By Holly Hayes Our health care conflict resolution series began with Part I, applying the “principled negotiation” method to health care (post available here) and followed with Part II, examining a case study of “Separating the People from the Problem” (post available here). In this post, let’s take an example of a physician and a hospital group negotiating to buy the physician’s practice to see how “positional bargaining” results in failure to find a solution. Physician: I need you to buy my practice for $X and I will not take weekend call. If you don’t want to buy my practice, my partners and I can take it down the road to hospital Y. Hospital Representative: We are willing to offer you $Z for your practice and we must have a weekend call rotation as part of the deal. Physician: You don’t care about me or my practice, this discussion is over. Wise solutions acknowledge interests, not positions. The basic problem with the physician and the hospital representative is not that one is buying and one is selling, the conflict is between their interests or their concerns, fears, needs and desires related to the negotiation. What are some tools to help reconcile interests rather than merely seeking to compromise positions? In Getting to Yes, Roger Fisher and William Ury describe techniques for identifying interests so that options can be developed that meet both party’s interests. Ask “Why?” – put yourself in their shoes. Ask “Why Not?” — why doesn’t the other side agree with us? Realize each side has multiple interests – the physician wants a secure income for his family, he wants time with his family so he does not want to always be on call. Realize the most powerful interests are basic human needs – security, economic well-being, control over one’s life, a sense of belonging, recognition. Talk about interests – make your interests come alive for the other side. The hospital representative can talk about ways to include the physician in decision-making at the hospital and about what the hospital needs in terms of income to make a profit to reinvest in its people and physical plant. Using these techniques, let’s see how the conversation between the physician and the hospital representative is more productive: Physician: I need you to buy my practice for $X and I will not take weekend call. If you don’t want to buy my practice, my partners and I can take it down the road to hospital Y. Hospital Representative: I understand you have spent your time and your own income to build such a successful practice. You have been a great partner for us for five years. Can you help me understand how you arrived at the $X figure and talk a little about the call issue? Physician: We recently bought an MRI and quite a bit of other costly equipment that would be included in the purchase price. I have spoken with some other physician practices and this price seems fair. I just want to be fairly compensated for the value my partners and I have brought to this practice over the past five years. In terms of call, I want time with my family on the weekends. I am afraid that if one of my partners leaves, I will have to take both my call and their call and who knows when a new physician could be recruited. I want control over my life. Hospital Rep: Would it be alright with you if we had both your accountant and my CFO take a look at the practice financials? There are also some industry standards we could apply to the purchase price. As for call, you make a very good point about how much call would be needed. Of course, my problem is that I need to provide certain coverage or the hospital cannot provide certain services and those patients will go down the road. This is a problem across the country and I know many hospitals have begun to pay very high prices to provide call for certain specialties. I wonder if you would consider being part of our medical staff executive committee as part of a purchase package? This would not guarantee you no call, but it would give you a chance to help make policy about how we move forward. If we can reach agreement on purchasing your practice, it will take both of us to make the best decisions for a successful partnership. Physician: Yes, I can agree to those next steps. I am starting to feel a level of comfort that I will be treated fairly. As the two parties talked about their interests by asking questions and realizing that the most powerful interests are basic human needs, they both came closer to the purpose of negotiating — serving their interests and finding an acceptable solution. Part IV in our series will explore more on this topic – “how to invent options for mutual gain”. We welcome any comments you have about conflict you have experienced in health care and lessons you have learned. Technorati Tags: Healthcare, ADR Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at: holly@karlbayer.com.

The following bills relating to alternative dispute resolution were introduced by the 111st Congress. Click on the bill number to read its text and on the status link to find the bill’s most recent legislative action. Stay tuned to Disputing for more legislative updates! Bills that passed: “An Act Making Appropriations for the Department of Defense for the Fiscal Year Ending September 30, 2010, and for Other Purposes” contains an amendment (the “Franken Amendment“) that bans funds to defense contractors who require workers (employees and independent contractors) to arbitrate “any claim under Title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.” (H.R. 3326 ; Amendment; Senator Franken’s video is here) H.R. 3326 was signed by President Barack Obama and became law on December 19, 2009. Final version is here and major actions are here. Also, find guest-posts by F. Peter Phillips here and here. The Consolidated Appropriations Act of 2010 (H.R. 3288), a spending bill signed into law by President Obama on December 16, 2009, includes a provision under which owners of automobile dealerships can use a binding arbitration process administered by the American Arbitration Association (AAA) to seek reinstatement if their businesses were closed by automobile manufacturers during the implementation of the Emergency Economic Stabilization Act of 2008. Read our posts here and here. Find out more details at the AAA website. A recent WSJ article is here. Bills still pending: The Arbitration Fairness Act of 2009 would ban mandatory pre-dispute arbitration in employment, consumer, and franchise contracts. Senate version: S. 931 and Status. House version: H.R. 1020 and Status. The Employee Free Choice Act of 2009 would amend the National Labor Relations Act to require first mediation and then binding arbitration if both parties are unable to reach an agreement within a certain time frame. Senate version: S. 560 and Status. House version: H.R. 1409 and Status. The Payday Loan Reform Act of 2009 would amend the Truth in Lending Act to establish additional payday loan requirements to protect consumers. This bill prohibits a mandatory arbitration clause that is “oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers.” H.R. 1214 and Status. The Fairness in Nursing Home Arbitration Act of 2009 would render pre-dispute arbitration clauses in nursing home contracts unenforceable. S. 512 and Status. House version: H.R. 1237 and Status. The Mortgage Reform and Anti-Predatory Lending Act of 2009 would amend the Truth in Lending Act of 1968. The bill provides that “[n]o residential mortgage loan and no extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer, other than a reverse mortgage may include terms which require arbitration of any other nonjudicial procedure as the method for resolving any controversy.” H.R. 1728 and Status. The Labor Relations First Contract Negotiations Act of 2009 would amend the National Labor Relations Act to require the arbitration of initial contract negotiation disputes. H.R. 243 and Status. The Consumer Fairness Act of 2009 would treat arbitration clauses which are unilaterally imposed on consumers as an unfair and deceptive trade practice and prohibit their use in consumer transactions. H.R. 991 and Status. The Preserving Homes and Communities Act of 2009 would require certain mortgagees to make loan modifications, establish a grant program for state and local government mediation programs, and create databases on foreclosures. S. 1731 and Status. The Conflict Resolution and Mediation Act of 2009 would provide assistance to local educational agencies for the prevention and reduction of conflict and violence. H.R. 4000 and Status. The Agricultural Credit Act of 2009 would reauthorize state agricultural mediation programs under title V of the Agricultural Credit Act of 1987. H.R. 3509 and Status. The Department of Peace Act of 2009 would establish a Department of Peace that would take a proactive, strategic approach in the development of policies that promote national and international conflict prevention, nonviolent intervention, mediation, peaceful resolution of conflict, and structured mediation of conflict. H.R.808 and Status. The Rape Victims Act of 2009 provides that employment-related arbitration agreements shall not be enforceable with respect to any claim related to a tort arising out of rape. S. 2915 and Status. The Foreclosure Mandatory Mediation Act of 2009 would require lenders of loans with Federal guarantees or Federal insurance to consent to mandatory mediation. S. 2912 and Status. Technorati Tags: arbitration, ADR, law

