AHLA Offers Enhanced ADR Training Opportunities

     For many years, the American Health Lawyers Association ("AHLA") Alternative Dispute Resolution Service has offered basic (one day) training courses in arbitration and mediation. I just heard from Geoff Drucker, Manager of the ADR Service, that the Service is taking a big step towards expanding its educational and service capabilities.

     From October 19-21, the ADR Service will provide some enhanced arbitration and mediation training opportunities. Offered in partnership with Hamline University School of Law (one of the nation's preeminent ADR and health law programs), the training sessions will be held in Minneapolis, MN. Details are available on the AHLA website.

     As Geoff explained it, these training sessions will break from the past in that (1) they will be longer and thereby permit more in-depth coverage of the material through role playing; (2) they will take place at a university conference center rather than a hotel meeting room; and (3) they will embody the quality associated with programs at Hamline.

     The courses' instructors appear to be top notch. The two and one-half day mediation training will be given by Debra Gerardi, President of Emerging Healthcare Communities ("EHCCO")  and Professor Sharon Press of Hamline School of Law's Dispute Resolution Institute. The one and one-half day arbitration training will be given by a panel of experienced health law arbitrators from around the country, including Marcia Augsburger, Elise Dunitz Brennan, Anthony DiLeo, and Michael Jordan. Debra Gerardi will speak at a joint plenary luncheon.

     According to Geoff, the ADR Service's foray into more in-depth training is hopefully the first of other steps to improve its offerings. On the horizon may be higher training requirements for neutrals who are new to the Service (with these new courses meeting that higher standard). He also sees the potential for an entire AHLA conference devoted to ADR (similar to the AHLA's regular subject matter offerings, e.g., Medicare/Medicaid, Tax Exempt Organizations, Antitrust, Fraud & Abuse). Both of these would be welcome developments.

     Registration for these training sessions is limited. You can register here.

[Image: University Hall - Old Main, Hamline University, Saint Paul, MN, March 19, 2008, by William Wesen]

Ken Feinberg (And Me!) On How To Settle A Dispute

     Ken Feinberg is probably America's most well-known neutral - an attorney, mediator and special master in administering mega-settlements such as those formed to compensate the victims of the 9/11 attacks, the Virginia Tech massacre and the BP Gulf Coast oil spill. Although some might say its not difficult to make everyone happy when you have virtually unlimited funds to disburse, not everyone is happy with the outcome of his work, and that's probably how it should be.

     Having read about his work and heard Mr. Feinberg speak in person, he impresses me as someone who deserves the recognition he's achieved. That's why I was anxious to learn what he had to say when asked about his "priority list" for how to settle a dispute. Appearing in the 7/29/12 NY Times one page magazine (hat tip to the ADR Prof Blog), Mr. Feinberg told Spencer Bailey -

In all the negotiations I do, there's a priority list: One, know the facts. Two, be dogged. Three, keep an open mind. Next, be creative in getting to "yes." Finally, a very important basic proposition: Put yourself in the other person's shoes.

     Amazing, I thought to myself. These are exactly the priorities I would have listed in answer to the same question. What does that tell me? It probably says that I've had some great mediation instructors, and enough experience to have learned what works and what doesn't.

     It is quite another matter to have the ability to carry out the priorities Mr. Feinberg identifies. That's where the work really begins. Harder still is convincing parties to mediation (and their counsel) that you know the right priorities and have the ability to make mediation worth their effort. Ken Feinberg has their trust and confidence when he walks in the room. The rest of us work to earn it every chance we get.

[Image: Ken Feinberg, NY Daily News photo, 2010]

NJ Bar Health Law Section Announces Programs For 2012-2013

     I am honored to serve as Chair of the New Jersey State Bar Association's Health Law Section for the upcoming year. The Section includes 446 members of the Bar who represent healthcare providers and other clients relating to the health care field. The Section's Board recently approved a schedule of meetings and programs that I'd like to share with you.

  • September 11, 2012 : The aftermath of the SCOTUS decision on the Affordable Care Act (Law Center)
  • October 19, 2012: Annual Health Law Symposium (Seton Hall Law School)
  • November 13, 2012: The View From Trenton After Election Day - NJ Commissioner of Health (invited) (Law Center)
  • December 11, 2012: Holiday reception and roundtable on in-house/outside counsel relationships and alternative fee arrangements (Law Center)
  • January 8, 2013: Brown bag lunch program on Ethics For Health Lawyers (law firms throughout NJ, t/b/d)
  • February 5, 2013: Medical Staff Due Process v. Hospital's Duty As Employer And A Hostile Work Environment (Law Center)
  • March 12, 2013: Joint program with NJ Hospital Association In-House Counsel on Current Tax Exemption Issues (NJHA, Princeton)
  • April 16, 2013: Alternative Dispute Resolution in Healthcare (Law Center)

     These programs are open to all members of the NJSBA. If you are not a member, please consider joining, or request to attend as a guest. In most cases, CLE credits and dinner are provided, and you will not be disappointed. Contact me directly if you have any questions.

Why Not More Corporate ADR?

     A fundamental premise of the alternative dispute resolution ("ADR") movement is that when properly applied, ADR can resolve most disputes faster, cheaper and better than conventional litigation. I'm convinced this is true, as are most ADR practitioners. When asked, most lawyers will say something positive about ADR, but fall short of endorsing its universal application (e.g., "I think ADR is great for the right case").

     This week I noticed two articles that brought home just how far ADR has to go in penetrating the world of corporate and commercial disputes. Writing in Corporate Counsel at LAW.COM, Craig Bleifer listed 10 Questions CEOs Should Ask GCs About the Legal Business Plan. It's a thorough list that attempts to remind GCs that in-house legal operations should make sense from a business standpoint, just like every other major department of the corporation. Notably absent from the article are the words "alternative dispute resolution" or anything else to suggest a rethinking of how the company handles disputes.

     I also noticed an article by Jennifer Smith on the Wall Street Journal's Law Blog entitled Getting More for Less. It covers an announcement by the Association of Corporate Counsel recognizing its 2012 Value Champions, "a handful of business and law firms who came up with innovative ways to boost efficiency and cut legal spending." The focus of the article is on alternative fee arrangements, and does not mention the use of ADR. It also ends by noting that smaller companies (under $5 billion in revenue) can't seem to benefit from alternative fee arrangements, which require "lawyers to predict outcomes and set the appropriate fees." (To be fair, in reviewing the actual ACC list, two of the firm's honored, Whirlpool and Wheeler Trigg, did emphasize an effort to seek "early resolution" of lawsuits, although not necessarily via ADR.)

     Why the devotion to "efficiency" in using law firms but no mention of ADR? The forces that are pushing towards "efficiency" should be having the same effect on increasing the use of ADR in the corporate setting. I think this is not occurring because in-house counsel are still lawyers. They have been trained to think like their outside counsel, are often former outside counsel themselves, and spend much of their time talking with their outside counsel about their corporations' disputes. As for the outside counsel, litigators do what they know best: litigate. In addition, there are more of them now than ever before, all looking for the same work.

     There are ways to bring the forces for efficiency and the value of ADR together. Success fee billing and ADR are made for each other. But more fundamentally, those who run corporations and manage their legal disputes need to be better "sold" on the value of ADR  -  a notion that does not fit neatly within the customs, habits and organizational structures of the law firms these same corporate leaders have come to trust and depend upon.

[Image: Large herd of red deer on Borrobol Estate, Scotland, November 1991, by Evelyn Simak]

Does Healthcare Reform Require Hospital v. Physician Power Struggle?

     Writing in John Goodman's Health Policy Blog, Larry Wedekind suggests that real healthcare reform will require physicians, not hospitals, to acquire control of our healthcare delivery system. His entire post is worth the read, but it can be summarized as follows:

1. All of the pilot programs and demonstration projects tried by the federal government to date have been disappointing at best.

2. The traditional pattern of de facto hospital control of the delivery system is like letting the fox guard the henhouse. Since hospitals need to fill beds and expand outpatient volume, their efforts to acquire physicians' practices and develop integrated delivery systems should be seen as thinly veiled efforts to feather their own nests.

3. Physicians alone are capable of taking action to improve their patients' health. By putting physicians "in charge" of the delivery system, patient-centered care coordination can become a reality.

     Mr. Wedekind seems to assume that only one side can be "in charge" of the healthcare delivery system. What many hospitals now realize is that only by way of a jointly determined approach will most hospitals and many physicians survive.

     Hospitals cannot prosper in the long run by simply "paying for referrals" and relying on volume rather than measurably improving their patients' health. Physicians lack the skill, time, facilities and capital required to build the infrastructure that patient-centered care coordination will require. Each side has what the other needs to succeed.

     The trick will be how well and how quickly these parties are able to transform their historical relationships into a new and better way of doing business. Some hospitals and their medical staffs are well on their way, while others have yet to begin. All will encounter stumbling blocks along the way. In addition to the usual business issues that arise in any partnership or joint venture, the hospital-physician relationship is incredibly burdened by laws and regulations that preclude many arrangements that would be perfectly legal in any other industry.

     The key for hospitals and physicians will be to realize that both parties have a hand on the steering wheel, and that a failure to steer in the same direction will be disastrous. Essential to this process will be having a means to identify and resolve conflicts early and effectively. Governance by litigation is not an option.

[Image: Two pilots prepare to launch from the carrier USS Harry S. Truman in the Persian Gulf, December 26, 2004]

"If I Were You..." Doesn't Work In Marketing Or Mediation

     Seth Godin, the marketing guru, author and master blogger wrote today at Seth's Blog about the common error of many trying to sell a product, service, idea or anything else to a less than receptive audience:

"If I were you..."

But of course, you're not.

And this is the most important component of strategic marketing: we're not our customer.

Empathy isn't dictated to us by a focus group or statistical analysis. Empathy is the powerful (and rare) ability to imagine what motivates someone else to act.

     In any mediation, each side is trying to "sell" the other on its side of the dispute. Often, a party to a mediation will come into the process with a clear idea of what the other side should be doing instead of whatever it is that's creating the conflict. In essence, they are thinking, and sometimes saying, "if I were you, here's what I'd do."

     What such parties are really saying is, "if you were me, here's what you would do." To Seth Godin's point, the other side is not you. What you would do is not that important to them.

     What would be useful is each party trying to better understand what the other side is trying to do, and why. The more each party does this, the greater the chances they will see the ways in which both of their interests can be addressed. This is where the mediator comes in.

[Image: Two "street signs" at Boxwood Public School, March 9, 2010]

Litigating A Medical Practice Break-Up Is Rarely A Good Idea

     I observe the insides of medical practice business disputes on a regular basis, and I am always amazed at (1) how many similarities there are, and (2) how often the parties turn to litigation to resolve their differences. Similarities appear in the form of legal agreements that are less than perfect, or which, although technically sound, fail to expressly address a particular situation that comes to pass in the parties' relationship. Unfortunately, once physicians find themselves on opposite sides of one of these "gray areas" in their documents, they reflexively call in the cavalry, and the litigation battle begins.

     Writing in the New York Business Divorce blog, Peter A. Mahler describes just such a situation in Anesthesiology Practice Undergoes "Legal Equivalent of a Proctology Exam" in Shareholder Dispute, dissecting the recent post-trial decision by Suffolk County Commercial Division Justice Emily Pines in Suffolk Anesthesiology Associates, P.C. v. Verdone, 2012 NY Slip Op 50728(U)(Sup.Ct. Suffolk County April 25, 2012). He fairly describes the case as "a bare-knuckles contest pitting an expelled physician-shareholder of a large Long Island anesthesiology practice against the 11 other physician shareholders."

     I will not repeat Mr. Mahler's stellar synopsis of the case, including the court's pre-trial and post-trial rulings, which is worth the read. Familiar elements include an apparent power struggle, major business decisions favored by fewer than all of the shareholders, alleged "whistleblower" claims and some "tit for tat" good faith and fair dealing issues. The end result was a finding of some "breach" or "fault" by both sides, and an order that put them close to what a disinterested observer would have recommended from the very beginning. 

     Mr. Mahler observes that the absence of a particular provision in the parties' documents (involuntary termination without cause) probably inspired both sides to adopt the litigation posture they pursued. Similar omissions or the occurrence of unanticipated circumstances are often present in these cases. To me, the real question is why, time and time again, "divorcing" physicians in these circumstances and their lawyers escalate the litigation to what he calls "a DEFCON 1 situation in which each side has little choice but to launch their biggest missiles against the other, necessitating public disclosure of embarrassing and potentially troublesome information about the Practices."

     To be fair, I know only what I read in the blog post and the court's post-trial decision, and it is possible there were facts that compelled this course of action. More likely, the familiar pattern of emotional clients making irrational decisions, and lawyers doing their best to litigate their way to victory, led to this result. The litigation started in October 2008 and went to trial in 2012. There were numerous interim proceedings and pre-trial motions. The trial lasted 11 days and included the testimony of 15 witnesses and over 100 exhibits. One can only imagine the total cost to both sides in legal fees, expenses and time lost from practicing medicine.

     Mr. Mahler suggests that mandatory arbitration provisions in the parties' agreements would have saved them from public disclosure of their "dirty linen" and greatly shortened the time (and money) required to reach a resolution. I agree. But I find even more compelling the argument for mediation prior to any form of adjudicative proceedings. This appears to have been a textbook case of the parties having more than sufficient common interests and available resources to fairly defuse their dispute through mediation. The cost-benefit analysis of mediation in these cases is off the charts. Hopefully, "divorcing" physicians and their counsel will take heed.

Solving The Balance Billing Problem In New York And Elsewhere

     Over three years ago, I wrote here about the "balance billing" problem; in short, the practice of non-participating healthcare providers billing patients for the difference between the provider's charge and the out of network payment made by the patient's insurer/PPO ("payer"). As described by E.J. McMahon in Newsday, the problem in New York has taken an interesting turn, but come no closer to a satisfactory resolution.

     When Governor Andrew Cuomo was New York's Attorney General, he investigated charges that the Ingenix database then used to set fees for out of network providers was skewed in favor of the payers who controlled it. A settlement resulted in the creation of an independent nonprofit company, "Fair Health," that generates a "usual and customary" fee database. In the meantime, some payers began the practice of paying non-participating providers on the basis of the (lower) Medicare fee schedule, and some providers began increasing their standard "charges" substantially in an effort to drive up the Fair Health rates. Non-participating providers unsatisfied with the Fair Health fees continue to bill their patients for the "balance owed" on the standard charge.

     While some progress has been made, the fundamental problem remains. When a balance bill is created, one of three parties must be left "holding the bag:" the patient, the non-participating doctor or the payer. E.J. McMahon suggests that New York "should set up an arbitration process to resolve reimbursement disputes between insurers and physician, while shielding consumers from bills for disputed balances." I'll be the last one to object to the use of an ADR process to resolve these disputes, but some greater clarity is required.

  1. Although politics and economics may favor an absolute "hold harmless" for patients in these cases, that result wouldn't always be fair, or sound policy. If a patient knowingly chooses to go to an out of network provider with full awareness that the charge will well exceed the payer's obligation to pay, why shouldn't the provider be able to collect the full charge from the patient? On the other hand, if the patient is unaware of the balance bill potential, or the magnitude of the difference, the patient should be off the hook. Rules can be adopted to define what the patient must be told, when and by whom.
  2. Patients who are made aware of the potential differential and are unhappy with their predicament will likely complain to their payer, as they should. However, rather than focus on the provider's charges, the payer should make the patient aware of the other alternative providers, both in and out of network, who are available to provide the necessary service within the confines of the payer's allowable charge. If the alternative providers offered by the payer are too few, too inconvenient or otherwise unacceptable, that's a problem with the payer's network, not a "balance billing" problem, at least in the eyes of this patient.
  3. For cases in which the patient is held harmless because he or she is unaware of the balance bill potential or its magnitude, the payer and the provider must find a way to agree on what the provider should be paid. This is where an ADR process would come into play. In order to avoid every case being contested, a presumption should be adopted with respect to the Fair Health fee schedule. That presumption could be the 100th percentile, the 80th or some other point on the schedule thought to fairly represent the usual and customary charge. Absent a protest by either party, this is what the provider would be paid. If either the provider or the payer objects to the presumption created under the Fair Health fee schedule, binding arbitration could be requested.
  4. The role of the arbitrator would be to, de novo, determine fair and reasonable compensation for the provider under the particular circumstances. Using this standard, a world renowned surgeon with 30 years of experience and outstanding results might expect a higher fee than the presumptive schedule, whereas a new surgeon who simply charged well above the presumptive schedule might not fare as well.
  5. To encourage good faith and fair play, both parties would submit their best and final offer to the arbitrator. Using so called "baseball arbitration" rules, the arbitrator would then hear the evidence in an expedited procedure and choose the one that best meets the standard of "fair and reasonable under the circumstances." The loser would pay the costs of the arbitration.

     The process just described, or something like it, wouldn't make "balance billing" disappear, but it would be far superior to the confusion, expense and unfairness arising from the current, ad hoc litigation approach to the problem. Let's see if New York and other states agree.

[Image: A balanced (roseate spoon)bill.]

Who Pays The Hospital - Medical Staff Standing Neutral?

     See my guest post today at Disputing: Who Pays the Hospital - Medical Staff Standing Neutral? This is a follow up to the four part series on the Hospital - Medical Staff Standing Neutral that appeared here (See Part I, Part II, Part III and Part IV). If you haven't seen it before, Disputing is a terrific ADR blog, and I'm grateful for the opportunity to appear there.

[Image: Pennybacker Bridge, Austin, Texas, 1997, by Eric Hunt]

Selecting A Hospital-Medical Staff Standing Neutral

       This fourth and final installment on the Hospital-Medical Staff Standing Neutral will address the neutral selection process. Previous posts introduced the concept, its advantages and relation to Joint Commission requirements, and how to define the neutral's role.

