1- Sao Gupta Gantz

HEALTHCARE DISPUTES ACROSS NATIONALBOUNDARIES: THE POTENTIAL FOR ARBITRATION

DETH SAO,*AMAR GUPTA,t

AND DAVID A. GANTZI

ABSTRACT

Trade in international health services has the potential to play a lead-ing role in the global economy, but its rapid growth is impeded by legalbarriers. Advances in technology and cross-border movement of peopleand health services create legal ambiguities and uncertainties for busi-nesses and consumers involved in transnational medical malpracticedisputes. Existing legal protections and remedies afforded by traditionaljudicial frameworks are unable to resolve the following challenges: (1)assertion of personal jurisdiction; (2) choice offorum and law considera-tions; (3) appropriate theories of liability for injuries and damages aris-ing from innovations in medical care and delivery of health services;and (4) enforcement offoreign judgments. Such legal uncertainties andambiguities call for a uniform means of redress that is more flexible andpredictable than litigation in a court room. Arbitration, a privatestreamlined adjudication process that has been successfully utilized onan international level to resolve several of the above mentioned legalquandaries, offers a potential solution. The voluntary, flexible, andlegally binding nature of arbitration agreements across jurisdictionsmakes this form of dispute resolution more efficient and adaptive tochanges in the health services industry than litigation. With carefulconstruction of an approach that accounts for arbitration costs, reasona-ble recovery amounts, and complementary mechanisms such as no-faultcompensation, international arbitration of medical malpractice disputeswill more fairly and efficiently reallocate the legal risks borne by busi-nesses and consumers.

* J.D. 2010, James E. Rogers College of Law, University of Arizona; B.A. 2001, Wel-lesley College.

t Thomas R. Brown Endowed Professor, University of Arizona; Ph.D. 1980, IndianInstitute of Technology Delhi; M.S. 1980, Sloan School of Management, MassachusettsInstitute of Technology; B.Tech. 1974, Indian Institute of Technology Kanpur.

+ Samuel M. Fegtly Professor of Law and Director, International Trade and BusinessLaw Program, James E. Rogers College of Law, University of Arizona; J.S.M. 1970, StanfordLaw School; J.D. 1967, Stanford Law School; A.B. 1964, Harvard College.

The Geo. Wash. Int'l L. Rev.

I. INTRODUCTION

As one of the fastest growing sectors in the world economy, busi-ness and legal circles have focused much attention and concern onthe international health services industry. However, several tradebarriers, chief among them legal liability risks and remedies forbusinesses and consumers, impede the potential of the health ser-vices industry to be a leading player in the global economy. Earlierscholarship in international health services trade has analyzed legalbarriers in this industry, and this Article attempts to build uponsuch existing scholarship by proposing the use of arbitration as amethod of dispute resolution for transnational medical malprac-tice claims involving businesses and consumers.

International arbitration of medical malpractice disputes wouldmore fairly and efficiently reallocate the legal risks borne bypatients and foreign healthcare providers. To build a case for sucha proposal, Part II will discuss the globalization and growth of thehealth services trade and its unmet potential. Part III will addressthe ways in which inefficiencies and inadequacies of current litiga-tion systems contribute to a gap between the industry's present per-formance and its potential. Part IV proposes the use of arbitrationas a viable alternative dispute mechanism to national courts thatmore effectively resolves the uncertainties associated with legal lia-bility risks and remedies of traditional medical malpractice litiga-tion. Part V will examine how the features and processes ofarbitration may be best applied to medical malpractice claims inthe context of a business-to-consumer dispute. In particular, thissection will address public policy considerations, potential alloca-tion of costs and liabilities of all parties involved in the transaction,complementary dispute resolution mechanisms, and alternativeforums and contract provisions. Finally, Part VI will conclude withthe observation that the proposal of an international arbitrationframework for cross-border health services disputes representsmerely one of several feasible and potentially successful paths topursue, including some that have yet to be thought of. This Articleseeks to continue the dialogue demonstrating the necessity to con-sider and act upon new solutions.

