Healthcare Neutral ADR Blog

Unintended Harm Really Does Hurt Less

richardjwebb@mac.com (Richard J. Webb) — Thu, 12 Feb 2009 11:53:00 -0500

Dan Ariely's Predictably Irrational blog pointed me to a recent article in Economist.com called "Malice Aforethought." The article reviews a study in Psychological Science by Drs. Kurt Gray and Daniel Wegner of Harvard University that essentially asked the question:

"If someone accidentally steps on your toe, it hurts. But does it hurt more if you think he did it deliberately?"

According to The Economist, their answer is that it probably does.

The article describes the tests administered by Drs. Gray and Wegner to 43 students, who assessed levels of discomfort associated with tasks that were in some cases stated to be intentionally inflicted by their study partner, and in other cases the result of random selection and contrary to the will of their study partner. Discomfort was rated by the participants on a scale of one to seven.

"...the students rated the strength of shocks they thought had been intentionally administered at 3.62 on average; those they thought unintentional averaged 3.00. The researchers also found the apparently unintentional shocks hurt progressively less as the experiment went on, whereas those perceived as deliberate continued to hurt as much."

Whether this research can be extended to non-physical harm remains to be seen. But I am willing to bet that it can. The lesson for parties in mediation is clear: When you really didn't intend to inflict the "harm" being experienced by your adversary, let him know it. This is related to, but different from the often touted value of an "apology." Apologies carry implications of fault, guilt and regret that may not be appropriate or possible at every stage in a mediation. Convincing the other side that you did not intend a result to occur is more limited and easier to do.

The greatest benefit of communicating an absence of intent is its capacity to build a bridge of understanding that is often required for a successful mediation. Without admitting fault or responsibility, one party can often say, "I understand how this makes you feel, and I just want you to know that it was never my intent for you to experience that result." This can be followed up by an explanation of what the offending party was trying to do or say, thus giving credibility to the denial of intent. Particularly in cases based upon or motivated by a perceived injustice or betrayal, this approach moves the mediation to a different level, where realistic and constructive solutions can be reached.

[Image: Car vs. motorcycle accident in Pisek, Czech Republic, February 1, 2008, by Chmee2]

Will Healthcare Reform Spread The Wealth To Primary Care?

richardjwebb@mac.com (Richard J. Webb) — Tue, 03 Feb 2009 20:03:00 -0500

Yesterday's Wall Street Journal Health Blog had a post by Jacob Goldstein on the potential struggle brewing between primary care physicians and specialist physicians over the need to free up more money for primary care - a widely accepted element of necessary healthcare reform. Earlier that day, the American College of Physicians called for more federal funding for primary care, not through "budget neutral" adjustments in the Medicare physician fee schedule (i.e., by reducing payments to specialists), but simply by paying more upfront for primary care. The WSJ Health Blog interpreted the primary care position paper this way:

"Congress could try to pay primary care docs more by cutting Medicare payments to some of the rich specialists. But the rich specialists would fight that tooth and nail, and nothing would ever get done."

Reading this, I couldn't help but recall a time in my former life when I heard a newly proposed law firm partnership compensation system described by one of its proponents this way: "It will work well because some partners will make more, and everyone else will make about the same." Regrettably, law firm profits are a zero sum game. There may be enough "stimulus" mania (i.e. printing of money) in Washington these days to save the primary care docs and the specialists from a zero sum fate, but probably not for very long.

More than two months ago, this primary v. specialist conflict was predicted and thoroughly dissected by Maggie Mahar and Niko Karvounis in The Health Care Blog, where they dubbed it the "Spread the Wealth Controversy." In the end, they concluded that money alone would not be the answer to the problem:

"Ultimately, we will probably need to grapple with primary care as a cultural issue within the medical community....in medical schools, students are sometimes looked down upon for choosing to specialize in cognitive care. Further, research has shown that the medical school curriculum actually drains students of empathy, which may contribute to de-valuing communicative, interpersonal care....The bottom line is that we need to take a multi-faceted approach to the primary care crisis."

For a more provacative treatment of the need for systemic reform of primary care, see "Mythology and Healthcare Reform" by Monte Uyemura, M.D., also in The Health Care Blog. Better yet, just subscribe to The Health Care Blog - its a great read on all matters concerning the health care system.

I have friends and colleagues on both sides of this primary v. specialist conflict. Most of them don't see it as their conflict at all, and find it unpleasant to talk about. Unfortunately, it won't likely go away.

[Image: "Artwork" with 20 Dollar bills]

Welcome Betsy Ryan's Healthcare Matters Blog!

richardjwebb@mac.com (Richard J. Webb) — Wed, 28 Jan 2009 11:09:00 -0500

I recently learned that Betsy Ryan, the President and CEO of the New Jersey Hospital Association, has started a blog called "Healthcare Matters." It appears as part of the New Jersey Hospital Association's public website.

"Healthcare Matters eamines the many issues confronting New Jersey's hospitals and their patients. Readers are encouraged to join the discussion, because healthcare matters- to all of us."

For those not familiar with Betsy Ryan, she was recently appointed to the NJHA's top management post after years of service as the organization's Chief Operating Officer and General Counsel. She has extensive experience in the legislative, regulatory, financial and operational issues facing New Jersey's hospitals. As a result, her blog is well positioned to address a subject not currently covered directly in the blogosphere.

