Healthcare Neutral ADR Blog

Mediating The Healthcare Reform Debate

Richard J. Webb — Tue, 09 Mar 2010 10:04:00 -0500

Even before watching the bipartisan healthcare summit on February 25th, I began to think about how I would mediate the divide between the Obama/Reid/Pelosi reform proposal and the position staked out by the Rupublican leadership. Without knowing it, I was not alone in imagining a mediated solution to this conflict. Mediator Christopher Annunziata wrote in his CKA Mediation and Arbitration Blog that If Anyone Needs a Mediator, It's These People:

"Both sides need to move from their entrenched positions and discuss real options, not just talking points prepared by pointy headed people in Ivory Towers or tucked inside the Beltway. Having a mediator involved would be very useful."

A week later, Mediator Lee Jay Berman posted at Eye On Conflict that Real Political Reform Requires Adding a Neutral To the Mix:

"What makes mediation work is the introduction of a neutral third party. Having an unbiased person at the table can bring big picture perspective into the room when all others are mired in the fog of their power games and can't or won't see another approach...A real neutral, who wouldn't be a politician campaigning for reelection, would turn off the cameras, close the door, and encourage everyone to disclose his or her needs, pressures and underlying interests in the privacy and confidentiality of the mediation process."

Leaving aside all of the ways in which the healthcare reform debate does not resemble the setting required for effective mediation, I began to imagine what I would do if thrust into a room with a commitment from both sides to mediate in good faith. Having reviewed the parties' respective positions on numerous, individual proposals for reform, I first thought that there must be a way to parse and compromise among these proposals to reach a mutually acceptable outcome. But the more I thought about it, the clearer it became that such an effort would fail. I had an intuitive sense of why it would fail, but I struggled to explain that result in terms familiar to traditional mediation theory. In fact, I started a blog post on this subject, but put it aside, unfinished.

Shortly after that, I read a description of the Frank Sander Lecture to be given by Professor Lawrence Susskind as the opening plenary of the ABA Dispute Resolution Section's Annual Spring Conference on April 8th: "Values and Identity Conflicts: Proposing a New Dispute Resolution Doctrine." The summary, which appears in the ABA Section of Dispute Resolution's February Just Resolutions Enews (members only), turned on the light bulb in my head.

As the description of Professor Susskind's lecture puts it:

"Sometimes...disputes are more about values and identities than about interests; when this happens, traditional mediation tactics may not work."

* * *

"We define values-based disputes as those in which the parties' values and identities are so important to the dispute that they interfere with the parties' ability to settle interest-based issues, or in more severe circumstances, even to proceed with the process of dispute resolution.

* * *

Values-based disputes, thus, present special challenges for a mediator. These include: the usual interest -based techniques may lead to superficial agreements that do not really satisfy the parties' most important concerns (and, thus, may not be durable). This is especially likely when parties conceal their values and identities and initially act as if disputes are really about interests" (emphasis added).

This is exactly the problem in the healthcare reform debate. For one side, the values associated with providing high quality healthcare insurance coverage to everyone in America are central to that party's identity, and transcend all of the policy details and budgetary considerations that might be viewed as "interests." For the other side, the values associated with maintaining individual responsibility and promoting smaller government are paramount.

To really address these differences in values, Democrats would have to acknowledge that, in the end, it doesn't matter how much their healthcare reform will cost, because in their view it assures a fundamental right, and the country will just have to figure out how to pay for it somehow, someday. Not a message suitable for anyone seeking reelection in the current environment. Similarly, Republicans would have to acknowledge that it would not be a bad result if millions of people had no prospect of enjoying high quality healthcare insurance coverage, and instead had to rely on the "safety net" of Medicaid, charity care, and hospital emergency rooms until they could work their way out if it. No great sound bites to campaign on there, either. This is why the proponents on both sides of this public debate speak only in terms of the regulatory nuts and bolts, dollars and cents and parliamentary machinations that continue to make our heads spin.

I don't know how Professor Susskind's lecture will suggest the mediator should approach this dispute. My guess is that after getting the parties to acknowledge their core values, the mediator would need to facilitate a discussion in which each side accepts those aspects of the other's values that it can agree with, and then builds upon those shared beliefs. Even when values are not shared, each side can be urged to at least respect the other's values, and adopt a willingness to permit the other side to pursue those values in fashioning a mutual resolution to the conflict. I know this probably will not happen in Washington, but the thought process is instructive, and you never know who might be listening to Professor Susskind on April 8th.

