by Holly Hayes The Congressional Budget Office (CBO) issued an analysis of the effects of tort reform proposals on health care spending. The CBO estimates that implementing a nationwide package of tort reform proposals would result in reductions of health care spending of about 0.5 percent or about $11 billion in 2009. This figure represents a reduction of 0.2 percent from lower medical liability premiums and a 0.3 percent reduction from less utilization of health care services. CBO’s Analysis of the Effects of Proposals to Limit Costs Related to Medical Malpractice (“Tort Reform”) Today (October 9, 2009) CBO released a letter updating its analysis of the effects of proposals to limit costs related to medical malpractice (“tort reform”). Typical legislative proposals for tort reform have included caps on awards for noneconomic and punitive damages, rules allowing the introduction at trials of evidence about insurance payments and related sources of income, statutes of limitations on suits, and replacement of joint-and-several liability with a fair-share rule. Tort reform could affect costs for health care both directly and indirectly: directly, by lowering premiums for medical liability insurance; and indirectly, by reducing the use of diagnostic tests and other health care services when providers recommend those services principally to reduce their potential exposure to lawsuits. Because of mixed evidence about whether tort reform affects the utilization of health care services, past analyses by CBO have focused on the impact of tort reform on premiums for malpractice insurance. However, more recent research has provided additional evidence to suggest that lowering the cost of medical malpractice tends to reduce the use of health care services. CBO now estimates that implementing a typical package of tort reform proposals nationwide would reduce total U.S. health care spending by about 0.5 percent (about $11 billion in 2009). That figure is the sum of a direct reduction in spending of 0.2 percent from lower medical liability premiums and an additional indirect reduction of 0.3 percent from slightly less utilization of health care services. (Those estimates take into account the fact that because many states have already implemented some of the changes in the package, a significant fraction of the potential cost savings has already been realized.) Enacting a typical set of proposals would reduce federal budget deficits by roughly $54 billion over the next 10 years, according to estimates by CBO and the staff of the Joint Committee of Taxation. That figure includes savings of roughly $41 billion from Medicare, Medicaid, the Children’s Health Insurance Program, and the Federal Employees Health Benefits program, as well as an increase in tax revenues of roughly $13 billion from a reduction in private health care costs that would lead to higher taxable wages. Technorati Tags: Tort Reform, Healthcare President Obama, arbitration, ADR, law, mediation 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.

Karl Bayer stumbled upon this year’s Fulbright & Jaworki’s Litigation Trends Survey Report and we thought you might be interested in reading it. Here is an excerpt: How to Resolve? Litigation versus Arbitration: 20. Commercial International Arbitrations Expected to Rise: Nearly a quarter of counsel from large-cap companies and 17% of all respondents expect an increase in the number of commercial international arbitrations they will be involved in over the coming year. Increases are expected, particularly, in the financial services, insurance, manufacturing and retail sectors. 21. Rate of International Arbitration Higher in U.K. and Among Retail/Wholesale: 22% of U.K. respondents say their company has been party to at least one international arbitration in the last 12 months, versus 14% of U.S. respondents. That number goes up to 29%, however, when looking only at large-cap companies. Moreover, 72% of retail and wholesale companies that participated in the survey commenced at least one international arbitration in the past 12 months. 22. Arbitration in Labor Suits – A Special Case: 15% of respondents said their company requires arbitration of disputes in non-union settings – that`s down from last year`s 22%. Why choose arbitration for these suits? The process is beneficial from an employee-relations standpoint, according to 83% of those respondents. Cost also is an issue: The median cost ($50,000) to arbitrate a single-plaintiff employment case is about half the median cost ($99,038) of litigating a single-plaintiff employment case to conclusion. Though arbitration is not the better route for everyone: Large-cap companies, on the whole, spend more on arbitrating single-plaintiff cases, with 61% of large-caps paying upwards of $50,000 per case. The median cost of arbitration for public companies is also substantially higher than for private companies. 23. For Domestic Disputes, Leaning Toward Litigation: 55% of U.S. respondents said that in disputes that are not international in nature, and when given a choice, they opt for litigation over arbitration – from both the defensive and offensive side. (In the U.K., however, arbitration for domestic disputes remains popular with 51% of U.K. respondents saying they opt for arbitration in domestic disputes.) The primary considerations for choosing one over another are cost, efficiency, higher comfort level and predictability of outcome. 24. Why Are Some In-House Counsel Choosing Litigation for Domestic Disputes? In the U.S., some in-house lawyers believe litigation is more likely to produce decisions on the legal merits rather than an arbitrator`s unchecked sense of fair play. What`s more: arbitration can be no less expensive or time-consuming. The median cost for arbitration – $50,000 – is way up from last year`s median cost of $35,000. Litigation, some respondents say, offers greater discovery opportunities, greater availability of dispositive motions and more established rules. Any thoughts? You may download Fulbright’s 6th Annual Litigation Trends Survey Report here. Technorati Tags: arbitration, ADR, law,