So far, Healthcare Matters has captured some of Betsy's personal perspectives on current events affecting New Jersey's hospitals. She has already attracted some lively discussion. Subscription by RSS is easily done, and I encourage all to join in and expand this dialogue.

[Image: welcome kitty, by Portraitlady4306, August 27, 2007]

What It Means To Be Neutral

richardjwebb@mac.com (Richard J. Webb) — Thu, 22 Jan 2009 10:57:00 -0500

[An astronaut training in the Neutral Buoyancy Laboratory at the NASA Johnson Space Center]

I recently read an excellent commentary in the New Jersey Law Journal (195 N.J.L.J. 95, January 12, 2009, page 19) by retired New Jersey Superior Court Judge Harvey Weissbard entitled "The Myth of Judicial Neutrality." Available online by subscription only, it's worth digging out your old hard copy if you missed this when it first appeared. In Judge Weissbard's view:

"The notion that a judge is neutral is one of many legal fictions. The concept presumes that the judge is a tabula rasa, a clean slate." Instead, Judge Weissbard suggests, "every judge is a product of life experiences, which result in an indelible imprint we may call the judge's personal philosophy...We all know that a lifetime of practice in a particular area cannot be shrugged off when the robe is put on. And personal world views, derived from family experience or religious indoctrination, are no less likely to influence the judge."

Judge Weissbard's central point is that judicial neutrality exists only as the result of a conscious struggle by judges to recognize and subordinate their personal values and beliefs to the objectivity that all litigants are promised.

So, too, is the neutrality of the non-judicial "neutral" in arbitration, mediation and other forms of alternative dispute resolution. There is no denying the "personal philosophy" one acquires through a lifetime of professional practice, business and personal relationships. In the course of a friendly conversation or barroom debate, that "personal philosophy" would likely show itself rather clearly. But like a judge, the ADR neutral must face what Judge Weissbad calls "the proverbial elephant in the room" and handle each case fairly and objectively.

Unlike a sitting judge, the ADR professional's "neutrality" as perceived by the parties is subject to a higher test in the form of the opinion of the marketplace. Although judicial forum shopping can and does occur to a limited extent, ADR neutrals are subject to immediate and lasting negative consequences if any party believes the neutral is "biased." Parties and their counsel will simply vote with their feet.

This is the reason why "subject matter expertise" can coexist with "neutrality" on the ADR professional's resume. Very few neutrals have had a legal practice that was evenly divided among the representation of parties on all sides of the disputes in which they now claim to have subject matter expertise. In selecting an ADR professional, parties can attempt to figure out whether a candidate's legal experience potentially predisposes him or her to that party's point of view (i.e., a neutral with a shortsighted business plan), or they can select someone who has a reputation for being fair, open-minded and neutral.

Balance Billing For Healthcare Services - Who Will Be Left Holding The Bag?

richardjwebb@mac.com (Richard J. Webb) — Mon, 19 Jan 2009 11:07:00 -0500

One of the hottest areas for disputes in the healthcare industry is the practice of "balance billing" of patients by non-participating providers for services reimbursed by the patient's insurer at less than the provider's billed charges. The provider's demand to be paid the difference, or "balance," then becomes a point of contention in a three way battle between the provider, the patient and the insurer. The provider just wants to be paid its standard charge, the patient wants the insurer to cover whatever the patient owes, and the insurer wants to limit its outlay to the payment of a "reasonable" charge.

Recently, this issue has been played out dramatically in California, where regulators have mandated (and the California Supreme Court has agreed) that non-participating emergency department physicians accept an insurer's payment on behalf of its insureds as "payment in full," with the physicians having no right to collect the balance directly from the patient. The physicians may pursue the insurers, but only by disproving the insurer's determination that the physicians had received the reasonable and customary fee for such services.

Meanwhile, in New York, Attorney General Andrew M. Cuomo has wrestled one of the nation's largest insurers, United Health Group, into an agreement to overhaul the manner in which it makes its determinations of "reasonable and cutomary" fees, thereby trying to reduce the number of "balance bills" that end up as payment disputes between patients and providers.

Last week, New Jersey got into the act with the publication of proposed regulations by its Department of Banking and Insurance to amend the rules governing the Small Employer Health Benefits Program. The proposed rules would change the definition of the payment required by insurers to non-participating (or "non-network") providers from a "reasonable and cutomary" charge to the "allowed charge," with the "allowed charge" to be based on the charge profile for New Jersey developed by Ingenix. Moreover, the rule change would extend to hospitals as well as physicians. Interestingly, the Ingenix model is the same one New York Attorney General Cuomo just compelled United Health Group to stop using in New York, calling that system "unreliable, inadequate and wrong." Comments to the proposed New Jersey rule changes are due today.

When health insurers cover services provided by non-participating (or non-network) providers, but do not pay the providers' customary charges, something has to give. In the current political and economic environment, it is highly unlikely that the states will permit the insured patients to be subject to lawsuits by providers to collect a balance bill. On the other hand, although the current New Jersey proposal might appear to do so, I don't believe we are ready for a system where a health insurer will be given the authority to effectively determine what all of the healthcare providers in a state can and should be paid by insurers with whom they have no contracts.

