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, an MCO might require persons who choose to subscribe to agree to
the binding arbitration of potential medical malpractice claims. Although most
states would accept this, there is growing trend to require that the ADR
agreement be signed after the patient is injured so that it is really a free
choice. The courts would likely reject an agreement with a private physician
who allowed a patient to schedule an appointment and arrive at the office, but
then required the patient to agree to arbitration before treatment. ADR
agreements are not allowed as a condition of emergency care or in other
situations where the patient cannot exercise free choice.
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. [
Compensation in New York. Report of
the Harvard Medical Malpractice Study to the State of New York. 1990.] Some
of these patients do not realize that they were the victims of malpractice,
some intentionally choose not to sue their medical care providers, but most 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.