On this week’s episode, PW regular contributor Dr. MedLaw reviews a recent Disney controversy and shares ethical and legal considerations for doctors to use arbitration agreements in their practice.

Hi. Let me just introduce myself to any listeners I haven’t met before. I’m Dr. MedLaw. I’m a radiologist and malpractice attorney.

Today, we’re going to be looking at arbitration agreements in medical practices. Arbitration agreements actually just turned up in the news. You’ve probably heard about the recent tragic death of a doctor at Disney World. She died of anaphylaxis due to food allergies, and her husband then sued Disney for wrongful death, claiming that she’d been given incorrect information about the contents of the food that she had ordered.

You would think Disney would settle this quietly, but they moved to compel arbitration. They claimed that the husband couldn’t sue them because he had once signed up for their streaming service on a free trial and, as part of that, had clicked on an agreement to settle any disputes with Disney with arbitration.

Even though he didn’t even follow through with the streaming service—he dropped it after the free trial—they claim that this bound him and he could not now bring litigation over wrongful death.

I think everybody remembers the public response was explosively negative, and Disney was hemorrhaging bad publicity. So they withdrew the demand to arbitrate, the case is now on track to go to court, and it will probably be settled. But the issue about the arbitration is that if Disney had not withdrawn that demand, they might well have prevailed.

Now, of course, it’s going to sound nutty that if you agree to a term of service agreement that goes on in micro-font for 12 pages for a video trial, that could block you from having court access for a death. But the reality is that such clauses are routinely upheld in the commercial setting, even if they’re very unfair. The Supreme Court stance has been to shrug and glibly tell you, “Huh, if you don’t like it, don’t sign it,” like you have a choice.

But here’s the thing: medical care is not a typical commercial setting. So let’s look at arbitration agreements in medical practices, with the Disney situation as comparison.

Now, about 15, maybe 20 years ago when the issue of malpractice insurance cost was a very hot topic, there were a lot of proposals for “tort reform,” which basically meant making it impossible for people to sue.

The idea of having patients sign arbitration agreements that precluded them for suing for malpractice was very widely touted. The doctor would avoid a lawsuit, and the mechanics of arbitration were also very good for the doctor because there are limited discovery and cross-examination. And, frankly, arbitrators are private. They’re not like judges. They want to get rehired to do more arbitrations, so they would low ball claims so that the defense would hire them again.

But the practical reality was that when these agreements were opposed by people who wanted to be plaintiffs, courts did not uphold them. In fact, courts often saw them as contracts of adhesion.

Now, this is a contract that one party drafts and the other party has to accept as is—take it or leave it. The Disney streaming contract is an example of a contract of adhesion. But it’s one thing when a corporation does this, and all that’s really at stake if you refuse is that you can’t watch She-Hulk: Attorney at Law. It’s another thing when the party that’s demanding the limitation is actually a fiduciary for the party being forced to give up the right to sue, and literal life and death can be at stake if a patient rejects the contract and is turned away from care.

The actual starting point for the side that wants to enforce an arbitration agreement is really favorable because courts are not inherently opposed to arbitration. The idea that someone should be able to see compensation for their injuries in a court of law is very deeply hallowed, but judges are practical people. They like the fact that arbitration lightens their overstuffed dockets, and they like the idea of people settling cases that can be reasonably settled without banging each other to death through the full litigation process.

What offends judges about a demand to arbitrate a case of alleged medical injury is the power imbalance. And that’s an imbalance that exists precisely because this is about medical care. This is not like a vendor and a supplier coming to an arm’s length, negotiated agreement between merchants to arbitrate shipping issues. A patient is being presented with a no-options arbitration agreement. It’s being presented by a highly educated doctor, backed by a lawyer, and it’s against someone who’s likely less erudite and inherently vulnerable because they need treatment.

That last point goes to whether an arbitration agreement in a medical practice is even a valid contract at all. To be enforceable, a contract has to be “a meeting of the minds.” But can someone who’s ill or fears that they are ill, and wants the doctor to help them, really engage in a clear-eyed analysis of contractual rights when they’re presented with a term that can block them from getting care?

If there’s overt duress by one party over the other, that’ll invalidate a contract. Courts saw an inherent duress. It was baked into the very setting of someone needing medical help from a doctor who would withhold that care if they didn’t sign as the doctor wanted them to. So courts found that these agreements were legally “unconscionable” because the patient was in this uniquely powerless position uniquely and the benefits were so one-sided.

So, what did they do? The courts set the agreements aside and allowed the patients to sue.

