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Medical Arbitration Clauses, Are they Always Enforceable?

cv of physician lawyer dan horowitz


MEDICAL STAFF OF DOCTORS MEDICAL CENTER IN MODESTO v. Ivan Jeffery KAMIL  is a case that addresses whether an arbitration clause in a physician contract forces a defamation case to be arbitrated as well.  It was argued by Cheryl A. Orr, Los Angeles for Dr. Ivan Kamil and the law firm Bond Curtis LLP, and attorney Charles Bond of Walnut Creek argued for Medical Staff.   

The issue was whether a medical group and an insurance provider required arbitration of any dispute “concerning the terms of [the] [a]greement.” The insurance provider sought to terminate the agreement because of alleged inadequate performance by the medical group that was represented by Charles Bond.  The next question was whether this contract dispute based provision applied to all disputes between parties to the mediation agreement.

The court found that although the dispute under the contract may have given rise to the public statements that were potentially defamation, the broad arbitration clause had boundaries. The court ruled that the arbitration clause did not apply to the medical group's defamation action against the insurance provider.

The cost of arbitration was much less than the cost of litigation in the Superior Court.  Just the number of parties guaranteed that a Superior Court (not arbitration) venue for the case would lead to millions of dollars in attorney's fees.

In this case the plaintiffs were Valley Heart Associates Medical Group, Inc., 16 individual physicians employed by Valley Heart , and the Medical Staff of Doctors Medical Center in Modesto, an unincorporated association of physicians practicing at Doctors Medical Center (“Medical Staff”).  The defendants were Blue Cross of California, its parent corporation, Wellpoint Health Networks, Inc., individual officers of Blue Cross, a spokesman for Blue Cross (collectively “Blue Cross”), and Health Benchmarks.

This case serves as a warning to doctors who make statements to the press regarding ongoing litigation. In this era when Donald Trump comments on judges, court staff and witnesses it is tempting and seemingly not out of the ordinary to make comments to reporters or colleagues. Remember though that defamation is what recently cost Donald Trump an $ 80 million dollar verdict. California does have strong SLAPP laws which protect you if you make a public statement. But these protections are not absolute and the expense of defending a defamation action in a state court is onerous.

On the flip side, insurance companies and law enforcement agencies often issue press releases when there are large criminal arrests or major civil reimbursement lawsuits filed.

In the Medical Staff case (where Charles Bond represented the plaintiffs) the defamation took place

“Between October 29, 2003, and November 22, 2003, Blue Cross published letters, press releases and other writings and made oral statements that 59 percent of the heart procedures performed by Physicians were medically unnecessary. The statements also said Medical Staff was complicit in and knowingly permitted Physicians to perform these procedures. The statements were purportedly based on the study conducted by Health Benchmarks. Blue Cross published the statements to the Los Angeles Times, the Modesto Bee and the Sacramento Bee, and posted a press release on the website of Blue Cross. The publication of the statements resulted in stories in each of those newspapers. The statements were false, and Blue Cross twice admitted they were false. Blue Cross reaffirmed and republished the statements even after admitting they were false.”

The takeaway from this that lawsuits and arbitration clauses are complex. They may not always be enforceable and if they are enforced they may not apply to all disputes between the parties. Arbitration clauses may or may not apply in actions where medical directors are involved in lawsuits but do not have direct contracts with the hospital (but their contract with their employing corporation has such a clause.) Cases where temporary restraining order, posting of a security bond to secure potential restitution in a criminal case, restitution proceedings and other types of proceedings may or may not be included in a contractual arbitration clause.

Never agree to an arbitration (or avoid arbitration) without consulting with your medical lawyer. Daniel Horowitz and Dr. Mark Ravis (also an attorney) are expert in representing physicians in complex cases and arbitrations. Contact Horowitz & Ravis for an arbitration issues involving a medical practice.