top Five” solution work?
A. The basic idea is that each specialty would decide on the top five procedures or diagnostic studies that are done commonly but only really help a small fraction of patients. These are things like arthroscopy for osteoarthritis of the knee or MRI’s and CAT scans, all of which are massively overused, not because they help but because of our enthusiasm regarding high technology.

Once each specialty has gone through the research evidence and decided on its “Top Five,” the respective professional organizations would take a public stand, issuing guidelines and recommendations against overuse of those “Top Five” procedures or studies.

By taking a public stand and making it harder for individual doctors to say, “Oh, I know better,” we could build real momentum for cost containment. And we would ultimately all benefit because we don’t need all that technology. You can still be as healthy without it.

A physician-led effort to determine guidelines and recommendations against overuse of the “Top Five” procedures or studies could have a tremendous impact on curtailing future medical costs. We suggest that the process outlined by Dr. Brody could benefit from applying conflict resolution techniques. For example, we recently posted a Four-step Approach to Problem-solving used by the program for Health Care Negotiation and Conflict Resolution at Harvard. This approach could be applied to the “Top Five” process:

A Four-step Approach to Problem-solving

Four negotiation steps developed by the Program for Health Care Negotiation and Conflict Resolution guide minor and major negotiations in health care. The structured multidimensional problem-solving process is called “Walk in the Woods,” after a famous story in which international negotiators at loggerheads over a nuclear arms treaty went for a walk in the woods near Geneva and discovered common interests that led to new solutions.

Step one: self interests. Each participant articulates his or her view of key problems, issues, and options. They are encouraged to actively listen, question, and interact with one another.

Step two: enlarged interests. The participants reframe their understanding of current problems and possible options with a wider perspective, based on the integrative listening and confidence-building that occurred in step one.

Step three: enlightened interests. The group is ready to engage in innovative thinking and problem-solving, generating ideas and perspectives that had not previously been considered.

Step four: aligned interests. Participants build common ground perspectives, priorities, action items, agreement, or plans for moving forward. Depending on the scope of the intended objectives, at this point they recognize the tangible contributions and opportunities accomplished through the meeting.

We invite your comments on this topic.

Technorati Tags: Healthcare, ADR

Tags: tort reform

By Holly Hayes Bovio

Conflict in health care differs from conflict in other arenas because it can result in significant negative outcomes – in some cases, life or death.

Part IV in our series on applying conflict resolution skills in the health care setting follows the Principled Negotiation techniques described by Roger Fisher and William Ury in Getting to Yes with a focus on “inventing options for mutual gain”. Part I in the series can be viewed (here), Part II, (here) and Part III (here).

Why do we want to take the time to invent options when we disagree? Often conflict appears to have only one solution – split the pie in half — and people usually believe they know the correct answer – their answer is the right answer.

Four major obstacles typically inhibit the invention of more than one option for consideration in a negotiation:

1. Premature judgment
2. Searching for a single answer
3. The assumption of a fixed pie
4. Thinking that solving the problem is “the other party’s problem”

We can imagine a typical health care conflict between the Emergency Department (ED) Manager and the Manager of Environmental Services (Housekeeping) in a hospital could look like this:

Emergency Department (ED) Manager: I am glad you agreed to talk with me about the housekeeping problem we have had in the ED. I think you know that I am short staffed right now and my staff cannot keep up with the minor cleaning after a patient discharge we have been doing up to now. I need your staff to take over all of the cleaning in the department. We have to take care of the sickest, most urgent patients in the hospital.

Manager of Environmental Services: Well, I understand you are busy, but my department hasn’t added any new staff, why do you think we could pick up the slack for your staff?

ED Manager: Well, let’s just split the jobs then, you do half of the work and we will do our best to do the other half of the cleaning.

Manager of Environmental Services: I guess we can try to make that work.

