As private equity firms acquire medical groups, their patients may notice a new piece of paperwork pushed their way — a form for binding arbitration, in which patients waive their rights to a jury trial in the event of medical malpractice, Bloomberg reports.
An increasing number of medical groups require patients to sign binding arbitration agreements before receiving care. In arbitration, the patient (the plaintiff) and the owner of the medical practice (the defendant) each select an arbitrator. The third arbitrator is generally a neutral party. The arbitration is almost always conducted in private, and the arbitrators' decisions are usually final and not necessarily explained, Bloomberg reports.
Private equity firms, which typically acquire medical practices and roll them up into large medical networks with hundreds of offices under a single brand, can find arbitration as an attractive alternative to jury trials, which can still lead to awards in the tens or hundreds of millions of dollars for plaintiffs. The process can incur lower legal fees since it can be much faster than a jury trial. Arbitration is also less visible than jury trials, which are a matter of public record.
"Juries, understandably, are likely to have less sympathy for a well-capitalized Wall Street owner than for a grieving mother who's been treated poorly," according to Bloomberg.
The financial industry has historically embraced binding arbitration, whereas healthcare has not. The insurance industry has encouraged binding arbitration between providers and patients by offering better terms to medical groups that get patients to preemptively waive their right to a jury trial. These forms can turn patients off, however. Some physicians also prefer the option of fighting charges in court if they're accused of medical malpractice and having the opportunity to clear their name publicly, Bloomberg reports.