       The essence of the standing neutral concept is: (1) an expert, neutral person is selected in advance by both parties to an ongoing transaction or relationship; (2) the neutral is given sufficient information to be familiar with the parties as problems arise; and (3) the neutral remains readily available to assist the parties in resolving disputes quickly and efficiently. The neutral selection process should reflect these expectations.

       The process of selecting a hospital-medical staff standing neutral is best undertaken by a committee representative of the interests likely to be involved in the conflicts to be managed. On the hospital side, this might include a member of the board of trustees, the hospital CEO, the CMO and in-house counsel. On the medical staff side, the group might include the current president of the medical staff, the immediate past president or president elect, and the Chiefs of Medicine and Surgery. If hospital in-house counsel will participate, and the medical staff has regular independent counsel, medical staff counsel should also be included.

       The selection committee should attempt to identify a person who can carry out the standing neutral's responsibilities. That person would be:

1. Neutral (i.e. have no no current or recent relationship with any of the parties);

2. Expert in the subject matter of the likely disputes (probably a lawyer specializing in hospital-physician matters);

3. Trained and experienced in dispute resolution processes;

4. Readily available as conflicts arise; and,

5. Cost effective.

Above all, the neutral selected should have the confidence of both the hospital and the medical staff.

       With the selection of a qualified standing neutral and a commitment to the process of conflict management, hospitals and medical staffs can better face the challenges that threaten the relationships so vital to their existence.

[Image: Football referees at a Razorback game, October 6, 2007, by Belinda Hankins Miller]

Part 3- Defining The Role Of The Hospital-Medical Staff Standing Neutral

     I previously introduced the concept of the hospital-medical staff standing neutral, and how satisfaction of Joint Commission conflict resolution requirements and other advantages argue for its use. This Part 3 of the series will turn to the potential roles a standing neutral can fulfill. There is no blueprint to follow on this, nor should there be. The parties are free to define both the functions to be performed by the standing neutral, and the kinds of disputes that will fall within the standing neutral's purview. The hospital and the medical staff will need to agree on these things up front.

     In all cases, the essence of the concept is that the standing neutral is selected in advance of any dispute, is given information sufficient to be familiar with the parties as problems arise, and remains readily available to deal with disputes quickly and efficiently.

     The functions to be performed by the standing neutral can span the range of dispute resolution processes. Some parties may simply want a standby facilitator, who can jump in to assist the parties when their direct negotiations have stalled. A step up from this would be a formal mediation process. Other parties may want the neutral to hear from both sides and offer a non-binding recommendation for the resolution of their disputes. The parties may want the neutral to make a binding decision, effectively acting as an arbitrator. The standing neutral also may serve as a hearing officer pursuant to the fair hearing procedures under the medical staff bylaws. All of these may be used in different circumstances, individually or in combination, as suited to the parties' situation.

     As for the kinds of disputes that will fall within the standing neutral's purview, the parties may consider disputes arising from some or all of the following:

- proposed changes to medical staff bylaws, policies and rules

- "turf battles" between members of the medical staff and the executive committee and/or the board of trustees

- credentialing and discipline of individual practitioners

- implementation or restructuring of hospital physician payment initiatives, including managed care networks, Accountable Care Organizations and "gainsharing"

- "economic credentialing"

- hospital-physician joint ventures

     Next up, selecting a hospital-medical staff standing neutral.

[Image: a child amateur boxing exhibition match in Union City, New Jersey, July 1, 2010, by Luigi Novi]

State Courts, Lean Budgets And ADR

       "State courts across the United States are bracing for another year of austerity as a new budget cycle threatens once again to limit funding for the courts." So writes Sheri Qualters in the National Law Journal, as reprinted this week in the New Jersey Law Journal online edition (subscription required). Her story goes on to detail the problems faced by state courts nationwide, which depend on anemic state tax revenues for their funding. She further details the steps being taken by state courts to trim budgets and curtail services in an effort to balance the books.

       New Jersey is no exception to this trend. In response to ever-increasing caseloads and budgetary constraints, the state's Administrative Office of the Courts recently issued a report in support of proposed legislation to increase filing fees and permanently dedicate the new revenue to improving the courts; specifically, the creation of an e-filing system and the funding of Legal Services of New Jersey.

       Nowhere in the article cited above or the NJ AOC report is there mention of the role alternative dispute resolution can play in reducing the burdens on a state court system. In fact, the New Jersey judiciary is currently reevaluating the state's mandatory mediation program based on concerns that it diverts too many resources away from the administration of a growing civil case load. Many in the New Jersey ADR community fear that the current court mandated mediation program will be scrapped for "budgetary reasons." Both sides on this issue are missing the forest for the trees.

       The railroad barons of the 19th century lost their preeminence because they thought they were in the railroad business when they were really in the transportation business. Apparently, those running state court systems today believe they are in the litigation business, when they should be in the dispute resolution business. There is a well established and competent (albeit private) community of ADR providers now operating in parallel with the state courts. That community stands ready willing and able to work in tandem with the court system to resolve disputes at virtually no additional cost to the taxpayers.

       Previous efforts to integrate private ADR providers with the state courts (including the current New Jersey program) have encountered two major obstacles. First, the courts are reluctant (and some would say Constitutionally unable) to mandate any substitute for a trial in state court, particularly anything the litigants must pay for in addition to statutory filing fees. Second, the courts have been unable to assure the competence and quality of ADR providers in court annexed programs. However, neither of these obstacles is insurmountable.

       This is where the ADR community needs to focus its attention. There is no question that ADR processes can dispose of most disputes more efficiently than litigation in state court. The legal community has had a generation of exposure to ADR, and is prepared to accept its use under the right circumstances. Creative minds can find a way to overcome the obstacles to a state court - private ADR system, thereby solving the current budgetary problem, yielding better outcomes and protecting the taxpayers.

       Much more discussion and debate on how to overcome these obstacles must follow. For today, I can only suggest that we not write or accept further analyses of the "state court budget problem" that do not include a major role for ADR. Private ADR providers are to the state court systems what the interstate highways are to the railroads. Door to door delivery of all shipping containers by railroad is prohibitively inefficient and expensive. Let's stop making that mistake.

[Image: Unloading a shipping container with household contents, June 19, 2010, by Geo Swan]

Part 2 - Joint Commission Conflict Resolution Requirements And The Advantages Of A Hospital-Medical Staff Standing Neutral

     I previously introduced the concept of the hospital-medical staff standing neutral. In this Part 2 of a series, I will cover relevant Joint Commission requirements, and the advantages and drawbacks of using a hospital-medical staff standing neutral to resolve conflicts between hospitals and their medical staffs.

Joint Commission Requirements

     Joint Commission Leadership Standard LD.02.04.01 requires that "the hospital manages conflict between leadership groups to protect the quality and safety of care." The Elements of Performance supporting this standard require that "senior managers and leaders of the organized medical staff work with the governing body to develop an ongoing process for managing conflict among leadership groups."

     Similarly, Joint Commission Medical Staff Standard MS.01.01.01 requires that "Medical Staff bylaws address self governance and accountability to the governing body, including by way of Element of Performance 10, which says in part:

"The organized medical staff has a process which is implemented to manage conflict between the medical staff and the medical executive committee on issues including, but not limited to, proposals to adopt a rule, regulation, or policy or an amendment thereto."

     It is clear that the Joint Commission expects each hospital and its medical staff to have a dispute resolution mechanism in place. However, other than for the basic elements of the process (set forth in the Elements of Performance under LD.02.04.01), the Joint Commission leaves it up to each hospital and medical staff to fashion their own means of compliance. Most have simply adopted policies that mimic the Joint Commission's directives, but are short on detail, essentially leaving conflict resolution to a case-by-case process. Unfortunately, this typically results in the parties falling into their familiar routine: "lawyering up" and setting the litigation machine into motion. Establishment of a hospital-medical staff standing neutral fundamentally alters this habit - and its advantages far outweigh its drawbacks.



     1. Enables self-determination. The hospital and the medical staff remain in control of their relationship and the resolution of their differences, rather than abdicating to the legal system.

     2. Saves time. The standing neutral can be activated at a moment's notice. Once involved, the neutral's use of alternative dispute resolution processes can bring about a resolution more quickly than traditional legal proceedings.

     3. Less costly. The parties will spend less on lawyers and incur lower internal costs by resolving their disputes more quickly and efficiently.

     4. Creates trust and confidence. Because the parties have jointly selected the standing neutral, and jointly defined the neutral's role, they can be confident that the process used to resolve their dispute will be fair.

     5. Preserves relationships. Rather than "slugging it out" through legal proceedings, parties using a standing neutral are encouraged to cooperate in a process that will yield a fair result.

     6. Reduces the occurrence of disputes. Experience in the use of standing neutrals in the construction industry suggests that parties using this mechanism come to have fewer dispute as time goes on. This occurs because that each party realizes its position on any given issue will be quickly and candidly reviewed by a neutral who will hold both parties to the same standard of good faith and reasonableness. This forum does not favor hyperbole, stonewalling, bluffing and other tactics common to the traditional legal process. Accordingly, parties over time tend to self-regulate their demands and positions to more naturally coalesce around their common objectives.


     The establishment of a hospital-medical staff standing neutral is not without some perceived drawbacks.

     1. Cost. The cost of the standing neutral must be considered. However, when compared to the internal costs and legal fees associated with resolving disputes through conventional means, this cost is minimal.

     2. Loss of control. Some parties and their legal counsel may feel that the presence of a third party neutral will interfere with the party's ability to "control" the handling of disputes that arise. But the neutral only has whatever authority the parties agree upon in advance. In reality, parties have far less "control" over the process and outcome of conventional litigation than they might think. 

     3. Fear of bias. If a party believes the standing neutral is biased towards the interests of the other party, the process is bound to fail. This is why both parties must participate actively in the selection of the standing neutral. It also means the neutral must work diligently to remain unbiased and appear to be unbiased throughout the engagement.

     4. Confidentiality. Introduction of a standing neutral to the parties' discussions opens up the possibility that confidences will be disclosed. The parties must believe that the selected neutral will honor the obligations of confidentiality imposed under the parties' agreements and by law.

     Next up, defining the role of the hospital-medical staff standing neutral.

[Image: Unbalanced scales, January 8, 2007, via Wikimedia Commons]

The Hospital-Medical Staff Standing Neutral - Part 1

     The idea of a "standing neutral" is well known within the construction industry, and has been used there in various forms for many years. The construction standing neutral is a trusted expert selected by the owner and the contractor at the outset of a project who remains available until the project's conclusion to assist the parties in resolving disputes as they arise. A standing neutral for construction projects works well because the parties have an ongoing relationship, and a mutual need to resolve disputes quickly and efficiently.

     Hospitals and their organized medical staffs stand in a similar posture, but with even greater interdependence. Their relationship is ongoing, indeed, it's perpetual. Rather than a contractual arrangement in which the parties exchange money for goods and services, the relationships between hospitals and their medical staffs are symbiotic. The hospital needs the members of its medical staff to admit and care for patients, and needs the organized staff to oversee and regulate the practice of medicine within the hospital's facilities. The members of the medical staff need the facilities, equipment, nurses and other personnel that the hospital provides, and the physicians cannot afford.

     The smooth functioning of the hospital-medical staff relationship is crucial to their common economic well-being. As forces beyond their control strain that relationship, conflicts will arise. Just as in the case of an ongoing construction project, the parties can choose to address these conflicts on an ad hoc basis, or proactively provide for a mechanism that stands ready to resolve conflicts as they arise: the hospital-medical staff standing neutral.

     This is the first in a series of posts on this subject. It is drawn from an article I wrote in the September-October issue of the Physician Executive Journal ("PEJ") (subscription required). Future posts will address the advantages of a hospital-medical staff standing neutral, including Joint Commission standards on conflict resolution that favor its use; defining the role of the hospital-medical staff standing neutral; and the process for selection of a hospital-medical staff standing neutral.

[Image: Chair umpire referee on court 18 at Wimbledon 2006, via Wikimedia Commons]

ADR Can Help Lawyers "Win Cheap"

     I've been on a mission to convince fellow lawyers that encouraging clients to use mediation, arbitration and other alternative dispute resolution methods is good for clients and their lawyers. According to Dan Hull:

          "Think like a client. The trick now is to win cheap.

For an experienced client, the cost of the lawsuit is part of the "victory" analysis. So is closure--or just getting it over with."

     I can't say it any better, so I won't. Read on at What About Paris?

[Image: $620 in 31 twenty dollar bills, August 14, 2007, by Merzperson]

Request For Mediation Can Be A "First-Filed Action"

       The "first filed action" rule says that when lawsuits over the same dispute are filed in different states, the courts in both states will give the "first filed" action the exclusive right to go forward. Often described as a matter of "comity," the rule furthers the practical goals of certainty and efficiency within our federal system. However, as a matter of policy, the rule can be seen as unfavorable towards alternative dispute resolution. Counsel faced with the possibility of litigation in an unfriendly jurisdiction will often race to be the "first to file" a lawsuit rather than pursuing mediation. Not so in New Jersey anymore.

       Last week, the Appellate Division of the Superior Court of New Jersey ruled that the "first filed action" rule applies when a party demands mediation or arbitration, as contractually obligated, and the other party later files a lawsuit in a different jurisdiction. In CTC Demolition Company, Inc. v. GMH AETC Management/Development LLC, et al (Docket No. A-3703-10T4), Judge Clarkson S. Fisher, Jr., wrote for a unanimous panel:

"Although the creation of the first-filed rule may have presupposed that the interplay of its principles would relate solely to which of two lawsuits should proceed to disposition, the proliferation of mediation and arbitration as an alternate but highly-favored method for resolving disputes since the first-filed rule's development, suggests the legitimacy of CTC's argument that its demand for mediation should be treated like the filing of a complaint.

...once mediation was demanded to occur in New Jersey, the later institution of the Pennsylvania action represented an untoward attempt to move the situs of this dispute, giving rise to special equity that warrants a disregarding of the Pennsylvania action."

       This is great news for ADR in New Jersey, and hopefully elsewhere. Although this case was remanded to the trial judge for findings of fact on which of the parties' contracts applied to this dispute (raising the possibility that the contract providing for mediation would be held not to apply at all), the Court's holding on the first-filed action rule is clear. At least where the parties' agreement requires mediation before arbitration (or, presumably, litigation), a demand for mediation in New Jersey will trump a later filed lawsuit in another jurisdiction.

[Image:Brown filing cabinet, March 9, 2007, via Wikipedia Commons]

Garth Brooks' Hospital Lawsuit - Decision Error On Display?

       Garth Brooks was just awarded $1 million in a breach of contract lawsuit against his hometown hospital. Brooks alleged that the hospital reneged on its promise to build a women's health center in honor of his late mother, towards which Brooks contributed $500,000. Brooks asserted the hospital agreed to build and name the project when he made the contribution. The hospital said the donation was unconditional, and his requests for the naming rights came later. The women's center was never built, and the hospital told Brooks they intended to use his money for other construction projects.

       Apparently, the jury believed Brooks' side of the story. They ruled that the hospital must return Brooks' $500,000 donation and pay him another $500,000 in punitive damages. Brooks is a home town hero, generally regarded as a likable guy and was trying to do a good thing on behalf of his beloved, deceased mother. Just how did the hospital decide to go to trial on this one?

I don't know. I wasn't there, I don't know those involved and it may be that there's more to this story. If so, I hope someone will comment to fill us in.

       It appears, though, that the hospital suffered from what Randall Kiser calls "decision error." Speaking at a meeting of the New Jersey State Bar Association's Dispute Resolution Section this week, Kiser delivered a tour de force review of his empirical research and recommendations for effective pretrial decision-making by lawyers and their clients. As described in his book, Beyond Right and Wrong, The Power of Effective Decision Making for Attorneys and Clients, "decision error" occurs when the result a party achieves after trial is inferior to the other party's last offer of settlement before trial.  

       Using this definition, it appears likely that the hospital's election to go to trial in the Garth Brooks case was a decision error. The more interesting question is how this decision was made. Randall Kiser offers a multitude of potential explanations, but without being on the inside, one can only speculate. My take away from the Garth Brooks case and Randall Kiser's work is that mediation offers the perfect mechanism to reduce decision error. If all of the factual assumptions, legal theories and cost benefit analyses of both parties are subjected to the crucible of a thorough mediation process, the chances of a decision error will be greatly reduced.

       Randall Kiser's research shows that in only 15% of cases, the result after trial falls somewhere between the last best settlement offers of both parties. This means that one of the parties is wrong  (i.e., makes a decision error) in 85% of all cases that go to trial. Among other things, mediation should get both parties to more accurately measure the true value of their side of the case, and thereby reduce the potential for decision error. Future posts will examine some elements of bad decisions the mediator can help to fix.

[Image: Garth Brooks, Marshall of OSU Homecoming Parade, October 17, 2009, by Fletcherspears]

Reshaping Doctors' Compensation - Be Careful What You Wish For

       Healthcare reform measures and the prevailing wisdom of industry visionaries tell us that the way we pay our doctors must change. In a nutshell, we're told that doctors paid on a "piecemeal" basis: have an incentive to order and do more work (at greater cost); treat the immediate condition rather than the whole patient; and are disconnected from any responsibility for the real, total cost of their patients' care. Thus, the push towards "accountable care" calls for remaking doctors' compensation models to discourage piecemeal work, reward patient satisfaction and instill awareness of total system costs. Government agencies, health insurers and hospitals that regularly deal with doctors' compensation are anxious to put this theory into practice.

 But be careful what you wish for.

        At least some evidence shows that patient satisfaction doesn't indicate the best medical care. Writing at KevinMD.com, Kevin Pho, M.D. acknowledges that patient satisfaction scores are a good way to identify ways to improve the patient experience, and that "happy patients" are far less likely to file malpractice claims. He also recognizes that patient satisfaction generally translates into higher revenue for hospitals. On the other hand, studies do not indicate a strong correlation between patient satisfaction and quality of care. In fact, the compulsion to make patients happy by "giving them what they want" may run counter to both quality and cost considerations.

