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 Arbitration 'A Good Thing,' Veteran Litigator Says

Washington, D.C.—Federal efforts to regulate arbitration agreements in the nation’s care centers are a sop to trial lawyers and not a reaction to public outcry, a veteran litigator tells Provider.

“The industry, in my view, shouldn’t be scared,” Arnall, Golden, Gregory partner Jason Bring says. “There’s no consumerism out there where people are feeling affronted by this. It’s, quite frankly, the trial lawyers’ push.”

Officials at the Centers for Medicare & Medicaid Services (CMS) say they “share stakeholders’ concerns” that providers are strong-arming, or at least sleep-walking, residents or families into signing arbitration agreements. They’ve proposed a sweeping set of rules that would regulate everything from the language used to explain the agreements to where the arbitration will be held. CMS regulators have even opened the question about whether they have the authority to make all such agreements non-binding.

Franken’s Arbitration Crusade

Regulators have acknowledged that the proposed rules would be “burdensome” for caregivers, but say it’s ultimately the best way to protect the rights of residents. They’re being cheered on by some congressional Democrats—especially Sen. Al Franken (D-Minn.), who has issued at least two public letters on the topic since late September. 

Franken has long been a foe of arbitration agreements. His first successful piece of legislation choked off funds for any defense contractor who used arbitration clauses as a way to keep rape victims out of the courts. Lawyers and law firms have been his top donors, contributing nearly $2.6 million to his campaign, according to the Center for Responsive Politics, a nonprofit group that tracks money in politics.

Some providers are feeling defensive about the controversy, worried that any public protest will play into the plaintiffs’ bar hands. But Bring, who has dedicated his career to defending providers from lawsuits, says providers have nothing to be ashamed about in defending arbitration.

‘It’s A Good Thing’

First, there is case law, going back to the 1920s, demonstrating that such agreements are soundly Constitutional, Bring says. Second, arbitration is practically universal in American lives: everything from EBay to baseball, and most Americans are comfortable with it.

Then there’s a third, and even more important, reason to defend arbitration, Bring says.

“It’s a good thing,” he says. “It’s less expensive, it’s more efficient. Arbitration is a benefit to everyone, everywhere.”

As if to underline Bring’s point, new data released Thursday by risk management firm Aon shows that regulators’ (or trial lawyers’) attacks on “binding” arbitration may be mere tilting at windmills. More than half of the people who challenged their arbitration agreements had them overturned by the courts, Aon found.

Challenges, Outcomes

Aon sampled thousands of claims since 2003, and found that of the 303 cases where families or residents challenged arbitration agreements, only 146—48 percent—were upheld by the courts. Moreover, those cases where the arbitration agreement was enforced saw an average payout of $197,000 per case, Aon found.

That’s just covering contested cases. In uncontested cases—where an arbitrator’s decision wasn’t challenged or where the case was settled without an arbitration agreement in place—arbitration was more lucrative for residents or families: on average, an arbitrator’s award in an uncontested case was about $110,000 per case, while the average settlement without an arbitrator was about $95,000 per case, Aon’s report says.

“That really tells me that we don’t need regulations on this,” Bring tells Provider. “The courts are often reluctant to validate arbitration. Really—a few phrases, a couple of clauses out of place—and the whole thing can be tossed out.”

Bill Myers is Provider’s senior editor. Email him at Follow him on Twitter, @ProviderMyers.
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