By one means or another, the states will turn these three way disputes into two way disputes between the insurers and the providers. The rules of this game are just now beginning to take shape, as seen in the California and New York initiatives discussed above. Once those rules are clarified, alternative dispute resolution techniques will come to the fore. Individual lawsuits to collect a balance bill will disappear, and class actions to challenge the rules of the game will have been played out. The rest will be about whether providers can get insurers to understand why their charges should be paid. Providers and insurers will find better, faster and cheaper answers to those questions outside the courtroom.

[Rattlesnake sacking, from That Other Paper from Austin, Texas, March 31, 2007]

The Mediator's Proposal: Too Much Of A Good Thing?

richardjwebb@mac.com (Richard J. Webb) — Mon, 15 Dec 2008 20:01:00 -0500

Attorney John DeGroote, in his Settlement Perspectives blog, wrote last week about "The Mediator's Proposal: A Great Tool For Yesterday's Disputes." As John defines it, a "mediator's proposal" is:

"...a set of settlement terms advanced by a mediator in an effort to settle a dispute when the parties have reached an impasse. The mediator's proposal is made on a double-blind basis to all parties in separate communications; the parties are asked to accept or reject the terms as proposed, with no modification or counteroffer, within a specific time frame."

This impasse breaking tool, in John's view, is far too accessible, and as a result, may be creating more deadlocks than it solves. Calling to mind the old Mad Magazine cartoon "Spy v. Spy," in which Spy White and Spy Black engaged in acts of espionage to elicit responses that could be met with predictable countermeasures, John suggests that sophisticated counsel in many mediations are now purposefully working towards an impasse rather than towards a settlement, knowing that a mediator's proposal will be forthcoming. In his words,

"Compromise is no longer the goal of the mediation exercise; instead it becomes a play to the 'neutral,' whose power to craft the mediation proposal will make her the real decisionmaker."

John's observation and "Spy v. Spy" analogy, like everything on his blog, are insightful and well crafted. So am I worried that by making a mediator's proposal in any of my future mediations I may be working against the fundamental principles of mediator neutrality and party self-determination? Or that I will be creating more deadlocks than I am breaking? No.

First, the notion that the potential for a mediator's proposal will cause the parties to "play" the mediator rather than mediate in good faith assumes that most counsel are not already "playing" the mediator anyway. My observation is that most good counsel are always doing a little bit of both. As a mediator, I expect that, and don't hold it against the client.

Second, at least under my idea of what a "mediator's proposal" should represent, each party's effort and movement prior to the mediator's proposal are relevant to the formulation of the proposal. I would not offer a mediator's proposal unless the parties have made significant progress towards settlement, there is a discrete and manageable distance remaining between them, and they both seek my input. In that case, my proposal is intended to suggest a way for them to finish what they have started but cannot conclude despite their best efforts, and further mediation is not possible. A party who "hangs back" in the mediation process cannot safely assume that my proposal will simply "split the baby."

Finally, I think most lawyers will have more confidence in their ability to negotiate effectively through good faith mediation than they will have in their ability to double think me (a la "Spy v. Spy") into an advantageous mediator's proposal.

In the truest sense, a "mediator's proposal" is not mediation at all, and if it becomes more than an occasionally used closing technique, the process might better be called a neutral case evaluation. But as long as parties are showing up to mediate, and cases are getting settled, I can deal with the possibility that somebody is trying to outsmart me. Let's not forget, Spy White and Spy Black each lost an equal number of their encounters.

[Image: A postcard with the public domain "me worry?" face that later inspired Mad magazine's Alfred E. Neuman]

AHLA Offers Practical Toolkit For Managing Healthcare Conflicts

richardjwebb@mac.com (Richard J. Webb) — Wed, 26 Nov 2008 08:40:00 -0500

Before you head off for the long Thanksgiving weekend, consider signing up for a teleconference to be held next Tuesday that you might otherwise miss in the post holiday crush. The American Health Lawyers Association ("AHLA"), through its ADR Task Force, is offering "A Practical Toolkit for Managing Healthcare Conflict" from 3:00 to 4:00 p.m. Eastern Time on December 2, 2008. You can read the full description of the program and sign up on the AHLA's website. It is open to AHLA members and non-members.

Presumably, the teleconference will be based on the "Practical Toolkit for Managing Healthcare Conflict" just published by the AHLA, which is available as a PDF on the AHLA website. This document is a good summary of the need for conflict management in the healthcare (particularly hospital) setting, and provides a framework for hospital management to approach conflict management comprehensively. It also addresses the specific requirements for internal hospital conflict resolution processes mandated by the Joint Commission.

No doubt the current economic crisis affecting hospitals in New Jersey and throughout the country will only make conflict more prevalent and important to manage. It will be interesting to see whether some of the suggestions made in the AHLA's toolkit, which will carry a new and significant price tag, will gain traction. I believe what they say about "an ounce of prevention" applies here, but those with the checkbooks may need more convincing.

Joining in to hear this program would be a step in the right direction.

