The Managed Mediation of a Payor-Provider Health Care Dispute

Viggo Boserup, Esq.

Viggo Boserup, Esq.

by Viggo Boserup, Esq.

A Different Kind of Mediation

Typically, more than 95 percent of mediations are initiated by one or two parties who agreed on a mediator, scheduled the mediation, filed a brief and showed up at the mediation session.  The mediation session is often the first time the parties discuss the issues with the mediator or each other.  The success of mediations involving large numbers of claims and related issues, however, is often in direct proportion to the degree of pre-mediation communication, document exchanges and analyses of these unique types of claims.  It is the goal of the Managed Mediation to facilitate pre-mediation activities and greatly increase the likelihood of resolution.

Unique Qualities of Payor-Provider Disputes

What makes payor-provider disputes unique is that most often there are multiple issues, or buckets, involving decision-makers from different departments within the same organization (i.e., the claims people versus the contracts people versus the case administrators).  Each bucket may contain hundreds or thousands of separate claims that arise under the same contractual relationship.  Because the claims are individually small, the provider most often waits until it has gathered a sufficient number of claims to make filing the action or mediating the case pre-litigation worthwhile.1

These types of claims fall into several familiar categories, such as lack of authorization, medical necessity and usual and customary rates.  Typically, they will span fixed dates of service.  During the pendency of the action, there may accrue additional claims for additional dates of service or claims that were not part of the original claims but arose under the same contractual or non-contractual relationship as the original claim(s).  At the same time, the existing contract may be expiring, may have expired or may be in the process of being renegotiated during the pending action.  So by the time of the mediation, there are original claims, accrued claims, future claims certain to arise from the relationship and often contract issues that need to be addressed.

To continue reading about the managed mediation, please read the full article from Law.com.


1 In one case involving separate provider hospitals, all of whose cases were consolidated into a single civil action, Medicaid claims filed against the administering agency averaged more than 1,000 patients per hospital.  Total amount of all claims was less than $10 million, making individual actions highly impractical.  Two initial mediations set the stage for two settlements, clarification of issues and subsequent sessions.  After two years and additional sessions, all claims were resolved.

 

The Future of Mediation

It is impossible to talk about the future, present or past of mediation without putting some sort of definition to that term.  Clearly, mediation as dispute resolution has been around as long as disputes.  When defined as a process that involves a designated third-party to assist in the resolution of disputes, mediation is almost as old.  Village elders in remote parts of the world continue to be among the most effective mediators anywhere.  For purposes of this article I will focus on mediation in commercial disputes where most parties are represented by legal counsel and where the mediator has established themselves as credible and qualified to function in that role.

Many of the other writings for the Mediation Futures Project have focused on the mediators themselves and the plethora of issues surrounding effective mediation.  Some deal with the desired qualifications and certifications of mediators, while others opine on the techniques that will be the most successful in mediating disputes in the future.  These are all important issues and there are shelves of books to be read about them, but the following observations are aimed at the global trends in the mediation of disputes as an adjunct or alternative to resolving them in court.

Most pundits of the ADR profession agree that commercial mediation in the United States started its formal development in the 1970s, and in particular following the 1976 Pound Conference in Minneapolis.  Of course various forms of institutionalized conciliation, mediation and arbitration had been around much longer.  The first organizations formed to provide mediation services for a fee appeared shortly thereafter.  Today there are hundreds of companies and thousands of individuals engaging in these services, either in for-profit or non-profit companies or working in court-annexed programs.

Commercial mediation in Europe also has fairly deep roots, but again today’s most prominent ADR organizations have only been around for the past few decades, and most are in the United Kingdom.  The European Parliament passed the 2008 mediation directive to encourage the use of modern facilitated mediation in its member countries, but with little effect to date.

So what can the history of commercial mediation in the United States tell us about the future of mediation globally?  I would posit that most developed countries outside of the United States will have an experience similar to the U.S., a slow but steady adoption of facilitated mediation as a faster, easier and less expensive alternative to protracted court cases.

There are many examples where this trend is beginning to pick up momentum around the world.  New commercial mediation centers have been launched in the past year alone in Brazil, Ecuador, Mexico, Egypt, Israel, Kuwait, India, Pakistan, South Korea and China just to name a few.  But the number of cases being handled in each of these locations can be counted by the dozens, where in the U.S. there are multiple ADR providers who routinely handle hundreds or thousands of mediations per year.

The most common driver behind the growth of commercial mediation is the growth of litigation as economies develop, which inevitably leads to court backlogs that can extend cases out to 10 years or more.  In extreme examples including India, it could take as long as 20 years to see a court case to its conclusion.  With around 15 judges for every million citizens and more than 31 million open cases, the concept of “catching up” is not in their future without a massive overhaul of the Indian legal system and courts, and a heavy dose of ADR.

A fascinating example to watch is China, where courts were not widely used for commercial disputes until recent years when the economy was opened up to foreign entities, free trade zones were established and modern court systems were set up.  What followed was a steep increase in the number of lawsuits, leading to the establishment of arbitration and mediation practices in law firms and the incorporation – with government support – of private mediation entities.

