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Medical Malpractice Arbitration Act: Michigan's Experience with Arbitration

Published online by Cambridge University Press:  24 February 2021

Mary Bedikian
Mary Bedikian*
Affiliation:
American Arbitration Asociation; 1971, 1975, Wayne State University; 1980, Detroit College of Law
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Abstract

In the 1970's, Michigan and other states were confronted with a medical malpractice crisis of astronomical proportions. The escalating number of medical malpractice lawsuits and concomitant increase in malpractice premiums for health care providers fostered a divisive climate among doctors, lawyers and patients. In response to this crisis, the Michigan legislature enacted the Medical Malpractice Arbitration Act. The Act establishes a process whereby patients may agree to arbitrate any claims rather than pursue them through the courts.

Part II of this Article discusses the historical evolution of arbitration as a precursor to its establishment as a resolution modality for health care disputes. Part III describes the statutory framework of the Michigan Medical Malpractice Arbitration Act. Part IV discusses the contractual and constitutional challenges to the arbitration statute and their resolution in Morris v. Metriyakool.

As the law respecting arbitration becomes less vulnerable to judicial perforation, this Author suggests that other jurisdictions treat the Michigan Medical Arbitration Program as an archetype, susceptible to replication.

Type
Articles
Information
American Journal of Law & Medicine , Volume 10 , Issue 3 , Fall 1984 , pp. 287 - 307
Copyright
Copyright © American Society of Law, Medicine and Ethics and Boston University 1984

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References

1 1975 Mich. Pub. Acts Nos. 140, 141 (codified at MICH. COMP. LAWS §§ 500.3051-.3062, 600.5033-.5065 (1979)).

2 See generally HOUSE COMM. ON INTERSTATE AND FOREIGN COMMERCE, 94TH CONG., 1ST SESS., AN OVERVIEW OF MEDICAL MALPRACTICE 30 (Comm. Print 1975); U.S. DEP't OF HEALTH, EDUCATION & WELFARE, MEDICAL MALPRACTICE: REPORT OF THE SECRETARY's COMMISSION OF MEDICAL MALPRACTICE 4 (1973); Lerner, , The Medical Malpractice Crisis: Response v. Reaction, AM. ARB. ASS'N WIDE WORLD ARB. 140 (1978)Google Scholar; Note, Medical Malpractice Arbitration: Time for a Model Act, 33 RUTGERS L. REV. 454 (1981).

3 See generally AMERICAN ARB. ASS'N, MICHIGAN MEDICAL ARBITRATION PROGRAM, BULLETIN No. 1 (1980).

4 See, e.g., Ducastel, , Medical Malpractice: Fact or Fiction?, 60 MICH. BAR J. 940 (1981)Google Scholar; Mengel, , The Constitutional and Contractual Challenges to Michigan's Medical Malpractice Aribitration Act, 59 J. URB. LAWS 319 (1982)Google Scholar; Sidel, , Malpractice Reform in Michigan, 1976 DET. C.L. Rev. 235Google Scholar; Note, The Michigan Malpractice Acts Requirement of a Physician on the Panel Violates the Due Process Rights to a Fair and Impartial Tribunal, 28 WAYNE L. REV. 1843 (1982).

5 See Schoonmaker, , The Medical Malpractice Arbitration Program in Michigan, INS. L.J. 370 (1977)Google Scholar; Note, supra note 4; see also, infra notes 33-56 and accompanying text.

6 See Morris v. Metriyakool 418 Mich. 423,344 N.W.2d 736 (1984); see also infra notes 34-56 and accompanying text.

7 Increasing numbers of malpractice verdicts against doctors, hospitals and other health service providers resulted in rapidly escalating malpractice insurance costs and a general deterioration of the medical profession's liability insurance marketplace. Several insurers reduced the scope of available malpractice liability coverage, and in some regions physicians experienced difficulty in obtaining insurance at any price.

Note, supra note 2, at 454.

