The benefits and risks of using presuit voluntary binding arbitration as an alternative dispute resolution process in medical malpractice cases.

Author:D'Alesio, Daniel J., Jr.

Medical malpractice litigation is very costly, not only in monetary terms, but also because of the emotional toll the ordeal exacts upon the parties and their counsel during the protracted timeline to final disposition. Alternative dispute resolution (ADR) practices initiated prior to the onset of litigation can mitigate both the monetary and the emotional costs. ADR processes can be informal or formal. Risk management professionals and insurers, for example, may approach a patient to attempt to resolve a claim to the patient's satisfaction without engaging in the formal legal process. A presuit mediation program in which the patient and the health care provider agree to engage a mediator to assist them in resolving their dispute prior to more formal legal action is also an effective mechanism to resolve claims early, efficiently, and in a less-costly manner.

In Florida, formal ADR procedures are found within the state's statutory scheme at various stages of the litigation and prelitigation processes. Florida law requires that parties to a lawsuit attend court-ordered mediation in good faith. (2) The court may also order the litigants to submit to nonbinding arbitration. (3) Both of these ADR processes occur during the litigation phase of the lawsuit, often after the parties have incurred great costs. Voluntary binding arbitration is another statutory ADR process that parties to a claim may use to resolve their differences. Although this mechanism can be used in any civil dispute, (4) a specific presuit voluntary binding arbitration (PVBA) process is available to parties at the earliest stage of a medical malpractice dispute. During the statutorily required presuit stage (5) of a medical negligence claim, any party to the noticed claim may offer to submit to PVBA to resolve their case without litigation. (6) Under this statutory scheme, the defendant admits liability, and the arbitration process is used solely to determine damages to be awarded to the claimant. (7) This article introduces attorneys and insurers to the PVBA process, which, if used wisely, provides a very helpful mechanism to resolve medical negligence claims early, more cost-effectively, and with more predictable results for the parties involved.

Who May Engage in PVBA?

PVBA is not available for rights of action involving the state of Florida "or its agencies or subdivisions, or the officers, employees, or agents thereof." (8) For all other claimants and defendants, however, the PVBA process is available and may prove to be an effective ADR opportunity for all parties involved in the dispute.

Notice, Timing, and Process

During the presuit stage of a medical negligence claim, the parties may elect to have damages determined by an arbitration panel. (9) Either party may initiate the process by serving a request upon the opposing party for arbitration on damages within 90 days after service of the claimant's notice of intent to initiate litigation upon a defendant. (10) If there are multiple defendants, the claimant must submit the offer to arbitrate to each defendant against whom the claimant has asserted a claim in the presuit notice of intent to initiate litigation. (11) Conversely, if there are multiple claimants, any defendant who wishes to offer voluntary binding arbitration must submit the offer to each claimant who has joined in the notice of intent to initiate litigation. (12) Acceptance of the request by a party within the statutorily defined time period constitutes a binding commitment to comply with the decision of the arbitration panel. (13) Florida law further provides that an insurer or self-insurer of a party is prohibited from offering to arbitrate or to accept a claimant's offer to arbitrate without the written consent of the insured. (14)

Once PVBA is accepted, no other recourse or remedy is available to the claimant against any participating defendant, and the process is undertaken with the understanding that damages will be awarded as provided by general law, including the Florida Wrongful Death Act, subject to some limitations discussed in this article. (15) The consent to engage in PVBA, however, does not prevent the parties from settling their dispute at any time by mutual agreement. (16)

The timing of the arbitration hearing normally depends on coordinating the schedules of the parties and the arbitration panel. The panel consists of one arbitrator selected by the claimant, one selected by the defendant, and an administrative law judge from the Division of Administrative Hearings, who serves as the chief arbitrator. (17) If there are multiple claimants or multiple defendants, the side or sides with multiple parties will attempt to agree upon a single arbitrator as the selection for their side. If the multiple parties cannot reach a consensus, each party individually will nominate an arbitrator, and the director of the Division of Administrative Hearings will appoint one of the nominated arbitrators to the arbitration panel. (18) The arbitrators must be independent of the parties, the witnesses, and the legal counsel. (19) The PVBA statute provides that "no officer, affiliate, subsidiary, or employee of any party, witness, or legal counsel may serve as an arbitrator in the proceeding...." (20) The hearing is conducted by all of the arbitrators, but a consensus of all the arbitrators is not needed to determine factual issues or to make any final decision; only a majority of the arbitrators is required to resolve these matters. (21) The chief arbitrator, however, decides all evidentiary matters. (22) The procedural rules for conducting PVBA are promulgated by the Division of Administrative Hearings. (23)

If the parties agree to submit to PVBA, there are consequences relating to damages, costs, fees, and appeals. These consequences may be either beneficial or limiting, depending upon the status of the parties, the nature of the underlying claim, the number of claimants and defendants, and the types of recoverable damages.

Benefits to the Defendant

* Limitations on Noneconomic Damages--The defendant receives the benefit of a cap on noneconomic damages that the arbitration panel can award. These damages are limited to $250,000 "per incident," and may be reduced further by the percentage basis with respect to the claimant's capacity to enjoy life. (24) If, for example, the arbitration panel finds that the injury reduced the claimant's capacity to enjoy life by 50 percent, the maximum noneconomic damages award per incident would be $125,000.

Although the per-incident language might, at first glance, be read to limit the total aggregate recoverable by all claimants from all defendants to $250,000, in St. Mary's Hospital, Inc. v. Phillipe, 769 So. 2d 961 (Fla. 2000), reh'g den. (2000), the Florida Supreme Court interpreted the per incident language as permitting each claimant to recover noneconomic damages up to the cap of $250,000, regardless of the number of claimants. For example, if a claim is asserted by a husband who alleges injury caused by the negligence of one medical provider defendant, and his wife asserts a consortium claim, the two claimants may recover noneconomic damages up to $250,000 each, for an aggregate recovery of $500,000 from the sole medical provider defendant.

Conversely, in determining the application and calculation of the PVBA noneconomic cap in cases involving multiple defendants, the Third District Court of Appeal in Deno v. Lifemark Hospital of Florida, 45 So. 3d 959 (Fla. 3d...

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