The managers did not “expand the pie” before dividing it – they did not invent options for mutual gain before reaching a solution. Let’s look at some other approaches where the managers take the time to invent creative options:

1. Separate the act of developing options from the act of judging the options – brainstorming is a fairly common exercise where parties produce as many ideas as possible without considering their merit until a complete list is made.
2. Broaden the options rather than looking for a single answer – one example of this is to invent options of different strengths, some weaker options, some stronger options for consideration; another example is to look through the eyes of someone else, for example, look at the problem through the eyes of the patient or a family member, what options would they suggest?
3. Search for options that present opportunity for mutual gain – the secret here is to look for joint gain rather than a winner and a loser by identifying shared interests or dovetailing differing interests.
4. Invent ways to make decisions easy for the other party – a painless choice for the other side that advances your interests is a win-win for both parties.

Let’s try the conversation with the two department managers applying the techniques above.

Emergency Department (ED) Manager: I am glad you agreed to talk with me about the housekeeping problem we have had in the ED. I think you know that I am short staffed right now and my staff cannot keep up with the minor cleaning after a patient discharge we have been doing up to now. We have to take care of the sickest, most urgent patients in the hospital. What do you suggest?

Manager of Environmental Services: That is a problem. I wonder if our departments could split the cost of a temporary staff member to help in the short-term?

Emergency Department (ED) Manager: That’s a thought. What if we spent some time streamlining the cleaning process to make the best use of the staff’s time. Your department must have a lot of ideas you could share with us.

Manager of Environmental Services: We do have some ideas that have worked in other departments that could be applied here as well. Let’s form a group of your staff and my staff to look at how we can work together to solve the problem.

By working together, the two managers invented options that will likely result in even more options for consideration that will benefit the departments, the hospital and ultimately the patients. The key is taking time to explore those options for mutual gain that advance the interests of both parties.

We welcome your comments and invite you to share other examples of conflict in health care.

Technorati Tags: Healthcare, ADR

Tags: negotiations

The United States Court of Appeals for the Fifth Circuit held that a NASD arbitration panel did not exceed its authority when awarded attorney’s fees directly to counsel.

In Institutional Capital Management, Inc. v. Claus, No. 08-20710 (5th Cir. Feb. 11, 2010), Leonard Claus and Institutional Capital management (ICM) entered into an agreement to buy and sell bonds. After a dispute over some bonds that Claus originally purchased to sell to Sterling Financial Investment Group, Inc. (Sterling) Claus sued ICM alleging negligence, gross negligence, negligent representation, breach of contract, violations of federal and state securities laws, and violations of federal and state statutory fraud. Claus hired Michael Fallick to represent him on a contingency fee basis.

An arbitration panel at the National Association of Securities Dealers (NASD) awarded Claus $25,000 in compensatory damages and $70,000 in attorney’s fees directly to Fallick. The panel also charged Claus $22,000 in arbitration fees. Thus, the net award to Claus was for $3,000. Sterling and ICM moved to vacate the arbitration award and a magistrate judge agreed because “the arbitration panel exceeded its authority when it awarded attorney’s fees directly to Fallick in violation of Texas law.”

The Fifth Circuit first highlighted the Federal Arbitration Act (FAA) grounds to vacate an award. However, the court noted that there is no need to consider whether the alleged legal error violates the FAA, because there is no reversible error in this case. The court explained that Texas law prohibits the award of fees to be paid directly to counsel unless authorized by statute. But it noted that a party that has been ordered to pay attorney’s fees has no standing to challenge to whom those fees are paid to. The court also addressed appellees’ argument that the fee award was unreasonable. It stated that “[a] disproportionate fee award is not tantamount to an excessive attorney’s fee award under Texas law.”

Accordingly, the court reversed the judgment of the magistrate judge and reinstated the arbitral award.

