New Jersey Healthcare ADR Lawyer & Attorney : Healthcare Neutral : Richard Webb : New York Metropolitan Area

              
          [Image: Douglas Fairbanks as Robin Hood; a screenshot from the 1922 United artists film Robin Hood.]

          Writing in the ABA Journal Law News Now, Debra Cassens Weiss alerted me to an article in today's New York Times about the practice of judges becoming "Robin Hoods With Extra Settlement Money."  Adam Liptak describes in "Doling Out Other People's Money" what often happens when class action settlements conclude with settlement funds going unclaimed.   It  appears that many judges presiding over class action settlements  have adopted the practice of awarding such "left over" funds to charities that carry out some purpose deemed consistent with the objective of the settlement.  Often, although these charities carry out good works, their connection to the  subject  matter of the case is tenuous at best.
          The notion that the cy pres doctrine supports such redistribution of funds is a stretch.  It would be far more consistent with that doctrine to pay the "extra" funds to those plaintiffs who did sign on for the settlement, at least up to the amount of their legitimate damages.  Alternatively the funds could be placed in trust for the benefit of similarly injured parties who have not been identified.  Of course, the funds also could be returned to the defendants who paid them.
          Maybe I am missing something (class action counsel jump in here), but why are these issues being left to a judge to decide?  The likelihood of residual funds being available at the end of a settlement should not be a surprise to the parties at the time a class action settlement is reached.  The disposition of such funds can and should be negotiated and settled by the parties in advance.  Essentially, the funds paid by the defendant in settlement should never become "excess" or "left over" in the first place, but simply directed by agreement to contingent beneficiaries.  The disposition of these potential funds can provide another item of value to be accounted for in structuring class action settlements, thus permitting greater flexibility and potential for a settlement to be reached.

• Email This
• Print
• Comments
• Trackbacks

         
            [Image:  Photo of Poker Table at the 2004 World Poker Tour 5 Diamond Bellagio by        
            flipchip/LasVegasVegas.com]

           As reported by Debra Cassens Weiss in the ABA Journal, a front page story in today's Wall Street Journal highlights the growing importance of accounting for subrogation claims of healthcare payers when resolving personal injury disputes.  The WSJ article recounts the very sad story of Deborah Shank, a former Wal-Mart employee who was permanently brain damaged in a non-work  accident.  Wal-Mart's health plan paid $470,000 towards her medical expenses, but after the Shank family settled its underlying tort claim against an unrelated trucking company,  Wal-Mart sued the Shanks to recover the medical expenses that had been paid by Wal-Mart, citing a subrogation provision in the Wal-Mart health plan.  So far, two courts have upheld Wal-Mart's claim.

          The tragic circumstances of the Shank family and the huge economic disparity between the parties' drive the focus of the WSJ article and subsequent commentary in the WSJ Health Blog following a post by Joe Mantone.

          Leaving aside the moral debate that naturally arises on these facts, there is a lesson here for neutrals and all counsel involved in resolving disputes that include the payment of significant healthcare expenses by someone.  It is risky business to fail to account for all interested players, including the healthcare payers who may be well behind the curtain when a settlement is being crafted.  (This is not to say that a better result could have been obtained for the Shanks - the limits of the defendants' insurance and Wal-Mart's approach to settlement may have made the outcome unavoidable.)

          What Joe Mantone calls "a cottage industry of auditing firms" is helping payers to recoup what they estimate is between 1% and 3% of healthcare spending - big numbers by any standard.  And the fact that a company like Wal-Mart would take on the public relations cost of pursuing its claim against the Shanks tells you that big business is prepared to make the pursuit of healthcare expense subrogation a standard operating procedure. 

          Other topics spring to mind, some of which may be resolved by state law but some are not.  Can the settlement be lawfully structured to minimize the injured party's subrogation exposure?  Does it matter if the healthcare payer participates?  Has notice?  What is the neutral's role and ethical obligation in this regard?  