[Image: A toolbox, by Per Erik Standberg, May 13, 2006]

Caught In The Legal Recession?

richardjwebb@mac.com (Richard J. Webb) — Tue, 18 Nov 2008 12:55:00 -0500

Legal periodicals these days are filled with stories about the effects of the current economic downturn on the legal profession. Some offer dire predictions, while others see a cloud with a silver lining. The American Bar Association wants to feel the pulse of its members on this issue and share the result of its efforts. You can go to the poll being conducted for the ABA by Survey Monkey to participate. Paste this into your browser bar to participate:

http://www.surveymonkey.com/s.aspx?sm=9Dhw2g7bX_2bxfq4mW8eB1Cg_3d_3d

Tear yourself away from watching your 401(k) and give this poll about two minutes of your time. I did, and it made me feel better.

[Image: Fishing net, by Goddard Spaceflight Center Sport Fishing Club, May 15, 2003]

Honoring Those Who Serve On Veterans' Day

richardjwebb@mac.com (Richard J. Webb) — Tue, 11 Nov 2008 20:08:01 -0500

Fellow mediator and blogger Nancy Hudgins points out a great site to explore on this day in honor of those who serve in our nation's military. "Any Soldier Dot Com" will give you the address of a soldier to whom you can send a "care package" of your creation. Nancy details her own experience in sending such packages, and reminds us that it really doesn't take much to make a big difference in the lives of those who serve.

I saw Nancy's post just as I read of the efforts of two New Jersey dentists (and friends of mine), Ed Johnson and his daughter, Katelin Johnson. Ed and Katelin conduct an annual drive to buy up the Halloween candy collected by local kids and send it to our troops. The price paid is $1 per pound, and this year their package is expected to exceed 400 pounds. It will be sent to a local soldier serving in Afghanistan for further distribution there. The Johnsons pay for the candy and the costs of packaging and shipping.

Whatever you may feel about our nation's involvement in any given conflict, efforts like these bring to mind that "supporting the troops" can take many forms. Spread the word.

[Image: Joseph Ambrose, an 86 year-old World War I veteran, attends the dedication day parade for the Vietnam Veterans Memorial in 1982. He is holding the flag that covered the casket of his son, who was killed in the Korean War]

Living With Hall Street v. Mattell Under The New Jersey Arbitration Act

richardjwebb@mac.com (Richard J. Webb) — Mon, 03 Nov 2008 08:00:00 -0500

I wrote here previously about the options faced by healthcare lawyers considering the use of an arbitration agreement following the U.S. Supreme Court's decision in Hall Street Associates, L.L.C. v. Mattell, Inc. As I saw it then, the decision in Hall Street requires counsel to decide what it is about the arbitration process that would cause them to choose arbitration in the first place. It seemed to me that those who wanted the best of all worlds (i.e., the scope of authority, speed and finality of traditional arbitration and the legal safety net of enhanced judicial review), probably could not have it all. I just read an article that addresses this point in far greater detail in the context of cases arising under the New Jersey Arbitration Act.

In "Law And More: Enforced Arbitration With Enhanced Judicial Review" (New Jersey Lawyer News online, November 1, 2008), attorney Christopher Walsh of the Gibbons firm presents a thoughtful analysis of the issues faced by New Jersey counsel in enforcing an arbitration provision calling for expanded judicial review, even though the New Jersey Arbitration Act allows the parties to select this option. He focuses on the ambiguity of the Hall Street decision itself, the potential preemption of the New Jersey Arbitration Act, the effects of a removal of a state court vacatur proceeding to federal court, and the use of a choice of law provision to insulate the a desired application of the New Jersey Arbitration Act.

Although I remain struck by the incongruity of using arbitration subject to "enhanced judicial review," this is clearly a path some parties and their counsel will want to follow. In New Jersey, Christopher Walsh's article is a good place to begin.

[Image: Lesser Ury: Leser mit Lupe, c. 1895]

Program On Healthcare - Consumer ADR In Philadelphia

richardjwebb@mac.com (Richard J. Webb) — Tue, 14 Oct 2008 08:20:00 -0500

I heard from Jean Hemphill, Chair of the Health Care Group at Ballard Spahr, that she will be among the speakers at a free seminar on Thursday, October 16, 2008, entitled: "Arbitration of Health Care Claims Seminar: Reducing Malpractice Exposure and Maximizing Your Collections." The program will be held from 2:00 to 4:30 p.m. at the Philadelphia Marriott West in West Conshohocken, Pennsylvania.

Other speakers scheduled to appear include Ballard Spahr partners Alan S. Kaplinsky and Jeremy T. Rosenblum, former Duke University General Counsel David Adcock, Keith Maurer and Aaron Rose of National Arbitration Forum spin-off Forthright, and Deborah Lorber, Director of Risk Management, Drexel University College of Medicine. The agenda promises to "explain how arbitration of malpractice and billing claims can radically reduce malpractice exposure, increase success in collecting on delinquent accounts, and improve patient relations."

This seminar appears poised to argue the other side of the debate raised by current legislative efforts to ban pre-dispute arbitration agreements between healthcare providers and patients, particularly in the nursing home context. That debate should go on, but it will be important for both sides to consider alternatives other than an "all or nothing" result. Among the issues in play:

- Should agreements to arbitrate consumer/patient bills for services rendered be given the same status as agreements to arbitrate claims of medical malpractice? Should different rules apply?