       Another serious challenge to the prevailing wisdom comes from David Shaywitz, M.D., PhD, writing at The Health Care Blog (1/17/12). He questions whether it is appropriate and in the best interest of patients for doctors to be thinking about society's healthcare costs?

"The cornerstone of medicine, the most fundamental principle, in my mind, is the absolute, rock-solid belief that your doctor is your unqualified advocate and will work as hard as possible to provide you with the best medical treatment possible, as if you were a member of her own family...


Perhaps (and it pains me to say this), physicians have something to learn from our colleagues in the law.  It could be that we are better served by an adversarial system of some kind, where at least you can trust your doctor, rather than by a system in which physician’s role is to assess not only your disease but your relative value to society.

We’re not there yet, but when I read about the supposed moral imperative to be responsible stewards of the public healthcare dollar – yes, I worry.  And so should you."


I think David Shaywitz is right.

       So what does this mean for the prevailing wisdom? It may mean that the prevailing wisdom is as much about how to maximize payment under the coming ("reformed") system as it is about improving patient care. Could we be substituting a new set of flawed incentives for the old flawed incentives? As conflicts arise in the competition over the ever-shrinking pie, the players need to steer clear of false assumptions. The process of sorting out the allocation of limited dollars will be hard enough without paying for dubious improvements. 

[Image: Wish, November 22, 2009, by Jessica Tam]

Randall Kiser To Address NJ Dispute Resolution Section On Effective Decision Making

       The New Jersey State Bar Association's Dispute Resolution Section is offering a three part series of programs on decision making entitled "Judgments: How We Reach Them And How We Can Improve Them." The series will open with a presentation on January 24, 2012 by Randall Kiser, the principal analyst at DecisionSet and an expert on attorney-client decision making. He is the author of two books, Beyond Right and Wrong: The Power of Effective Decision Making for Attorneys and Clients, and How Leading Lawyers Think: Expert Insights Into Judgment and Advocacy.

       Randall Kiser's work first got my attention in 2008 when the study underlying his first book was released and covered by The New York Times. Most notably, his study revealed that in 85 percent of the cases that went to trial, the final outcome after trial was outside the last zone of settlement determined by the parties prior to trial. (In my view, this means that mediation offers much better odds than going to trial.)

       Participants in this program will explore whether our customary means of evaluating disputes is impeding or facilitating their resolution. The program will be offered at the NJSBA's Law Center in New Brunswick at 6:00 p.m., and will include dinner and 1.5 CLE credits. It is a great opportunity to hear a nationally recognized authority address a topic that is central to our professional lives, but not well understood. Pre-registration is available on the NJSBA website.

       Subsequent programs in this series will focus on decision making in the contexts of arbitration (February 28) and mediation (March 27). Details on these programs will follow in upcoming posts.

[Image: Deep In Thought, by Ben Pollard, March 16, 2008]

CEDR Comes Across The Pond!

       The Centre for Effective Dispute Resolution ("CEDR") has been a leader in dispute resolution and conflict management worldwide for over 20 years. Based in London, CEDR operates a dispute resolution service that offers a broad range of processes, including mediation, arbitration, early neutral evaluation and neutral facilitation. In addition, CEDR provides ADR training in a variety of skills. CEDR is widely recognized as the foremost trainer of mediators in the world.

       This summer, I was fortunate to join 10 other mediators in taking CEDR's Mediator Skills Training Course in New York City. Over four, full days, our group received the benefit of demonstration, practice and observation by a faculty of four very experienced CEDR instructors. The course culminated in a each participant mediating a simulated case, with professional actors playing the parties. Upon displaying satisfactory performance of a set of key competencies, participants were awarded the status of CEDR Accredited Mediator. This was the first time this accreditation course had been offered in the United States. 

       The CEDR course was very effective for several reasons. First, the quality of the faculty was excellent, and the class size was small. Second, the course fostered self-awareness through attention to detail and significant coaching feedback. Finally, because the course culminated in an individual assessment of fitness for accreditation, the participants' level of focus and effort was notably higher than in the typical mediation training. For any mediator with basic training and some real life mediation experience, this course can be a valuable step in professional development.

[Image: U.S. Navy Photo by Mass Communication Specialist 2nd Class Jason R. Zalasky, 9/8/07]

Doctors' Crystal Ball Shows Trouble Ahead


       Hat tip to John Goodman's Health Policy Blog for pointing out a recent Thomson Reuters - HCPlexus survey of U.S. doctors' predictions on the effects of the Patient Protection and Affordable Care Act, a/k/a the Health Care Reform Act of 2010 ("HCRA"). Among the highlights:

1. 65% of respondents said that the quality of health care in the U.S. will deteriorate over the next five years, while only 18% thought it would improve.

2. 78% of respondents thought that health care reform will have a negative impact on physicians, while only 8% predicted  a positive effect. The majority believed that the process for physician reimbursement will become less fair to physicians.

3. 58% of respondents predicted health care reform would have a negative impact on patients, compared with 27% who said it would be positive and 15% who said its effect would be neutral.

4. 45% of all respondents indicated they did not know what an ACO is, and no category or specialty had more than 17% of respondents who were actively participating in discussions to form an ACO.

       You can find an Executive Summary of the survey and obtain the entire report on the HCPlexus website.

       Whether the majority of this survey's respondents are right or wrong remains to be seen. But there is no doubt that their prevailing mind-set is driving much of the dialogue among physicians, hospitals and other providers today. Parties on all sides of negotiations and disputes over relationships to be played out over the next five years should take note.

Guido v. Duane Morris: Court Requires Kabuki Dance For Mediated Settlement

     Earlier this year I wrote about the oral argument before the New Jersey Supreme Court in Guido v. Duane Morris. The case concerns the plaintiffs' right to sue their former lawyers for malpractice based upon a settlement the plaintiffs accepted after mediation two years earlier. It required the Court to reconcile two previous opinions, Puder v. Buechel, 183 N.J. 428 (2005) and Ziegelheim v. Appollo, 128 N.J. 250 (1992). In a decision handed down last week, the New Jersey Supreme Court ruled that the former clients could overcome a motion for summary judgment and proceed to trial - essentially to attempt to prove that the settlement agreed to by them could have been better but for the negligence of their former lawyers.

     Despite assurances in the Court's opinion to the contrary, Guido paints a large bullseye on every lawyer whose client has second thoughts about a mediated settlement after the ink is dry. Significantly, the Court emphasized that when putting the mediated settlement in Guido on the record,

"unlike in Puder, plaintiffs did not represent to the court that
they were satisfied with the settlement, or that the settlement
was fair and adequate.
(emphasis added) The entirety of the colloquy between the court and plaintiffs concerning the settlement addressed but two questions:  whether plaintiffs understood and agreed to abide by the settlement terms, and whether plaintiffs were subject to any impediments in understanding those terms.  Glaringly absent is any representation by plaintiffs that the settlement was 'fair' and 'adequate,' a representation deemed crucial in Puder."


      Did the Court really believe that the plaintiffs in Guido v. Duane Morris would not have answered "yes" if asked whether they were satisfied with their settlement, and whether it was fair and adequate? Apparently these are now magic words that all counsel would be wise to include in written acknowledgments from their clients upon approving any mediated settlement.

     [Image: Kitano Odori kabuki dance, by Onihide, April 18, 2009]

Contracting For The Unknown Using ADR


[Image: "Cap'n Archie" fortune telling machine, Archie McPhee store, Seattle, Washington, March 20, 2007, by Joe Mabel]


     Healthcare providers and insurers sign contracts every day that extend well beyond the horizon of the world in which they operate. The unknown dimensions of the future healthcare marketplace became even more uncertain with the recent passage of federal healthcare reform legislation. Many of the concepts contained in that law are subject to interpretation and political implementation, not to mention the possibility of repeal or modification by a future Congress.

     Healthcare lawyers routinely seek some protection from future uncertainty affecting their clients' contracts by drafting "out" clauses that spring into effect upon the happening of certain significant events. Among these are governmental findings of illegality or adverse tax effects, changes in the law and substantial failure of economic expectations. Typically, these contractual provisions (1) define the potential adverse event; (2) require that the parties attempt to negotiate a contractual amendment to resolve the problem; and (3) in the absence of agreement, permit either party to terminate on short notice. Robin Fisk recently discussed this topic in the context of provider - payor contracting in her Managed Care Contracting & Provider Payment blog. I think the concept has even wider application. Hospital-physician service contracts, joint venture agreements and institutional affiliations of all stripes can also expect to be affected by presently unknown legal and economic developments.

     Allowing either party to terminate a contract upon an adverse event is a simple and effective solution to the problem created by that event.  But it leaves the parties without a contract. Rarely is such an event so intractable that it could not have been dealt with had the parties known of it at the inception of the contract. Rather than terminating the contract, the parties can provide in advance for how they want its negative consequences to be resolved, and then employ an alternative dispute resolution process to reach a solution.

     The key elements of such a provision include (1) a clear definition of what constitutes the adverse event; (2) the principles that will guide how the adverse event is to be alleviated (e.g., "the parties agree to implement the minimum change required to eliminate illegality while preserving the structure and economic result of the relationship to the greatest extent possible"); and (3) a process to resolve any dispute in the implementation of this provision.

     With respect to process, a multi-step dispute resolution clause is particularly well suited to this situation. As recently defined by John DeGroote in his Settlement Perspectives blog

A multi-step dispute resolution clause is a contractual provision that requires the parties to an agreement to escalate a dispute through varying levels of management or other processes, such as mediation, using agreed-upon procedures before litigation or arbitration may proceed.

     Along with a multi-step resolution clause, parties seeking to address unknown, adverse events through ADR would do well to define their selection of an ADR neutral to suit the events in question. This requires more than the designation of a neutral to be provided by an ADR service (e.g. AAA, AHLA). It should also include a requirement of experience in representing parties with respect to the issues raised by the adverse event.

     Some unknown adverse events may so dramatically frustrate the parties' original expectations that it makes no sense to continue their contract. Most do not. Rather than abandon or renegotiate an entire contract, a multi-step ADR clause can often preserve the benefit of the original bargain for both parties.

Emotions In Mediation: Beware The Runaway Train

     Every dispute comes to mediation wrapped in emotion. Sometimes it relates to the wrong or harm arising from the conduct that triggered the dispute. Other times, it is simply the emotion surrounding months or years of being on one side of the dispute and believing the other side to be wrong. Or it can be both. Traditional mediation theory holds that it is vitally important for both sides to have the opportunity to express their emotions, and for the mediator to acknowledge them. This is thought to be beneficial because:

- It may be the first and only opportunity a party has to meaningfully "vent," without which that party can never put the dispute to rest.

- It enables each party to hear what the other really feels, without which a willingness to address those feelings in a settlement cannot be achieved.

- It educates the parties and their counsel on what the mediator is up against, thus guiding realistic negotiations.

     I have always accepted the wisdom of encouraging parties' expressions of emotion in mediation, and have permitted parties to "vent" with few limitations. ("Venting" by counsel is another matter, and generally not worthy of much leeway.)  I have found that parties appreciate the opportunity to express strong emotions, and that my acknowledgment of their feelings goes a long way towards building the credibility required to resolve the dispute later in the day.

     Recently, Dan Ariely, the author of the terrific book Predictably Irrational and the blog of the same name, wrote about "The Long Term Effects Of Short-Term Emotions." His research in the field of behavioral economics is fascinating, and can be related to the decision-making process of parties in the midst of dispute resolution. He has found that decisions made under the influence of short term emotions are often poorly made, by objective standards. Moreover, such decisions have a powerful, precedent setting effect on all later decisions. What does this mean for mediation?

1. Expressions of emotion can create an ideal environment for bad (i.e., irrational) decision-making. Letting parties "vent" may be valuable for the reasons noted above, but the mediator must recognize that it creates the potential for momentum that may be difficult to keep on the tracks.

2- A decision motivated by negative emotions that creates a dispute will tend to lead to subsequent decisions consistent with the first, long after the initial motivating emotions have subsided. People look for and value consistency in their actions. Revisiting the emotions associated with an early decision will help only if those emotions can be carefully separated from the objective consequences of adhering to that original position.


 [Runaway coal train at Fishs Eddy, New York, in the East Branch of the Delaware River, January 1, 1870, Cornell University Library]

What's A Doctor Worth To A Hospital?

     In the ongoing symbiotic relationship between hospitals and members of their medical staffs, it is understood that the physicians generate hospital revenue by admitting their patients and ordering tests and procedures. But exactly how much is any doctor "worth" in this sense? Thanks to the HealthLaw Prof Blog, I saw that James A. White recently covered this issue in the Wall Street Journal Health Blog. Citing to a study of 114 U.S.hospitals by physician recruiters Merritt Hawkins, the WSJ produced a chart listing average hospital net inpatient and outpatient dollars derived from referrals, tests and procedures done in the hospital.

     The chart showed average hospital revenue ranging from a low of $696,888 (from nephrology) to a high of $2,815,650 (for neurosurgery). The average for internal medicine was $1,678,341. The article doesn't talk about the hospitals' costs to provide the services that resulted in the hospital revenue described. Although some costs are evenly distributed among all patients, some are not.

     Any hospital administrator will tell you that not many days go by without some physician on staff reminding the administrator of how much his or her presence is "worth" to the hospital. Unlike most other fields of endeavor, physicians by law cannot be paid by the hospital for what they are "worth" in business generation. But that doesn't mean physicians will not expect to be compensated for that value in some way. Nor does it mean that hospitals can afford to be oblivious to this calculation of value.

     Whether in negotiating employment compensation, the structure of a joint venture, or the terms of a services agreement, a hospital should know what the physician across the table is worth in hospital revenue. Although this is not the only value of the physician to be assessed, and the hospital cannot base its offer on the value of physician business generation, the potential loss or absence of that hospital business is certainly a major factor in calculating what mediators call the hospital's WATNA (worst alternative to a negotiated agreement).

     This analysis is complicated, and may yield unexpected results. But failing to do it is like ignoring the size of the pot on the table. You will end up paying too much, or folding on deals the hospital can't afford to lose. 

[Image: Hole cards in a game of Texas hold'em, by Thomas van de Weerd, September 2, 2006]

Medicaid Cuts Will Strain Hospital - Physician Relations

     Kevin Sack wrote earlier this week in The New York Times about the effect Medicaid cuts are having on patients throughout the country. The focus of that article was the hardship resulting from the decision by more and more doctors to simply stop participating in the Medicaid program rather than accept payment rates that assure an operating loss. As states look for ways to balance their budgets, further cuts in Medicaid appear inevitable, even as the sluggish economy forces more people onto Medicaid rolls.

     Hospitals depend on physician participation in Medicaid in a variety of ways:

- Physicians who see Medicaid patients in their offices keep those patients from using the Hospitals' emergency rooms for non-emergent care.

- Hospitals required by law to provide care to all patients without regard to their financial means must have a medical staff that is prepared to provide the full range of professional services to all, including Medicaid patients.

- Hospitals have "on call" and "coverage" requirements that mandate physician service, as needed, to all patients who enter the hospital without a prior physician relationship.

- Hospitals routinely have numerous exclusive contracts with particular physician groups to provide all of the services within a specialty (e.g., radiology, anethesiology, pathology) as required by all hospital patients. These contracts typically require the physicians' participation in the Medicaid program.

- Hospitals frequently develop outpatient and ancillary facilities separate from the main hospital campus to reach more profitable segments of the healthcare market (e.g. surgicenters, ambulatory care centers, diagnostic imaging centers). These efforts involve physican participation, whether as co-owners, tenants or professional service providers. The hospitals involved frequently mandate Medicaid participation of such facilities to satisfy regulatory requirements, tax exemption criteria or the hospitals' mission statements.

When Medicaid payment rates sink low enough, and too many physicians want out, something will have to give.


     Physicians will argue that they cannot afford to give their services away, at least not to the percentage of patients that may be included in expanded Medicaid enrollments. Hospitals will argue that patient service is a shared mission, and the hospitals' rates of payment from Medicaid are equally miserable. Physicians will counter that the mandates driving the hospitals (as noted above) are hospital mandates, for which the hospitals must bear the cost. Hospitals will counter that they have no source of funds from which to pay those costs.

     This is where mediation can help. Hospitals and physicians facing this problem need to have an ongoing relationship after the current dispute is resolved. A heavy handed, litigation driven, "win or lose" approach to solving the problem is inconsistent with that need. It also ignores the opportunity to identify and build upon common interests, including interests separate from the Medicaid problem. Finally, a neutral with substantive knowledge of the industry can help hospitals and physicians identify solutions that are both financially feasible and legally sound.

[Image: Delancey Street, Bowery, Manhattan, New York City, September 13, 2005]

Mediating The Healthcare Reform Debate

     Even before watching the bipartisan healthcare summit on February 25th, I began to think about how I would mediate the divide between the Obama/Reid/Pelosi reform proposal and the position staked out by the Rupublican leadership.  Without knowing it, I was not alone in imagining a mediated solution to this conflict. Mediator Christopher Annunziata wrote in his CKA Mediation and Arbitration Blog that If Anyone Needs a Mediator, It's These People:

"Both sides need to move from their entrenched positions and discuss real options, not just talking points prepared by pointy headed people in Ivory Towers or tucked inside the Beltway.  Having a mediator involved would be very useful."

     A week later, Mediator Lee Jay Berman posted at Eye On Conflict that Real Political Reform Requires Adding a Neutral To the Mix:

"What makes mediation work is the introduction of a neutral third party. Having an unbiased person at the table can bring big picture perspective into the room when all others are mired in the fog of their power games and can't or won't see another approach...A real neutral, who wouldn't be a politician campaigning for reelection, would turn off the cameras, close the door, and encourage everyone to disclose his or her needs, pressures and underlying interests in the privacy and confidentiality of the mediation process."

