Kaiser Arbitrations

Your Rights in an Arbitration against Kaiser Permanente

What is Arbitration?

In California, health-care consumers who are victims of medical negligence are ordinarily entitled to a jury trial.  In a jury trial, the attorneys for the consumer (the “plaintiff”) and the health-care provider (the “defendant”) present evidence to a jury in a California courtroom.  At the end of the trial, the judge instructs the jury on the law that applies to the case.  The jurors decide whether the defendant healthcare provider’s negligence harmed the consumer.  If the jury decides that it did, the jury next decides how much money the healthcare provider should pay the consumer to compensate for the harm it caused.

Arbitration “Agreements”

Sometimes, members of a health plan are required to sign an agreement to arbitrate any claim of medical negligence.  For several years, Kaiser Permanente has required new members to sign an arbitration agreement.  The agreement states that the member agrees to arbitrate any claim of medical negligence instead of litigating the claim in a court of law.  In an arbitration hearing, a neutral arbitrator – often an experienced attorney or retired judge – replaces the jury and decides the case.

The Kaiser Arbitration System

Kaiser Permanente has established its own arbitration system.  The system is administered by an “independent” body called the OIA – The Office of the Independent Arbitrator.  The OIA’s function is to receive claims against Kaiser Permanente, give information to the claimant (the Kaiser member) about his or her rights in arbitration; and to communicate with the parties until they have chosen an arbitrator.  The OIA itself does not conduct or make decisions in arbitration.  But it maintains the rules that must be followed in a Kaiser arbitration.

If you are a Kaiser Permanente member, you may have signed an agreement to arbitrate any claim of medical negligence.  Kaiser arbitration agreements are mandatory – they do not allow the Kaiser member to choose a court trial instead.  Furthermore, they are binding: that is, except in rare circumstances, the arbitration decision is final and may not be appealed.  To find out whether an agreement you signed requires you to arbitrate your medical malpractice claim, consult a consumer lawyer.

Are Kaiser Arbitrations Fair to the Consumer?

On the surface, Kaiser arbitrations seem to offer the same opportunity to be compensated for the harm caused by a negligent physician as would a court trial.  The Kaiser arbitrator must follow California law, including the same instructions that are given to jurors.  But there is a key difference:  whereas jurors have no financial incentive to decide in favor of the consumer or the healthcare provider, arbitrators are usually paid by Kaiser for their time.

It is true that Kaiser arbitrators are paid the same regardless of whether they award money to the Kaiser member.  However, there is a limited pool of Kaiser-approved arbitrators.  And it is only human to want to be hired again in the future.  An arbitrator who decides Kaiser Permanente must pay money to one of its members because of a Kaiser physician’s negligence stands less of a chance of being chosen in the future as an arbitrator.  Let’s see how this works.

The Process of Choosing an Arbitrator: The Kaiser Strike-and-Rank System

The Kaiser OIA maintains a list of arbitrators whom it has accepted as “qualified” to arbitrate medical malpractice claims by its members.  In our opinion, a substantial number of these persons are fair.  That is, they have shown that they will award a fair amount to a Kaiser member who proves that Kaiser harmed that member through medical negligence.

Unfortunately, just because the Kaiser OIA includes a fair arbitrator on its list does not mean that Kaiser Permanente must agree to him or her.  Remember that Kaiser Permanente and its member are adversaries in a Kaiser arbitration.  Both must obey the rules set by the Kaiser OIA.  Both, together, must choose an arbitrator whose name is on the Kaiser OIA list.  This is the procedure:

1.         First, the Kaiser OIA chooses 12 names from its list at random and sends them to the claimant and to Kaiser Permanente.  The OIA also sends a printout of the history of each arbitrator’s decisions.  For each arbitrator, the printout shows how many times the arbitrator decided for the member and how many times for Kaiser Permanente.  It also shows the amount of money the arbitrator awarded to the member in those cases he or she ruled in favor of the member – if there were any such cases.

2.         Each party – the member (the “claimant”) and Kaiser Permanente (the “respondent”) – “strikes” four names from the list.  That is, each party – separately and in secret – lists four arbitrators that are not acceptable to that party.  None of the arbitrators who have been struck will be chosen as an arbitrator in the case.

3.         Each party then ranks the remaining eight arbitrators on the list.  Each party – separately and in secret – lists its most preferred arbitrator as Number 1; the next most-preferred as Number 2, and so on.

4.         The parties submit their lists to the Kaiser OIA.  The OIA removes the names of all arbitrators who have been struck.  It adds the scores submitted by each party for the remaining arbitrators.  The arbitrator with the lowest combined score is named as the arbitrator for the case.

From the perspective of the claimant – the Kaiser member – Kaiser’s process tends to eliminate the fairest arbitrators:  Kaiser tends to strike those arbitrators who, relatively frequently, decide in favor of members and awarded them money.  Similarly, Kaiser tends to rank highly arbitrators who have ruled in its favor.  The arbitrators who are then chosen are likely to be, at best, around the middle ranks of the member’s list.  And remember: every arbitrator wants to earn fees from future arbitrations, and knows that awarding money to the consumer will tend to hurt his or her chances.

Payment of the Arbitrator’s Fees

A.        The claimant is allowed to hire his own “party arbitrator.”  If he or she does so, Kaiser Permanente will also choose its own party arbitrator.  Thus, in addition to the member and Kaiser together selecting the overall arbitrator, there will also be two party arbitrators at the arbitration hearing.  The party arbitrators are allowed to advocate for their clients to the overall arbitrator, who still has the final decision to make.  Kaiser and its member each must pay the fees for their respective party arbitrator.  Hiring a party arbitrator does not guarantee an outcome more favorable than if no party arbitrators had been chosen.

If the Kaiser member agrees not to use party arbitrators, Kaiser will waive arbitration fees for the member.  Arbitration fees can amount to many thousands of dollars per party, so the opportunity to avoid paying the arbitration fees is an important consideration in deciding whether to hire a party arbitrator.

Must You Hire an Attorney to Arbitrate Against Kaiser?

We highly recommend that you are represented by an attorney throughout the arbitration process.  Kaiser is always represented by capable attorneys.  And Kaiser is not limited in any way in the amount of money it pays its attorneys.  Consequently, Kaiser’s attorneys will use the arbitration process to their advantage if the member is not represented by an attorney.  As an example, Kaiser usually brings a motion for summary judgment (“MSJ”) before the arbitration hearing.  An MSJ is a legal document that asks the arbitrator to throw out the member’s case against Kaiser Permanente.  Kaiser’s MSJ normally includes at least one declaration written and signed by an expert hired by Kaiser Permanente.  If the member does not submit a written opposition to Kaiser’s MSJ that includes an expert declaration on behalf of the member, Kaiser is very likely to win the MSJ.  An attorney skilled in representing claimants can often defeat Kaiser’s MSJ.

An attorney advocating for the member is also very important during the discovery process.  During discovery, each side requests information and documents of the other, and takes depositions of witnesses.  It is very difficult for a claimant without a lawyer to successfully navigate the discovery process.

Finally, it is important for the claimant to be represented at the arbitration hearing.  This hearing takes the place of a courtroom trial.  But it still includes opening statements, examination and cross-examination of witnesses, and closing arguments, among many other procedures requiring legal expertise.

If you believe you have a claim against Kaiser Permanente for medical malpractice, seek legal advice immediately.