- Can steps be taken to assure that patients and their families truly understand the meaning of arbitration agreements upon the initiation of a healthcare service, with enforcement of the arbitration agreement being dependent upon adherence to some "industry standard" measures?

- Can healthcare providers and ADR professionals do more to assure the neutrality of mandated ADR processes, and in particular, nullify the perceived advantage of "repeat users" of ADR services?

If you will be anywhere near Philadelphia this Thursday, consider preregistering via the Ballard Spahr website, and see if the presenters at this program address these questions. You can share your impressions by leaving a comment on this post below.

[Image: Geno's Steaks at dusk, Philadelphia, PA, by Bobak Ha'Eri, April 19, 2007]

New Jersey Hospital Seizes An Opportunity To Maintain Its Mission

richardjwebb@mac.com (Richard J. Webb) — Mon, 13 Oct 2008 08:00:00 -0500

I've written here previously about the need for all constituents at a financially challenged hospital to collaborate towards a mutually positive solution, and to seize the moment of opportunity that arises once it is clear that the status quo cannot be sustained. Waiting for a financially strapped state government like New Jersey's for help may result in others seizing control, but will not likely fix the underlying problems.

It was great to read last week that Raritan Bay Medical Center, a two hospital system with an older and larger facility in Perth Amboy and a newer, smaller complex in suburban Old Bridge, was planning to meet with potential buyers of the Old Bridge facility to secure a cash infusion for the struggling Perth Amboy hospital. I was born in Perth Amboy Hospital in 1953. No, this is not me below, but the scene probably looked much like this back then.

Writing in the Star Ledger online edition, Tom Haydon reports that employees at the two hospitals were informed of the possible sale last month, and that local and state political figures were fully behind the move. The sale would consolidate Raritan Bay's operations at the Perth Amboy facility, where Raritan Bay serves a large number of uninsured patients, while permitting the Old Bridge facility to continue operating with minimal disruption to its employees and community.

It remains to be seen whether the proposed sale will occur and have a lasting corrective effect on Raritan Bay's financial challenges. However, it is refreshing and encouraging to see the governing board and management of a hospital having the foresight and will to act, while they still have options, to remain true to their view of their hospital's mission.

[Image: Two nurses with baby in nursery, Toronto, Ontario, circa 1955, by Canadian Nurses Assoc.]

Don Vanarelli's Top 10 New Jersey Mediation Blogs!

richardjwebb@mac.com (Richard J. Webb) — Sat, 11 Oct 2008 11:00:00 -0500

I was pleased to see that New Jersey's mediation community had moved far enough into the blogosphere to warrant a "top 10" list of New Jersey mediation blogs, and that this blog had made the list. Attorney and mediator Donald D. Vanarelli came up with the list and posted it here, and it was picked up as far away as New Zealand (by Geoff Sharp here)! Among the more active blogs mentioned were Sans Mediation World of ADR (by Marvin Schuldiner), New Jersey Family Law Matters (by fellow LexBlog client T. Sandburg Durst), NJ Family Legal Blog (by the Family Law Group at Fox Rothschild) and Don Vanarelli's own blog on NJ Elder Law, Estate and Special Needs Planning, Mediation and Collaborative Family Law.

Don Vanarelli's path crossed with mine nearly 20 years ago when we both practiced law at the same firm. I saw him again last year at a meeting of the Justice Marie Garibaldi Inn of Court on ADR, prior to the launch of his blog. Don has carved out a niche in the elder law practice area that is undoubtedly enhanced by his mediation training and experience. His blog provides some icing on that cake, and hopefully, will help spur others to join the ADR dialogue.

[Image: Top ten icon, by STyx and Producer]

Do Doctors Confess Errors Only When Caught?

richardjwebb@mac.com (Richard J. Webb) — Fri, 10 Oct 2008 07:00:00 -0500

A study published on October 6, 2008 in the Archives of Pediatrics and Adolescent Medicine suggests that doctors will more frequently tell patients about errors that are obvious or likely to be detected than they will tell them of less apparent errors. A post by Jacob Goldstein in the Wall Street Journal's HealthBlog reviews the study and places its findings within the context of our evolving healthcare culture.

Doctors traditionally have been less than forthcoming in telling patients about errors because they fear potential lawsuits, and have been told consistently by defense attorneys to say nothing that could be construed as "an admission of guilt." Forces are at work to change this. These include:

- the "apology and disclosure movement" promoted by "Sorry Works";

- the enactment by some states of legislation precluding the use of "confessions" or apologies in subsequent malpractice litigation;

- required disclosure of errors that cause harm to patients under Joint Commission accreditation standards; and,

- a variety of other governmental and industry mandates for "transparency."

Aside from these external forces, many doctors and the hospitals in which they practice have begun to realize that it is in their own best interest to adopt and implement a program under which:

- medical errors are identified and disclosed;

- with an explanation of the error;

- an assurance that it will not be repeated;

- a sincere apology; and,

- an offer of just compensation.