Technorati Tags:
ADR, law,  arbitration

Tags: securities arbitration

Professor Mitchell H. Rubinstein at the Adjunct Law Prof discussed last week this mediation confidentiality case:

Anthony v. Andrews, 2009 WL 4547605 (Ohio Ct. App. Dec. 4, 2009), is an interesting mediation case. Rebecca Anthony sued Dr. Annette Andrews in state court alleging medical malpractice.  During a court-ordered mediation, Andrew’s counsel informed the mediator that Andrews would not give her consent to settle the matter and had never given consent to do so.  The mediator included these statements in his mediation report.  Upon viewing the report, the trial court concluded that Andrew’s counsel had failed to negotiate in good faith during the mediation.  The trial court sanctioned Andrews in the amount of Anthony’s attorneys fees, lost income, and expenses in attending the session.  Andrews appealed to the Court of Appeals of Ohio. The Court reversed.  The Court held that the statements regarding Andrew’s consent were statutorily privileged from disclosure as mediation communications and failed to meet any exceptions to the privilege as permitted by statute.  The Court rejected Anthony’s argument that no privilege should apply since no mediation took place because Andrew’s counsel lacked settlement authority, explaining that the statute nonetheless considers certain statements made pursuant to mediation as mediation communications.

This was not a labor case which is governed by federal law. Also, most states do not have mediation privilege statutes.

We would like to hear how other jurisdictions handle the issue of mediation confidentiality!

Related Posts:

• 2009 Developments in Mediation: Mediation Confidentiality (Dec. 31, 2009)
• The Uniform Mediation Act and Confidentiality (Oct. 2, 2009)
• Mediation Confidentiality (Sept. 19, 2009)
• Legislating ‘Bad Faith’ in Mediation (Sept. 4, 2009)

Technorati Tags: ADR, law, mediation

Tags: Mediation, mediation confidentiality

The Alternative Dispute Resolution Section of the State Bar of Texas has recently published its Winter 2010 newsletter. The newsletter contains the following articles:

• Judicial Survey on Alternative Dispute Resolution Processes Preliminary Analysis and Report (2009)
• Improving the Quality of Healthcare: Resolving Claim Disputes in Medicine
• Mediation of Medical Licensure Issues Before the Texas Medical Board
• Thankful for Unanswered Prayers? Unconscionability Equilibrium
• Unconscionability and Arbitration
• One Shot or Two Shots Arbitration
• Ethical Puzzler
• Reflections From the Edge
• 2009: A year of ADR Idea
• ADR on the Web: Making Mediation Your Day Job

You may download this issue here.

Tags: State Bar of Texas ADR Section

By Holly Hayes Bovio

Our health care conflict resolution series began with Part I, applying the “principled negotiation” method to health care (post available here) and followed with Part II, examining a case study of “Separating the People from the Problem” (post available here).

In this post, let’s take an example of a physician and a hospital group negotiating to buy the physician’s practice to see how “positional bargaining” results in failure to find a solution.

Physician: I need you to buy my practice for $X and I will not take weekend call. If you don’t want to buy my practice, my partners and I can take it down the road to hospital Y.

Hospital Representative: We are willing to offer you $Z for your practice and we must have a weekend call rotation as part of the deal.

Physician: You don’t care about me or my practice, this discussion is over.

Wise solutions acknowledge interests, not positions. The basic problem with the physician and the hospital representative is not that one is buying and one is selling, the conflict is between their interests or their concerns, fears, needs and desires related to the negotiation. What are some tools to help reconcile interests rather than merely seeking to compromise positions?

In Getting to Yes, Roger Fisher and William Ury describe techniques for identifying interests so that options can be developed that meet both party’s interests.

1. Ask “Why?” – put yourself in their shoes.
2. Ask “Why Not?” — why doesn’t the other side agree with us?
3. Realize each side has multiple interests – the physician wants a secure income for his family, he wants time with his family so he does not want to always be on call.
4. Realize the most powerful interests are basic human needs – security, economic well-being, control over one’s life, a sense of belonging, recognition.
5. Talk about interests – make your interests come alive for the other side. The hospital representative can talk about ways to include the physician in decision-making at the hospital and about what the hospital needs in terms of income to make a profit to reinvest in its people and physical plant.

Using these techniques, let’s see how the conversation between the physician and the hospital representative is more productive:

Physician: I need you to buy my practice for $X and I will not take weekend call. If you don’t want to buy my practice, my partners and I can take it down the road to hospital Y.

Hospital Representative: I understand you have spent your time and your own income to build such a successful practice. You have been a great partner for us for five years. Can you help me understand how you arrived at the $X figure and talk a little about the call issue?

