South Florida Hospital News
Wednesday November 21, 2018

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September 2011 - Volume 8 - Issue 3




Resolving Contractual Disputes: Considering Binding Arbitration

Healthcare providers rarely enter into a contract with an expectation that there will be disagreements that cannot be resolved amicably. As a consequence, they frequently fail to pay adequate attention to an agreement’s dispute resolution provisions. Whether it is an employment agreement, lease or some other contract, disagreements and disputes may arise that cannot be resolved without the intervention of a third party.
The time to focus on dispute resolution is when the parties are negotiating their agreements. Otherwise, they probably will find themselves embroiled in expensive, time consuming, and very public litigation.
Litigation, mediation and binding arbitration are the most commonly used mechanisms to resolve an irreconcilable dispute. Binding arbitration, the method covered in this article has a number of advantages:
Control: In arbitration the parties select and retain a private individual or panel to make determinations of fact and law, and reach a decision concerning the merits of their claims. The ability to select a knowledgeable decision-maker can be critically important in an industry as regulated as healthcare, which is fraught with unique regulations and practices. Imagine trying to educate someone who is not already familiar with the subtleties of the Stark Law or “incident to?” The opportunity to have someone who already has expertise in the area can benefit both parties.
Cost: Arbitration frequently is less expensive and resolved more quickly than litigation. Without rules of procedure and evidence, the parties and the arbitrator can agree on the scope of discovery (one of the most expensive aspects of any litigation) and set the timetable for that discovery and when the matter will be heard for disposition. In short, the parties have control over the arbitration process that is not available in litigation.
Finality: In litigation, where a judge or jury initially decides the issues, a disappointed litigant has a right to appeal that decision, thereby prolonging the uncertainty and increasing the cost of resolving a dispute. Parties to mediation may not reach a settlement and remain free to litigate their dispute. In contrast, the decision of the arbitrator/panel usually is final and binding on both parties. Absent some very unusual circumstances, once the arbitrator issues his or her decision there are very few grounds on which it can be appealed.
Confidentiality: For disputes involving parties in the healthcare industry, one of the greatest benefits of arbitration may be confidentiality. In a growing number of health care disputes, one party accuses the other of improper, unethical and/or illegal conduct. Unlike litigation, arbitration is a private dispute resolution process. Unless the parties agree, access to the proceeding is not open to the public. Similarly, the pleadings, testimony and exhibits are not disclosed. The confidentiality of the arbitration process helps to ensure that the dispute does not spill out into the public domain. In addition, unintended consequences, such as attracting the attention of the OIG or another federal or state agency responsible for regulating some aspect of the healthcare industry, are greatly reduced.
Dispute resolution provisions are like hurricane shutters; hopefully, you will never need them, but when you do they can be invaluable. Make sure your agreements address this issue and identify a mechanism before it is needed. Arbitration offers a number of benefits worth considering (i.e. control, lower cost and faster result, finality and confidentiality) for parties negotiating the dispute resolution provision of their contract.
Stephen Siegel, a Board Certified Health Law Attorney with more than 25 years experience, works out of the statewide firm’s Miami and Fort Lauderdale offices. He can be reached at (305) 373-9424 or
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