• Email This
• Print
• Comments
• Trackbacks

                
          [Image: You talking to me? Photo by Ped Xing, Austin, Texas, 2005]

          Writing in his HealthBlawg, David Harlow tells the tale of Boston's financially distressed Carney Hospital and asks the question: When do you pull the plug on a hospital?  The story is one that has already played out at several other hospitals in the northeast over the last year, and which looms at many others.  Recounting a story and an editorial appearing in the Boston Globe, Mr. Harlow's account captures the familiar push and pull between the major "stakeholders" in these cases: the governing board (or owner) of the facility, the state regulatory authorities, the city in which the hospital is located, the financing agency or bondholders of the facility's debt, and the facility's rank and file employees (or their union). 

          These parties may, in fact, be holding productive talks, but more likely remain engaged in "a lot of wishful thinking."  So, as Mr. Harlow asks, what is to be done?

          If Carney is like most distressed hospitals, the stakeholders are approaching their  predicaments with the assistance of good legal counsel, each focused on protecting them against their respective "worst case" scenarios.  There is no lawsuit or other articulated conflict uniting the stakeholders in a common discussion, much less a common dispute to be resolved.  Thus, whatever "talking" there is takes place between only two of the stakeholders at a time and tends to be of the "doomsday" variety.  This approach ignores the fact that each stakeholder is very unlikely to achieve its "best case" scenario by unilaterally imposing it on the others, and that each stakeholder acting unilaterally will probably obtain a worse result than it would if all of them pooled their interests in a common discussion.

          David Harlow suggests one such collaborative outcome, and mentions another offered by Paul Levy in Running A Hospital.  I don't know whether their solutions would work.  My point is that all of the stakeholders need to talk with each other if the best alternative for all is to emerge.  The services of a neutral, whether called a mediator, negotiator, or facilitator, would greatly improve the chances for that best alternative to occur.  By focusing on that end result, and facilitating a collaborative process, the neutral would supply the catalyst needed for the stakeholders to achieve what they currently cannot see.  Surely in the nearby hotbed of dispute resolution there are a number of highly qualified candidates for that role.  It would be time, money and energy well spent.

• Email This
• Print
• Comments (1)
• Trackbacks (1)

        
         [Image: Omaha jazz great Lewis "Luigi" Waites plays the vibraphone during a tribute to Duke Ellington, July 29, 1999, Photo by Jim Williams, for "Joselyn Art Museum: Jazz on the Green," a Nebraska Local Legacies project]

         I just heard from Debra Gerardi, Chair of the Program on Healthcare Collaboration and Conflict Resolution at the Werner Institute for Negotiation and Dispute Resolution at Creighton University.  Debra alerted me to an upcoming program at the Werner Institute that should be considered by anyone interested in healthcare dispute resolution.  Creating Cultures of Engagement in Health Care - International Conference and Dialogue: New Models for Addressing Conflict, Disruption and Avoidance in Health Care, will be held at Creighton in Omaha on June 3-5, 2008.

        As stated in the program description on the Werner Institute's website, the purpose of the conference is to provide participants with an opportunity to:

1. Learn how to apply principles and practices from the field of dispute resolution to upcoming mandates for change including the new 2009 JCAHO leadership standards related to disruptive behavior and conflict management;
2. Learn the principles guiding conflict resolution practice in health care including the essential components for conflict management training programs;
3. Working with experts in health care mediation, negotiation and collaborative law, create an action plan for advancing the outcomes of the conference dialogues and create an ongoing community of experts.

       Thanks again, Debra! 

• Email This
• Print
• Comments
• Trackbacks

     
           [Image: Photo of Justices of the U, S, Supreme Court, March, 2006]