Physician: We recently bought an MRI and quite a bit of other costly equipment that would be included in the purchase price. I have spoken with some other physician practices and this price seems fair. I just want to be fairly compensated for the value my partners and I have brought to this practice over the past five years. In terms of call, I want time with my family on the weekends. I am afraid that if one of my partners leaves, I will have to take both my call and their call and who knows when a new physician could be recruited. I want control over my life.

Hospital Rep: Would it be alright with you if we had both your accountant and my CFO take a look at the practice financials? There are also some industry standards we could apply to the purchase price. As for call, you make a very good point about how much call would be needed. Of course, my problem is that I need to provide certain coverage or the hospital cannot provide certain services and those patients will go down the road. This is a problem across the country and I know many hospitals have begun to pay very high prices to provide call for certain specialties. I wonder if you would consider being part of our medical staff executive committee as part of a purchase package? This would not guarantee you no call, but it would give you a chance to help make policy about how we move forward. If we can reach agreement on purchasing your practice, it will take both of us to make the best decisions for a successful partnership.

Physician: Yes, I can agree to those next steps. I am starting to feel a level of comfort that I will be treated fairly.

As the two parties talked about their interests by asking questions and realizing that the most powerful interests are basic human needs, they both came closer to the purpose of negotiating — serving their interests and finding an acceptable solution.

Part IV in our series will explore more on this topic – “how to invent options for mutual gain”. We welcome any comments you have about conflict you have experienced in health care and lessons you have learned.

Technorati Tags: Healthcare, ADR

Tags: negotiations

source: www.aoc.gov

The following bills relating to alternative dispute resolution were introduced by the 111st Congress. Click on the bill number to read  its text and on the status link to find the bill’s most recent legislative action.

Stay tuned to Disputing for more legislative updates!

Bills that passed:

• “An Act Making Appropriations for the Department of Defense for the Fiscal Year Ending September 30, 2010, and for Other Purposes” contains an amendment (the “Franken Amendment“) that bans funds to defense contractors who require workers (employees and independent contractors) to arbitrate “any claim under Title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.” (H.R. 3326 ; Amendment; Senator Franken’s video is here) H.R. 3326 was signed by President Barack Obama and became law on December 19, 2009.  Final version is here and major actions are here. Also, find guest-posts by F. Peter Phillips here and here.

• The Consolidated Appropriations Act of 2010 (H.R. 3288), a spending bill signed into law by President Obama on December 16, 2009, includes a provision under which owners of automobile dealerships can use a binding arbitration process administered by the American Arbitration Association (AAA) to seek reinstatement if their businesses were closed by automobile manufacturers during the implementation of the Emergency Economic Stabilization Act of 2008. Read our posts here and here. Find out more details at the AAA website. A recent WSJ article is here.
  

Bills still pending:

• The Arbitration Fairness Act of 2009 would ban mandatory pre-dispute arbitration in employment, consumer, and franchise contracts. Senate version: S. 931 and Status. House version: H.R. 1020 and Status.

• The Employee Free Choice Act of 2009 would amend the National Labor Relations Act to require first mediation and then binding arbitration if both parties are unable to reach an agreement within a certain time frame. Senate version: S. 560 and Status. House version: H.R. 1409 and Status.

• The Payday Loan Reform Act of 2009 would amend the Truth in Lending Act to establish additional payday loan requirements to protect consumers. This bill prohibits a mandatory arbitration clause that is “oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers.” H.R. 1214 and Status.

• The Fairness in Nursing Home Arbitration Act of 2009 would render pre-dispute arbitration clauses in nursing home contracts unenforceable. S. 512 and Status. House version: H.R. 1237 and Status.

• The Mortgage Reform and Anti-Predatory Lending Act of 2009 would amend the Truth in Lending Act of 1968. The bill provides that “[n]o residential mortgage loan and no extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer, other than a reverse mortgage may include terms which require arbitration of any other nonjudicial procedure as the method for resolving any controversy.” H.R. 1728 and Status.

• The Labor Relations First Contract Negotiations Act of 2009 would amend the National Labor Relations Act to require the arbitration of initial contract negotiation disputes. H.R. 243 and Status.