Pay Doctors Less And They Will Work Less

Richard J. Webb — Wed, 03 Mar 2010 08:00:00 -0500

Really? A recent article in The Washington Post by Carla K. Johnson points out that doctors have steadily cut their work hours over the last decade, largely in response to a decline in pay for doctors' services.

"It's not that doctors are terrible slackers. Average hours dropped from about 55 to 51 hours per week from 1996 to 2008, according to the analysis, appearing in Wednesday's Journal of the American Medical Association.

That's the equivalent of losing 36,000 doctors in a decade, according to the researchers."

Is it just me, or does this headline belong with that group of newspaper clippings routinely deadpanned by Jay Leno, e.g.: "Obesity Study Blames Overeating," or "Police Raid Gun Shop - Find Weapons."

I suspect the same headline would occur if the circumstances applied to lawyers, teachers, auto mechanics, construction workers or anyone else used to being paid for what they do. As our leaders in Washington debate the various ways to pay doctors even less, keep this headline in mind when planning your next negotiation.

[Image: "A Very Difficult Case," c. 1905]

Changes In Legal Practice And The Use Of ADR

Richard J. Webb — Tue, 23 Feb 2010 09:37:00 -0500

In case you haven't noticed, the law business - the way law is practiced - has been changing at a rate uncharacteristic of the profession. Financial pressure from the economic downturn is a major contributor to this development. But change was afoot long before the subprime meltdown and stock market nosedive. The viability of the "big law" pyramid model for most purchasers of legal services has been questioned since the starting salaries of newly minted associates crossed into six figures, but only with the disappearance of easy money has awareness of the issue entered the mainstream.

I am writing about this here because of a fundamental premise of my decision to pursue a career in ADR: that the resolution of most business disputes through litigation waged by opposing traditional model law firms is not an economically viable option for the healthcare industry. By "traditional model law firms" I mean firms organized under a pyramid structure, deploying all resources available to every aspect of litigating a dispute, and billing on the basis of hourly rates. Instead, I see a growing role for solos, practice groups and firms with no "leverage" imperative, an acceptance of alternatives to hourly rate billing, and a focus on the value of specific tactics rather than an automatic adherence to the traditional litigation roadmap.

For some time, I have been following the ideas on these and related topics advanced by the bloggers linked on the left side bar of this post under the heading "Recommended Legal Practice Blogs." They each have a unique focus and style, but all are worth a look. Patrick Lamb at In Search Of Perfect Client Service and Dan Hull at What About Paris? (f/k/a What About Clients?) are consistent voices for a new, client centered approach to legal practice emphasizing service and value. I find myself agreeing with almost everything they say. Which brings me to the point of this post.

Even among the most forward thinking voices in the legal blogosphere, the potentially expanded role of ADR in carrying out the lawyer's goals of improving client service and maximizing value is not given the attention it deserves. Almost all litigated cases are settled. The business of law is much more about settling disputes than it is about litigating cases. Yet most lawyers see it the other way around. Early case evaluations, pre-claim mediation, ad hoc arbitration and success fees tied to settlement (and litigation cost savings) need to be pursued along with the more commonly deployed pre-trial mediation. Indeed, I would expect this initiative to be at the very core of a value based approach to legal practice.

Since entering the ADR field, I have wondered about the inherent conflict between the interests of the lawyer engaged on an hourly fee basis and the interests of the client in achieving the most economically efficient result. Conventional wisdom says that a good (and smart) lawyer will always forsake the opportunity to earn a larger fee in favor of achieving the best economic result for the client - because a well served client will be back for the next case and sing your praises to others. Unfortunately, I'm not sure this maxim is followed as often as we might think. It is not that most lawyers are consciously calculating their own benefit to the detriment of their clients. Instead, most lawyers are simply thinking in the way they were trained, and in the way they are encouraged to think by the traditional legal model they work within.