          Today, the U.S. Supreme Court will hear oral argument in the most important ADR case of the year, and one that could have a major impact on healthcare dispute resolution for years to come.  Hall Street Associates, L.L.C. v. Mattel, Inc., 196 F. App’x 476 (9th Cir. 2006), cert. granted, 127 S. Ct. 2875 (May 29, 2007), is not a healthcare case, but one arising from a commercial transaction in which the parties entered into a post-dispute agreement to arbitrate. In particular, their arbitration agreement provided that the federal district court could vacate, modify or correct the arbitrator’s award to correct legal or factual error, grounds not expressly stated in the Federal Arbitration Act   
(“FAA”).  The legal issue presented for decision, on which the Circuit Courts of Appeal are divided, is whether the FAA precludes parties from providing for more expansive judicial review of an arbitration award than the narrow scope of review specified in the FAA (under which awards can be vacated only when obtained by fraud or arbitrator misconduct, or if in excess of the arbitrator’s authority). 
          The legal arguments on both sides of this case are well crafted and quite interesting.  Ross Runkel, in his Law Memo, provides a summary, instant access to all of the briefs, and other sources. Sarah Cole, writing in Indisputably, handicaps the outcome and favors the argument for parties’ expansion of judicial review of arbitration awards.  On the law she may be right, but I hope her pick is wrong. 
          There are enough arguments based on legislative intent, case law and statutory construction to support an outcome on either side of this case.  My view is a simpler and more practical one.  If the Supreme Court, in effect, tells all of the lawyers in America that they can assure that their clients’ interests can be “fully protected” in arbitration by drafting an expanded provision for judicial review, that is what America’s lawyers will do.  Indeed, some  might consider it malpractice to do otherwise.
          In an industry like healthcare, which is just starting to understand and realize the benefits of alternatives to traditional litigation, the widespread expectation of “enhanced arbitration” would make it even harder to get conflicts resolved quickly and efficiently.  That is a change I would rather not see.    

• Email This
• Print
• Comments
• Trackbacks (1)

               
[Image: Karma. Illustration taken from "Ten Questions people ask About Hinduism...and ten terrific answers!"]

          I checked my newsreader tonight only to find my own picture - looking back at me from the Settle It Now Negotiation Blog.  Victoria Pynchon, commercial mediator and accomplished blogger, graciously welcomed me to the ADR blogging neighborhood with a reminder to me and her readers of the many ADR bloggers who have been moving the discussion of this topic forward for some time.  I am very grateful to be included in this dialogue, and hope I can contribute my fair share.

• Email This
• Print
• Comments (2)
• Trackbacks

          On Thursday, November 8, 2007, the American Health Lawyers Association will present A "How To"  Teleconference: Arbitrating Healthcare Cases.  The one hour program to begin at  2:00 p.m. Eastern Time, is sponsored by the AHLA's ADR Task Force.  It will focus on the use of ADR in the healthcare industry, and how healthcare lawyers can introduce the use of ADR to their clients.

 [Image: Alexander Graham Bell on the telephone in New York (calling Chicago) in 1892.  Gilbert H.   Grosvenor Collection, Prints and Photographs Division, Library of Congress.]

• Email This
• Print
• Comments
• Trackbacks

[This post is taken from my longer article, "Economic Credentialing -  Hospitals and Physicians at the Crossroads", appearing in the New Jersey Lawyer Magazine, February 2007.]  

          "Economic credentialing"  generally refers to any hospital policy of limiting membership on its medical staff, or the right to exercise certain clinical privileges,  to those physicians who have demonstrated patterns of practice in keeping with announced economic parameters.   Implementation of a successful program of economic credentialing will be more likely if it includes the following components:

1. development of a persuasive financial analysis to demonstrate the necessity of the desired changes in physicians' behavior;
2. solid medical support for the safety and efficacy of the desired behavior required by the rules;
3. an outlier provision to recognize extraordinary cases that fall outside the normal range of circumstances that justify the rules;
4. an enforcement mechanism based upon a percentage of compliance that can start at the current mean and adjust to the optimal level over a reasonable time;
5. consideration and approval of specific standards by each department or division of the medical staff to which the rules will apply;
6. initial and ongoing education of the entire medical staff concerning the scope and benefit of the rules; and,
7. periodic reevaluation of the scope of the rules in light of medical literature and the experience at the hospital.
   

Hospitals and physicians share an interest in the hospitals' financial viability.  They also share an interest in maintaining facilities of the highest quality and providing the best patient care possible.  These interests are enough to unite them in confronting the overwhelming economic pressures facing hospitals and physicians today.  Through their cooperation, economic credentialing can become a positive force for change within hospitals. It can form the foundation for the successful hospital-medical staff relationship of the future.

• Email This
• Print
• Comments
• Trackbacks