Aaron Bruhl (pictured left) Professor at the University of Houston Law Center, has posted this interesting commentary at the Prawfsblawg yesterday about Rent-A-Center v. Jackson, the upcoming U.S. Supreme Court case about whether courts or arbitrators should decide the issue of unconscionability. (previously discussed here). Here is an excerpt: The Federal Arbitration Act makes arbitration agreements as enforceable as all other contracts. In April, the Supreme Court will hear argument in Rent-A-Center v. Jackson, which concerns the question of who – court or arbitrator – decides a claim that an arbitration agreement is unconscionable and thus unenforceable. In this case, the arbitration agreement itself assigns (or at least purports to assign) that power to the arbitrator. The Ninth Circuit, however, held that unconscionability was an issue for the court. This case holds obvious interest for those who study ADR, consumer law (most consumer contracts have arbitration clauses, whether or not you know it), and employment law (this case is an employment discrimination suit). What I hope to show you is that it is just as interesting for those who study federal courts and judicial politics. Beneath the surface, the case is, in a sense, more Bush v. Gore than Williams v. Walker-Thomas Furniture. To see why the case is so intriguing, one has to appreciate what one might call its strategic context. The Supreme Court is strongly pro-arbitration. Some state and federal courts are not quite so enthusiastic, at least when it comes to consumer and employment contexts with their largely adhesionary contracts. (Please note that I’m not discussing whether the Court’s decisions in this area, and its broader pro-arbitration stance, reflect sound interpretations of the relevant statute, good policy, etc.) Over the course of the last couple of decades the Supreme Court has shut off most avenues for challenging arbitration agreements at the wholesale level – state law cannot declare particular fields like consumer transactions off limits from arbitration, courts cannot deem arbitration per se violative of public policy, etc. All such arguments are preempted by the Federal Arbitration Act. What remains, though, is the possibility for retail-level challenges to particular arbitration clauses under section 2 of the Act, which allows ordinary contract defenses that would invalidate any contract. So arbitration itself cannot be questioned, but a particular arbitration clause might be invalidated as the product of duress, fraud, etc. In the last few years, as other routes for challenging arbitration have been closed off, unconscionability has become a surprisingly common and surprisingly effective way of attacking arbitration agreements. The challenges do not attack arbitration per se – federal law favors arbitration – but instead target various aspects of a particular arbitration process: a given clause might forbid class arbitrations, bar punitive damages or otherwise restrict remedies, sharply curtail discovery, require a consumer to pay hefty arbitrator’s fees, etc. There have been many cases on these topics in recent years, and a good number of them sustain the challenge to the arbitration clause. Read the entire post here.

Karl came across this interesting comment by Jose Antonio Garcia Alvaro, posted at the ADR Resources Dispute Resolution and Mediation LinkedIn Group. I just received and read the 2009 statistical report of the Arbitration Institute of the Stockholm Chamber of Commerce, an institution that ranks among the best in the world according to several surveys. http://www.sccinstitute.se/filearchive/3/31104/SCC_Statistical_Report_2009.pdf As you will see, of 225 cases filed last year with the SCC, only 3 were resolved through mediation. That’s negligible. At ADR Resources, we follow worldwide trends on arbitration and mediation. Over the past five years numerous reports have indicated that the international business community was ready to shift from an “arbitration-only” scenario, to a growing use of mediation, a growing use of a multi-tier approach to resolve commercial disputes. It all appears to be a case of intentions, not deeds –lip service, if you will. When it comes to drafting international commercial contracts, arbitration reigns supreme as the preferred ADR method by far thus far. There is no “growing” use of mediation to levels that would suggest even a slight shift to mediation to resolve international business disputes. Now, why? Not enough experienced mediators out there in this whole, big world? An entrenched sense that binding arbitration is best when it comes to resolving international commercial disputes? Not enough work on the part of ADR organizations to promote the use of mediation in “big-time” international commercial transactions? A bit of “all of the above”? We would like to know your comments about this post!