The major benefit of ADR is not as an alternative to disputes that have already
ripened to the point that a lawsuit is about to be filed. ADR should been seen
as part of a general strategy of avoiding disputes rather than just a more
expeditious method of resolving them. ADR is most effective when it is
incorporated in all business transactions. Many Fortune 500 companies
are putting ADR provisions in their contracts with suppliers and corporate
customers. In addition to requiring ADR should a formal dispute arise, the
unavailability of litigation encourages the quick, informal resolution of
disputes.
All states allow ADR for medical business disputes, and most allow it for
medical malpractice claims but only if the choice of ADR is voluntary. For
example, a health maintenance organization (HMO) might require persons who
choose to subscribe to agree to the binding arbitration of potential medical
malpractice claims. This would be acceptable as a condition of the HMO-patient
contract. In contrast, the courts would likely reject an agreement with a
private physician who allowed a patient to present in the office, but then
required the patient to agree to arbitration before treatment. ADR agreements
would never be allowed as a condition of emergency care.
In many cases, it is the malpractice insurance companies that resist ADR
agreements because ADR has the potential to increase the overall payments to
claimants. An efficient system for resolving disputes will allow patients with
small claims to be compensated. Studies of the incidence of medical malpractice
find that many more patients are injured by negligent medical care than file
medical malpractice lawsuits.[5] Some of these
patients do not realize that they were the victims of malpractice, some
intentionally choose not to sue their medical care providers, and some are
unable to secure representation because their claim is too small. If the cost
of these small claims exceeds the savings in limiting large claims and
attorney's fees, then ADR will only increase the cost of insurance.
[5]Compensation in New York. Report of
the Harvard Medical Malpractice Study to the State of New York. 1990.
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