Arbitration agreements are becoming an increasingly common way for businesses and service providers to limit their liability. These agreements, which can be either expressly signed or, in some cases, implied with purchase, strip the consumer of the ability to take any disputes regarding the product or service – including those that stem from injuries – to the court. Instead, consumers are compelled to resolve the matter in arbitration.
Why does this matter? Because arbitration and the court system are not equal, and in many ways, there are stark disadvantages for personal injury plaintiffs. First and foremost is the fact that arbitrators tend to favor the business or service provider. Research has shown that even when awards are granted in a plaintiff’s favor, they tend to be smaller than the awards issued in court. Arbitrators do not have to follow the law, and arbitration proceedings are not public. There is also no right to appellate review if one side believes the determination is unfair.
Arbitration agreements are considered binding contracts, so their enforceability is weighed according to North Carolina’s contract law. There are a number of challenges that can be asserted, including a finding that the arbitration agreement is unconscionable. This means the contract is so overwhelmingly one-sided or unjust in favor of the party with superior bargaining power as to be contrary to good conscience. This was what was alleged in a recent medical malpractice lawsuit before the North Carolina Court of Appeals.
The plaintiffs in this case – a husband and wife – alleged the defendant doctor was negligent in performing a laparascopic bilateral hernia repair back in May 2009. They filed a personal injury lawsuit against the doctor and his practice. The defendants responded with a motion to stay the proceedings to enforce an agreement for alternative dispute resolution (i.e., the arbitration agreement). The plaintiffs asked the court to deny this motion, arguing the arbitration wasn’t enforceable because it was unconscionable.
The agreement had been signed approximately two weeks before the patient’s surgery. Although it was signed by the patient, it was not signed by his wife.
The trial court originally denied the defendants’ motion to compel arbitration on the ground that the wording of the agreement left material issues subject to future agreement (i.e., agreeing on three arbitrators, agreeing which rules will govern the arbitration, etc.). There was also a notation in the document that “this is not a binding contract.”
At a second hearing on the matter, the trial court again denied the defendants’ motion on the ground that the agreement was a product of constructive fraud and unconscionability. As to the wife, the agreement couldn’t be enforced because she never signed it, never sought it, and didn’t benefit from it.
On appeal, the justices noted that while medical malpractice claims can be properly submitted to arbitration, there have often been questions raised to patients’ understanding of these contracts and the potentially coercive circumstances under which such agreements are made. Using arbitration agreements for health care services is distinct from their use in commercial or labor disputes because the legal relationship between a patient and a doctor is unique.
The onus is on the defendant in these cases to show they acted fairly and honestly with full and open disclosures. Any agreement that waives the right to a jury trial has to be cautiously examined. In this case, the plaintiff is a 68-year-old man with no educational degree beyond high school and a job that requires little reading. He has no real experience reading legal documents. In contrast, the defendants have extensive experience managing patient complaints, responding to patient claims of negligence, and resolving disputes via arbitration.
This arbitration agreement was given to the patient in a stack of intake forms he was handed while waiting to see the doctor. The patient considered the forms to be a formality, and no one at the office set aside the arbitration agreement as a special form or explained that it meant he was signing away his right to seek redress through the judicial process. The agreement itself doesn’t indicate the patient is waiving his or her right to trial by signing it. The court noted the agreement was poorly worded, and parts were “confusing and nonsensical.” The patient was never given a copy of it.
The defendant argued there was no fiduciary patient-doctor relationship at the time the plaintiff signed the form, and therefore it wasn’t unconscionable. The appellate court disagreed. The plaintiffs will now be allowed to proceed with their case to trial.
Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.
King v. Bryant, 2014, North Carolina Court of Appeals
More Blog Entries:
Bigler-Engler v. Berg, Inc. – $13M Injury Lawsuit Verdict Voided, New Trial Ordered Unless Settlement Reached, Jan. 27, 2017, Charlotte Medical Malpractice Lawyer Blog