Arbitration clauses have become more and more common in many types of contracts between consumers and businesses over the last 50 years, However, the dramatic increase in the use of arbitration clauses in medical care agreements should be of special concern to consumers and their advocates. By agreeing to an arbitration clause, a patient or their family may be giving up their right to sue the other party in state or federal court and instead assenting to resolve disputes through what is known as binding arbitration. Binding arbitration is a process that closely resembles a judicial proceeding, although the “judge” of an arbitrated dispute is simply a private party, and the court rules and procedures that are used in judicial proceedings may not apply.
Binding arbitration is promoted by companies and industry groups as a simplified way of resolving disputes that could get out of hand if they were processed through a full-fledged judicial proceeding. Complainants are legally entitled to a fair process through arbitration, and state and federal laws are applied to their claims.
In reality, the differences between an arbitration proceeding and a judicial proceeding almost always favor the large company, with consumers and patients receiving the short end of the agreement. A recent New York Times article discussing the use of arbitration agreements in nursing home contracts notes that although agreeing to binding arbitration cannot be mandatory for a prospective patient, the agreements are often structured to hide that fact. Many consumers agree to arbitrating potential disputes because they don’t know they have the right to refuse it.