On June 20, 2013, the Florida Supreme Court held in Franks v. Bowers that a medical practice’s custom pre-surgery binding arbitration agreement (the “Agreement“) was unenforceable because it violated key public policy objectives of Florida’s Arbitration Code as well as Florida’s Medical Malpractice Act.
A. What went wrong?
In short, the Agreement was too one-sided. It sought to compel arbitration, limited damages, and removed key requirements imposed on the physician, such as the requirement to admit fault. In other words, too much of a good thing … really wasn’t a good thing.
B. It’s about the give as well as the take…
The essence of the Court’s position was two-fold: (1) that language which contravenes the Medical Malpractice Act’s public policy purposes of equity, expediency, and cost minimization may be rendered unenforceable; and (2) that any contract which seeks to enjoy the benefits of the Florida’s Arbitration Code, must necessarily adopt each of the Arbitration Code’s provisions (and not merely cherry pick the beneficial ones). Paraphrasing Justice Pariente’s concurring opinion: If an agreement causes a person to give up the benefit of the right to access to court, such as in binding arbitration, then the person giving up that right must receive an “equal” benefit in return.
C. What should the agreement include, or not include?
While stopping short of developing a structured checklist for each arbitration agreement, the Justices have provided a clear list of do’s and don’ts:
DO: Review your current arbitration agreement against Florida’s Arbitration Code to ensure that it includes and/or addresses all relevant components.
DON’T: Attempt to limit the key provisions of Florida’s Medical Malpractice Act. These key provisions include:
- The relaxed evidence standard; meaning, don’t attempt to draft language which seeks to limit the discoverable/admissible evidence in the arbitration hearing;
- Key responsibility and damage provisions, such as the concept of joint and several liability—a provision which extends total damages to each of the several potential defendants to be sorted out between them;
- The requirement to pay the arbitration award in a prompt, expedient manner;
- The interest penalties for failing to promptly pay an arbitration award; or
- The ability of an judge or panel of judges to review the arbitration award upon the showing of some grave injustice (termed by the courts as “manifest injustice”).
Those reluctant to revise their current agreements, should take heed: The Court appears clearly opposed to any attempt to impede the “prompt resolution of claims to reduce costs.” Therefore, any language that seeks to limit the physician’s admission of guilt may have you explaining your case before a jury of your peers. Consider yourself warned: The glacier lies ahead.