D.C.-Area Plaintiffs Battle Insurers over Arbitration Clauses

By Goldreich, Samuel | The Washington Times (Washington, DC), March 23, 1998 | Go to article overview

D.C.-Area Plaintiffs Battle Insurers over Arbitration Clauses


Goldreich, Samuel, The Washington Times (Washington, DC)


Plaintiffs' attorneys have long complained that many managed care health insurance companies are difficult to sue because of a federal law designed to protect employer benefits.

Now the Washington area has become a testing ground for a new battle between health care lawyers over the issue of binding arbitration, the out-of-court process designed to avoid lawsuits.

The George Washington University Health Plan is defending five cases in local courts against patients claiming malpractice by doctors under contract with the plan. The complaints range from a man sent home from the GW ambulatory care center only to suffer a stroke the next day, to a man who lost most of the use of one kidney after seeking treatment for a bladder infection.

What the cases have in common is that all the patients suing the health plan were federal employees at the time they sought care.

GW health plan attorneys have offered the same defense in all cases, saying the suits should be dismissed because the plan's federal benefits program requires members to submit to binding arbitration "any claim for personal injury, mental disturbance or wrongful death arising out of the rendition or failure to render services."

That's a quotation from the GW plan's health benefits brochure for federal employees.

"The federal government decided that there might be some cost savings if people followed a dispute resolution process before they could go to court," said Erling Hansen, director of legal and regulatory affairs for the GW health plan.

Sharon Wells, a spokesman for the federal Office of Personnel Management (OPM), said that the Federal Employees Health Benefit Program mandated a complaint arbitration process for every insurance company - including all health maintenance organizations (HMOs) - since 1995.

"Enrollees use a disputed claims process and if they don't accept the OPM review of the arbitration, then they can sue OPM in federal court," she said.

Mr. Erling described the GW health-plan lawsuits as an example of plaintiffs' attorneys "trying to reach into the deepest pockets" to collect damages.

But malpractice attorney Patrick M. Regan said that the GW health plan is violating federal employees' rights through its arbitration requirement.

He represents the parents of an 8-year-old boy who died at GW University Medical Center while he was covered by the health plan. The family prevailed in its right to file a lawsuit without first going through arbitration, but GW health plan attorneys have appealed the case to the District Court of Appeals.

"Why would the federal government want to deny its employees their constitutional right to a trial by jury?" Mr. Regan asked. "This is a moneymaking provision by GW to discourage members from filing claims."

Barry Nace, an attorney representing three people who have sued the GW health plan, said its arbitration process creates another escape clause that the health plan otherwise might not have as a federal contractor. …

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