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Implementing ADR

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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