     Leaving aside all of the ways in which the healthcare reform debate does not resemble the setting required for effective mediation, I began to imagine what I would do if thrust into a room with a commitment from both sides to mediate in good faith.  Having reviewed the parties' respective positions on numerous, individual proposals for reform, I first thought that there must be a way to parse and compromise among these proposals to reach a mutually acceptable outcome. But the more I thought about it, the clearer it became that such an effort would fail. I had an intuitive sense of why it would fail, but I struggled to explain that result in terms familiar to traditional mediation theory. In fact, I started a blog post on this subject, but put it aside, unfinished.

     Shortly after that, I read a description of the Frank Sander Lecture to be given by Professor Lawrence Susskind as the opening plenary of the ABA Dispute Resolution Section's Annual Spring Conference on April 8th: "Values and Identity Conflicts: Proposing a New Dispute Resolution Doctrine." The summary, which appears in the ABA Section of Dispute Resolution's February Just Resolutions Enews (members only), turned on the light bulb in my head.



     As the description of Professor Susskind's lecture puts it:

"Sometimes...disputes are more about values and identities than about interests; when this happens, traditional mediation tactics may not work."

                                                 *  *  *

 "We define values-based disputes as those in which the parties' values and identities are so important to the dispute that they interfere with the parties' ability to settle interest-based issues, or in more severe circumstances, even to proceed with the process of dispute resolution.

                                     *   *  *

Values-based disputes, thus, present special challenges for a mediator.  These include: the usual interest -based techniques may lead to superficial agreements that do not really satisfy the parties' most important concerns (and, thus, may not be durable). This is especially likely when parties conceal their values and identities and initially act as if disputes are really about interests" (emphasis added).


     This is exactly the problem in the healthcare reform debate. For one side, the values associated with providing high quality healthcare insurance coverage to everyone in  America are central to that party's identity, and transcend all of the policy details and budgetary considerations that might be viewed as "interests." For the other side, the values associated with maintaining individual responsibility and promoting smaller government are paramount.

     To really address these differences in values, Democrats would have to acknowledge that, in the end, it doesn't matter how much their healthcare reform will cost, because in their view it assures a fundamental right, and the country will just have to figure out how to pay for it somehow, someday. Not a message suitable for anyone seeking reelection in the current environment. Similarly, Republicans would have to acknowledge that it would not be a bad result if millions of people had no prospect of enjoying high quality healthcare insurance coverage, and instead had to rely on the "safety net" of Medicaid, charity care, and hospital emergency rooms until they could work their way out if it. No great sound bites to campaign on there, either. This is why the proponents on both sides of this public debate speak only in terms of the regulatory nuts and bolts, dollars and cents and parliamentary machinations that continue to make our heads spin.

     I don't know how Professor Susskind's lecture will suggest the mediator should approach this dispute. My guess is that after getting the parties to acknowledge their core values, the mediator would need to facilitate a discussion in which each side accepts those aspects of the other's values that it can agree with, and then builds upon those shared beliefs. Even when values are not shared, each side can be urged to at least respect the other's values, and adopt a willingness to permit the other side to pursue those values in fashioning a mutual resolution to the conflict. I know this probably will not happen in Washington, but the thought process is instructive, and you never know who might be listening to Professor Susskind on April 8th.

Pay Doctors Less And They Will Work Less

     Really?  A recent article in The Washington Post by Carla K. Johnson points out that doctors have steadily cut their work hours over the last decade, largely in response to a decline in pay for doctors' services.

"It's not that doctors are terrible slackers. Average hours dropped from about 55 to 51 hours per week from 1996 to 2008, according to the analysis, appearing in Wednesday's Journal of the American Medical Association.

That's the equivalent of losing 36,000 doctors in a decade, according to the researchers."

     Is it just me, or does this headline belong with that group of newspaper clippings routinely deadpanned by Jay Leno, e.g.: "Obesity Study Blames Overeating," or "Police Raid Gun Shop - Find Weapons."

     I suspect the same headline would occur if the circumstances applied to lawyers, teachers, auto mechanics, construction workers or anyone else used to being paid for what they do. As our leaders in Washington debate the various ways to pay doctors even less, keep this headline in mind when planning your next negotiation. 


     [Image: "A Very Difficult Case," c. 1905]

Changes In Legal Practice And The Use Of ADR

       In case you haven't noticed, the law business - the way law is practiced - has been changing at a rate uncharacteristic of the profession. Financial pressure from the economic downturn is a major contributor to this development. But change was afoot long before the subprime meltdown and stock market nosedive. The viability of the "big law" pyramid model for most purchasers of legal services has been questioned since the starting salaries of newly minted associates crossed into six figures, but only with the disappearance of easy money has awareness of the issue entered the mainstream.

       I am writing about this here because of a fundamental premise of my decision to pursue a career in ADR: that the resolution of most business disputes through litigation waged by opposing traditional model law firms is not an economically viable option for the healthcare industry.  By "traditional model law firms" I mean firms organized under a pyramid structure, deploying all resources available to every aspect of litigating a dispute, and billing on the basis of hourly rates. Instead, I see a growing role for solos, practice groups and firms with no "leverage" imperative, an acceptance of alternatives to hourly rate billing, and a focus on the value of specific tactics rather than an automatic adherence to the traditional litigation roadmap.

       For some time, I have been following the ideas on these and related topics advanced by the bloggers linked on the left side bar of this post under the heading "Recommended Legal Practice Blogs." They each have a unique focus and style, but all are worth a look. Patrick Lamb at In Search Of Perfect Client Service and Dan Hull at What About Paris? (f/k/a What About Clients?) are consistent voices for a new, client centered approach to legal practice emphasizing service and value. I find myself agreeing with almost everything they say. Which brings me to the point of this post.

       Even among the most forward thinking voices in the legal blogosphere, the potentially expanded role of ADR in carrying out the lawyer's goals of improving client service and maximizing value is not given the attention it deserves. Almost all litigated cases are settled. The business of law is much more about settling disputes than it is about litigating cases. Yet most lawyers see it the other way around. Early case evaluations, pre-claim mediation, ad hoc arbitration and success fees tied to settlement (and litigation cost savings) need to be pursued along with the more commonly deployed pre-trial mediation. Indeed, I would expect this initiative to be at the very core of a value based approach to legal practice.

       Since entering the ADR field, I have wondered about the inherent conflict between the interests of the lawyer engaged on an hourly fee basis and the interests of the client in achieving the most economically efficient result. Conventional wisdom says that a good (and smart) lawyer will always forsake the opportunity to earn a larger fee in favor of achieving the best economic result for the client - because a well served client will be back for the next case and sing your praises to others. Unfortunately, I'm not sure this maxim is followed as often as we might think. It is not that most lawyers are consciously calculating their own benefit to the detriment of their clients. Instead, most lawyers are simply thinking in the way they were trained, and in the way they are encouraged to think by the traditional legal model they work within.

       Most lawyers operating in the traditional legal model are like most doctors practicing in a traditional, healthcare setting with fully insured patients. When a patient presents with a complaint, the doctor deploys whatever resources are at his or her disposal to diagnose and cure the problem. Whether it is consultations with specialists, diagnostic tests and procedures, medications, surgeries or other therapies, the limits of modern medicine are the only constraint. For lawyers, depositions are like CAT Scans. It seems you can never be faulted for doing one too many.

       But just as doctors have come to see the economic erosion of their traditional model of practice, so must lawyers embrace what Patrick Lamb, Dan Hull and others have been saying for years now. I'm just suggesting that the proactive use of ADR should be a bigger part of that story.

       [Image: Change, by Felix Burton, May 17, 2005]

Healthcare Neutral ADR Blog Now Featured At Mediate.com

     I'm pleased to report that Mediate.com has included this blog in its list of Featured Blogs. Mediate.com is the leading website for "everything mediation." Each week, managing editor John Ford reviews the featured bloggers' sites and selects 8 to16 blog posts to be quoted, in whole or in part, at Mediate.com. If you are not already familiar with Mediate.com, there's a variety of other useful mediation information on that website as well. You can click over there by using the badge in the column immediately to the left of this post.





Changes In Scope Of Healthcare Practice = Conflict, Too

     Earlier this week I wrote about the inevitability of conflict arising out of the leading ideas behind healthcare reform.  Restructuring healthcare payment systems to reward efficiency and quality rather than volume will only be effective if they result in a decrease in overall spending. With that "smaller pie" will come disputes over how to slice the pie. But efforts to contain healthcare costs will not be limited to elegant reform measures based on lofty principles. Especially when government payers are involved, healthcare cost containment may take a more direct approach.

     Witness the "turf war" between anesthesiologists and Certified Registered Nurse Anesthetists ("CRNAs") going on in California. As reported by James A. White in The Wall Street Journal Health Blog, Governor Arnold Schwarzenegger last year exercised an option under the Medicare program to permit CRNAs in California to administer anesthesia without a supervising anesthesiologist. The California Medical Association and the California Society of Anesthesiologists filed a lawsuit to block Schwarzenneger's decision. Prior to California's decision, 14 other states had opted out of the physician supervision requirement.

     Healthcare cost containment by government payers can occur through licensing and enforcement proceedings that directly or indirectly change the scope of practice permitted in a given healthcare sector.  A health care adviser to California's Governor told Anesthesiology News that "the purpose of the opt-out decision was to reduce pressures on and increase access to services at small and rural hospitals." Hmm. The WSJ Health Blog notes that California has the largest number of anesthesiologists in the U. S. at 5,400. Leaving aside the debate on patient safety, it is not hard to understand that paying unsupervised CRNAs costs less than paying for physician supervision.

     Once states take action to change a permissible scope of practice, the action shifts to how that change will be applied by hospitals, physicians and third party payers. The California rule change did not mandate the use of unsupervised CRNAs. But when payers demand lower prices and hospitals compete for patients, possible cost reductions have a way of becoming necessary cost reductions. That's when the fun begins.

[Image: Turf War Graffiti at Glanmoelyn, Llanrug, United Kingdom, by Eric Jones, August 12, 2006]

Healthcare Reform and Inevitable Conflict: Smaller Pie Means Smaller Slices

     With all the media coverage of healthcare reform and its political ramifications, its easy to get caught up in the debate. Notwithstanding the recent setbacks, there will be some kind of reform in the not too distant future, if only because the sources of healthcare payment cannot keep up with the costs of providing care. Most healthcare economists agree that real reform will only come when the financial incentives of the current system are altered to reward quality and efficiency rather than volume

     A concept frequently put forth to address this objective is the "accountable care organization" or "ACO" (any reputable idea in healthcare must be reducible to a three letter acronym). Essentially, ACOs are associations of healthcare providers (typically, doctors and hospitals) that share responsibility for the coordinated care provided to a pool of common patients. ACOs can share clinical information and operate with some degree of financial integration. The providers in the ACO are then jointly "accountable" to the third party payers who fund the care provided to their beneficiaries by the ACO. (See the recent post in the Healthcare Economist explaining ACOs and some of the key characteristics of various ACO models.)

     Another concept aimed at the same objective is "value based purchasing" or "VBP."  Under VBP, the current system of Medicare payments to physicians (based on a per task menu of fees) would be converted to one based on efficiency and quality.  In order to assess a physician's efficiency and quality, the services provided to any patient would have to be grouped with all services within the same "episode of care." As noted in another post at the Healthcare Economist, this process of grouping carries with it a number of unanswered questions.

     Sooner or later, the use of ACOs and VBP in some form will become a reality.  There is no other politically viable approach on the horizon to reducing healthcare costs. But that will be only the beginning of a wave of conflict within the world of healthcare providers and third party payers.  ACOs, VBP and any other three letter acronym to come will only reduce healthcare costs by yielding a result by which the total dollars paid to doctors and hospitals for providing care to a group of patients is reduced. Otherwise, why bother? When the pie gets smaller, everyone's piece will get smaller, too. Those who provide the highest quality, most efficient services may get a larger piece, but that will only make everyone else's piece even smaller.


     Most doctors and hospitals do not believe they are overpaid under the current regime. Many have  experienced decreased net income over recent years. All will enter the new arena of ACOs and VBP firmly holding the "bottom line" position that they must at least maintain their financial status quo. The convergence of so many irreconcilable bottom lines will create conflicts that play out in a variety of scenarios. Who will lead the ACO? Who will be allowed in or kept out? Who will decide the internal compensation model, and what will it be? What effect will the ACO have on existing hospital-physician relationships? On existing medical practice agreements? How far will ACOs go to create, preserve and assert their control over patients in dealing with third party payers? How much of the benefit of their "efficiency" will providers share with third party payers?

 [Image: Thanksgiving pie aboard U.S. naval ship in the Persian Gulf, by Photographers' Mate Airman Rome J. Toledo, November 25, 2004]

Mediation in Healthcare Interview at Disputing Blog

Holly Hayes Bovio and Victoria VanBuren over at Disputing were very kind to post Holly's Q&A with me on Mediation in HealthcareDisputing has become one of my favorite ADR blog reads, and Holly and I share both a Duke connection and a focus on healthcare. I'm looking forward to collaborating with them again on healthcare ADR topics of interest.

  [Image: Thank You for using the Garden State Parkway, June 5, 2006, via Wikimedia Commons]

Guido v. Duane Morris: Potential Setback For Mediation?

     On Wednesday, January 20, 2010, the New Jersey Supreme Court heard oral argument in Guido v. Duane Morris, a case focused on whether a client could sue his former lawyers for malpractice based on a settlement the client had accepted years earlier.  It was on appeal from an Appellate Division decision in favor of the client that was well covered by Mary Pat Gallagher on LAW.COM in July 2009.  The case will require the Supreme Court to reconcile two of its previous decisions, Ziegelheim v. Apollo, 128 N.J. 250 (1992) and Pruder v. Buechel, 183 N.J. 428 (2005).  The legal community is closely watching the case, and both the New Jersey State Bar Association and the Trial Attorneys of New Jersey participated as amicus curiae.

     As reported by Michael Booth in the New Jersey Law Journal online edition, the oral argument found counsel and the Court struggling to parse the holdings in Ziegelheim and Pruder, with a heavy overlay of public policy considerations involving the attorney-client relationship. Although the outcome will likely be an important milestone in the law of attorney malpractice, its potential effect on the use of mediation should not be overlooked.

     Guido's underlying cause of action was settled after mediation. The settlement was placed on the record in the trial court, and included questioning of the parties to confirm their understanding and agreement to be bound by the settlement. Nonetheless, the Appellate Division found that the plaintiff's later alleged realization that his lawyers had not explained the long-term value and marketability implications of the settlement was a sufficient basis for a legal malpractice claim.  There was no question raised about the propriety of the mediation or the enforceability of the settlement itself (other than an argument by Duane Morris that Guido should have to ask the trial court to reform the settlement before suing his former counsel).  But a Supreme Court decision in favor of the client in Guido should cause lawyers to think differently about how they settle cases in mediation.

     Parties and their counsel often work long and hard in mediation sessions to hammer out a resolution to complex issues. Along the way, each party spends bargaining chips and gains concessions, the implications of which are, of necessity, evaluated on the fly. At the end of a successful day, the parties memorialize their settlement, sometimes subject to a formal agreement and court approval, sometimes not. Along the way, counsel will help their clients understand the legal consequences of their negotiation moves, and usually will take some time to review the final proposed settlement before sealing the deal.  But how much of such good counsel is enough?

     If parties to a settlement can look back with 20-20 hindsight, years later, and successfully assert that legal malpractice occurred based on their counsel's failure to fully explain issues such as those alleged in Guido, the parties' ability to settle many cases in mediation will be significantly hampered. This is not because parties will need to be better informed about their settlement decisions than they are now, but because counsel will need to be prepared to prove that their clients were well informed. Today, counsel can reasonably rely upon a brief conversation, or even a nod, to confirm the client's understanding on a given point. Often, that conversation or nod will follow hours of previous conversations and nods that unfolded during the course of the mediation. Will the awaited Guido decision effectively require all of that to be written down, and fully draped with the litany of disclaimers that characterize formal opinion writing?  If so, each mediation session should be scheduled to include an extra day, post-settlement, for the "c.y.a." exercise.

     One way of dealing with this problem is to have counsel provide a written cover letter to the client in connection with a formal settlement agreement prepared following the mediation. But this option raises the possibility that the client will balk at the formal settlement agreement and allege that the lawyer's explanatory letter came too late.  If the essence of the settlement reached at the conclusion of the mediation is already enforceable, the lawyer is still in the soup.

  [Image: Home-made Hungarian goulash soup, by Hu Totya, October 12, 2008]


     The Bar will anxiously await the Supreme Court's decision. In the meantime, if you have thoughts about how this issue affects your participation in mediation, please share your comments.

Mediator's Proposal Roundtable

     [Image: King Arthur and the Knights of the Round Table, via Wikimedia Commons.]


     I was delighted to see my comments on the use of "the mediator's proposal" included in a roundtable on that subject hosted by Steve Mehta over at Mediation Matters. Others weighing in on the topic were Lee Jay Berman, Don Philbin and Jeff Thompson. It is interesting to see how much agreement occurred among four mediators who did not discuss their answers to Steve's questions in advance.

     If you are interested in mediation and do not already read Mediation Matters, you should.  Steve Mehta regularly turns out well written posts on interesting mediation subjects from a very practical perspective.

Cardozo To Host Conflict At Work Symposium

[Image: Anselm Feuerbach's painting of a scene from Plato's Symposium, 1869.]

     The Cardozo School of Law Journal of Conflict Resolution will hold its 11th annual symposium in New York City on Thursday, November 5, 2009, entitled "Conflict Resolution at Work, ADR in the Private and Public Sectors."  The full day program will include panels on the use of ADR in real estate, federal government and healthcare.  I will be part of the panel on healthcare along with moderator Ellen Waldman, Jerry P. Roscoe, Chris Stern Hyman and Joan Ilivicky,  The symposium is free, and includes breakfast, a reception and CLE credits! If you attend, please stop by and say hello.