Most lawyers operating in the traditional legal model are like most doctors practicing in a traditional, healthcare setting with fully insured patients. When a patient presents with a complaint, the doctor deploys whatever resources are at his or her disposal to diagnose and cure the problem. Whether it is consultations with specialists, diagnostic tests and procedures, medications, surgeries or other therapies, the limits of modern medicine are the only constraint. For lawyers, depositions are like CAT Scans. It seems you can never be faulted for doing one too many.

But just as doctors have come to see the economic erosion of their traditional model of practice, so must lawyers embrace what Patrick Lamb, Dan Hull and others have been saying for years now. I'm just suggesting that the proactive use of ADR should be a bigger part of that story.

[Image: Change, by Felix Burton, May 17, 2005]

Will Healthcare Providers "Game" Quality Measures?

Richard J. Webb — Thu, 18 Feb 2010 18:12:00 -0500

I just read an interesting post over at John Goodman's Health Policy Blog, "What We Can Learn From The Airlines." Picking up on a story that 79.5% of all U.S. flights were on time last year, he points out that airlines have simply lengthened the "scheduled time" of their flights to improve the chances of "on time arrivals." He goes on to suggest that healthcare providers faced with third-party quality measures will do the same, yielding better measured quality, but no real improvement in quality of care.

Even assuming the airline assumption is correct (it wouldn't surprise me, but I really don't know), I don't think the conclusion holds for healthcare. Providers will not be able to manipulate the standards imposed by third parties in a way analogous to lengthening scheduled flight times. Perhaps the airline analogy was stretched a bit too far, and his real point is that providers will achieve quality measures in the same way that public school teachers now teach to standardized tests (by which their "quality" is judged).

The more interesting aspect of third-party quality improvement measures is that they can only have so much effect before "quality" levels off. Although a worthy goal, that range of improvement is not going to move mountains. The same is true for many of the economic incentive techniques being touted as cost cutting solutions for healthcare (e.g. "gainsharing"). You can only squeeze so much juice out of each tangerine.

[Image: Tangerine juicers via flickr, by Photocapy, December 13, 2006]

Arbitration Opt-Out Provisions Look Like Good Medicine

Richard J. Webb — Wed, 17 Feb 2010 07:17:00 -0500

Whether you believe healthcare providers should ask patients to sign pre-claim arbitration agreements, it is a practice that is growing among providers tiring of the burdens imposed by the traditional litigation process. I've previously written here why I think pre-claim agreements between healthcare providers and patients requiring arbitration are fine if made under the proper circumstances and without unfair restrictions on the patient's rights. Legislatures and courts have been getting involved on this issue, although for now the ability of providers and patients to agree to arbitrate remains widely accepted.

Nonetheless, providers seeking to require arbitration would be well advised to take steps to anticipate potential legislative and judicial limitations on such agreements, which will likely rest on the notion that they cannot be enforced because they are "contracts of adhesion." Essentially, this argument assumes there is such a vast difference in the bargaining power of the provider and the patient that the patient's consent to an arbitration agreement while in the process of seeking healthcare services was effectively coerced.

One way to deal with the "contract of adhesion" argument in advance is to include in the arbitration provision an "opt out" clause by which the patient is given a reasonable period of time to reject the arbitration requirement after the agreement is signed. In a consumer case outside of healthcare decided last week, such an opt-out clause was the key to the arbitration agreement being upheld. As reported by Shannon P. Duffy in The Legal Intelligencer via the New Jersey Law Journal online (subscription required), U.S. District Judge Michael M. Baylson decided the defendant's standard arbitration clause in Clerk v. ACE Cash Express, Inc. should be upheld:

"Here, because plaintiff was given the express opportunity to reject the arbitration agreement and failed to do so, plaintiff's argument that the arbitration agreement was presented on a take it or leave it basis fails, Baylson wrote."

This same logic would appear to be compelling in the healthcare context.

I am not suggesting that an "opt -out" clause is required or even advisable in all provider-patient arbitration agreements. Where such arbitration agreements are not already precluded by statute or binding precedent, providers may prefer to take their chances fighting off "contract of adhesion" arguments than lose the benefit of all the agreements from which patients will opt-out. However, with advice of counsel in each jurisdiction, an opt-out clause is something to consider along with all of the other techniques by which providers can seek to have their arbitration agreements upheld. They also may make mandatory arbitration provisions more palatable to providers who fear a backlash from their patients and the public.

