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Forcing Parties to Arbitrate Claims May Weaken Legitimate Claims

Over the last several months, many companies in the San Francisco area received a letter seeking to get them to waive their rights to sue Sutter Health, a network of doctors and hospitals that dominates the market in Northern California.

Jennifer Chaloemtiarana, general counsel for Castlight Health, a tech company, was one of the many recipients of such a letter. The letter asked Castlight to waive its rights to sue Sutter Health over any disputes between the two companies. If companies Castlight refused to waive its right to sue, a fact sheet enclosed with the letter stated that Castlight employees who received care from Sutter’s hospitals, doctors, and medical services would no longer be eligible for discounted in-network rates. “In both choices, Castlight and our companies lose,” Chaloemtiarana lamented.

Castlight is self-insured. It hired Anthem Blue Cross to manage its health coverage. However, when an employee seeks care, Castlight pays the medical bills. Anthem’s role is to negotiate discounted prices with medical provides, like Sutter Health. According to Chaloemtiarana, since Castlight has no direct relationship with Sutter Health, Sutter Health’s request for a legal agreement was highly unusual.

Castlight is uncomfortable with the notion that it cannot challenge Sutter Health in court. Sutter Health is already the largest medical system in Northern California, giving it a significant amount of power in the healthcare market. Some have already complained that Sutter Health has charged more for its services—on average, 25 percent above what other hospitals charge.

Representatives for Sutter Health argue that perceptions of the company’s market share are inflated, and that there is plenty of competition. Sutter Health is also facing a lawsuit: a grocery workers’ union has claimed that Sutter Health is using unfair business practices to preserve power over prices. The plaintiff, UCFW & Employers Benefit Trust, or UEBT, argues that the agreement that its insurance administrator entered into with Sutter Health is not binding upon UEBT. Courts have agreed. Thus, many argue that this is the reason Sutter Health has sent the letters to these companies.


Why do some companies want to require arbitration?

You may have noticed arbitration clauses in contracts you have signed, such as your cell phone contract and your insurance plan agreements. However, many people fail to notice arbitration clauses in the contracts they sign.

Forced arbitration results when an individual is required to use arbitration for a dispute as a condition of buying a product or service.

Arbitration often limits a consumer’s options in a dispute. In many cases, the company that requires arbitration also selects the location where arbitration is to take place—and this is often in a venue that has laws that benefit the company.

Additionally, there is either very limited discovery or no discovery at all in arbitration proceedings. And, usually, there is no right to appeal. This is especially troubling because arbitrators are not necessarily required to follow principles of law in making their decisions. Therefore, arbitration may rob individuals of the protections otherwise afforded to them by due process.

Finally, arbitration panels (lists of people “qualified” to be arbitrators) are comprised primarily of individuals who favor corporate interests over those of individual consumers.


How arbitration clauses can impact your healthcare

Arbitration clauses are appearing more and more in patient agreements with doctors, hospitals, and other medical professionals and healthcare facilities. These provisions invariably favor the medical professionals over the patient or patient’s family. Signing such a provision means that you will likely lose the right to file suit in the event the doctor or hospital negligently injures you.

These clauses are especially common in nursing home admission paperwork. Such facilities typically present patients and their families with stacks of documents to sign. Rarely, do they explain the arbitration agreement. It’s usually more like, “sign here, and here, and here.”

In any situation where you are presented with an arbitration agreement, it is critical for you to ask, “What happens if I don’t want to sign this?” Often, the answer is, “Nothing. You do not have to sign it if you don’t want to.” Then, it is best to politely decline to sign. That way, you preserve your right to go to court if a dispute arises later.

Were you forced to sign an arbitration agreement?

Forced arbitration is just bad for the little guy. Don’t sign this type of contract if you can avoid it. You are being tricked into giving up your rights. If your doctor or hospital is asking you to sign one, ask them why they need you to sign it. Ask them why they would even consider asking you to give up your right to a fair trial should they make a medical mistake. Ask them what they are afraid of, but don’t just sign a contract without knowing what you are giving up.  At The Eisen Law Firm, we handle only cases involving medical error. We can help you if you or a loved one has been injured by a medical professional, but we cannot help you if you give away your rights.  Call us at 216-687-0900 or contact us online if you have been a victim of medical error.