These elements can be combined and put into practice using a variety of alternative dispute resolution techniques. The July/August issue of the Patient Safety & Quality Healthcare e-Newsletter contains an excellent summary of five approaches now deployed around the country: the "Rush Model," the VA Model," the "University of Michigan Model," the "Pew Mediation and ADR Model," and the "Internal Neutral Mediator Model."

The authors of that article, Gary A. Balcerzak and Kathryn K. Leonhardt, conclude that "the success of existing ADR models is promising. With the potential to promote disclosure, meet the needs of patients, reduce costs, and improve patient safety, ADR in Healthcare holds great promise for the future." I could not agree more.

[Image: People waiting for confession, Lourdes, France, by Jean-noel Lafargue, August 9, 2005]

Stark IV Rules Create Traps For The Unwary - But Mediation Can Help

richardjwebb@mac.com (Richard J. Webb) — Wed, 08 Oct 2008 09:30:00 -0500

Fellow LexBlog powered blogger Todd Rodriguez, writing in the Physician Law blog, points out that the Centers for Medicare & Medicaid Services ("CMS") recently made a number of substantial changes to the Stark self-referral regulations that may affect existing business arrangements of physicians, hospitals and their partners. Some of these changes went into effect on October 1, 2008, while others will take effect one year later. In particular, these changes include the following:

1. Physician owners of an organization are now deemed to "stand in the shoes" of that organization with respect to its financial relationship with a provider of services to whom patient referrals are made.

2. The definition of "entity" for purposes of Stark prohibitions has been expanded to include a person or entity who actually provides the service "under arrangements" with the person or entity who submits the claim for payment to Medicare.

3. "Per service/per click" and percentage based rent arrangements under space and equipment leases between physicians and entities to which they refer will be prohibited.

An earlier post by Michael Cassidy in another LexBlog product, the Med Law Blog, also discussed these and other Stark IV changes here.

The message for physicians, hospitals and others in a position to provide Stark designated health services or refer patients for such services is clear. Many financial arrangements previously blessed by counsel may need to be reviewed and restructured, either immediately or within the next year.

Sometimes the agreements creating these financial arrangements will contain "unwind" or "renegotiation" provisions to address material changes in law and regulations. When the agreements are silent, the parties often have a mutual interest in renegotiation, although in some cases one of the parties may seek to escape from the deal entirely by claiming it is "void for illegality."

Whether or not mandated by their agreements, the parties to a transaction thrown out of compliance by the new Stark regulations can often benefit from a mediated restructuring of their deal. As contrasted with a litigated solution (and many direct negotiations), the mediation process in this context offers confidentiality, speed and reduced legal expenses, while enabling the parties to control their own destiny. It also enables the Byzantine requirements of the healthcare regulatory scheme to be met effectively, while preserving the parties' relationship that extends beyond their monetary interests of the moment.

[Image:Computer mouse caught in a mouse trap, by Karen Rustad, October 18, 2005]

New Jersey Bar To Hold Program On New Jersey False Claims Act

richardjwebb@mac.com (Richard J. Webb) — Wed, 24 Sep 2008 21:09:17 -0500

[Image: "Trenton Makes - The World Takes," by Bob Jagendorf, July 4, 2005]

Although this blog aims to cover "the intersection of alternative dispute resolution and healthcare law," it tends to focus on the ADR side of the street. Permit me to briefly divert from that course to promote tomorrow night's program of the Health & Hospital Law Section of the New Jersey State Bar Association on the "new" New Jersey False Claims Act. The program will be held at the NJSBA's Law Center in New Brunswick, with dinner starting at 6:00 p.m. (Thursday, September 25th).

Entitled "New Jersey False Claims Act: Risk for Providers; Opportunities for Whistleblowers," the program will feature Assistant Attorney General John Krayniak, who heads New Jersey's Medicaid fraud prosecution section, Marc Raspanti, a noted whistleblower's attorney, and Linda Eynon, in-house counsel for Horizon New Jersey Health, a Medicaid/NJ Family Care managed care organization. These panelists are expected to amplify their discussion of the law with extensive lessons drawn from their personal "war stories."

This program is a must for healthcare lawyers practicing in New Jersey. For those interested in the ADR angle, I plan to raise the potential use of ADR in this setting for discussion by the panelists. It is worth noting that the AHLA is devoting an entire break-out session at their upcoming Fraud and Compliance Forum in Baltimore to "Negotiating the Resolution of Healthcare Fraud Allegations." The aforementioned Marc Raspanti is a scheduled panelist at that session as well. I guess I just can't resist wandering over to the ADR side of the street.

Welcome John DeGroote - Settlement Perspectives Blog!

richardjwebb@mac.com (Richard J. Webb) — Thu, 18 Sep 2008 11:56:45 -0500

[Image: White Stork - welcoming the newly arrived, by Manfred Heyde, June 19, 2007]

The dispute resolution blogosphere grew stronger recently with the launching of "Settlement Perspectives," by John DeGroote. Let me join fellow bloggers Nancy Hudgins ("Civil Negotiation and Mediation"), Diane Levin ("Mediation Channel.com") and Christopher Annunziata ("CKA Mediation & Arbitration") in welcoming John to the dialogue. He has already demonstrated a grasp of the settlement process and human nature that makes his blog well worth reading. And his writing style and blog design are terrific. Along with the blogs just mentioned and those of Victoria Pynchon ("Settle It Now Negotiation Blog") and Geoff Sharp ("mediator blah...blah..."), he has become a regular read from my newsfeeder. Last but not least, I note that John is a fellow Duke Law grad - with basketball season just around the corner, I'll be hoping for some Blue Devil inspired perspectives.