There are also examples of developed economies where the legal system is sufficiently well-oiled, access to courtrooms is relatively quick, and the need for third-party mediators is reduced.  This is true in Germany, where most cases are disposed of in a few months and a form of conciliation is an accepted part of commercial legal practice, and in France where there is a relatively large judiciary to move court cases along.

It is only logical that mediation will become one of the primary tools to resolve disputes in a large number of developed and developing countries where the practice has yet to take hold and court cases are slow and expensive.  But there are numerous headwinds slowing the adoption of mediation, including resistance by lawyers who are afraid it will reduce their income, court systems that are seen as corrupt or unfair and do not support mediation or uphold out-of-court agreements, and economics that do not provide sufficient financial incentives for trained mediators to thrive.

Even with these headwinds, commercial mediation will experience a slow but steady growth all over the globe in the next decades.  The result in fairness, cost savings and user satisfaction will create its own momentum.

There’s Always Time for a Second Opinion

The litigation process is full of variables and, no matter how strong a party’s case might be, going to trial is rarely a sure thing. There is also a tendency for counsel and clients to be overconfident in their assessments of their position. Thanks to the evolution of ADR, however, parties have many options available to them to secure an unbiased, neutral evaluation or second opinion about the strengths and weaknesses of a particular case and trial strategy.

There are a full range of circumstances in which a second opinion from an experienced lawyer or former judge might be useful:

Pre-filing assessment: Deciding whether or not to file a case, and what claims to make, is a difficult decision. Input from a veteran law and motion judge, who has likely seen thousands of motions to dismiss, could effectively eliminate the risk of wasting time and money on unproductive pleading wars. An experienced neutral can also provide valuable information for a cost-benefit analyses of going to trial.

Case valuation in advance of settlement discussions or mediation: Second opinions from an experienced neutral about how to value a case for settlement purposes could be especially important for clients and counsel. Sometimes clients and lawyers need a second opinion to feel the confidence necessary to make difficult decisions and an objective assessment of the whole situation can be particularly valuable.

Mock hearings: Lawyers generally reserve mock trials for big cases that will be presented to a jury. However, it can be very valuable to secure a neutral evaluation of any aspect of a case to be presented to a judge or during administrative hearings. A second opinion based on a mock proceeding, for example, could be very useful in advance of a motion to dismiss, for summary judgment, class certification or even on especially significant motions in limine. On a more recently developing front, IP lawyers might find neutral second opinions especially useful when preparing to appear before a panel of administrative law judges in an inter-parties dispute in a Patent Trial and Appeal Board proceeding.

Preparing for an appellate briefing: Lawyers grappling with challenging appeals also can benefit substantially from second opinions about the content and style of their briefs, the manner in which they make oral arguments, and, most significantly, the strengths and weaknesses of their substantive positions. Retired appellate judges can alert counsel to key issues and vulnerabilities and can give lawyers opportunities to practice fielding difficult questions or dealing with difficult judicial personalities – thus both improving their performance and reducing the anxiety they experience when the real show begins.

As ADR becomes a more prominent feature of our legal system, it is important that counsel and clients understand the full range of options available to them. This is particularly true for neutral evaluation or second opinions, which provide valuable insights into the strengths and weaknesses of a case, helping to mitigate uncertainty while saving time and money.

First Things First: Design the Arbitration Process You Want

Richard Chernick, Esq.

Richard Chernick, Esq.

By Richard Chernick, Esq.

The principles for drafting a pre-dispute arbitration clause are straightforward.  They do require an understanding of the legal relationship, which will be the subject of the clause, some sense of the nature of disputes that are likely to arise and a basic understanding of arbitration process.

Following are the top 10 rules:

  1. Identify the scope of arbitration with precision.  The gold standard is “all disputes arising out of or relating to this Agreement . . .” This is a “broad form” clause that is invariably interpreted by courts to encompass related tort and statutory claims.  Anything less may limit the arbitrators’ power to determining only contractual disputes.
  2. Decide whether determining arbitrability shall be delegated to the arbitrators or left with the court.  Typical delegation language:  “any controversy, claim or dispute arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate…”  Courts will enforce such delegations.
  3. State who will administer the arbitration.  “The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures.”   If neither an institution nor institutional rules are mentioned, the arbitration will be non-administered (ad hoc).
  4.  Choose rules to govern the arbitration in the case of a non-administered clause:  “The arbitration shall be governed by the UNCITRAL Rules.”
  5.  Decide between a sole arbitrator and a tripartite panel and specify the method of selection of the arbitrator(s), mindful of the default process contained in the designated rules in the event of a failure to agree: “Each party shall select an arbitrator (who shall serve as a neutral arbitrator as that term is used in the Revised Code of Ethics for Arbitrators in Commercial Disputes); the party-appointed arbitrators shall jointly select the presiding arbitrator.”
  6.  Specify the governing (substantive) law: “shall be determined by arbitration in Los Angeles, California, in accordance with the laws of the State of California for agreements made in and to be performed in California.”
  7.  Address the scope of discovery unless the (default) rules are acceptable to the parties.
  8.  Choose a venue for the arbitration:  “shall be determined by arbitration in Los Angeles, California…”

For more on Mr. Chernick’s discussion on designing the arbitration process, please read the full article from Law.com.