Unintended Harm Really Does Hurt Less

       Dan Ariely's Predictably Irrational blog pointed me to a recent article in Economist.com called "Malice Aforethought."  The article reviews a study in Psychological Science by Drs. Kurt Gray and Daniel Wegner of Harvard University that essentially asked the question:

"If someone accidentally steps on your toe, it hurts.  But does it hurt more if you think he did it deliberately?"

According to The Economist, their answer is that it probably does.

       The article describes the tests administered by Drs. Gray and Wegner to 43 students, who assessed levels of discomfort associated with tasks that were in some cases stated to be intentionally inflicted by their study partner, and in other cases the result of random selection and contrary to the will of their study partner.  Discomfort was rated by the participants on a scale of one to seven. 

"...the students rated the strength of shocks they thought had been intentionally administered at 3.62 on average; those they thought unintentional averaged 3.00.  The researchers also found the apparently unintentional shocks hurt progressively less as the experiment went on, whereas those perceived as deliberate continued to hurt as much."

        Whether this research can be extended to non-physical harm remains to be seen.  But I am willing to bet that it can. The lesson for parties in mediation is clear:  When you really didn't intend to inflict the "harm" being experienced by your adversary, let him know it.  This is related to, but different from the often touted value of an "apology."  Apologies carry implications of fault, guilt and regret that may not be appropriate or possible at every stage in a mediation. Convincing the other side that you did not intend a result to occur is more limited and easier to do.

       The greatest benefit of communicating an absence of intent is its capacity to build a bridge of understanding that is often required for a successful mediation.  Without admitting fault or responsibility, one party can often say, "I understand how this makes you feel, and I just want you to know that it was never my intent for you to experience that result."  This can be followed up by an explanation of what the offending party was trying to do or say, thus giving credibility to the denial of intent. Particularly in cases based upon or motivated by a perceived injustice or betrayal, this approach moves the mediation to a different level, where realistic and constructive solutions can be reached.

[Image: Car vs. motorcycle accident in Pisek, Czech Republic, February 1, 2008, by Chmee2]

What It Means To Be Neutral

[An astronaut training in the Neutral Buoyancy Laboratory at the NASA Johnson Space Center]


       I recently read an excellent commentary in the New Jersey Law Journal (195 N.J.L.J. 95, January 12, 2009, page 19) by retired New Jersey Superior Court Judge Harvey Weissbard entitled "The Myth of Judicial Neutrality."  Available online by subscription only, it's worth digging out your old hard copy if you missed this when it first appeared.  In Judge Weissbard's view:

"The notion that a judge is neutral is one of many legal fictions.  The concept presumes that the judge is a tabula rasa, a clean slate."  Instead, Judge Weissbard suggests, "every judge is a product of life experiences, which result in an indelible imprint we may call the judge's personal philosophy...We all know that a lifetime of practice in a particular area cannot be shrugged off when the robe is put on.  And personal world views, derived from family experience or religious indoctrination, are no less likely to influence the judge."

       Judge Weissbard's central point is that judicial neutrality exists only as the result of a conscious struggle by judges to recognize and subordinate their personal values and beliefs to the objectivity that all litigants are promised.

       So, too, is the neutrality of the non-judicial "neutral" in arbitration, mediation and other forms of alternative dispute resolution.  There is no denying the "personal philosophy" one acquires through a lifetime of professional practice, business and personal relationships.  In the course of a friendly conversation or barroom debate, that "personal philosophy" would likely show itself rather clearly.  But like a judge, the ADR neutral must face what Judge Weissbad calls "the proverbial elephant in the room" and handle each case fairly and objectively.

       Unlike a sitting judge, the ADR professional's "neutrality" as perceived by the parties is subject to a higher test in the form of the opinion of the marketplace.  Although judicial forum shopping can and does occur to a limited extent, ADR neutrals are subject to immediate and lasting negative consequences if any party believes the neutral is "biased."  Parties and their counsel will simply vote with their feet. 

       This is the reason why "subject matter expertise" can coexist with "neutrality" on the ADR professional's resume.  Very few neutrals have had a legal practice that was evenly divided among the representation of parties on all sides of the disputes in which they now claim to have subject matter expertise.  In selecting an ADR professional, parties can attempt to figure out whether a candidate's legal experience potentially predisposes him or her to that party's point of view (i.e., a neutral with a shortsighted business plan), or they can select someone who has a reputation for being fair, open-minded and neutral

The Mediator's Proposal: Too Much Of A Good Thing?

     Attorney John DeGroote, in his Settlement Perspectives blog, wrote last week about "The Mediator's Proposal: A Great Tool For Yesterday's Disputes."  As John defines it, a "mediator's proposal" is:

"...a set of settlement terms advanced by a mediator in an effort to settle a dispute when the parties have reached an impasse.  The mediator's proposal is made on a double-blind basis to all parties in separate communications; the parties are asked to accept or reject the terms as proposed, with no modification or counteroffer, within a specific time frame."

     This impasse breaking tool, in John's view, is far too accessible, and as a result, may be creating more deadlocks than it solves.  Calling to mind the old Mad Magazine cartoon "Spy v. Spy," in which Spy White and Spy Black engaged in acts of espionage to elicit responses that could be met with predictable countermeasures, John suggests that sophisticated counsel in many mediations are now purposefully working towards an impasse rather than towards a settlement, knowing that a mediator's proposal will be forthcoming.  In his words,

"Compromise is no longer the goal of the mediation exercise; instead it becomes a play to the 'neutral,' whose power to craft the mediation proposal will make her the real decisionmaker."

     John's observation and "Spy v. Spy" analogy, like everything on his blog, are insightful and well crafted.  So am I worried that by making a mediator's proposal in any of my future mediations I may be working against the fundamental principles of mediator neutrality and party self-determination?  Or that I will be creating more deadlocks than I am breaking?  No.


     First, the notion that the potential for a mediator's proposal will cause the parties to "play" the mediator rather than mediate in good faith assumes that most counsel are not already "playing" the mediator anyway.  My observation is that most good counsel are always doing a little bit of both.  As a mediator, I expect that, and don't hold it against the client.

     Second, at least under my idea of what a "mediator's proposal" should represent, each party's effort and movement prior to the mediator's proposal are relevant to the formulation of the proposal.  I would not offer a mediator's proposal unless the parties have made significant progress towards settlement, there is a discrete and manageable distance remaining between them, and they both seek my input.  In that case, my proposal is intended to suggest a way for them to finish what they have started but cannot conclude despite their best efforts, and further mediation is not possible.  A party who "hangs back" in the mediation process cannot safely assume that my proposal will simply "split the baby."

     Finally, I think most lawyers will have more confidence in their ability to negotiate effectively through good faith mediation than they will have in their ability to double think me (a la "Spy v. Spy") into an advantageous mediator's proposal. 

     In the truest sense, a "mediator's proposal" is not mediation at all, and if it becomes more than an occasionally used closing technique, the process might better be called a neutral case evaluation.  But as long as parties are showing up to mediate, and cases are getting settled, I can deal with the possibility that somebody is trying to outsmart me.  Let's not forget, Spy White and Spy Black each lost an equal number of their encounters.

[Image: A postcard with the public domain "me worry?" face that later inspired Mad magazine's Alfred E. Neuman]

AHLA Offers Practical Toolkit For Managing Healthcare Conflicts

     Before you head off for the long Thanksgiving weekend, consider signing up for a teleconference to be held next Tuesday that you might otherwise miss in the post holiday crush.  The American Health Lawyers Association ("AHLA"), through its ADR Task Force, is offering "A Practical Toolkit for Managing Healthcare Conflict" from 3:00 to 4:00 p.m. Eastern Time on December 2, 2008.  You can read the full description of the program and sign up on the AHLA's website.  It is open to AHLA members and non-members.

      Presumably, the teleconference will be based on the "Practical Toolkit for Managing Healthcare Conflict" just published by the AHLA, which is available as a PDF on the AHLA website.  This document is a good summary of the need for conflict management in the healthcare (particularly hospital) setting, and provides a framework for hospital management to approach conflict management comprehensively.  It also addresses the specific requirements for internal hospital conflict resolution processes mandated by the Joint Commission.


     No doubt the current economic crisis affecting hospitals in New Jersey and throughout the country  will only make conflict more prevalent and important to manage.  It will be interesting to see whether some of the suggestions made in the AHLA's toolkit, which will carry a new and significant price tag, will gain traction.  I believe what they say about "an ounce of prevention" applies here, but those with the checkbooks may need more convincing. 

     Joining in to hear this program would be a step in the right direction.


[Image: A toolbox, by Per Erik Standberg, May 13, 2006] 

Honoring Those Who Serve On Veterans' Day



     Fellow mediator and blogger Nancy Hudgins points out a great site to explore on this day in honor of those who serve in our nation's military.  "Any Soldier Dot Com" will give you the address of a soldier to whom you can send a "care package" of your creation.  Nancy details her own experience in sending such packages, and reminds us that it really doesn't take much to make a big difference in the lives of those who serve.

     I saw Nancy's post just as I read of the efforts of two New Jersey dentists (and friends of mine), Ed Johnson and his daughter, Katelin Johnson. Ed and Katelin conduct an annual drive to buy up the Halloween candy collected by local kids and send it to our troops. The price paid is $1 per pound, and this year their package is expected to exceed 400 pounds.  It will be sent to a local soldier serving in Afghanistan for further distribution there.  The Johnsons pay for the candy and the costs of packaging and shipping.

     Whatever you may feel about our nation's involvement in any given conflict, efforts like these bring to mind that "supporting the troops" can take many forms.  Spread the word.

[Image: Joseph Ambrose, an 86 year-old World War I veteran, attends the dedication day parade for the Vietnam Veterans Memorial in 1982.  He is holding the flag that covered the casket of his son, who was killed in the Korean War]

Don Vanarelli's Top 10 New Jersey Mediation Blogs!

     I was pleased to see that New Jersey's mediation community had moved far enough into the blogosphere to warrant a "top 10" list of New Jersey mediation blogs, and that this blog had made the list.  Attorney and mediator Donald D. Vanarelli came up with the list and posted it here, and it was picked up as far away as New Zealand (by Geoff Sharp here)!  Among the more active blogs mentioned were Sans Mediation World of ADR (by Marvin Schuldiner), New Jersey Family Law Matters (by fellow LexBlog client T. Sandburg Durst), NJ Family Legal Blog (by the Family Law Group at Fox Rothschild) and Don Vanarelli's own blog on NJ Elder Law, Estate and Special Needs Planning, Mediation and Collaborative Family Law


     Don Vanarelli's path crossed with mine nearly 20 years ago when we both practiced law at the same firm.  I saw him again last year at a meeting of the Justice Marie Garibaldi Inn of Court on ADR, prior to the launch of his blog.  Don has carved out a niche in the elder law practice area that is undoubtedly enhanced by his mediation training and experience.  His blog provides some icing on that cake, and hopefully, will help spur others to join the ADR dialogue. 

     [Image: Top ten icon, by STyx and Producer]

Do Doctors Confess Errors Only When Caught?

     A study published on October 6, 2008 in the Archives of Pediatrics and Adolescent Medicine suggests that doctors will more frequently tell patients about errors that are obvious or likely to be detected than they will tell them of less apparent errors.  A post by Jacob Goldstein in the Wall Street Journal's HealthBlog reviews the study and places its findings within the context of our evolving healthcare culture.


     Doctors traditionally have been less than forthcoming in telling patients about errors because they fear potential lawsuits, and have been told consistently by defense attorneys to say nothing that could be construed as "an admission of guilt."  Forces are at work to change this.  These include:

- the "apology and disclosure movement" promoted by "Sorry Works";

- the enactment by some states of legislation precluding the use of "confessions" or apologies in subsequent malpractice litigation;

- required disclosure of errors that cause harm to patients under Joint Commission accreditation standards; and,

- a variety of other governmental and industry mandates for "transparency."

     Aside from these external forces, many doctors and the hospitals in which they practice have begun to realize that it is in their own best interest to adopt and implement a program under which:

- medical errors are identified and disclosed;

- with an explanation of the error;

- an assurance that it will not be repeated;

- a sincere apology; and,

- an offer of just compensation.

     These elements can be combined and put into practice using a variety of alternative dispute resolution techniques.  The July/August issue of the Patient Safety & Quality Healthcare e-Newsletter contains an excellent summary of five approaches now deployed around the country: the "Rush Model," the VA Model," the "University of Michigan Model," the "Pew Mediation and ADR Model," and the "Internal Neutral Mediator Model."

     The authors of that article, Gary A. Balcerzak and Kathryn K. Leonhardt, conclude that "the success of existing ADR models is promising.  With the potential to promote disclosure, meet the needs of patients, reduce costs, and improve patient safety, ADR in Healthcare holds great promise for the future."  I could not agree more.

[Image: People waiting for confession, Lourdes, France, by Jean-noel Lafargue, August 9, 2005]

Stark IV Rules Create Traps For The Unwary - But Mediation Can Help

Fellow LexBlog powered blogger Todd Rodriguez, writing in the Physician Law blog, points out that the Centers for Medicare & Medicaid Services ("CMS") recently made a number of substantial changes to the Stark self-referral regulations that may affect existing business arrangements of physicians, hospitals and their partners.  Some of these changes went into effect on October 1, 2008, while others will take effect one year later.  In particular, these changes include the following:

1. Physician owners of an organization are now deemed to "stand in the shoes" of that organization with respect to its financial relationship with a provider of services to whom patient referrals are made.

2. The definition of "entity" for purposes of Stark prohibitions has been expanded to include a person or entity who actually provides the service "under arrangements" with the person or entity who submits the claim for payment to Medicare.

3. "Per service/per click" and percentage based rent arrangements under space and equipment leases between physicians and entities to which they refer will be prohibited.

An earlier post by Michael Cassidy in another LexBlog product, the Med Law Blog, also discussed these and other Stark IV changes here

The message for physicians, hospitals and others in a position to provide Stark designated health services or refer patients for such services is clear.  Many financial arrangements previously blessed by counsel may need to be reviewed and restructured, either immediately or within the next year. 

Sometimes the agreements creating these financial arrangements will contain "unwind" or "renegotiation" provisions to address material changes in law and regulations.  When the agreements are silent, the parties often have a mutual interest in renegotiation, although in some cases one of the parties may seek to escape from the deal entirely by claiming it is "void for illegality."

Whether or not mandated by their agreements, the parties to a transaction thrown out of compliance by the new Stark regulations can often benefit from a mediated restructuring of their deal.  As contrasted with a litigated solution (and many direct negotiations), the mediation process in this context offers confidentiality, speed and reduced legal expenses, while enabling the parties to control their own destiny.  It also enables the Byzantine requirements of the healthcare regulatory scheme to be met effectively, while preserving the parties' relationship that extends beyond their monetary interests of the moment.

[Image:Computer mouse caught in a mouse trap, by Karen Rustad, October 18, 2005]

Welcome John DeGroote - Settlement Perspectives Blog!


       [Image: White Stork - welcoming the newly arrived, by Manfred Heyde, June 19, 2007]

     The dispute resolution blogosphere grew stronger recently with the launching of "Settlement Perspectives," by John DeGroote.  Let me join fellow bloggers Nancy Hudgins ("Civil Negotiation and Mediation"), Diane Levin ("Mediation Channel.com") and Christopher Annunziata ("CKA Mediation & Arbitration") in welcoming John to the dialogue.  He has already demonstrated a grasp of the settlement process and human nature that makes his blog well worth reading.  And his writing style and blog design are terrific. Along with the blogs just mentioned and those of Victoria Pynchon ("Settle It Now Negotiation Blog") and Geoff Sharp ("mediator blah...blah..."), he has become a regular read from my newsfeeder.  Last but not least, I note that John is a fellow Duke Law grad - with basketball season just around the corner, I'll be hoping for some Blue Devil inspired perspectives.

     If you negotiate and settle disputes, whether as a party, counsel or neutral, check it out!

Mediation Offers Better Odds Than Going To Trial

          Advocates of mediation often point to several advantages of that process over conventional courtroom litigation: the uncertainty (risk) of a litigated outcome; imperfect decision-making by the judge or jury; lack of the parties' control over the process;  and increased costs.  Now we can add to this list a more practical rationale:  if you are a plaintiff and you go to trial, the odds are you will do worse than if you settle. 

          At least that is the conclusion of a comprehensive study of civil lawsuits as reported by Jonathan D. Glater in The New York Times online Business Section.  The study, to be published in the September issue of the Journal of Empirical Legal Studies, is said to be "the biggest of its kind to date."  It contrasts the results actually achieved by the parties at trial with the results that were offered to them in settlement but declined.  The decisions of both plaintiffs and defendants were separately analyzed.

          According to Randall L. Kiser, a co-author of the study and a principal analyst at DecisionSet, plaintiffs made the wrong decision by going to trial in 61 percent of the cases.  Defendants made the wrong decision far less often, in 24 percent of the cases.  Before defendants and their counsel draw too much comfort from having been "right" more often than "wrong" by choosing to go to trial (i.e., 76% v. 24%),  they should also consider that the study found getting it wrong cost plaintiffs $43,000 on average, while the cost of getting it wrong for defendants averaged $1.1 million.

          To me, the most interesting and compelling finding of the study reported by the NYTimes was this:

          "In just 15 percent of the cases, both sides were right to go to trial - meaning that the defendant paid less than the plaintiff had wanted but the plaintiff got more than the defendant had offered."

          What this means is that in 85 percent of the cases that went to trial, the outcome was outside the last zone of settlement determined by the parties prior to trial.  If the plaintiff offered to settle for $100 and the defendant offered to pay $50, they both might intuitively expect  the trial to yield an outcome somewhere between $50 and $100.  And they would be wrong 85 percent of the time!

           The NYTimes article discusses some of the potential explanations for the consistent pattern of litigants going to trial when it is clearly the wrong choice - another interesting topic in itself.  But without knowing why, parties and counsel can appreciate the consequences of these choices.  

