The Promise and Perils of “Med-Arb”

Maria Walsh

Maria Walsh

By Maria C. Walsh

When disputing parties tire of mediation (because it is too “weak”) or fear arbitration (because it is too “controlling”), they seek an Alternative Dispute Resolution solution that is “just right.”  Recently, I’ve heard a number of highly talented negotiators, and one famous law school, endorse med-arb as the best of all ADR worlds.  The advantages, however, come with caveats.

Through mediation, parties in conflict negotiate a dispute settlement with the assistance of a neutral mediator.  The materials, design, and strength of the deal all belong to the disputants.  If they can’t agree, the deal collapses.  Each party’s attraction to controlling the settlement terms through negotiation is tempered by the frustration that each lacks power to unilaterally impose a solution.  Sometimes mediation doesn’t feel sufficiently “muscular.”

In contrast, arbitration delivers closure because the parties give an impartial arbitrator authority to impose a decision.  The arbitrator decides the facts, judges the parties’ legal rights, and dictates the result.  Med-arb, as the name indicates, is a hybrid, sometimes proposed as a cure for a failed mediation.  Frustrated, tired of spending money, time, and effort in negotiation, parties want closure and may ask the mediator to provide a binding decision.  The neutral mediator who has weighed all the accusations and defenses, debated the various proposed solutions, and earned the trust of all parties during the mediation process, seems the perfect candidate to adjudicate the remaining irreconcilable differences between the parties.  Med-arb may be the perfect solution; but counsel considering med-arb should think about the following:

To continue reading Maria C. Walsh’s discussion on The Promise and Perils of “Med-Arb,” please read the full article from Law.com by clicking here.

Reimagining Arbitration

Richard Chernick, Esq.

Richard Chernick, Esq.

By Richard Chernick, Esq.

The rapid growth of commercial arbitration has not been without drawbacks.  As counsel have become more sophisticated in dispute process design, arbitrations now often incorporate many elements of a court trial.  Litigation constructs such as detailed pleadings, broad-based discovery, provisional relief, dispositive motions and formal rules of evidence are often now a part of arbitration.  The inevitable consequence of these changes has been increased expense and delay.

To preserve the benefits of arbitration, it is necessary to address this issue from several perspectives, starting with the arbitration clause.  A thoughtful process usually should include a negotiation or mediation step, reasonable limits on the scope of discovery, overall time limits on the arbitration, and the designation of one rather than three arbitrators whenever possible.

Limitations on discovery are crucial. The administering institution selected in the clause, and its rules, will initially define the scope of discovery.  The clause may add restrictions or additions to rules-based discovery.  The key is to choose a discovery process that is proportionate to the magnitude of the dispute, limit excessive e-discovery and give the arbitrator power to assure a reasonable scope of discovery.

Set specific time limits on arbitration and make sure they are enforced.  An outside limit could be specified (for example, one year from the commencement of the arbitration to the issuance of the final award) or the provider’s rules may be relied on where they impose such limits. Care should be taken not to set unreasonable limits, and discretion should be accorded to the arbitrator to vary these limits in exceptional circumstances.

To learn more about reimagining arbitration, please read the full article from Law.com by clicking here.

Experts Predict ADR Will Help Resolve ACA Claims

By Chris Poole

The use of ADR to resolve healthcare-related claims will increase with the implementation of the Patient Protection and Affordable Care Act (ACA).  Experts predict the increase will stem from the need to reduce costs as well as the healthcare groups that will bring new disputes for resolution.

Dr. Leonard Fromer, an assistant clinical professor at the UCLA School of Medicine and a board member of TransforMED, LLC, said the passage and implementation of the ACA is “moving healthcare from a volume-based system to one based on the value of the healthcare provided and their outcomes.”  The establishment and projected growth of Accountable Care Organizations (ACOs) is the main component that comes from the PPACA that will change the types of disputes that will arise and the manner in which they are handled and resolved, he explained.