If you negotiate and settle disputes, whether as a party, counsel or neutral, check it out!

Mediation Offers Better Odds Than Going To Trial

richardjwebb@mac.com (Richard J. Webb) — Fri, 08 Aug 2008 13:08:00 -0500

          Advocates of mediation often point to several advantages of that process over conventional courtroom litigation: the uncertainty (risk) of a litigated outcome; imperfect decision-making by the judge or jury; lack of the parties' control over the process; and increased costs. Now we can add to this list a more practical rationale: if you are a plaintiff and you go to trial, the odds are you will do worse than if you settle.

          At least that is the conclusion of a comprehensive study of civil lawsuits as reported by Jonathan D. Glater in The New York Times online Business Section. The study, to be published in the September issue of the Journal of Empirical Legal Studies, is said to be "the biggest of its kind to date." It contrasts the results actually achieved by the parties at trial with the results that were offered to them in settlement but declined. The decisions of both plaintiffs and defendants were separately analyzed.

          According to Randall L. Kiser, a co-author of the study and a principal analyst at DecisionSet, plaintiffs made the wrong decision by going to trial in 61 percent of the cases. Defendants made the wrong decision far less often, in 24 percent of the cases. Before defendants and their counsel draw too much comfort from having been "right" more often than "wrong" by choosing to go to trial (i.e., 76% v. 24%), they should also consider that the study found getting it wrong cost plaintiffs $43,000 on average, while the cost of getting it wrong for defendants averaged $1.1 million.


          To me, the most interesting and compelling finding of the study reported by the NYTimes was this:

          "In just 15 percent of the cases, both sides were right to go to trial - meaning that the defendant paid less than the plaintiff had wanted but the plaintiff got more than the defendant had offered."

          What this means is that in 85 percent of the cases that went to trial, the outcome was outside the last zone of settlement determined by the parties prior to trial. If the plaintiff offered to settle for $100 and the defendant offered to pay $50, they both might intuitively expect the trial to yield an outcome somewhere between $50 and $100. And they would be wrong 85 percent of the time!

           The NYTimes article discusses some of the potential explanations for the consistent pattern of litigants going to trial when it is clearly the wrong choice - another interesting topic in itself. But without knowing why, parties and counsel can appreciate the consequences of these choices.

          The smart money goes to mediation.

          [Image: A roulette wheel, by Toni Lozano via flickr]

5th Circuit's Poliner Decision Boosts HCQIA Immunity

richardjwebb@mac.com (Richard J. Webb) — Fri, 01 Aug 2008 16:52:05 -0500

[Image: U.S. Hygiene Laboratory photo of Schick test, a measure of immunity from diphtheria, 1915]

          It may be the weather, the economy, or the mounting pressure on hospitals and physicians to "compete" with each other like never before, but lately I have noticed a sharp increase in matters presented to me involving "professional review activities" by hospitals against physicians on their medical staffs. These disputes come in all shapes and sizes, but always require reference to the hospital's medical staff bylaws and applicable law.

          In particular, the federal Health Care Quality Improvement Act of 1986 ("HCQIA") provides for "safe harbor" procedures to be followed in the course of any professional review activity, compliance with which is a precondition to the legal immunities offered by the Act. The HCQIA's requirements have become the industry standard, and often shape (or at least must be read together with) the provisions of a hospital's medical staff bylaws concerning the due process rights of affected practitioners.

          In 2004, a jury in the Northern District of Texas awarded a physician $366 million in damages against a hospital and members of its medical staff for action taken by them to suspend the plaintiff physician's medical staff privileges. The award in that case, Poliner v. Texas Health Systems, et al, sent shivers through hospitals throughout the country because the trial court permitted the damages award to stand (albeit substantially reduced in amount on remittitur), notwithstanding the defendants' claim of immunity under the HCQIA. This week, the Fifth Circuit Court of Appeals issued a decision in the defendants' appeal on this issue, and reversed the judgment of the District Court.

          The Court's opinion focused on whether the defendants in Poliner had adhered to the four requirements for immunity under the HCQIA:

1 - Were their actions taken in the reasonable belief that they furthered quality health care?

2- Was there a reasonable effort to obtain the facts?

3- Were adequate notice and hearing procedures afforded to the affected physician?

4- Did they reasonably believe that their adverse action was warranted by the facts known?

          There was no dispute that these were the requirements for immunity under the HCQIA.   The question faced by the Fifth Circuit was whether the District Court had interpreted these requirements correctly in applying them to the defendants in Poliner. In several important respects, the Fifth Circuit found that the District Court had erred.

          Of most importance to hospitals and counsel for physicians on both sides of these situations, the Fifth Circuit held:

- The HCQIA's reasonableness requirements were intended to create an objective standard of performance rather than a subjective good faith standard.