[Image: Band-Aid brand adhesive bandage manufactured by Johnson & Johnson, by Svetlana Miljkovic, June 20, 2006]

Healthcare Neutral ADR Blog Now Featured At Mediate.com

Richard J. Webb — Mon, 15 Feb 2010 18:38:00 -0500

I'm pleased to report that Mediate.com has included this blog in its list of Featured Blogs. Mediate.com is the leading website for "everything mediation." Each week, managing editor John Ford reviews the featured bloggers' sites and selects 8 to16 blog posts to be quoted, in whole or in part, at Mediate.com. If you are not already familiar with Mediate.com, there's a variety of other useful mediation information on that website as well. You can click over there by using the badge in the column immediately to the left of this post.

Healthcare Self-Disclosure - "I'm Sorry" Revisited

Richard J. Webb — Thu, 11 Feb 2010 12:44:00 -0500

I just read an excellent article on the decision process for in-house corporate counsel considering self-disclosure of a regulatory infraction. Richard Marshall's piece in Corporate Counsel, aptly titled "Uuuhhh, Look, We Messed Up Here," provides solid, practical advice that applies to the healthcare industry as well as the more general business audience for whom it was written.

At the heart of any effective self-disclosure are the same elements often associated with effective apologies in the healthcare malpractice setting. As with patients and families who have suffered harm, just saying "I'm sorry" to a regulator is not enough. The healthcare provider in both cases must offer an explanation of what happened; proof that corrective measures have been taken; appropriate compensation for any harm caused; and a sincere acknowledgment of responsibility.

Having taken these steps, the self-disclosing provider has framed the discussion of future regulatory compliance in a more favorable way. Although a regulator receiving such self-disclosure will not be legally bound to approve a fair and reasonable resolution, most will.

[Image: Mea Culpa, by Robert Bryce Muir 2006, Sculpture from Grizedale Forest, photo by Russ McGinn, June 2006]

New Jersey Battle Over Out Of Network Waivers Of Copays Continues

Richard J. Webb — Tue, 09 Feb 2010 12:32:00 -0500

An interesting battle has developed in New Jersey over the billing practices of healthcare providers that do not "participate" in health insurance networks established by their patients' insurers. Participation in such networks generally requires the hospital, physician or other provider to contractually accept the payment schedule of an insurer as payment in full for services provided to any person covered by that insurer's network. Some providers choose not to "participate" (i.e., do not sign participation agreements) with certain health insurance networks. That choice may result from the provider's rejection of the insurer's fee schedule, a dissatisfaction with the utilization rules and practices of the insurer, or a generalized aversion to any arrangement that might interfere with the provider-patient relationship. Whatever the reason, most non-participating providers believe they have no obligation to adhere to an insurer's fee schedule when billing patients who are covered by that insurer's network. So far, so good.

The problem arises from the practices of the provider after sending the patient a bill in excess of the amount allowed by the network's fee schedule. Under most patients' coverage plans, the patient is responsible for copayments computed as a percentage of the out of network provider's reasonable charge. Such copayment percentages can range from 10% to 50%, resulting in a substantial out of pocket cost to the patient if collected by the provider. But some providers choose not to pursue collection of these copayments, either on a case by case basis, or as a matter of regular practice. Providers who "waive copayments" are happy enough to accept the insurer's payment of the "covered" portion of their fees, and their patients are happy to receive no "balance bill." The insurers are not so happy. (Note that if the patient or the insurer thinks the provider's charge is not "reasonable," a different problem arises, as previously discussed here.)

For insurers, copayments serve an important function: they create a strong disincentive for patients to utilize non-participating providers. This function is carefully calculated into the rates charged by insurers for the coverage provided to their insureds. Insurers argue that by "waiving" copayments, nonparticipating providers are frustrating the intent of the insurance coverage contract between the insurer and the insured. Although payment for any given service of a nonparticipating provider is not increased by the waiver of a copayment, the widespread practice of waiving copayments ultimately drives up the utilization of nonparticipating providers, and thus overall payments to providers are increased.

The legal conundrum created by this practice exists because it is a three way dispute involving two contracts but no three way agreement. The provider-patient relationship permits them to make any deal they want concerning payment for the provider's services. The insurer-patient relationship is based on a contract with clear rules about what the insurer will pay for and what it will not. But the provider and the insurer have no relationship and no agreement whatsoever.

