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

           

            [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.

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          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]

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          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]

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           [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.

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          [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.

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         [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 is 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.

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          [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.

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          [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.

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                     [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.

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   [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.

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         [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.

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          [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.

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          [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.

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          [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!

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     [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!

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            [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. 

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           [Image: Veto image taken from a website by "The Office of the Clerk" of the U.S. House of Representatives, 10/29/07]         

           Yesterday, New Jersey Governor Jon S. Corzine "pocket vetoed" legislation addressed here previously that would have broadened the grounds for survivors' claims in wrongful death cases, including unlimited damages for "grief".  According to the New Jersey State Bar Association's Daily Briefing (members only), Corzine said that "unlimited damages based on emotional anguish or pain and suffering could have a significant impact on state and local budgets, since government entities are not infrequently named as defendants in wrongful-death suits, and there are similar concerns as the State undertakes efforts to attract and grow businesses here."
            Although the Governor did not specifically mention the concerns of healthcare providers in his veto message, this action caused a sigh of relief among healthcare industry advocates, who had worked hard to oppose the legislation.  No doubt the bill will be reintroduced. 
            Corzine recommended "that the Legislature consider alternative means of striking an appropriate balance, especially by granting more flexibility for courts to reduce excessive non-pecuniary damage awards and defining non-pecuniary damages less expansively" (emphasis mine).  Interesting possibilities.  But for now, at least, the dynamics of resolving healthcare wrongful death cases in New Jersey remain unchanged.

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             [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.

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          [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.

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          [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.

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               [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.

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

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

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

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

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

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

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