Verdicts

Not Court's Place to Ban Arbitration Pacts for
Med-Mal Claims

A New Jersey appeals court has declined to adopt a bright-line rule against pre-dispute agreements imposing binding arbitration on medical malpractice claims, finding that such a strict policy would have to be imposed by the legislative rather than the judicial branch of the government. Moore v. Woman to Woman Obstetrics & Gynecology, — A.2d —-, 2010 WL 3238968, N.J.Super.A.D., Aug. 18, 2010 (NO. A-0953-09T1).

On her first visit to a specialist high-risk pregnancy obstetrician, plaintiff Monica Moore signed an agreement that included a mandatory arbitration clause. She signed the document, along with a raft of other forms, just prior to a scheduled ultrasound, which she was in a hurry to have completed so that she could make it to another appointment. Moore went to the specialist because, at 44 years old, she was at an advanced age for successfully carrying a pregnancy.

After giving birth to a daughter who has Down syndrome, Moore and the baby's father brought suit for wrongful birth. They alleged that the doctor did not offer them chorionic villus testing in the early months of pregnancy, which would have warned them of their daughter's chromosomal abnormality and likelihood of being born with Down syndrome. When they learned of the test's existence it was too late for them to terminate the pregnancy. The doctor moved to enforce the arbitration clause, and the trial court dismissed the suit.

The appeal drew amici on both sides, with The New Jersey Association for Justice arguing in favor of a per se rule against the enforcement of arbitration agreements in med-mal cases, on the bases that the doctor-patient relationship should preclude such agreements and that people seeking medical care are in a vulnerable state. The New Jersey Medical Society opposed limitations on arbitration clauses. In writing for the panel, Appellate Division Judge Jane Grall noted that the plaintiffs' and their supporters' concerns pertained to policy questions that had been resolved by the New Jersey legislature when it passed the state's Arbitration Act in 2003. That Act does not contain any prohibition on arbitration agreements based on the nature of the claim. In rejecting a per se rule against arbitration agreements in medical malpractice cases, Grall relied in part on state Supreme Court precedent in Fawzy v. Fawzy, 199 N.J. 456 (2009), which held arbitration of child custody issues permissible, subject to a special standard of judicial review to protect children from harm.

Despite its refusal to announce a blanket prohibition against med-mal arbitration clauses, the court determined that the trail court's summary dismissal of the plaintiffs' claim was error. The lower court should have heard arguments concerning the existence of a valid agreement, during which the plaintiffs could argue that although they signed the agreement, they did so under circumstances that would void it, such as fraud, duress, or undue influence. Judge Grall specifically addressed the possibility of an unconscionability argument, pointing out that the Restatement (Second) of Contracts makes a contract avoidable for undue influence based on the relationship between the parties if the party seeking avoidance was justified in assuming the other would not act against his or her welfare. Plaintiffs raised several unconscionability factors that might preclude enforcement, including the setting in which Moore signed the agreement, the fact that she was not alerted to the presence of the agreement in the pile of papers, and the fact that she not only signed away her own right to bring suit, but also her husband's and unborn child's. (In this regard, the court wrote, “[W]e are not aware of any legal theory that would permit one spouse to bind another to an agreement waiving the right to trial on his or her claim without securing his consent to the agreement.”) In addition, although the agreement gave Moore a right to consult a lawyer and to rescind the agreement within 15 days, she was not provided with a copy of the agreement, which “as a practical matter, renders [that safeguard] ineffective and gives rise to an inference of additional inequality in the parties' respective bargaining positions.” Finally, the agreement stated that Moore had been given a list of physicians who did not require an arbitration agreement before treatment, which Moore denied receiving. This disputed fact should have been viewed in her favor on motion for summary judgment.

For the foregoing reasons (among others), the panel remanded the matter for further proceedings.

Not Court's Place to Ban Arbitration Pacts for
Med-Mal Claims

A New Jersey appeals court has declined to adopt a bright-line rule against pre-dispute agreements imposing binding arbitration on medical malpractice claims, finding that such a strict policy would have to be imposed by the legislative rather than the judicial branch of the government. Moore v. Woman to Woman Obstetrics & Gynecology, — A.2d —-, 2010 WL 3238968, N.J.Super.A.D., Aug. 18, 2010 (NO. A-0953-09T1).

On her first visit to a specialist high-risk pregnancy obstetrician, plaintiff Monica Moore signed an agreement that included a mandatory arbitration clause. She signed the document, along with a raft of other forms, just prior to a scheduled ultrasound, which she was in a hurry to have completed so that she could make it to another appointment. Moore went to the specialist because, at 44 years old, she was at an advanced age for successfully carrying a pregnancy.

After giving birth to a daughter who has Down syndrome, Moore and the baby's father brought suit for wrongful birth. They alleged that the doctor did not offer them chorionic villus testing in the early months of pregnancy, which would have warned them of their daughter's chromosomal abnormality and likelihood of being born with Down syndrome. When they learned of the test's existence it was too late for them to terminate the pregnancy. The doctor moved to enforce the arbitration clause, and the trial court dismissed the suit.

The appeal drew amici on both sides, with The New Jersey Association for Justice arguing in favor of a per se rule against the enforcement of arbitration agreements in med-mal cases, on the bases that the doctor-patient relationship should preclude such agreements and that people seeking medical care are in a vulnerable state. The New Jersey Medical Society opposed limitations on arbitration clauses. In writing for the panel, Appellate Division Judge Jane Grall noted that the plaintiffs' and their supporters' concerns pertained to policy questions that had been resolved by the New Jersey legislature when it passed the state's Arbitration Act in 2003. That Act does not contain any prohibition on arbitration agreements based on the nature of the claim. In rejecting a per se rule against arbitration agreements in medical malpractice cases, Grall relied in part on state Supreme Court precedent in Fawzy v. Fawzy , 199 N.J. 456 (2009), which held arbitration of child custody issues permissible, subject to a special standard of judicial review to protect children from harm.

Despite its refusal to announce a blanket prohibition against med-mal arbitration clauses, the court determined that the trail court's summary dismissal of the plaintiffs' claim was error. The lower court should have heard arguments concerning the existence of a valid agreement, during which the plaintiffs could argue that although they signed the agreement, they did so under circumstances that would void it, such as fraud, duress, or undue influence. Judge Grall specifically addressed the possibility of an unconscionability argument, pointing out that the Restatement (Second) of Contracts makes a contract avoidable for undue influence based on the relationship between the parties if the party seeking avoidance was justified in assuming the other would not act against his or her welfare. Plaintiffs raised several unconscionability factors that might preclude enforcement, including the setting in which Moore signed the agreement, the fact that she was not alerted to the presence of the agreement in the pile of papers, and the fact that she not only signed away her own right to bring suit, but also her husband's and unborn child's. (In this regard, the court wrote, “[W]e are not aware of any legal theory that would permit one spouse to bind another to an agreement waiving the right to trial on his or her claim without securing his consent to the agreement.”) In addition, although the agreement gave Moore a right to consult a lawyer and to rescind the agreement within 15 days, she was not provided with a copy of the agreement, which “as a practical matter, renders [that safeguard] ineffective and gives rise to an inference of additional inequality in the parties' respective bargaining positions.” Finally, the agreement stated that Moore had been given a list of physicians who did not require an arbitration agreement before treatment, which Moore denied receiving. This disputed fact should have been viewed in her favor on motion for summary judgment.

For the foregoing reasons (among others), the panel remanded the matter for further proceedings.