An article in the New Jersey Law Journal on December 17, 2009 (subscription required) by healthcare attorney David Barmak laid out the case for the nonparticipating providers in this battle. Relying on the lack of privity of contract between the insurers and the nonparticipating providers, and citing to the New Jersey Appellate Division decision in Garcia v. Healthnet of New Jersey, Inc., he argues that recent New Jersey challenges of the waiver of copayments are "founded on economics and business decisions [with] very little basis in the law..." He concludes by saying "New Jersey law permits providers to operate their practices as they so choose with respect to the financial issues independent of Horizon's [i.e., Horizon Blue Cross Blue Shield of New Jersey's] review and control...In short, out-of-network physicians are permitted to decide for themselves whether to collect or write off an account balance based on their own judgment of what is in the practice's and the individual patient's best interest."

Responding in an op-ed commentary in this week's New Jersey Law Journal (February 2, 2010, subscription required), Thomas Eschleman claims that David Barmak's argument "is flawed and inaccurately portrays recent lawsuits by Horizon...against out -of-network [providers]." Eschelman, associate general counsel of Horizon Blue Cross Blue Shield of New Jersey, dismisses Garcia v. Healthnet as "an unpublished, and factually distinguishable, Appellate Division decision." He points to language in another case and various regulatory authorities supporting his contrary view. He challenges Barmak's "privity of contract" argument by pointing out that the nonparticipating providers hold themselves out as accepting the benefits of their patients' insurance contracts, and often assert a right to payment under those contracts. Finally, Eschelman suggests that at least one lawsuit involving Horizon included allegations that providers artificially boosted their stated charges after leaving Horizon's network.

This battle will continue until a more definitive solution arrives, whether via judicial decision, new legislation or regulatory pronouncement. Until that occurs, the resolution of any given case will require a close study of the facts, and attention to the legitimate interests of all three parties to the dispute.

[Image: A three way collision on S309 in Hezheng County, China, by Vmenkov, July 24, 2009]

Changes In Scope Of Healthcare Practice = Conflict, Too

Richard J. Webb — Thu, 04 Feb 2010 11:20:51 -0500

Earlier this week I wrote about the inevitability of conflict arising out of the leading ideas behind healthcare reform. Restructuring healthcare payment systems to reward efficiency and quality rather than volume will only be effective if they result in a decrease in overall spending. With that "smaller pie" will come disputes over how to slice the pie. But efforts to contain healthcare costs will not be limited to elegant reform measures based on lofty principles. Especially when government payers are involved, healthcare cost containment may take a more direct approach.

Witness the "turf war" between anesthesiologists and Certified Registered Nurse Anesthetists ("CRNAs") going on in California. As reported by James A. White in The Wall Street Journal Health Blog, Governor Arnold Schwarzenegger last year exercised an option under the Medicare program to permit CRNAs in California to administer anesthesia without a supervising anesthesiologist. The California Medical Association and the California Society of Anesthesiologists filed a lawsuit to block Schwarzenneger's decision. Prior to California's decision, 14 other states had opted out of the physician supervision requirement.

Healthcare cost containment by government payers can occur through licensing and enforcement proceedings that directly or indirectly change the scope of practice permitted in a given healthcare sector. A health care adviser to California's Governor told Anesthesiology News that "the purpose of the opt-out decision was to reduce pressures on and increase access to services at small and rural hospitals." Hmm. The WSJ Health Blog notes that California has the largest number of anesthesiologists in the U. S. at 5,400. Leaving aside the debate on patient safety, it is not hard to understand that paying unsupervised CRNAs costs less than paying for physician supervision.

Once states take action to change a permissible scope of practice, the action shifts to how that change will be applied by hospitals, physicians and third party payers. The California rule change did not mandate the use of unsupervised CRNAs. But when payers demand lower prices and hospitals compete for patients, possible cost reductions have a way of becoming necessary cost reductions. That's when the fun begins.