- The Court's review of the reasonableness of the defendants' decisions must be based on the information known to them at the time, and not what might be later shown to be true by experts or otherwise.

- Immunity does not require the defendants to have been correct or "right" in their findings, only that their findings were objectively reasonable under the facts available at the time.

- Plaintiff's allegations of anti-competitive motives and evil intent are of no consequence to the immunity offered by the HCQIA if the defendants' actions are objectively reasonable.

- Immunity from money damages under the HCQIA does not require compliance with the hospital's medical staff bylaws, as long the four requirements of the HCQIA set forth above have been met.

          This decision will greatly affect the resolution of conflicts involving professional review action, whether during the hospital-medical staff proceedings or in subsequent litigation. The trial court's decision created a perception of risk in many professional review scenarios that expanded the range of potential outcomes "on the table" during any effort to resolve these matters. Under the Fifth Circuit's decision, that range has been shrunk.

          Aside from its value as direct precedent, the decision is very clear, well reasoned and practical in its approach, and I wager it will be widely followed. Affected physicians will now get far less impact from suggestions that "the review panel was out to get me," "my expert knows more about this than you do," or "the hospital didn't follow its bylaws."

           Poliner appears to have put the balance of negotiating power back to where it was intended by the HCQIA. It clearly elevates considerations of patient safety over the right of an affected physician to seek money damages. It leaves unchanged the affected physician's right to seek remedies other than money damages (e.g., to enforce rights under the medical staff bylaws), and holds hospitals and medical staffs to a reasonable standard of conduct that they can realistically implement. It warrants their collective sigh of relief.

(Hat tip to the Horty Springer Health Law Express (join here) for being the first to bring this decision to my attention.)

Less Can Be More: Success Fee Billing And ADR

richardjwebb@mac.com (Richard J. Webb) — Wed, 09 Jul 2008 15:08:33 -0500

            [Image: "Bronze Gate" (2005) is a cor-ten steel work by sculptor Robert Morris set in the garden of the dialysis pavilion in the hospital of Pistoia, Italy.]
                                                                                                                                                                                                             For several years, I have been reading in many legal industry periodicals that "the billable hour is dead," or at the least, that alternative fee arrangements are the way of the future. But my experience has not supported these assertions. I thus read with interest an article by Debra Cassens Weiss in this week's online ABA Journal about an Ohio law firm's switch to success-fee billing. In it, Stanley Chesley, name partner in Waite, Schneider, Bayles & Chesley, describes how and why his firm "recently adopted a success-fee billing method for its corporate clients."

          Chesney told the ABA Journal.com that a "success fee" can be based on several factors including: whether the case against the defendant client is settled or dismissed: (1) within a fixed time, (2) for less than a set amount, and (3) within applicable insurance coverage. He also points out D&O insurance often pays attorneys' fees and claims out of the same pot, creating an incentive for defendants to settle earlier than later.

          Chesney's partner, D. Michael Grodhaus, not only practices using this fee model, he blogs about it at The Alternative Fee Lawyer. There, and in other online articles, there is discussion of real world clients and matters using alternative fee arrangements that make for interesting reading.

          As a mediator, reading Chesney's explanation of why "success fee" billing makes sense really got my attention. As reported by the ABA Journal:

          “'Very few cases are going to trial. Corporations are spending millions of dollars in defense costs, and [there are] huge budget issues. And at the end of the day, the cases are settled.'

          'I think many cases should be settled before summary judgment because the cost of discovery is not only the lawyer fees, it’s also the corporate executives and all the department heads' who have to spend valuable time giving depositions and assisting in discovery, he says. The days of settling on the courthouse steps are over, he says. 'All I’ve done is seize the moment.'"

          Just after reading this, I came upon a great piece in What About Clients? courtesy of Geoff Sharp in mediator blah...blah... entitled "At what price glory? The lure of ADR in a down economy." There, Dan Hull persuasively argues that even defense counsel for well funded clients should be thinking beyond merely "winning" their cases. As he puts it, "[f]or the experienced client, the cost of the lawsuit is part of the 'victory' analysis...The trick now is to win cheap* (*GCs would rather have 'no lawsuit' than a great case or defense)."

          The solution, according to Hull, is ADR: "A good arbitration panel or mediator will cut to the quality of the suit and its likelihood of success quicker than even the best American judges, who often feel obligated to give bad and iffy cases a wide berth."

          This is where "success fees" come in. Although every lawyer I talk to agrees that prolonging litigation for the sake of bigger fees is both unethical and bad for business in the long run, it cannot be ignored that lawyers paid on an hourly basis make less from a case that settles early than they do on a protracted litigation. This combines with the prevailing belief that good legal representation requires that "no stone be left unturned" to create a powerful force against the early and frequent use of ADR.

          Healthcare industry observers will recognize that very similar circumstances exist with respect to physician payment systems, which appear to be moving from a "fee for service" to a "pay for performance" model. For lawyers, "success fees" are a form of "pay for performance." They permit the lawyer to focus entirely on what is really best for the client, including containment of the client's legal fees, and to choose ADR when it will serve those interests. For many lawyers, this would mean greater and better use of ADR.

          Less can be more, for both the client and counsel.