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Show Mandatory Medical Arbitration: The Wrong Answer to the Rising Cost of Health Care in Utah Bryson B. Morgan nies cut their rates, they wound up having a great year when investing the "float" on the premium in this amazing market (the float occurs during the time between when premiums are paid to the insurer and losses paid out by the insurer-for example there is about a 15 month lag in auto insurance). Further, interest rates were relatively high in recent years as the Federal Reserve focused on inflation. But, from the year 2000 to 2002, the market turned with a vengeance and the Fed cut interest rates again and again. Item two above had occurred well before September 11. Item three above, the low rates, were also apparent. Insurance companies' operating profit as a percentage of premium dropped from 13 percent of premium in 1997 to about 3.5 percent of premium in 2000 (A.M. Best Company 2001). Well before September 11 the cycle had turned, rates were rising, and a hard market was developing. As Plunkett states, "An anticipated price jump of 10 to 15 percent in 2001 was predicted by the CFA and confirmed by the Insurance Information Institute" (2002). Item number one, the shock loss, was all that was missing. The attacks of September 11 provided that in an aching-ly painful way. While the increases were mostly due to the cycle turn, they were sped up by the attack, collapsing two years of anticipated increases into a few months. The practices of the insurance industry itself are largely to blame. Plunkett noted that "Each time the cycle turns from a soft market to a hard market the response by insurers is predictable: they shift from inadequate under-pricing to unconscionable over-pricing, cut back on coverage, and blame large jury verdicts for the problem" (2002). This turn in cycle had a particularly strong effect on Utah's largest medical malpractice insurer. The physician run UMIA is a relatively small company and so it finds it harder to keep rates low in an era when the larger insurers are competing for the business of Utah physicians. When the market turned down, many of the larger insurers got out of the medical malpractice insurance business. However, smaller insurers like the UMIA, who have no other choice, remained in the medical malpractice insurance business and watched as their profits plummeted. Physicians became outraged when they suddenly had to raise rates to make up for the previous years of less expensive coverage. Policy Implementation: IHG's Arbitration Agreement Soon after the adoption of S.B. 138, IHC implemented mandatory arbitration for many of its customers. In a radio interview Senator Parley Hellewell (R-Orem) admitted, "When we passed the bill last year, we had no idea what kinds of things that IHC would put in their contract that would make it so one-sided and so lopsided" (2004). An analysis of common provisions of IHC's and other arbitration agreements follows: 1. High cost of Arbitration: Article 3 (C) of IHC's arbitration agreement stated that: "Patient(s) and Provider(s) will each pay the fees and expenses of the arbitrator they appointed. Each side shall also pay one' half of the fees and expenses of the Presiding Arbitrator and the other expenses of the arbitration panel." (McConkie 2004). Patients pay thousands of dollars per day to arbitrate. Most cases occupy more than one day and a complicated case could occupy many more. For example, a ten day case would cost $40,000, of which the patient is required to pay half) win or lose. Compared to a court filing fee of about $200, and arbitration is clearly the more expensive option. In court, the process is at no cost to either the defendant or the plaintiff. 2. Forfeiture of past or future claims. Upon signing the agreement, patients must give up their right to sue IHC for any past or future claims, and pursue those claims through arbitration. For example, patients with medical injuries that occurred prior to the signing of the agreement, and for which an action may be cur' rently pending, can be forced to start those claims from the beginning, this time through arbitration. 3. Patients forfeit their right to sue any person or com' pany who contracts with IHC: The arbitration agree' ment covers "any person or entity in any way employed by, contracting with, or working for IHC' (McConkie 2004). Parties not even employed by IHC and others who are not actual signatories to the docu' ment are thereby released from any civil legal action for malpractice. For example, if IHC contracts with a company that supplies a faulty pacemaker, the patient cannot sue that company. 4. IHC retains the right to sue patients: Patients give up their right to go to trial against IHC. However, IHC reserves the right to go to trial and pursue legal action by any means against a patient. 5. Patients have no right of appeal: "Arbitration is your sole and exclusive remedy. That means that you waive your right to...seek any other legal remedy' (McConkie 2004). Arbitration is final and binding, meaning that the patient is bound by the decision of the arbitration panel. Patients waive their right to seek any other legal remedy. The ability to appeal influences both parties to reach a fair and just deci' sion. Without the right to appeal, this important check on the legal system is lost. 6. Patients sign away more than just their rights: Patients sign away the rights of their spouse, heirs, children, and unborn children: IHC maintains that parents can forfeit the legal right to sue of their minor and unborn children and that one spouse can forfeit the rights of another, even when they are separated, without mutual consent and knowledge. 7. Secrecy of arbitration proceedings: The outcome of arbitration proceeding is private and confidential-While IHC maintained that it was an important pro' 46 |