[Image: Turf War Graffiti at Glanmoelyn, Llanrug, United Kingdom, by Eric Jones, August 12, 2006]

Healthcare Reform and Inevitable Conflict: Smaller Pie Means Smaller Slices

Richard J. Webb — Mon, 01 Feb 2010 09:28:00 -0500

With all the media coverage of healthcare reform and its political ramifications, its easy to get caught up in the debate. Notwithstanding the recent setbacks, there will be some kind of reform in the not too distant future, if only because the sources of healthcare payment cannot keep up with the costs of providing care. Most healthcare economists agree that real reform will only come when the financial incentives of the current system are altered to reward quality and efficiency rather than volume.

A concept frequently put forth to address this objective is the "accountable care organization" or "ACO" (any reputable idea in healthcare must be reducible to a three letter acronym). Essentially, ACOs are associations of healthcare providers (typically, doctors and hospitals) that share responsibility for the coordinated care provided to a pool of common patients. ACOs can share clinical information and operate with some degree of financial integration. The providers in the ACO are then jointly "accountable" to the third party payers who fund the care provided to their beneficiaries by the ACO. (See the recent post in the Healthcare Economist explaining ACOs and some of the key characteristics of various ACO models.)

Another concept aimed at the same objective is "value based purchasing" or "VBP." Under VBP, the current system of Medicare payments to physicians (based on a per task menu of fees) would be converted to one based on efficiency and quality. In order to assess a physician's efficiency and quality, the services provided to any patient would have to be grouped with all services within the same "episode of care." As noted in another post at the Healthcare Economist, this process of grouping carries with it a number of unanswered questions.

Sooner or later, the use of ACOs and VBP in some form will become a reality. There is no other politically viable approach on the horizon to reducing healthcare costs. But that will be only the beginning of a wave of conflict within the world of healthcare providers and third party payers. ACOs, VBP and any other three letter acronym to come will only reduce healthcare costs by yielding a result by which the total dollars paid to doctors and hospitals for providing care to a group of patients is reduced. Otherwise, why bother? When the pie gets smaller, everyone's piece will get smaller, too. Those who provide the highest quality, most efficient services may get a larger piece, but that will only make everyone else's piece even smaller.

Most doctors and hospitals do not believe they are overpaid under the current regime. Many have experienced decreased net income over recent years. All will enter the new arena of ACOs and VBP firmly holding the "bottom line" position that they must at least maintain their financial status quo. The convergence of so many irreconcilable bottom lines will create conflicts that play out in a variety of scenarios. Who will lead the ACO? Who will be allowed in or kept out? Who will decide the internal compensation model, and what will it be? What effect will the ACO have on existing hospital-physician relationships? On existing medical practice agreements? How far will ACOs go to create, preserve and assert their control over patients in dealing with third party payers? How much of the benefit of their "efficiency" will providers share with third party payers?

[Image: Thanksgiving pie aboard U.S. naval ship in the Persian Gulf, by Photographers' Mate Airman Rome J. Toledo, November 25, 2004]

Mediation in Healthcare Interview at Disputing Blog

Richard J. Webb — Mon, 25 Jan 2010 09:29:00 -0500

Holly Hayes Bovio and Victoria VanBuren over at Disputing were very kind to post Holly's Q&A with me on Mediation in Healthcare. Disputing has become one of my favorite ADR blog reads, and Holly and I share both a Duke connection and a focus on healthcare. I'm looking forward to collaborating with them again on healthcare ADR topics of interest.

[Image: Thank You for using the Garden State Parkway, June 5, 2006, via Wikimedia Commons]

Guido v. Duane Morris: Potential Setback For Mediation?

Richard J. Webb — Fri, 22 Jan 2010 09:33:31 -0500

On Wednesday, January 20, 2010, the New Jersey Supreme Court heard oral argument in Guido v. Duane Morris, a case focused on whether a client could sue his former lawyers for malpractice based on a settlement the client had accepted years earlier. It was on appeal from an Appellate Division decision in favor of the client that was well covered by Mary Pat Gallagher on LAW.COM in July 2009. The case will require the Supreme Court to reconcile two of its previous decisions, Ziegelheim v. Apollo, 128 N.J. 250 (1992) and Pruder v. Buechel, 183 N.J. 428 (2005). The legal community is closely watching the case, and both the New Jersey State Bar Association and the Trial Attorneys of New Jersey participated as amicus curiae.

