LOS ANGELES _ Terre Wertz said she was told everything was
going fine with her pregnancy. But her son was born with multiple
birth defects, which she believes should have been detected with
better prenatal care.
She decided to sue her health plan, Cigna Health Plan of
California, but the suburban Sylmar, Calif., resident found that
she could not.
When she joined the HMO years earlier, Wertz said, she
unknowingly signed away her rights to a court trial and agreed to
settle all disputes through arbitration.
Whether they know it or not, millions of Californians have
done the same.
Most California health maintenance organizations require their
members to enter into binding arbitration agreements, requiring
them to forgo their rights to a jury trial and settle bad faith
or malpractice lawsuits through private arbitration.
A growing number of doctors are also asking their patients to
sign arbitration agreements before they will provide treatment.
Among those plans that require arbitration are Blue Cross of
California, Kaiser Permanente, PruCare of California, Health Net
and PacifiCare. Blue Shield of California and FHP International
Corp. do not have binding arbitration provisions.
Consumer groups say the arbitration clauses are unfair because
most people don't read their contracts carefully enough to
realize they've given up their right to sue in court until it's
too late, said Jamie Court, executive director of Consumers for
Quality Care Project, a Los Angeles nonprofit organization.
And even if they notice the arbitration clause, they have no
choice but to accept the provision or seek coverage from a health
plan that doesn't require arbitration.
Plaintiffs' attorneys say arbitration is weighted in favor of
HMOs because the settlement awards are usually smaller than those
handed down by juries.
"It's not as fair to the victims," said Kenneth M. Sigelman,
an attorney in Los Angeles.
But HMO officials disagree, saying arbitration is fair and
faster than the courts, while stemming the huge awards sometimes
issued by juries. The problem is particularly severe in health
care, where ill or dying victims can affect the emotions of
"The sympathy factor tends to go to the individual and not the
corporation," said Pat Keane, director of litigation at Blue
Cross of California. "We believe arbitration is more beneficial
to us in terms of outcome."
Kaiser Permanente prefers arbitration even though officials
estimate they lose more cases in arbitration than if they were
trying them in court.
According to Trischa O'Hanlon, senior counsel at Kaiser,
plaintiffs in arbitration usually are awarded some kind of
settlement, albeit less than they had requested.
"But it's more predictable. You don't have the outliers, like
the $25 million verdicts," O'Hanlon said.
The growth in arbitration over the past 20 years has been
fueled by the nation's overcrowded court system and rising legal
"We want our doctors practicing medicine, not sitting in
courtrooms," O'Hanlon said.
Though HMO attorneys agreed that consumers are less likely to
win multimillion-dollar awards in arbitration, they argued that
such awards are excessive and usually are overturned on appeal.
Last year, an $89 million jury award against Health Net sent
shock waves through the HMO industry. The suit was filed by the
family of a breast cancer victim who was denied a bone-marrow
transplant by Health Net to treat her condition.
Health Net appealed and the family ultimately settled out of
court for a smaller amount.
Some HMOs, such as Kaiser, have been using arbitration since
the 1970s. Others have added the provision to their contracts in
Under arbitration, each side selects one arbitrator _ often a
retired judge _ to represent their views. …