ACOs are groups of doctors, hospitals or other healthcare provides that come together voluntarily to give coordinated high quality care to patients. ACOs were established by the PPACA to provide quality care while keeping healthcare costs down.

Under the old system, parties brought cases based on billing disputes or the meaning of contract terms, Fromer said.  However, with the creation of the ACA and ACOs, cases will begin to shift toward disputes over the metrics used by insurance companies and the federal government in Medicare cases to determine reimbursement, quality of health outcomes and value.

Michael D. Roth, an attorney and ADR neutral in Los Angeles who specializes in healthcare disputes, echoed Fromer’s suggestion regarding new disputes. “Doctors will have more interaction with providers in the system, which could lead to disputes over payments based on outcome,” he said.

ADR could also be used due to changes in the ACA, which require that a higher percentage of revenue go directly to medical care and not administrative costs, he said.  “ADR could grow in use because it is seen as a cost-saving measure since outside legal costs will count as administrative costs under the ACA,” Roth said.

Katherine Benesch, an attorney with Benesch & Associates in New Jersey, specializing in healthcare law and ADR, said a factor that will encourage the use of ADR more often “is the repeat-business nature of contract relationships in the healthcare sector.

Using mediation or arbitration to resolve a dispute will result in a settlement or decision in “less time for less money,” and the parties will “have had a say in the process,” which goes a long way toward allowing the parties to move on from the dispute and resume their business relationship.

David L. Douglass, an attorney with Sheppard Mullin in Washington, D.C., who specializes in healthcare litigation, said that in his area of practice, healthcare fraud disputes, ADR is often used in civil cases and “has become more popular with industry and government,” he noted.

According to Douglass, “Mediation is the more popular option because it allows parties in very complex cases involving numerous statutes to craft confidential settlements and resolve wide-ranging claims in one process.”

Covered or Not: Has Hartford v. Swift Opened a Faster Lane for Intellectual Property and Insurance Mediation?

Barbara A. Reeves Neal, Esq.

Barbara A. Reeves Neal, Esq.

By Barbara A. Reeves Neal, Esq.

The California Supreme Court recently issued its long-awaited coverage decision in Hartford Casualty Ins. Co. v. Swift Distribution, Inc., 59 Cal. 4th 277 (2014).  The Court, applying California state law, upheld the trial court’s granting of Hartford Casualty Insurance Company’s (Hartford) motion for summary judgment, ruling it had no duty to defend or indemnify a claim tendered by its insured under the advertising injury provision of a general liability policy.  In so doing, the California Supreme Court resolved a split of authority in the California appellate courts regarding the specificity of allegations required to trigger an insurer’s duty to defend or indemnify claims for advertising injuries.  The commercial general liability policy at issue included a provision for coverage of advertising injury.

The California Supreme Court took the case “to clarify the principles governing the scope of a commercial general liability insurer‘s duty to defend [emphasis added] an insured against a claim alleging disparagement.”  Its holding “that a claim of disparagement requires a plaintiff to show a false or misleading statement that (1) specifically refers to the plaintiff‘s product or business and (2) clearly derogates that product or business” by “express mention or by clear implication” clarifies the law on what is necessary to establish a claim of implied disparagement but fails to provide other than a passing mention of the duty to defend.  Rather, having defined what allegations had to be stated to state a covered claim for implied disparagement under “advertising injury,” and having found those allegations missing, the Court jumped to the conclusion that there was no duty to defend.

How is this holding likely to impact the settlement of the underlying cases, especially those that usually arise as infringement of intellectual property rights?  The answer is that if we take the Court’s language at face value, parties will be more willing to address the real meat of the case, the infringement issues.  This is because unless the plaintiff has clearly pled an advertisement that disparages the defendant’s product, the implied disparagement claim will fall by the wayside inasmuch as it is no longer a basis for insurance coverage.

To continue reading about Hartford v. Swift and its impact on Intellectual Property and Insurance mediation, please read the full article from Law.com by clicking here.