In Theriault v. FIA Card Services, N.A., No. 09-30233 (5th Cir. Oct. 8, 2009), Victor Theriault became delinquent on his credit card account with FIA Card Services, N.A. (formerly known as MBNA America Bank, N.A.) (FIA) around December 2006. FIA filed for arbitration at the National Arbitration Forum (NAF). On April 2007 NAF issued an arbitration award in favor of FIA. Theriault challenged the award on the grounds that FIA had violated the Truth in Lending Act (TILA) and breached its contract. The district court confirmed the arbitration award and Theriault now appeals. The Fifth Circuit, in a two-page unpublished opinion, affirmed the district court’s judgment. The court said that Theriault failed to establish grounds for vacating the arbitration award under Section 10 of the Federal Arbitration Act. Technorati Tags: arbitration, ADR, law, Fifth Circuit, NAF, National Arbitration Forum

Last week’s Wall Street Journal had an interesting and well-written article about arbitration of credit card disputes, centered around the National Arbitration Forum (NAF). Hat tip to Don Philbin. Here is an excerpt: Arbitration and mediation have existed as ways to resolve disputes in the U.S. for more than 200 years. They became the standard practice in the financial world after 1987, when a Supreme Court decision gave securities firms the go-ahead to require arbitration to resolve brokerage-account disputes. In a typical case, a bank refers an unpaid credit-card bill to a debt collector. If the collector is unsuccessful at recovering it, it refers the case to an arbitration body. Arbitration bodies, such as NAF and AAA, which generated revenue by charging fees to the parties involved, use retired judges and attorneys as arbitrators who decide the cases. If the arbitrator rules for the creditor, the collector can ask a court for a judgment to collect. Because a debt collector can earn up to a third of the debt outstanding when the ruling is in the bank’s favor, it can be in a collector’s interest for an arbitrator to rule against the card holder. Former arbitrators, a congressional subcommittee, consumers and government suits are now alleging that NAF has been systematically ruling against consumers for years. Banks prevail over consumers in 94% of debt-collection arbitrations, an NAF official said in recent testimony to a congressional subcommittee. Arbitration advocates defend those results, citing studies that show debtors lose at a similar rate in court. They say that there is typically a long paper trail proving that customers owe the amounts in dispute. A congressional subcommittee, which began an investigation last year to study the fairness of mandatory arbitration, concluded in July that the current arbitration system is “ripe for abuse.” Arbitration, as “operated by NAF, does not provide protection for those consumers,” the committee said. A sweeping overhaul won’t occur unless Congress decides whether to pass laws limiting how arbitration can be used. But arbitration experts now expect that more collection claims will be funneled into the courts. Read the full article here. Related Posts: Pending U.S. Legislation on Arbitration and Mediation: Update (Oct. 14) Class Action Suit Filed Against the National Arbitration Forum (Sept. 17) U.S. Congressional Hearing | “Mandatory Binding Arbitration – Is it Fair and Voluntary?” (Sept. 16) Videos of Congressional Hearing | Arbitration or Arbitrability?: the Misuse of Arbitration to Collect Consumer Debts (Sept. 7) American Bar Association’s Resolutions on the Arbitration Fairness Act of 2009 (Aug. 26) Recent Developments in Arbitration of Consumer Disputes (Aug. 14) Testimony from the U.S. Congress Hearing on the Misuse of Arbitration to Collect Consumer Debts (July 24) The American Arbitration Association Confirms Today That It Supends Arbitration of Consumer Debt Collection (July 23) National Arbitration Forum Settles with Minnesota’s Attorney General (July 20) U.S. Congress Hearing on the Misuse of Arbitration to Collect Consumer Debts (July 20) National Arbitration Forum Sued by the Minnesota Attorney General (July 16) National Arbitration Forum’s Response to NPR Arbitration Story (June 17) Employment and Consumer Arbitration: NPR Article (June 10) Technorati Tags: arbitration, ADR, law, legislation, Arbitration Fairness Act of 2009, consumer arbitration, National Arbitration Forum