8 The crisis elicited a national inquiry. In 1971, the Department of Health, Education & Welfare established a Medical Malpractice Commission. The Commission sponsored a 1.5 million dollar research project and conducted public hearings. The Commission concluded:

The total number of claims paid does not appear to be as important a factor in the overall problem as does the number that give rise to large settlements or awards. These relatively few claims (the 6.1 percent above $40,000) appear to be the ones that most alarm health-care providers. [M]ore than half of the claimants who receive payment get less than $3,000, the other half receive more. Less than one out of every 1,000 claims paid is for $1 million or more, and there are probably not more than seven such payments each year. There is little doubt that the number of large awards or settlements has been increasing dramatically within the recent past.

U.S. DEP't OF HEALTH, EDUCATION & WELFARE, supra note 2, at 10.

9 Mengel, supra note 4, at 319 (citing H.R. CONG. RES. 14, 78th Leg., 3d Sess., 1975 J. HOUSE OF REPRESENTATIVES STATE OF MICH. 107; H.R. RES. 15, 78th Leg., 4th Sess., 1975 J. OF THE STATE OF MICH. 127-28).

10 Ladimer, , Medical Malpractice Claims, in ARBITRATION: COMMERCIAL DISPUTES, INSURANCE, AND TORT CLAIMS 301-02 (A., Widiss ed. 1979)Google Scholar.

11 See ALA. CODE § 6-5-485 (1975); ALASKA STAT. § 09.55.535 (1983); CAL. CIV. PROC. Code § 1295 (West 1982); GA. CODE §§9-9-110 to -133 (1982); I I I . ANN. STAT. ch. 10, §§ 201-214 (Smith-Hurd Supp. 1984): LA. REV. STAT. ANN. §§ 9:4230-:4236 (1983); MICH. COMP. LAWS §§ 600.5040-.5065 (1979); N.D. CENT. CODE §§ 32-29-01 to -10 (1976); OHIO REV. CODE ANN. §§ 27.11.21-.24 (Page 1981); S.D. CODIFIED LAWS ANN. §§ 21-25B-1 to -3 (1979); VT. STAT. ANN. tit. 12, § 7002 (Supp. 1984); VA. CODE § 8.01-581.12 (1984).

12 C., WOOLEY, THE SUMERIANS 93–94 (1929).Google Scholar

13 The trilogy consisted of three steel workers union disputes: United Steelworkers of America v. American Mfg. Corp., 363 U.S. 564 (1960); United Steelworkers of America v. Warrior and Gulf Navigation Co., 363 U.S. 574 (1960); United Steelworkers of America v. Enterprise Wheel and Car Corp., 363 U.S. 593 (1960).

The Court addressed several critical issues. The principal issue was whether arbitration could be compelled by a party to a contract. The Court held that while the determination of arbitrability lies exclusively within the province of the courts, the courts should not intercede unless the arbitration clause is not susceptible to an interpretation that covers the dispute. The courts use this as a pretext to invoke jurisdiction. All doubts relating to arbitrability must be resolved in favor of the arbitration process. Warrior and Gulf Navigation Co., 363 U.S. at 582-83.

The second issue concerned the scope of judicial review. The Court held that the interpretation of the agreements was clearly for the arbitrator to decide. Courts were not empowered to substitute their own judgment for that of the arbitrator. The Court's opinion contained this significant and much-quoted paragraph:

When an arbitrator is commissioned to interpret and apply the collective bargaining agreement, he is to bring his informed judgment to bear in order to reach a fair solution of a problem. This is especially true when it comes to formulating remedies. There the need is for flexibility in meeting a wide variety of situations. The draftsmen may never have thought of what specific remedy should be awarded to meet a particular contingency. Nevertheless, an arbitrator is confined to interpretation and application of the collective bargaining agreement; he does not sit to dispense his own brand of industrial justice. He may of course look for guidance from many sources, yet his award is legitimate only so long as it draws its essence from the collective bargaining agreement. When the arbitrator's words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the awards.

Enterprise Wheel and Car Corp., 363 U.S. at 597 (emphasis added).

Third, the Court discussed the merits of a dispute brought for judicial hearing. The Court observed that it is not for the courts to make excursions into an arbitrator's jurisdiction, and render determinations on the merits of a dispute. No matter the extent that it appears the arbitrator's opinion is improper or incorrect, it cannot be modified unless the arbitrator abused or exceeded his contractual authority. Enterprise Wheel and Car Corp., 363 U.S. at 598-99; see also Note, Arbitration and the Courts, 58 Nw. U.L. REV. 466 (1963).