As reported by Michael Booth in the New Jersey Law Journal online edition, the oral argument found counsel and the Court struggling to parse the holdings in Ziegelheim and Pruder, with a heavy overlay of public policy considerations involving the attorney-client relationship. Although the outcome will likely be an important milestone in the law of attorney malpractice, its potential effect on the use of mediation should not be overlooked.

Guido's underlying cause of action was settled after mediation. The settlement was placed on the record in the trial court, and included questioning of the parties to confirm their understanding and agreement to be bound by the settlement. Nonetheless, the Appellate Division found that the plaintiff's later alleged realization that his lawyers had not explained the long-term value and marketability implications of the settlement was a sufficient basis for a legal malpractice claim. There was no question raised about the propriety of the mediation or the enforceability of the settlement itself (other than an argument by Duane Morris that Guido should have to ask the trial court to reform the settlement before suing his former counsel). But a Supreme Court decision in favor of the client in Guido should cause lawyers to think differently about how they settle cases in mediation.

Parties and their counsel often work long and hard in mediation sessions to hammer out a resolution to complex issues. Along the way, each party spends bargaining chips and gains concessions, the implications of which are, of necessity, evaluated on the fly. At the end of a successful day, the parties memorialize their settlement, sometimes subject to a formal agreement and court approval, sometimes not. Along the way, counsel will help their clients understand the legal consequences of their negotiation moves, and usually will take some time to review the final proposed settlement before sealing the deal. But how much of such good counsel is enough?

If parties to a settlement can look back with 20-20 hindsight, years later, and successfully assert that legal malpractice occurred based on their counsel's failure to fully explain issues such as those alleged in Guido, the parties' ability to settle many cases in mediation will be significantly hampered. This is not because parties will need to be better informed about their settlement decisions than they are now, but because counsel will need to be prepared to prove that their clients were well informed. Today, counsel can reasonably rely upon a brief conversation, or even a nod, to confirm the client's understanding on a given point. Often, that conversation or nod will follow hours of previous conversations and nods that unfolded during the course of the mediation. Will the awaited Guido decision effectively require all of that to be written down, and fully draped with the litany of disclaimers that characterize formal opinion writing? If so, each mediation session should be scheduled to include an extra day, post-settlement, for the "c.y.a." exercise.

One way of dealing with this problem is to have counsel provide a written cover letter to the client in connection with a formal settlement agreement prepared following the mediation. But this option raises the possibility that the client will balk at the formal settlement agreement and allege that the lawyer's explanatory letter came too late. If the essence of the settlement reached at the conclusion of the mediation is already enforceable, the lawyer is still in the soup.

[Image: Home-made Hungarian goulash soup, by Hu Totya, October 12, 2008]

The Bar will anxiously await the Supreme Court's decision. In the meantime, if you have thoughts about how this issue affects your participation in mediation, please share your comments.

Mediator's Proposal Roundtable

Richard J. Webb — Thu, 21 Jan 2010 12:30:00 -0500

[Image: King Arthur and the Knights of the Round Table, via Wikimedia Commons.]

I was delighted to see my comments on the use of "the mediator's proposal" included in a roundtable on that subject hosted by Steve Mehta over at Mediation Matters. Others weighing in on the topic were Lee Jay Berman, Don Philbin and Jeff Thompson. It is interesting to see how much agreement occurred among four mediators who did not discuss their answers to Steve's questions in advance.

If you are interested in mediation and do not already read Mediation Matters, you should. Steve Mehta regularly turns out well written posts on interesting mediation subjects from a very practical perspective.

Cardozo To Host Conflict At Work Symposium

Richard J. Webb — Fri, 30 Oct 2009 10:54:16 -0500

[Image: Anselm Feuerbach's painting of a scene from Plato's Symposium, 1869.]

The Cardozo School of Law Journal of Conflict Resolution will hold its 11th annual symposium in New York City on Thursday, November 5, 2009, entitled "Conflict Resolution at Work, ADR in the Private and Public Sectors." The full day program will include panels on the use of ADR in real estate, federal government and healthcare. I will be part of the panel on healthcare along with moderator Ellen Waldman, Jerry P. Roscoe, Chris Stern Hyman and Joan Ilivicky, The symposium is free, and includes breakfast, a reception and CLE credits! If you attend, please stop by and say hello.

Unintended Harm Really Does Hurt Less

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?

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!

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

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?

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?

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]