          The smart money goes to mediation.

          [Image: A roulette wheel, by Toni Lozano via flickr]

Less Can Be More: Success Fee Billing And ADR


            [Image: "Bronze Gate" (2005) is a cor-ten steel work by sculptor Robert Morris set in the garden of the dialysis pavilion in the hospital of Pistoia, Italy.]
                                                                                                                                                                                                             For several years, I have been reading in many legal industry periodicals that "the billable hour is dead," or at the least, that alternative fee arrangements are the way of the future.  But my experience has not supported these assertions.  I thus read with interest an article by Debra Cassens Weiss in this week's online ABA Journal about an Ohio law firm's switch to success-fee billing.  In it, Stanley Chesley, name partner in Waite, Schneider, Bayles & Chesley, describes how and why his firm "recently adopted a success-fee billing method for its corporate clients."

          Chesney told the ABA Journal.com that a "success fee" can be based on several factors including:  whether the case against the defendant client is settled or dismissed: (1) within a fixed time, (2) for less than a set amount, and (3) within applicable insurance coverage.  He also points out D&O insurance often pays attorneys' fees and claims out of the same pot, creating an incentive for defendants to settle earlier than later.

          Chesney's partner, D. Michael Grodhaus, not only practices using this fee model, he blogs about it at The Alternative Fee Lawyer.  There, and in other online articles, there is discussion of real world clients and matters using alternative fee arrangements that make for interesting reading.

          As a mediator, reading Chesney's explanation of why "success fee" billing makes sense really got my attention.  As reported by the ABA Journal:

          “'Very few cases are going to trial. Corporations are spending millions of dollars in defense  costs, and [there are] huge budget issues. And at the end of the day, the cases are settled.'

          'I think many cases should be settled before summary judgment because the cost of discovery is not only the lawyer fees, it’s also the corporate executives and all the department heads' who have to spend valuable time giving depositions and assisting in discovery, he says. The days of settling on the courthouse steps are over, he says. 'All I’ve done is seize the moment.'"

          Just after reading this, I came upon a great piece in What About Clients? courtesy of Geoff Sharp in mediator blah...blah... entitled "At what price glory? The lure of ADR in a down economy."  There, Dan Hull persuasively argues that even defense counsel for well funded clients should be thinking beyond merely "winning"  their cases.  As he puts it, "[f]or the experienced client, the cost of the lawsuit is part of the 'victory' analysis...The trick now is to win cheap* (*GCs would rather have 'no lawsuit' than a great case or defense)."

          The solution, according to Hull, is ADR: "A good arbitration panel or mediator will cut to the quality of the suit and its likelihood of success quicker than even the best American judges, who often feel obligated to give bad and iffy cases a wide berth."

          This is where "success fees" come in.  Although every lawyer I talk to agrees that prolonging litigation for the sake of bigger fees is both unethical and bad for business in the long run, it  cannot be  ignored that lawyers paid on an hourly basis make less from a case that settles early than they do on a protracted litigation.  This combines with the prevailing belief that good legal representation requires that "no stone be left unturned" to create a powerful force against the early and frequent use of ADR.

          Healthcare industry observers  will recognize that very similar circumstances exist with respect to physician payment systems,  which appear to be moving from a "fee for service" to a "pay for performance" model.  For lawyers, "success fees" are a form of "pay for performance."  They permit the lawyer to focus entirely on what is really best for the client, including containment of the client's legal fees, and to choose ADR when it will serve those interests.  For many lawyers,  this would mean greater and better use of ADR.

          Less can be more, for both the client and counsel.

Special Issue Of New Jersey Lawyer Covers Healthcare Law

          The current issue of in Re: Magazine, the special supplement to the weekly newspaper, New Jersey Lawyer, is dedicated to healthcare law and is online now.


          In addition to an article by yours truly entitled Alternative Dispute Resolution In The Healthcare Industry, topics covered include:

- Nuances Of Purchasing  A Medical Practice, by Peter A. Greenbaum;

- The Next Wave Of Healthcare Fraud Enforcement In New Jersey, by Mark S. Olinsky and Gary W. Herschman;

- Answering Malpractice Insurance Questionnaires, by Christopher R. Barbrack;

- Medicaid Beneficiaries' Rights Not To be Evicted From Nursing Homes, by William P. Isele; and,

- New IRS Form 990 And Transparency For Nonprofit Boards, by Todd C. Brower and Isai Senthil.

[Image: Newspaper Rock, by Jon Sullivan, February 15, 2004]

What Consumers Of ADR Want From Their Mediators

          Concluding my original report on the highlights of the ABA Section of Dispute Resolution Spring Conference in Seattle, I attended several break out sessions which focused on what consumers of ADR services really want from their neutrals.  One of these was a presentation on the Findings on Mediation Quality from the ABA Section of Dispute Resolution Task Force on Improving the Quality of Mediation (H7), given by four members of that Task Force (Kathleen A. Bryan, Leila Taaffe, Wayne Thorpe and Rachel Wohl).

          The entire Report is worth reading - both for mediators and those who use mediators - but the panel focused on the key findings about what consumers of mediation really want and view as "high quality" in mediation:

- Preparation.  The panel emphasized that this included not only that the mediator review and understand the available materials, but that the mediator do whatever is possible to assure that counsel and the parties are prepared as well - that is, that everyone starts "on the same page."

- Customization of the mediation process.  The panel mentioned the importance of pre-mediation communication with counsel to determine what they expect, and what they believe will be useful in the process - for example, whether the parties will benefit from joint sessions and opening statements.  Logistical matters involving time, length and scope of sessions, as well as presence and participation of parties were also seen as important items for the mediator to nail down.

- Analytical assistance from the mediator.  The parties and counsel want the mediator to help  resolve the case by fairly assisting them to analyze how their case will be viewed by a judge or jury, but, according to the panel, they don't want their mediator to tell them "this is what will happen."  They also value creative suggestions, and welcome the mediator's perspective when based on subject matter expertise.

- Persistence by the mediator.  Counsel surveyed for the Report consistently valued and gave high marks for a mediator's persistence - having a manifest commitment to getting the conflict resolved at all stages of the mediation.  The panel noted the importance of mediator follow-up, whether the mediation resulted in settlement or not.

         [Image: Pike Place Market (Seattle) greengrocer vegetable display, by Rootology, 5-30-08]

Apologizing For Adverse Healthcare Outcomes: Saying "Sorry" Is Not Enough

           [Image: Older Sorry! board game, by myguitarzz, June 5, 2006]

          Last month's 10th Annual ABA Section of Dispute Resolution Spring Conference in Seattle offered at least two break-outs sessions on the use of apologies in mediation, one of which focused on adverse healthcare outcomes.  "Breakthroughs, Benefits and Backfires of Apology in Litigation," presented by Karen S. Fasler, Debra Gerardi, Dale Hetzler and Darrell L. Puls, examined research and anecdotal evidence on the use of apologies by healthcare providers following unintended treatment events.  Their presentation was fascinating and compelling.  I have since read from other sources which appear to support their conclusions.  In short, they offered that:

1. Following adverse outcomes, patients and families want most to understand what happened, and will react with anger to any effort to hide or deny the truth.

2. Sincere expressions of compassion, before fault is determined, and without any admission of error (e.g., "I am sorry for your loss," or "I am sorry that this happened to you"), are almost always appropriate and effective in minimizing the potential for legal claims by the patient or family.

3. If it is determined that the adverse outcome resulted from a provider's negligence, a sincere and complete apology will benefit the patient, the family and the provider; and if accompanied by other appropriate measures, will actually minimize the provider's likely malpractice exposure.  As articulated by Darrell Puls in his conference paper, a successful apology includes an admission of responsibility, an expression of remorse, reassurance of a commitment not to make the same error again, and an offer of appropriate restitution.

4. Where provider fault exists, an offer of a less than sincere and complete apology will do more harm than good (e.g., "I apologize for any alleged malpractice").

          Writing in the current (May) issue of the American Health Lawyers News (members only, print volume 12, number 5), Lee Taft analyzes some of the challenges to providers and their lawyers associated with making disclosures and offering apologies following adverse outcomes.  He amplifies the conclusions stated above, and then identifies some of the pitfalls that accompany even the most well intended efforts by providers to reconcile with  patients  who have been harmed.   Most notably, he  points out the difficulty faced by providers in offering information and apologies without jeopardizing their legal defense and insurance coverage, particularly when there are multiple providers and insurers involved.

          Some have suggested that this problem can be addressed by statute.  More than half the states have enacted some form of legislation restricting the admission into evidence of statements of apology offered by healthcare providers under certain circumstances.  As reported by New Jersey Lawyer, many plaintiffs' attorneys in states (like New Jersey) without such legislation believe such laws offer defendants an unfair advantage - essentially that healthcare providers are free to apologize whenever they choose if they believe it is appropriate, and their statements should be admissible on the same basis as those of any other defendant.

          The "apology and disclosure movement," represented by organizations such as "Sorry Works!", seeks to promote the use of programs like the one Lee Taft describes at Stanford University, or the joint physician-lawyer mediation program launched in Pennsylvania by the Montgomery County Bar Association and Medical Society along with Abington Memorial Hospital recently reported by The Philadelphia Inquirer.  These programs rely upon a careful, stepwise approach to communications with patients and families following an adverse outcome.  An important aspect of all such programs is the potential for mediation of remaining issues after full disclosure is made. 

          Whether or not a healthcare provider's apology is protected by statute from admission as evidence of malpractice, that result can always be achieved by offering the apology in the course of a mediation in which confidentiality is preserved, either by agreement of the parties, or by rule of court.

          The "best practice" that appears to be emerging from research and experience around the country requires healthcare providers to participate in a  structured approach to communications with patients and their families following adverse outcomes that includes:

- A statement of compassion and support from those involved immediately following the adverse outcome;

- Disclosure of reliable information as soon as possible, and follow up to include the patient and family;

- If the result is determined to be a result of provider negligence, a sincere and complete apology (as described above) offered in a context that will permit the providers involved to speak freely (i.e., in the course of a mediated resolution or under statutory protection), including an assurance that the error will not be repeated, and a just financial settlement;

- If the result is determined not to be the result of provider negligence, a vigorous but compassionate defense.

Mediation When It's All About The Money

          [Image: a conductor's bag with a money changer, by LosHawlos, June 17, 2005]

          Most mediators are attracted to the field by a belief in the effectiveness of interest based negotiation and the power that it holds for resolving disputes through mediation.  As most clearly articulated by Roger Fisher and William Ury in Getting To Yes, and embodied in our modern business lexicon as the "win-win solution,"  the search for resolutions that creatively address the parties' true interests is the essence of today's mediation training and practice.  It is thus with great reluctance that many mediators confront and respond to the notion that some disputes really are about money, and nothing but money.

          Attorney and mediator J. Anderson ("Andy") Little, author of the book Making Money Talk: How to Mediate Insured Claims and Other Monetary Disputes, urges mediators not to cringe at the thought of mediating a purely monetary dispute.  As he sees it, mediators who limit their role in such cases to that of a messenger between the parties are selling themselves short, and doing the parties a disservice.  Having read Mr. Little's book, I was even more persuaded by his presentation at the ABA Section of Dispute Resolution Spring Conference in Seattle entitled "Negotiating By The Numbers." 

          Before getting into what mediators can do in such cases, let me say that  Mr. Little does not accept the premise of many attorneys coming into mediation that every case is only about money.  Although I hear this from one of the attorneys at some point in almost every mediation, it is not usually true.  In most healthcare disputes that are ripe for mediation, the parties have interests at stake other than money, or which cannot easily be reduced to a specific dollar demand.  It usually takes some time and effort to uncover or get the parties to value their non-monetary interests, but they are there nonetheless.

          Assuming the parties really have no interest at stake other than how much money one of them will have to push across the table to the other, the mediator can still play a vital role in the process.  Making Money Talk explains these concepts much more fully and eloquently, but as a mediator, my "take aways" from Mr. Little's presentation were as follows:

1- If you have a "money only" case, embrace your role, and work as hard at the mediation process as you would in the most complex interest-based scenario.

2- Be prepared to use "reality testing" and other "evaluative" techniques to help each party and their counsel to get on the same page, and to enable the formulation of effective offers and counter-offers.

3- Be aware of the effect that particular monetary offers and counter-offers can have on the negotiation process, and coach the parties to formulate and time their offers to send the signals that they really intend the other party to receive.

4- Every "money only" mediation has two parts, the first to get the parties to their "best numbers,"  and the second to close the distance between their "best numbers."  How well the mediator performs tasks 1, 2 and 3 above will determine whether and when the parties get to the point that they need only close the final gap.

          Andy Little's ideas filled a void in my mediator's toolbox.  It caused me to rethink the "money only" case.  Ironically, I also realized that when used in combination with more traditional mediation concepts, the art of helping to move money across the table can help settle almost any case.

Report From Seattle: Some Perspectives On ADR

         [Image: View of downtown Seattle from Kerry Park, with Mt. Rainier in the background, by U.S. Geological Survey, October 16, 2005]

         Two weeks ago, I attended the 10th Annual ABA Section of Dispute Resolution Spring Conference in Seattle.  Having dug out from the tasks accumulated during my time away, and with the benefit of some time for reflection, I now turn to writing about a few of the topics covered in some of the break-out sessions I attended at the conference.  On the whole, the conference was excellent, and I have already touched upon some topics (Hall Street, med-arb) that were addressed there in great detail.  In posts to follow, I will share what I learned about:

- mediating cases in which the only issue is money;

- the use of apologies in helping to resolve disputes arising from adverse healthcare outcomes; and,

- what frequent consumers of ADR want and consider to be quality when selecting their neutrals.

          Aside from the sessions discussing these topics and others, the conference offered an opportunity to meet and talk with interesting people from around the country (and beyond) who share a belief in the value of alternative dispute resolution, and who seek to improve the way in which they advance the cause.  For anyone who is serious about ADR, I highly recommend it.

MED-ARB: The Best Of Both Worlds?

          [Image: Top view of the two-headed Boa Island Janus figure, County Fermanagh, Northern Ireland, by Kenneth Allen, May 22, 2006]

          Last night I attended a joint meeting of the New Jersey State Bar Association's Dispute Resolution Section and the New Jersey Association of Professional Mediators, at which a presentation and discussion took place concerning the dispute resolution process in which the neutral serves as both a mediator and an arbitrator in the same case - commonly referred to as "med-arb" or "arb-med," depending on the primary process for which the neutral is engaged.  The speakers, Patrick Westerkamp and Sally Steinberg-Brent, entitled their presentation "Mediation and Arbitration, Like Oil and Water?"  They approached the topic in the context of labor arbitrations, including an interesting historical review, and offered examples of how an experienced and trusted labor arbitrator could utilize mediation techniques to settle certain cases with the parties' consent.

          Against this backdrop, the diverse audience of ADR providers in attendance jumped in with spirited discussion of how and why med-arb could (or could never) work in their practices.  Among the strongest objections to the concept were voiced by the family law mediators in attendance, who saw the judgmental role of arbitrator as antithetical to their mediation practices.  Others focused on some practical problems with med-arb: How does the arbitrator maintain objectivity and neutrality after hearing confidential information from the parties in mediation?  What happens if mediation settles some but not all of the issues, and the remaining issues cannot be fairly arbitrated without reopening the settlement?  Are med-arb and arb-med permitted by applicable statutes, codes of ethics and rules of practice?  Time ran out before these issues could be fully explored, but a consensus seemed to emerge that med-arb can be a very helpful tool if used carefully and in appropriate circumstances. 

          In my view, for purposes of resolving common business disputes arising in the healthcare industry, the greatest utility exists in a process that might more accurately be described by the oxymoronic term "binding mediation."  Specifically, after making considerable progress but reaching an impasse, a mediator can, at the request of the parties, offer a "mediator's proposal."  The object of such a proposal is to state the mediator's sense of a fair allocation of the remaining ground between the parties, and not an opinion of how the entire conflict would be resolved in court.  The parties are then presented with this proposal in separate sessions and asked to accept or reject it.  Only if both parties accept it does the mediator reveal their decisions and settle the case.  Otherwise, the mediation is concluded without settlement.

          "Binding mediation" takes this process one step further.  At the point where the parties request a "mediator's proposal,"  they also may agree that they will accept the mediator's proposal as a binding decision.  Again, the mediator does not then offer an arbitral award in the traditional sense, but a solution that equitably resolves the remaining issues in the case, taking into account the prior course of negotiation and scope of available solutions at the time of impasse.  This is, I think, the kind of "med-arb" that  parties at impasse may want from a mediator in whom they have confidence when they cannot bear to leave the mediation without settlement.

          Among other things I learned from many of the courses and discussions I participated in at last week's annual meeting of the ABA Dispute Resolution Section in Seattle, the future of ADR lies in tailoring the process to suit the needs of the parties.  Call it "med-arb," "binding mediation" or something else, it is here to stay.

Super Lawyers, Like Superstars, Can Come And Go

          [Image: World Wrestling Entertainment (WWE) superstar Rikishi performs for the troops at Camp Victory, Baghdad, Iraq, December 20, 2003, by TSGT Lias M. Zunzanyika, USAF]

          Until very recently, I viewed the annual announcement of New Jersey's Super Lawyers with considerable skepticism.  Having practiced law for nearly 30 years with my fair share of success and professional achievement, it seemed to me that any such list that didn't include my name had to be faulty.  All of that changed this week when I was named a New Jersey Super Lawyer in the Health Care category (also published in the April print edition of New Jersey Monthly magazine).  Clearly, the folks over at Super Lawyers have finally gotten the kinks out of the selection process. 

          I don't know what made me a Super Lawyer this year, or why some terrific healthcare lawyers I know have yet to make the list.  But I confess that I'd rather be on the list than not.  I wish I could say that I didn't care, but I do, if only a little.  I also admit that I will buy the plaque commemorating this event.  After all, the selection process may never again be as well-conceived, fairly applied and thorough as it was this year - I will let you know.