14 415 U.S. 36 (1974).

15 Id. at 49.

16 The Court had previously addressed this issue in United Steelworkers of America v. Warrior and Gulf Navigation Co., 363 U.S. 574, 581-82 (I960), stating:

Arbitral procedures, while well-suited to the resolution of contractual disputes, make arbitration a comparatively inappropriate forum for the final resolution of rights created by Title VII. This conclusion rests first on the special role of the arbitrator, whose task is to effectuate the intent of the parties rather than the requirements of enacted legislation. Where the collective-bargaining agreement conflicts with Title VII, the arbitration must follow the agreement. To be sure, the tension between contractual and statutory objectives may be mitigated where a collective-bargaining agreement contains provisions facially similar to those of Title VII. But other facts may still render arbitral processes comparatively inferior to judicial processes in the protection of Title VII rights. Among these is the fact that the specialized competence of arbitrators pertains primarily to the law of the shop, not the law of the land.

17 393 Mich. 583, 227 N.W.2d 500 (1975).

18 Id. at 591, 227 N.W.2d at 503-04.

19 Id. at 595, 227 N.W.2d at 506.

20 1975 Mich. Pub. Acts Nos. 140, 141 (codified at MICH. COMP. LAWS §§ 500.3051-.3062, 600.5033-.5065 (1979)).

21 DEMLOW, & DIVELY, , MEDICAL MALPRACTICE IN MICHIGAN 6 (Mich., Feb.. 18, 1975)Google Scholar.

22 Id. at 21.

23 Jones, , Medical Malpractice Insurance—An Update 81 (June 6, 1977).Google Scholar

24 1975 MICH. PUB. ACTS NOS. 140, 141 (codified at MICH. COMP. LAWS §§ 500.3051-.3062, 600.5033-.5065 (1979)).

25 MICH. COMP. LAWS § 600.5041(1) (1979).

26 MICH. COMP. LAWS § 600.5040(2)(a) (1979).

27 MICH. COMP. LAWS § 600.5042(5) (1979).

28 A patient may revoke an Agreement to Arbitrate within sixty days of being discharged from the hospital. MICH. COMP. LAWS §§ 600.5041(3), 600.5042(3) (1979).

29 MICH. COMP. LAWS § 600.5041(4) (1979).

30 MICH. COMP. LAWS § 600.5044(3) (1979).

31 MICH. COMP. LAWS § 600.5044(2) (1979).

32 The court of appeals in Michigan is an intermediate appellate court. It has statewide jurisdiction of those cases “appealed as of right.” Eighteen judges comprise the court. Each judge is assigned to three-judge panels on a rotation basis. Judges for each panel are assigned by the Chief Judge of the Court of Appeals. Unanimous decisions are not required; a majority decision establishes a statewide precedent.

33 418 Mich. 423, 344 N.W.2d 736 (1984).

34 See, e.g., Edwards v. St. Mary's Hosp., 120 Mich. App. 1, 327 N.W.2d 377 (1982); Ballard v. Southwest Detroit Hosp., 119 Mich. App. 814, 327 N.W.2d 370 (1982); Christman v. Sisters of Mercy Health Corp., 118 Mich. App. 719, 325 N.W.2d 801 (1982); Gale v. Providence Hosp., 118 Mich. App. 405, 325 N.W.2d 439 (1982); Cushman v. Frankel, 111 Mich. App. 604, 314 N.W.2d 705 (1981); Brown v. Considine, 108 Mich. App. 504, 310 N.W.2d 441 (1981); Brown v. Siang, 107 Mich. App. 91, 309 N.W.2d 575 (1981); see also Mengel, supra note 4. The Author contends that another issue can be discerned in these cases, making a fair case for what is known as “substantive due process.” The Act violates due process because it abolishes a victim's common law right to sue in a civil court for a health care provider's negligent acts. However, to justify the existence of substantive due process, a party must demonstrate “either that there is no public purpose to be served by the statute, or that there is no reasonable relationship between the remedy adopted by the legislature and the public purpose.” Mengel, supra note 4, at 325. The first portion of the legal equation can be overcome; the first part of this Article suggests that the malpractice crisis needed to be addressed by providing alternatives to litigation. Thus, the public purpose prong of the test is satisfied. Insofar as the second aspect is concerned, the remedy of the state legislature was to provide a method of dispute resolution which would expedite claims disposition, and confront the malpractice crisis. Arbitration was never intended to displace litigation but was designed as an alternative method for the plaintiff to pursue his remedy for tortuous negligent conduct. Still, it is questionable whether the second aspect of the test can be met.