• The Consumer Fairness Act of 2009 would treat arbitration clauses which are unilaterally imposed on consumers as an unfair and deceptive trade practice and prohibit their use in consumer transactions. H.R. 991 and Status.

• The Preserving Homes and Communities Act of 2009 would require certain mortgagees to make loan modifications, establish a grant program for state and local government mediation programs, and create databases on foreclosures. S. 1731 and Status.

• The Conflict Resolution and Mediation Act of 2009 would provide assistance to local educational agencies for the prevention and reduction of conflict and violence. H.R. 4000 and Status.

• The Agricultural Credit Act of 2009 would reauthorize state agricultural mediation programs under title V of the Agricultural Credit Act of 1987. H.R. 3509 and Status.

• The Department of Peace Act of 2009 would establish a Department of Peace that would take a proactive, strategic approach in the development of policies that promote national and international conflict prevention, nonviolent intervention, mediation, peaceful resolution of conflict, and structured mediation of conflict. H.R.808 and Status.

• The Rape Victims Act of 2009 provides that employment-related arbitration agreements shall not be enforceable with respect to any claim related to a tort arising out of rape. S. 2915 and Status.

• The Foreclosure Mandatory Mediation Act of 2009 would require lenders of loans with Federal guarantees or Federal insurance to consent to mandatory mediation. S. 2912 and Status.

Technorati Tags:

arbitration, ADR, law

Tags: ADR Legislation

Aaron Bruhl (pictured left) Professor at the University of Houston Law Center, has posted this interesting commentary at the Prawfsblawg yesterday about Rent-A-Center v. Jackson,  the upcoming U.S. Supreme Court case about whether courts or arbitrators should decide the issue of unconscionability. (previously discussed here). Here is an excerpt:

The Federal Arbitration Act makes arbitration agreements as enforceable as all other contracts.  In April, the Supreme Court will hear argument in Rent-A-Center v. Jackson, which concerns the question of who - court or arbitrator - decides a claim that an arbitration agreement is unconscionable and thus unenforceable.  In this case, the arbitration agreement itself assigns (or at least purports to assign) that power to the arbitrator.  The Ninth Circuit, however, held that unconscionability was an issue for the court.  This case holds obvious interest for those who study ADR, consumer law (most consumer contracts have arbitration clauses, whether or not you know it), and employment law (this case is an employment discrimination suit).  What I hope to show you is that it is just as interesting for those who study federal courts and judicial politics.  Beneath the surface, the case is, in a sense, more Bush v. Gore than Williams v. Walker-Thomas Furniture.

To see why the case is so intriguing, one has to appreciate what one might call its strategic context.  The Supreme Court is strongly pro-arbitration.  Some state and federal courts are not quite so enthusiastic, at least when it comes to consumer and employment contexts with their largely adhesionary contracts.  (Please note that I’m not discussing whether the Court’s decisions in this area, and its broader pro-arbitration stance, reflect sound interpretations of the relevant statute, good policy, etc.)  Over the course of the last couple of decades the Supreme Court has shut off most avenues for challenging arbitration agreements at the wholesale level - state law cannot declare particular fields like consumer transactions off limits from arbitration, courts cannot deem arbitration per se violative of public policy, etc.  All such arguments are preempted by the Federal Arbitration Act.  What remains, though, is the possibility for retail-level challenges to particular arbitration clauses under section 2 of the Act, which allows ordinary contract defenses that would invalidate any contract.  So arbitration itself cannot be questioned, but a particular arbitration clause might be invalidated as the product of duress, fraud, etc.

In the last few years, as other routes for challenging arbitration have been closed off, unconscionability has become a surprisingly common and surprisingly effective way of attacking arbitration agreements.  The challenges do not attack arbitration per se - federal law favors arbitration - but instead target various aspects of a particular arbitration process: a given clause might forbid class arbitrations, bar punitive damages or otherwise restrict remedies, sharply curtail discovery, require a consumer to pay hefty arbitrator’s fees, etc.  There have been many cases on these topics in recent years, and a good number of them sustain the challenge to the arbitration clause.

Read the entire post here.

Tags: unconscionability