The Time To Mediate That's Just Right? Not Too Early, Not Too Late.

                     [Image: The Three Bears, Project Gutenberg etext 19993]

          Thank you to Geoff Sharp, a commercial mediator and barrister from New Zealand who also blogs at mediator blah...blah... for making a point about the timing of a mediation in the course of a dispute.  I pass along his post and amplify it here for those who might not have seen it.  He cites to a recent case from the UK that focused on the award of costs in litigation where the losing party alleged that the prevailing party had failed to mediate and thus incurred unnecessary expenses.
          When is the best time to commence the mediation of a dispute?  As Geoff Sharp put it in paraphrasing "the wise old Judge", the key is identifying "the happy medium: the point when the detail of the claim and the response [are] known to both sides, but before the costs that [have] been incurred in reaching that stage [are] so great that a settlement [is] no longer possible."  In short, not too early, not too late.
          Although this point was made in the context of a litigated case, the same caution about waiting too long applies to any dispute that causes parties to consult lawyers and begin to evaluate their legal options.  In all such matters, as time spent, opportunity costs and out of pocket expenses build, the parties have less and less  to move around on the bargaining table.  The parties also tend to believe (not always correctly, but believe it nonetheless) that their risks become more known and less variable as the elements of the dispute become more familiar.  It also appears to be human nature for the parties and counsel to harden in their positions with the passage of time and the inevitable personalization of the dispute.
          Mediating too soon can be a waste of time.  If the parties don't fully understand their case, they will not be comfortable with the reality testing and back and forth of a facilitated negotiation.  Worse yet, they may adopt false but hardened positions on issues that preclude a settlement later on.  And once parties have assembled for an unsuccessful mediation, they often will simply conclude that "mediation won't work in this case."
         Counsel should actively focus on this question of mediation timing, and make a purposeful decision about when to propose and accept mediation.  Leaving the decision to one's adversary, the court, or the occurrence of an impasse in direct negotiations misses an opportunity for effective mediation advocacy, and perhaps the best result for one's client.   Many mediators  (including this one) are happy to discuss mediation timing with both counsel to explore the issues raised here, and should be sought out for that purpose.

Use Mediators, Not Juries, To Resolve Medical Staff Disputes

   [Image: Engraving of Gilbert  and Sullivan's Trial by Jury, from Illustrated Sporting and Dramatic News, by D. H. Friston, May 1, 1875.]

          Recently I wrote about the risk of an "intuitive decision" associated with placing the resolution of a dispute in the hands of a judge.  As I was writing that post, I came across reports of a case recently decided in West Virginia that should get the attention of every hospital involved in a medical staff dispute that could end up before a jury.  As mentioned in West Virginia Business Litigation by Jeffrey V. Mehalic, Hamrick v. Charleston Area Medical Center ("CAMC") was a suit filed by a surgeon against a West Virginia hospital alleging misconduct and damage to his reputation resulting from the revocation of his medical staff privileges.  The case was covered by Eric Eyre of the Charleston Gazette at the start and end of the trial.

          CAMC revoked Dr. Hamrick's privileges when he failed to obtain a required medical malpractice insurance policy, which Dr. Hamrick insisted was not necessary as long as he maintained an adequate self-insurance fund.  That issue led to separate proceedings about the  adequacy of physician self-insurance under West Virginia law, in which Dr. Hamrick prevailed, and ultimately inspired state legislation permitting physicians to rely upon self-insurance.  In the meantime, Dr. Hamrick pursued his suit against CAMC for damages and immediately obtained an injunction reinstating his privileges, thus permitting him to continue in practice at CAMC during the litigation.

          So, notwithstanding that Dr. Hamrick had established his right to self-insure in court, that the West Virginia legislature had enacted a statute permitting self-insurance of the kind maintained by Dr. Hamrick, and that Dr. Hamrick's practice at CAMC was never interrupted, what did the jury do at the conclusion of the trial?  They returned a $25 million verdict for Dr. Hamrick.

          I know only what I read in the press about this case, but it appears some facts were brought out at trial that caused the jury to conclude that CAMC management had been less than forthright in their handling of the insurance dispute with Dr. Hamrick.  Charleston attorney Scott Segal, who represented Dr. Hamrick in the case, described some of these facts in a letter to the editor of the Charleston Gazette.  On the other hand, counsel for CAMC, Bob O'Neill, told the jury that "CAMC had acted reasonably and in good faith...they bent over backward," efforts which apparently included an offer to purchase a temporary commercial insurance plan for Dr. Hamrick until the matter was resolved.

          Perhaps the best insight into the jury's decision comes from Karen Miller, Dr. Hamrick's sister and lawyer, who was quoted after the verdict in the Charleston Gazette as saying, "We need new administrators over there, and we need a new Board of Trustees.  That's what the jury is telling the community, just like the doctor's [sic] have been."  Apparently there has been some dissatisfaction within the community served by CAMC in recent years concerning the performance of its leadership.  But was it the job of the jury in this case to address that dissatisfaction, or to take action that would lead to a change in CAMC's leadership? No matter what facts came out at trial, it is difficult to see how Dr. Hamrick could have established anything more than nominal damages, let alone $5 million in compensatory damages.  The $20 million punitive damages award seems to have been aimed solely at getting rid of CAMC's Board and management - even though the community will ultimately bear this cost.  Perhaps an appeal will turn things around, but I understand that West Virgina offers no appeal of right, so the state's Supreme Court must first agree to take the case.

          What's the moral of the story?  Hospitals locked in a dispute with a physician that may end up being decided by a jury must take into account the uncertainty of the jury's reasoning process, and the certainty that the jury will not be made up of hospital administrators or health care lawyers.  Even when a hospital is sure it is  "in the right", it may end up with a very bad result.  My guess is the case didn't settle because CAMC believed (1) that it was "right," and (2) that Dr. Hamrick's last settlement demand was higher than CAMC's risk of a bad jury verdict.  Whether CAMC was "right" or "wrong" didn't matter.  Getting hospitals to understand this, and helping them to correctly assess the  competing risks, are the mediator's bread and butter.

Let Governing Boards, Not State, Decide Hospitals' Fate

         [Image: Marionette puppet show for kids in Asbury Park,  NJ,  July 23, 2006,  by Jackie.]

         I read an op-ed in yesterday's Courier News online entitled "New Jersey Ought To Map Out Its Hospital Closings."  The position stated there was that economic forces are going to result in the closure of a certain number of hospitals in New Jersey, and it would be better for the legislature to "compile and publish a roster of hospitals it believes should be targeted for closure," and then to act on that list.  The author sees this as a better outcome than the current course, which might be called "survival of the fittest."  Admittedly, it has resulted in a string of bankruptcies and closings over the last few years, with no end in sight.  However, leaving aside what I believe is a false assumption - that a fair and politically unbiased "roster" of hospitals could be formulated - this theory is more fundamentally flawed.
          There are other options open to the governing boards of New Jersey's struggling hospitals besides filing for bankruptcy and closing down. I wrote here previously that  hospital boards need to candidly assess their financial condition and prospects long before bankruptcy becomes imminent, and collaborate with the other stakeholders involved to arrive at their optimal result.  Far better for these governing boards and their constituencies to decide their hospitals' fate than someone at the Department of Health.  But this will require hospital boards to assess, deliberate and collaborate as few have done to date. 
          Writing an editorial in the current  Metropolitan Corporate Counsel, Andrew Sherman and Boris Mankovetskiy amplify this theme by asking, "Is Bankruptcy The Cure For Distressed Hospitals?"  They point out the inherent limitations and difficulties of using a bankruptcy filing to cure a financially ailing hospital, and suggest that other options (debt restructuring, strategic alliance or sale) will often yield a better result.
          The governing boards of New Jersey's financially troubled nonprofit hospitals have the duty and the authority to assure that their hospitals' missions are fulfilled.  That means doing something other than "flying them into the side of a mountain" (a phrase favored by one of my former partners), and then handing the keys to a bankruptcy judge.  We can only hope that they will seize the opportunity to determine their own fate.

Hospitals Must Develop Sustainable ER On-Call Programs (Did you want to keep that finger?)

          [Image: Hospital Corpsman sutures a patient's hand.  Photo by Dexter Roberts, May 31, 2005]

          I recently wrote here that the Report of the New Jersey Commission On Rationalizing Health Care Resources (the "Reinhardt Commission Report") suggested three areas for collaboration between hospitals and their medical staffs that would be challenging, but worthy of pursuit.  Among them, the need to develop a mutually acceptable and enforceable program of Emergency Department coverage, jumped off the pages of the AHLA Health and Life Sciences Law Daily (members only) today in the form of an article by Ann Wlazelek in The Morning Call.  The story, "Doctors' stance leaves hospital shorthanded," tells the tale of a failed negotiation between management at Lehigh Valley Hospital and a group of specially trained hand surgeons to continue the surgeons' on-call coverage at the Hospital's Cedar Crest emergency room in Allentown, Pennsylvania.
          The Reinhardt Commission Report  (at pages  125-126) offers a concise explanation of the problem: hospitals by law must provide around the clock care in their emergency departments that includes a variety of specialized physicians' services, while the obligation of members of their medical staffs to provide those services is limited, unclear and difficult to enforce.  Most of the potential fixes for this problem suggested by the Report are outside the power of any one hospital to accomplish (e.g., standardized regulatory mandates for physician coverage,  increased Medicaid payments to physicians, regional coordination of services into Centers of Excellence).  The clear message in this portion of the Report is that each hospital faces unique circumstances, and must find its own way to solve the on-call problem.
          I don't know anything about the situation of the Lehigh Vally Hospital hand surgeons other than what I read in The Morning Call.   What I can tell is that each of the parties has adopted and stated a position that it will not relinquish.  The Hospital's position is that it must be able to determine the nature and scope of the services it will offer in its emergency department,  and that members of the Hospital's medical staff must provide all necessary on-call services as a condition of their staff membership. The hand surgeons' position is that they should not have to provide on-call services to patients from a great distance away who could have been treated by other qualified surgeons in their own area.
          Although these positions appear to be irreconcilable, I wonder if the parties have explored and shared their respective interests.  The Hospital's interests might include:
1- securing necessary medical expertise in the emergency department 24/7/365;
2- retaining the ability to determine the nature and scope of the services it will offer;
3- maintaining a medical staff rule for on-call coverage that is fair, reasonable and perceived as such; and
4- operating cost effectively. 
          The interests of the hand surgeons might include:
1- limiting their on-call coverage to patients who truly require their expertise; 
2- preserving the scheduling integrity of their regular office and surgical practice;  and
3- defining an on-call coverage obligation that is equitable when compared with other members of the medical staff. 
          I doubt that either party would object to the other's statement or attainment of their respective interests.  Might it then be possible for all or most of these interests to be accommodated within a comprehensive solution to the parties' on-call coverage problem?  I think it would.  I suspect this has not happened because the parties have not attempted to do it.  Instead, the hand surgeons are off the medical staff and the Hospital is about to spend a lot of money to recruit a hand surgeon who cannot possibly cover the emergency department 24/7/365.  Everybody loses.
          Hospitals in New Jersey and elsewhere can reach a better result if they work with their medical staffs to fashion solutions that address not their stated positions on this issue, but their respective, legitimate interests.  A mediated process of collaboration can create opportunities that otherwise will be missed.

Reinhardt Commission Report Will Require Unprecedented Hospital - Physician Collaboration

          [Image: US Navy Commander Robert S. Kerno, Commanding Officer, USS Yorktown, points out some sights to the President of Venezuela, Hugo Chavez, on a tour of the ship during the 43rd annual UNITAS exercise, March 2, 2002.]

          I wrote here last week that the recently released Report of the New Jersey Commission On Rationalizing Health Care Resources (the "Reinhardt Commission") contained a cogent analysis of the unique relationship between hospitals and physicians.  The Report makes a series of recommendations for the improvement of hospital finances, operating efficiency and patient care that are worthy of pursuit.  However, underlying several of those key recommendations is the need for collaboration between hospitals and the members of their medical staffs - collaboration of a kind rarely seen before now.
          In posts to follow, I will focus on what I see as three key areas in which any hospital and its medical staff can translate the Commission's recommendations into concrete results: 1- establishing joint hospital-physician accountability for adherence to evidence based practice guidelines; 2- developing a mutually acceptable and enforceable program of Emergency Department coverage; and 3- creating a feasible plan to improve the efficient use of hospital resources through changes in scheduling, deployment of professional resources, staffing of intensive care services and management of the continuum of care.
          Before any of these tasks can be addressed successfully, hospitals must decide that these are goals worthy of a significant effort.  Such an effort will likely require formation of a special Board level committee, with management staff, to be charged with development of a plan and the task of integrating the input of the medical staff.  That process of integration will vary from hospital to hospital based on the existing relationship and history, but will require careful attention in every case. 
          Although in most instances the hospital's pursuit of these goals will not immediately place it in a "conflict" or "dispute" with its medical staff, the potential for that result is high.  Moreover, the nature of the issues that must be placed on the agenda can create perceptions and reactions that, once formed, are difficult to undo.  The involvement of a neutral, third party in the design and facilitation of the collaboration process can often obviate or ameliorate these problems.  Agreement between a hospital and its medical staff on the selection of such a neutral may well be the best first step of their journey.

Welcome Mediation Meditations Blog!

          [Image: Welcome to the Winter Capital of America. Mardi Gras Maskers on Canal Street, New Orleans, LA, early 20th century postcard.]

         I just saw that Chris Annunziata and Vickie Pynchon have pointed out a new mediation blog, Mediation Meditations, being written by New York business and commercial mediator Christian Herzeca.  His posts offer an interesting perspective on mediator thinking and the process of mediation, and I have added him to the list of recommended ADR blogs here. 
         Thanks, Christian, for adding me to your blogroll, and keep up the great posts!

Reinhardt Commission Report: New Jersey Hospitals Need To Focus On Blocking and Tackling

     [Image: 2005 Texas Longhorn football team playing the University of Colorado, by Johntex 2005]

          The New Jersey Commission On Rationalizing Health Care Resources (a/k/a the "Reinhardt Commission") issued its long awaited Final Report 2008 last week, and was immediately met with a strong response from the New Jersey Hospital Association. In a press release, and more thoroughly in an "Initial Response" distributed to its members, the NJHA praised the Commission's Report "for effort" but found "it falls short in addressing the most fundamental problem confronting our state's hospitals: inadequate reimbursement, especially from governmental payers. The Commission's recommendations provide some steps for stopgap or incremental relief, but New Jersey's healthcare crisis is beyond the point of incremental action."
           It is hard to argue with the NJHA's point that  the reimbursement to its member hospitals by governmental payers (Medicare, Medicaid and Charity Care) is woefully less than the cost of providing that care, and that this problem is at the root of the system-wide financial crisis in the state. Perhaps the Reinhardt Commission's Report could have said this more clearly, or more forcefully.
          But I did not read the rest of the Report to suggest only "some steps for stopgap or incremental relief".  Instead, I think the Report took a realistic approach to solving the big problems by recommending a variety of significant but generally feasible changes in the way hospitals do business. Yes, hospitals need, deserve and in some cases must have more governmental funding to continue their missions. But the idea that all of the hospitals' financial problems can and will be solved only by somebody in Trenton or Washington writing a big check distracts from what the Report says hospitals must and can do to help themselves.
          In short, and in the spirit of the big game this Sunday, the Reinhardt Commission Report essentially urges New Jersey hospitals to focus on their "blocking and tackling", those elements of the game that don't get the media attention or the big money endorsements, but tend to separate the winners from the losers. In particular, the Report contains a thorough and insightful analysis of the relationship of hospitals and physicians, with recommendations for improvement that could have a major, positive impact on the financial performance of most hospitals. I think that's something worth talking about, and I plan to do so in some posts to follow.
          In the meantime, Go Giants!

In Praise Of The Low Tech Flip Chart

            [Image: Mediated Reality as illusory transparency, by Glogger, 10-09-2004]

            The use of high tech gadgets and digital technology in the practice of law becomes more prevalent every year.   An entire industry has grown up around creating the best presentation possible in the courtroom, within whatever bounds the court will allow.  This week, while preparing to mediate a case involving various related but off-setting claims among several parties, I sketched out on a legal pad a diagram of how those competing claims could be valued, discounted and traded off to reach a range of potential settlement.  It occurred to me that the parties might benefit from this approach (done, of course, with their permission and input at each step of the way), so I showed up at the mediation with my trusty flip chart and easel and put it to use.
            The result was terrific.  The parties and counsel were engaged and focused in a way that never would have happened if we simply talked about the claims.  It also permitted them to focus together on the process I was suggesting, rather than talking at each other.  The case settled -  not on the last terms I sketched out with their help, but on other terms that the parties were prepared to accept only because they had already established a mutual comfort level within the terms on the chart.
            I was very pleased but not too surprised.  In both advanced mediation courses I was fortunate to take at the Straus Institute at Pepperdine, the instructors made extensive use of flip charts to good effect, including demonstrations of how they can be used to engage parties and bring them actively into the process of formulating their own settlement.  It may not be "high tech", but it works. 

Happy New Year! NAF Notes Important Healthcare ADR Cases of 2007


             [Image: "Happy New Year To You", a 1908 postcard with artwork showing a frog holding a bottle of champagne with the cork popping.]