35 See, e.g., Moore v. Fragatos, 116 Mich. App. 179, 321 N.W.2d 781 (1982).

36 See, e.g., Sabatini v. Marcuz, 122 Mich. App. 494, 332 N.W.2d 629 (1982); McKinstry v. Valley Obstetrics/Gynecology, 120 Mich. App. 479,327 N.W.2d 507 (1982); Lovell v. Sisters of Mercy Health Corp., 119 Mich. App. 44, 325 N.W.2d 619 (1982); Horn v. Cooke, 118 Mich. App. 740, 325 N.W.2d 558 (1982); Murray v. Wilner, 118 Mich. App. 352, 325 N.W.2d 422 (1982); Malek v. Jayakar, 116 Mich. App. 111, 321 N.W.2d 858 (1982); Rome v. Sinai Hosp., 112 Mich. App. 387, 316 N.W.2d 428 (1982); Piskorski v. Art Centre Hosp., 110 Mich. App. 22, 312 N.W.2d 160 (1981); Williams v. O'Connor, 108 Mich. App. 613, 310 N.W.2d 825 (1981); Pipper v. Di Musto, 88 Mich. App. 743, 279 N.W.2d 534 (1979).

37 Jackson v. Detroit Mem. Hosp., 110 Mich. App. 202, 204, 312 N.W.2d 212, 213 (1981), rev'd sub nam., Morris v. Metriyakool, 418 Mich. 423, 344 N.W.2d 736 (1984).

38 107 Mich. App. 110, 309 N.W.2d 910 (1981), aff'd, 418 Mich. 423, 344 N.W.2d 736 (1984).

39 107 Mich. App. at 115, 309 N.W.2d at 911.

40 Id.

41 Id. at 120, 309 N.W.2d at 913.

42 Id.

43 Id. at 121, 309 N.W.2d at 913 (Bronson, J. concurring in part, dissenting in part).

44 Id. at 134, 309 N.W.2d at 919-20.

45 Id. at 137-38, 309 N.W.2d at 921.

46 Id.

47 Jackson v. Detroit Mem. Hosp., 110 Mich. App. 202, 204, 312 N.W.2d 212, 213 (1981), rev'dsub nam., Morris v. Metriyakool, 418 Mich. 423, 344 N.W.2d 736 (1984).

48 Id. at 204, 312 N.W.2d at 213.

49 Id. at 204, 312 N.W.2d at 214.

50 Id.

51 110 Mich. App. 22, 312 N.W.2d 160 (1981).

52 118 Mich. App. 395, 325 N.W.2d 435 (1982).

53 Id. at 399, 325 N.W.2d at 437.

54 418 Mich, at 423, 344 N.W.2d at 739.

55 Id. at 423, 344 N.W.2d at 738.

56 Id.

57 Compare Moore v. Fragatos, 116 Mich. App. 179, 321 N.W.2d 781 (1982), with Morris v. Metriyakool, 107 Mich. App. 110, 309 N.W.2d 910 (1981), o/fW, 418 Mich. 423, 344 N.W.2d 736 (1984).

58 See Williams v. O'Connor, 108 Mich. App. 613, 310 N.W.2d 825 (1981); Brown v. Siang, 107 Mich. App. 91, 309 N.W.2d 575 (1981); Morris, 107 Mich. App. 110, 309 N.W.2d 910 (1981). Albeit Judge Burns dissented in this case, his dissent was predicated upon the failure to designate the nature of the panel's composition in the arbitration agreement. This omission, he contended, was the quintessence of a knowing and voluntary waiver of the right to a jury trial.

59 MICH. COMP. LAWS § 600.5041(6) (1979).

60 Id.

61 116 Mich. App. 179, 321 N.W.2d 781 (1982).