Since then, there’s been an additional, very practical reason that has made these agreements unpopular: physician ratings sites have become much more a profound part of getting patients or losing them. Becoming the subject of posts describing you as being obsessed with being sued for malpractice could be ruinous to a practice (so, how good could you be as a doctor anyway, refusing to treat people who won’t first agree not to sue you?)

Disney’s the cautionary tale on that. Disney put a lot of effort over years, very successfully cultivating a reputation as a safe and accepting place for families dealing with food allergies. Then it trashed that in a single filing.

Arbitration agreements to curb malpractice claims are not entirely gone. There’s been a consolidation of practices and hospitals into these corporate behemoths. Venture capitalists are getting involved in the delivery of care, and they are always trying to shore up against being sued.

So arbitration agreements are making a comeback again. They’re not likely going to be upheld. The bottom line for an average practitioner is that using them to avoid malpractice litigation is really not the way for you to go.

However, arbitration can be used very effectively to deal with business issues with patients, like payment disputes. They can also be very useful in handing staff issues, like employment or disciplinary issues. So let’s take a look at the features that an arbitration agreement, whether with a patient or an employee in your practice, should have to make it more likely to be enforced if it’s challenged. And let’s compare that with the Disney case.

To start with, Disney could include the wide acceptance of arbitration deep within a contract for streaming that the consumer is unlikely to ever associate with a wrongful death action, and still have it be presumably enforceable, as long as it wasn’t deceptive. But a doctor’s going to be held to a higher standard of presentation.

The arbitration agreement should be clearly headed as such, written in readable font, and in lay language. Most importantly, not everyone knows what arbitration means. It should specifically state that the right to sue is being given up. And it should also say that the prospective patient or employee may want to consult an attorney first.

Disney could also enforce an arbitration clause from a contract that the consumer then rejected. Remember, the husband let the free trial lapse. That arbitration agreement was based solely on it having been accepted when the contract was initiated. The doctor needs to appear to be more fair and should include a clear revocation procedure. As long as the treatment hasn’t started or the employment hasn’t begun, there should be a period where the person can pull back and say, “No, I don’t want to do this,” and that ends it.

Disney services are desirable and fun, but they’re not essential, and a prospective customer can just walk away from them. But a doctor who wants to enforce a restriction on a patient’s or an employee’s legal recourse will need to show that the patient or the employee had options and still chose to knowingly accept arbitration as a requirement for joining the doctor’s practice.

Now, there’s obviously less of an issue as far as employees—they could just look for another job. But medical care is a unique transaction because of what can be at stake. And the circumstances of the arbitration agreement should reflect that an arbitration agreement with a patient can only be proffered as far as elective care. The prospective patient should also have enough time before care has to start to look for alternatives.

For example, if a patient is referred to your cardiology practice for an acute arrhythmia, they don’t have time to shop around, even though it’s not an emergency that drives them to the ER. It is elective care, and they’re making an appointment. But that referring family practitioner needs the answer on the patient now, and the patient needs your diagnosis. You can’t stick an arbitration agreement into that. There just isn’t enough time on the calendar for the patient to shop.

If there is no alternative—let’s say that you are the only cardiologist with the ability to do the diagnosis that’s required in that local area, or everybody else doesn’t have an opening when needed, or the prospective patient can only afford to see you because you’re the only one who takes their coverage. Even if you allow some time, that sort of constructive inability can move the arbitration agreement from acceptable as drafted into being functionally unconscionable to enforce in the eyes of a court. So you want to know your circumstances before you proffer an arbitration agreement.

Purely commercial arbitration agreements like Disney’s can also give the company sole control over choosing the arbitrator. But a doctor should not reserve that overweening power if they want their agreement with an employee or a patient to stand up if it’s challenged. Joint selection is much more likely to be upheld.

Finally, unlike a single click on a long terms of service recitation, the doctor should have every page of an arbitration agreement individually initialed, as well as having the entire agreement signed at the end, to show that the patient or employee looked at every page of a document in which they waived this. Very important.

And let me just say one thing: the best thing is to have an arbitration agreement that is only one page long.

In summary, the doctor, as the stronger party and the source of an essential service, must show that they were scrupulously fair and an arbitration agreement really was an agreement, rather than just a ploy or a coercion. Thanks for the chance to talk about this important topic.

Thanks for listening. Stay tuned for next week’s episode. To hear more, follow PeerPOV: The Pulse on Medicine on Apple Podcasts, Spotify, or Amazon Music.

This transcript has been edited for readability.