            Happy New Year!  I return to blogging after some time off for the holidays and to get my new business life in order.
            Thank you to Christina Doucet, Communications Specialist at the National Arbitration Forum, for bringing to my attention that four of the eighteen ADR cases identified as "most significant" by the Forum's 2007 ADR Law & Policy Year in Review are healthcare arbitration cases.  Significantly, all four of these decisions affirm the enforceability of arbitration agreements in cases of alleged medical malpractice or mistreatment of patients by a healthcare facility.  The cases are Reigelsperger v. Siller, 150 P.3d 764 (Cal. 2007), Covenant Health Rehab of Picayune, L.P. v. Brown, 949 So. 2d 732 (Miss. 2007), Hogan v. Country Villa Health Services, 55 Cal. Rptr. 3d 450 (Cal. Ct. App. 2007), and Owens v. National Health Corp., No. M2005-01272-SC-R11-CV, 2007 WL 3284669 (Tenn. Nov. 8, 2007).
            It will be interesting to see if cases decided in 2008 follow this pattern.  Even more interesting will be the success of certain legislative efforts (such as the "Arbitration Fairness Act of 2007") now being directed at protecting consumers from pre-dispute arbitration contracts - and which no doubt will be applied to patient/resident complaints such as those in the cases cited by the Forum.  Stay tuned.

Mediators Can Attend Christmas Parties


          [Image: Gracie Fields, accompanied by an RAF orchestra, entertains airmen at their Christmas party, December 27, 1939.  Photo by Royal Air Force official photographer, Mr. H. Hensser.]

          I write this in anticipation of attending two separate Christmas parties at the invitation of friends who are also potential sources of referrals for my mediation and other ADR services.  It follows my reading Geoff Sharp's recent post on whether attending such events creates an ethical dilemma for a mediator when the party's host is a "repeat user" of mediation services.  He points to an article by John Lande entitled "Lawyers' Routine Participation Directs Shape of Liti-Mediation" for a longer discussion of this issue.  Others have since weighed in with comments which generally suggest that a mediator should have "ethical concerns" about attending such parties, if for no other reason than "the appearance of impropriety".
          As Geoff Sharp suggests, one could dismiss this concern as "ridiculously politically correct", or more accurately perhaps, a classic case of "navel gazing", but this would trivialize what I think is a real problem affecting many mediators.  Let's get right to the point.
          Mediator neutrality is not just an ethical obligation, it is at the essence of what mediators do.  First and foremost, good mediators are neutral.  If you can't be neutral, and you can't convince the parties and their counsel that you have been neutral, you shouldn't be in this line of work.
          This debate is not really about Christmas parties, but about what Professor Lande calls the risk that "continuing relationships between lawyers and mediators can result in mediator bias."  His suggestion is that anytime a mediator views a lawyer as a source of future business, that lawyer's client has an advantage in the mediation.  I would agree that the client might have that advantage, or an advantage created by any number of other factors that could potentially affect the mediator's conduct ("consciously or unconsciously").  But a large part of being a mediator is having the ability to recognize the potential for such influences, and to deal with them effectively, whether by declining the case, disclosure or appropriate reflection and self-discipline. 
          The notion that repeat referrals from lawyers cannot be ethically accepted assumes the worst about the mediator, both ethically and with respect to his or her competence.  Moreover, it denies the parties' right to self determination of the process, and as a practical matter, makes it very difficult for the parties to obtain mediator subject matter expertise.  In my world, and I suspect many others, there are relatively few lawyers representing most of the clients  who are likely to be repeat users of  mediation services.  There also are relatively few mediators  with subject matter expertise available to serve those clients.  Requiring mediators with subject matter expertise to decline repeat users (whether lawyers or their clients) is to effectively prohibit a viable mediation practice.
          Most law firms rely heavily on "repeat users"; that is, they cultivate and maintain broad and long lasting relationships with their clients.  Law firms must represent these clients in accordance with numerous ethical mandates that often require some action contrary to their clients' interests.  This has never caused lawyers to believe that they should decline "repeat business" for fear of doing something unethical in order not to displease such clients.  Nor should they.  Part of being a good lawyer is knowing how and when to tell your best client that you can't and won't do something you think is unethical - even if it means losing the client.  Why as a profession do mediators think so much less of themselves? 
          I don't, and that's why I plan to go to both of my Christmas parties.  In fact, I will likely talk to potential "repeat users" at those parties about what it is that I can do for them as a mediator.  The first thing I will tell them is that they will get no special treatment from me, and that if they have a mediator who can be unduly influenced by a beer, a cocktail wiener or  a "repeat user," they should find another mediator.

Bringing Medicare To The Settlement Table Is Not So Easy

          [Image: Br'er Rabbit at the table from Uncle Remus, His songs and His Sayings: The Folk-Lore of the Old Plantation, by Joel Chandler Harris, p. 90.  Illustrations by Frederick S. Church and James H. Moser.  New York: Appleton and Company, 1881.]

          Recently I posted on the trend among third party healthcare payers to pursue subrogation claims against the proceeds of tort settlements obtained by their covered beneficiaries.  A case involving Walmart's recovery from the family of an injured former employee underscored the importance of bringing all necessary parties to the settlement table, even those who are not immediately apparent.   This week's AHLA Health Lawyers Weekly contained a summary of a case making it clear that Medicare, too, will pursue its subrogation claims in such cases, even when the parties have tried their best to settle around Medicare's claim. 
          In Mathis v. Leavitt, No. 07-0062-CV-W-RED (W.D. Mo. Nov. 26, 2007), the family of a deceased Medicare beneficiary settled a wrongful death claim against the tortfeasor which they characterized as being "in excess of the $77,403.67 that Medicare had paid on behalf of [the decedent]" following his injury but prior to his death.  The family then asked Medicare to acknowledge that it had no lien against the settlement proceeds, and Medicare refused.  On cross-motions for summary judgment, the District Court ruled in favor of Medicare.  The Court found that since a claim under the Missouri Wrongful Death  Statute includes damages for medical expenses paid on behalf of the decedent prior to death, the proceeds of settlement included "payment by a responsible party" from which Medicare must be reimbursed.
          Although it is not clear, it appears that the Court in Mathis is saying that the parties cannot leave Medicare reimbursed medical expenses out of a settlement agreement under the Missouri Wrongful Death Statute and thereby defeat Medicare's later subrogation claim.   Since the  same result  could likely be argued under most states' wrongful death statutes, the outcome in Mathis is significant.  Whether other courts will follow, and whether the same result will occur in non-death cases under common law remains to be seen.  Plaintiffs seeking to settle all tort cases involving significant prior Medicare reimbursement of expenses will do well to bring Medicare to the table, or proceed at their own risk.

Presenting Your Case In Mediation - Using The Fear Of Risk

               [Image: Screen capture from the film Carnival of Souls.]

          Thank you to Geoff Sharp for alerting me to the article by jury consultant Bob Gerchen entitled "How To Build A Mediation Presentation That Will Make An Insurance Adjuster's Sphincter Tighten."
          As the title would suggest, the author focuses on the need for advocates who are adverse to insurance adjusters to approach each mediation session as a unique opportunity - and gives some great advice on how to achieve a better result.  As I read it, it occurred to me that the article had a more basic theme that could be applied as well by advocates in most mediations.  To paraphrase Mr. Gerchen, your adversary, while in mediation, cares "about one thing more than anything else in the world, even more than money.  Risk."
          While most lawyers realize the importance of coming to a mediation session prepared to discuss the strengths of their case and the weaknesses of their opponent's case,  many do not focus on the fact that the mediation is not merely a "dry run" for the trial.  Mediation offers an opportunity to demonstrate why your adversary should not want to accept the risk of leaving the room without a settlement.  As Mr. Gerchen puts it, you need to ask yourself, "If I were [on the other side], what about this case would freak me out?"
          This is good reading and an important reminder that advocacy in mediation is not just another day in court.

Wal-Mart Healthcare Subrogation Case Highlights Need To Get All Players At The Table

            [Image:  Photo of Poker Table at the 2004 World Poker Tour 5 Diamond Bellagio by        

           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?  

Financially Distressed Hospitals Need More Talk Less Walk

          [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.

Werner Institute To Host Health Care Conference

         [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.
       A description of the Conference's Premises makes it clear that the Werner Institute is on the mark with this program in matching a discussion of conflict resolution theory with an examination of the current culture of healthcare delivery.  And you can check out Luigi while you're there.

       Thanks again, Debra! 

AHLA To Hold ADR Teleconference

          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.]

Economic Credentialing: A Cooperative Approach

[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.

[Image: Zipper _animated.gif, by DemonDeLuxe (Dominique Toussaint]

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.

Choosing Your Healthcare ADR Provider

[Image: New potato releases by Agriculture Research Service scientists give us even more choices of potatoes to eat.  Photo by Scott Bauer.]  

          If you are a party or legal counsel in a conflict or dispute in the healthcare field, and you believe that some form of alternative dispute resolution process may (or must) be utilized to solve it, you must persuade the other parties involved to share that conclusion and select a qualified ADR provider.  Often these tasks are related.  Opinions differ on how to select a neutral, but my view is that he or she should possess the following attributes:

1.  The neutral should be “neutral”.  Although obvious, the ADR provider you choose should be impartial, fair, open-minded and without conflicts of interest. 

2 . The neutral should be intelligent and creative.  Resolving disputes in the healthcare industry efficiently requires the ability to quickly grasp and understand complex facts and legal issues while simultaneously assessing and attending to the expectations of the parties. It often requires the ability to fashion creative alternatives that work both legally and practically.

3.  The neutral should understand your business.  Although many neutrals believe they can successfully resolve disputes in any industry, it is not reasonable to believe that they can do so efficiently.

4.  The neutral should understand the legal issues.  The web of legal constraints affecting most healthcare disputes is daunting. No amount of general legal experience at the bar or on the bench prepares a neutral to effectively assist the parties or their counsel in such cases.  Jerry Roscoe made this point persuasively in a particular context with his recent article: Resolving Allegations of Health Care Fraud – Does the Mediator Matter? (posted on the ABA Dispute Resolution Section’s Healthcare Committee website).

5.  The neutral should be committed to ADR.  In order to be consistently effective, a neutral must first and foremost believe that alternative dispute resolution principals actually work. Without that belief, the neutral brings no energy or additional value to the engagement, but merely serves as a technician in guiding the parties through a scripted process.

6.  The neutral should be cost effective.  A major justification for the use of alternative dispute resolution is that processes such as mediation and arbitration will be less costly than traditional litigation.  Although this is generally true, it is also true that some ADR services will cost more than others.  Generally, cost will be a function of the neutral’s hourly/daily rate and the parties’ commitment to work with that neutral.

7.  The neutral should be committed to good service.  As a party or counsel in a conflict subject to alternative dispute resolution, you are a prospective consumer of ADR services.  In evaluating a neutral, you should assess the extent to which he or she will provide the level of service that a professional service client paying significant fees should enjoy.  

ADR as Tort Reform

          All of the attention devoted to healthcare reform by the entire field of Presidential candidates reveals little mention of the need for medical malpractice reform.  Yet is there any question that reform of the current system of using unfettered, contingency fee litigation to address medical errors is essential to a meaningful improvement of our healthcare system?  As noted recently in the Healthcare Policy and Marketplace Review, an upcoming Common Good Public Forum in Washington, D.C. on November 5 will address "Health Courts, Administrative Compensation & Patient Safety: Research, Policy & Practice."  The topics and speakers promise to be interesting.

          On a slightly different track to the same destination, Kathleen Clark (on the website of the Collaborative Law Committee of the ABA's Dispute Resolution Section) suggests the use of collaborative law as an alternative to the current malpractice litigation model.  The theory of Ms. Clark's argument is compelling, and should be considered in concert with the broader, governmental initiatives to be discussed at the Common Good Public Forum.  However, I think Ms. Clark dismisses too completely the utility of "non-collaborative" techniques such as traditional mediation in reforming the current malpractice system. 

          Notwithstanding the theoretical soundness of the collaborative approach, there are serious practical impediments to its widespread use by plaintiffs' and defendants' counsel in the near future.  More importantly, there is no reason that the boundaries of traditional mediation cannot be pushed incrementally to include a wide range of techniques to help resolve malpractice claims on a case by case basis.  Writing in the current issue of Dispute Resolution Magazine (Fall 2007, Volume 14, Number 1), David A. Hoffman cogently illustrates the evolving boundary lines between mediation, arbitration and collaborative law.  Although not expressly directed at the malpractice debate, his points would apply there as well.

          Malpractice reform may be closer than we think.

[Image: Cartoon by John Tenniel, for Punch of May 25, 1867. The leading jockey is Benjamin Disraeli;  to his right is William Gladstone. The Reform Bill referred to ultimately became the 1867 Reform Act.]

Why ADR Works In Healthcare, Reason #3

          Completing the thought addressed in the two previous posts, there is a third reason why ADR works well in resolving healthcare industry disputes.

[Image: "Smeden og bageren". Illustration by Theodor Kittelsen for Johan Herman Wessel's poem]

Reason #3. 

          Parties to a healthcare dispute can especially benefit from ADR because the unique and complex subject matter of their conflict can be readily accommodated.  By selecting an ADR process and a neutral best suited to the conflict at hand, the parties move immediately into an efficient and productive mode of dispute resolution.  Resorting to traditional courtroom litigation often requires that a judge be educated on the parties’ business model, the world of healthcare finance and reimbursement, and a variety of legal constraints unique to the healthcare field.  Experience indicates that this is a difficult, time consuming and expensive process.  Although most judges are highly intelligent and capable, there is only so much time that can be devoted to each case.  Moreover, most judges sit in courts that handle cases of all varieties, in which healthcare cases are a relatively infrequent occurrence.

          By selecting an ADR neutral with substantive knowledge of the healthcare business and healthcare law, the parties achieve not only efficiency, but a much greater likelihood that they will obtain a result that is fair and mindful of both parties’ real interests.  Although the precise role of the neutral varies within the ADR process selected, the neutral can often help the parties and counsel better identify their interests and how they might mesh with those of the other party.  Where common ground is difficult to find, the neutral can help each party better understand all consequences of the proposals on the table, as well as those of “walking away”.  Sometimes, the neutral’s best value comes from affirming something a party has already heard from counsel, but better accepts with the neutral’s concurrence.  The credibility of the neutral as someone who truly understands the conflict just as well as the parties and their counsel is critical to achieving this result.

          Many examples of this advantage of ADR in healthcare can be imagined, but one may illustrate the point.  A hospital that has “exclusive” contracts with two medical groups to provide two different kinds of medical services at the hospital is faced with a dispute between the groups over which of them has the right to perform a new procedure, a dispute which quickly becomes a three way conflict involving the hospital.  Such “turf battles” are not unusual.  Aside from reviewing whatever the parties’ existing contracts say on the subject, the resolution of this conflict may require consideration of expert input on the impact of the outcome on patient care; the application of the hospital’s medical staff bylaws; provisions of existing managed care agreements;  Medicare reimbursement rules concerning permissible billing by the respective groups; state law and regulations governing hospital licensing and permitted scope of medical practice; and the resolution of other previous (or potential) “turf battles” at the same hospital.  Although the use of ADR in this case may not make all parties wildly happy, the neutral’s appropriate and timely attention to all of these factors will vastly improve the quality and fairness of the outcome.

Why ADR Works In Healthcare, Reason #2

          Continuing the thread started in my last post, there are several reasons why ADR works especially well in the healthcare industry. 

[Image: Photo of Coins in the Trevi Fountain in Rome being collected at early morning, by Giovanni Dall'Orto, March 2005]

Reason #2. 

          The parties to a healthcare dispute often (although not always) have interests at stake other than money, or which cannot easily be reduced to a specific dollar demand.  Traditional courtroom litigation is designed primarily to determine which party to a dispute must pay the other party, and how much.  Although courts can grant “equitable relief”, essentially ordering one party to do or stop doing something, that option is limited in scope and driven by the form of the prevailing party’s plea for relief.  In contrast, ADR processes embrace the notion that flexible solutions, tailored to the parties’ unique interests, offer  the best outcome to any dispute.

          An example of this advantage of ADR would be a dispute between a hospital and a medical group over the interpretation of the group’s contract to provide certain medical services at the hospital.  The dispute could involve any number of issues important to both parties, but could easily place the parties in a situation where the contract seemingly must be terminated, and one side will then sue the other for breach of contract.  Neither party in such case really wants to sue the other for money damages, nor do they want the disruption to patient care and hospital services that would accompany protracted litigation.  Courtroom litigation in such case will ultimately assure that the parties’ legal rights are determined and enforced, but it will also create the negative collateral effects that come from using too dull and heavy a tool.  The use of ADR processes in such a case would provide the parties with options and alternatives from which to jointly reach a workable solution.

          Other examples of this advantage of ADR would be disputes over the medical staff privileges to be granted by a hospital to a physician or other practitioner; conflicts between a hospital and its medical staff concerning the interpretation or amendment of the medical staff’s bylaws; disputes within the board of trustees of a health system concerning the system’s mission, or the performance of management; and disputes among providers concerning quality of care or patient access issues.  Although financial considerations may be important in all these disputes, in none of them does either party seek a payment of money.  ADR processes, as determined by the parties, could be focused immediately upon what the parties in such cases really care about. 

Starting a blog on Healthcare ADR

[Image: Musher Thomas Knolmayer at the Willow, Alaska start point of the 2005 Iditarod sled dog race, Photo by Tech. Sgt. Keith Brown]

          With this post, I start my first blog and what I think is the only blog site devoted to the topic of alternative dispute resolution in the healthcare industry.   As stated above on the masthead, I intend to blog at the intersection of ADR and healthcare law.  Both of these topics are well covered separately elsewhere (see links and blogs in sidebar), and I will try not to duplicate those efforts. 

          To make this site most useful, and to bring some order to my thoughts, I am dividing the world of ADR For The Healthcare Industry into topics that make sense to consider separately.  In alphabetical order, this blog will discuss alternative dispute resolution in the context of:

Commercial Healthcare Disputes

End of Life and Treatment Decisions

Healthcare Arbitration

Healthcare Mediation

Healthcare Regulatory Actions

Hospitals, Physicians and Medical Staffs

Managed Care Payment and Coverage Issues

Medical Malpractice Claims

These topics will overlap, and undoubtedly will subdivide and recombine over time.  But this is where I will start.  Let me know what you think.