62 Id. at 186, 321 N.W.2d at 785.

63 Id. at 188, 321 N.W.2d at 786.

64 Id. at 187, 321 N.W.2d at 786.

65 Id. at 189, 321 N.W.2d at 786.

66 Id. at 194, 321 N.W.2d at 789.

67 Id. at 197, 321 N.W.2d at 790.

68 See Mengel, supra note 4.

69 See S., WILLISTON, A TREATISE ON THE LAW OF CONTRACTS § 1023 (3d ed. 1961 & Supp. 1980)Google Scholar.

70 See, e.g., Detroit Automobile Inter-Insurance Exchange v. Gavin, 416 Mich. 407, 331 N.W.2d 143 (1982); Bricklayers and Stone Masons Union, Local No. 2 v. NLRB, 562 F.2d 775 (D.C. Cir. 1977). See generally S. WILLISTON, supra note 69, at § 1721.

71 See, e.g., Lovell v. Sisters of Mercy Health Corp., 119 Mich. App. 44, 325 N.W.2d 619 (1982); Ballard v. Southwest Detroit Hosp., 119 Mich. App. 814, 327 N.W.2d 370 (1982). See generally S. WILLISTON, supra note 69, at § 1763A.

72 See Sisters of Mercy Health Corp., 119 Mich. App. at 44, 325 N.W.2d at 619 (1982). All states but three have now adopted UCC § 2-302 which reads as follows:

  1. 1.

    1. If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made, the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

  2. 2.

    2. When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.

73 Strong, 118 Mich. App. at 400-01, 325 N.W.2d at 438 (quoting Williams v. Walker- Thomas Furniture Co., 350 F.2d 445 (D.C. Cir. 1965)).

74 Id.

75 See, e.g., Morris, 107 Mich. App. at 110, 309 N.W.2d at 910.

76 See id.; see also Gale, 118 Mich. App. 405, 325 N.W.2d 439 (1982).

77 118 Mich. App. 395, 325 N.W.2d 435 (1982).

78 Id. at 402, 325 N.W.2d at 437.

79 Id. at 402-03, 325 N.W.2d at 438.

80 418 Mich, at 423, 344 N.W.2d at 739.

81 MICH. COMP. LAWS § 600.5041(3) (1979).

82 Id.

83 92 Mich. App. 546, 285 N.W.2d 369 (1979).

84 Id. at 552, 285 N.W.2d at 372.

85 Id. at 553-54, 285 N.W.2d at 372-73.

86 110 Mich. App. 514, 313 N.W.2d 344 (1981).

87 Id. at 520, 313 N.W.2d at 346-47.

88 109 Mich. App. 243, 311 N.W.2d 754 (1981).

89 Id. at 250, 252-53, 311 N.W.2d at 737-38.

90 MICH. COMP. LAWS § 600.5065 (1979)

91 APPLIED SOCIAL RESEARCH, INC., EVALUATION, STATE OF MICHIGAN MEDICAL MALPRACTICE ARBITRATION PROGRAM SUMMARY REPORT (1983).

92 Id. at 32-34.

93 Id. at 33.

94 Id.

95 Id. at 34.

96 Id. at 40. The system of utilizing professionals rather than peers was to insure that histrionics and emotional soliloquies by skilled advocates would be displaced by a cautious and informed weighing of the evidence. By being impervious to these especial machinations, the expectation is that the disposition of malpractice claims in arbitration are more representative of the plaintiff's actual injuries. In some measure, arbitration can be deemed “protectionist” by both the consumer of health care services and the medical profession. Of the 419 cases initiated between 1976 and February 29, 1984, 86 resulted in awards. There was a unanimous ruling in all but one of these decisions. Although the plaintiffs’ advocates contend that the inclusion of medical specialists on the panel favors physicians and protects health care providers, the statistical information supports a contrary conclusion. The arbitration panel is required, as are judges and juries, to follow established legal precepts and standards in determining fault.

97 Id. at 41-42.

98 Id. at 43.

99 Although the ASR survey of arbitration disclosed that dispositions in arbitration take two months less than dispositions in a court, it is recognized that this situation is, by and large, a consequence of the legal battles being waged. Now that the constitutional challenges have been resolved, the cases should progress more rapidly.

100 Address by Chief Justice Burger, American, Bar Association convention, in Las Vegas (Feb. 1984).