Healthcare Arbitration Clauses

By Kosnitzky, Michael | Dispute Resolution Journal, August-October 2011 | Go to article overview

Healthcare Arbitration Clauses


Kosnitzky, Michael, Dispute Resolution Journal


When drafting arbitration clauses for healthcare contracts,1 the choices are limitless. Because arbitration clauses are contractual in nature, parties can deviate from default sets of rules and tailor their procedures to meet the specific needs of the underlying contract.

But while there are circumstances in which parties might find it beneficial to customize their arbitration agreement, parties frequently find that the standard American Arbitration Association clause (which may incorporate either the AAA Commercial Arbitration Rules or the AAA Healthcare Payor Provider Arbitration Rules) adequately serves their needs. Among other things, a standard AAA clause allows for brevity.

AAA Commercial Rules

Quoted in full in the preamble to the Commercial Rules (available at www.adr.org), the standard AAA arbitration clause reads as follows:

"Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof."

The above language triggers the applicability of default rules and procedures. The Commercial Rules specify, among other things, the process for selecting arbitrator(s), rules for ex parte communications, manner and extent of discovery, and conduct of proceedings. Without more, standard arbitration clauses bind the parties to the Commercial Rules. Under Rule R-1(a), however, parties may, "by written agreement, [] vary the procedures set forth in these rules."2

AAA Payor Provider Rules

Recognizing arbitration to be a prompt and effective way to resolve healthcare disputes between payors and providers, the AAA recently issued the Payor Provider Rules. Effective as of Jan. 31, 2011, the Payor Provider Rules are available in arbitrations between payors (such as insurers or HMOs) and providers (such as hospitals or doctors).

The standard arbitration clause invoking the Payor Pro - vider Rules reads as follows:

"Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration, administered by the American Arbitration Association pursuant to its Healthcare Payor Provi - der Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof."

This language binds the parties to arbitrate future disputes under the Payor Pro - vider Rules. These rules may apply even without language specifically invoking them. If the governing contract names the Com - mercial Rules, and the parties meet the definition of a payor and provider, the parties may mutually agree to substitute the Payor Provider Rules for the Commercial Rules.

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