Just as with the Industrial Revolution in the nineteenth centuryand the Information Technology Revolution of the twentieth cen-tury, we are now presented with another inevitable transformationof the global economy through the cross-border transfer of personsand technological advances for medical care. And, just as interna-tional business and legal practices adjusted to the two former

[Vol. 42

2010] Healthcare Disputes Across National Boundariesglobal revolutions, so too must we develop flexible frameworks toaccommodate the ambiguous and ever-changing nature of thehealth services industry.1

II. GLOBALIZATION OF HEALTH SERVICES

While cross-border exchange in health services is not a new phe-nomenon, the industry's scope and geographic reach has growntremendously in the past twenty years.2 Although there are someexceptions, 3 a historical overview reveals that until recent decades,health services were primarily local in nature, involving local par-ties and resources in all stages of such transactions. 4 Several factorsaccounted for the industry's circumscribed geographic scope,including limitations in medical knowledge, technology, and trans-portation. 5 Only within the past few decades have technologicaladvances catapulted trade in health services to an internationallevel. 6 In 2001, the World Health Organization (WHO) reportedhealth services as one of the fastest growing global markets. 7 In2009, the healthcare industry ranked among the top twenty fastestgrowing global industries.8

The nature and scope of international trade in health servicesmay be best understood through the four modes of supply adopted

1. See generally Amar Gupta, David A. Gantz, Devin Sreecharana & Jeremy Kreyling,Evolving Relationship Between Law, Offshoring of Professional Services, Intellectual Property, andInternational Organizations, 21 INFO. RESOURCES MGMT. J. 103 (2008) (discussing interna-tional frameworks for international property law).

2. Lior Herman, Assessing International Trade in Health Care Services 4 (European Ctr.for Int'l Political Econ., Working Paper No. 03, 2009), available at http://www.ecipe.org/publications/ecipe-working-papers/assessing-internationa-tradein-heathcare-services/?searchterm=Lior%20Herman.

3. For example, in pre-historic times dating as far back as the Bronze Age, peopletraveled to spas throughout Europe in the belief that mineral water had curative powers.

JOHN C. PAIGE & LAURA SOULLItRE HARRISON, OUT OF THE VAPORS: A SocIAL AND ARCHI-TEGTURAL HISTORY OF BATHHOUSE Row 1 (1986), available at http://www.nps.gov/history/history/onlinebooks/hosp/bathhouse-row.pdf.

4. Thomas R. McLean, The Global Market for Health Care: Economics and Regulation, 26WIs. INT'L L.J. 591, 591 (2008). For an in-depth analysis of the historical local nature ofhealth services, see Amar Gupta & Deth Sao, The Constitutionality of Current Legal Barriers toTelemedicine in the United States: Analysis and Future Directions of its Relationship to National andInternational Health Care Reform, 21 HEALTH MATRIX (forthcoming 2011) (manuscript at27-30).

5. McLean, supra note 4, at 591.6. Herman, supra note 2, at 4.7. Rupa Chanda, Trade in Health Services, 80 BULL. WORLD HEALTH ORG., 158, 158

(2002), available at http://www.scielosp.org/pdf/bwho/v8On2/al2v8On2.pdf.8. Global 500 2009: Top Performers - Fastest Growing Industries, CNNMONEY.COM, http:/

/money.cnn.com/ magazines/fortune/global500/ 2009/ performers/ industries/fastgrow-ers/ (last visited May 3, 2011).


by the General Agreement on Trade in Services (GATS) of theWorld Trade Organization (WTO): (1) cross-border delivery,where both supplier and consumer remain in different countries;(2) consumption abroad, where a consumer travels to a supplier'scountry to consume a service; (3) commercial presence, where aforeign supplier establishes a commercial presence in a consumer'scountry; and (4) presence of natural persons, where labor moves toa consumer's country.9 In the context of international health ser-vices, mode one encompasses a variety of services, ranging fromtelemedicine, to remote education, to the purchase of health insur-ance. 10 Mode two is broadly termed as medical tourism, where for-eign patients travel abroad for specialized or more affordablemedical care unavailable in their home countries.11 Mode threeprimarily encompasses foreign-ownership of medical practice andhospital activities in a patient's country.1 2 Mode four commonlyoccurs when individual foreign healthcare providers move to a con-sumer's country to offer their medical services. 13 This Article willfocus on modes one and two of international health services, asthese cross-border transactions are the most likely to involve thelegal ambiguities and uncertainties that businesses and consumersface in the event of a health services dispute.

Existing scholarship lacks comprehensive data on the extent ofthe health services trade,1 4 but an overview of the services trade inall sectors offers an instructive introduction to the nature andtrends of this sub-sector. Contrary to public perception that ser-vices outsourcing only flows one way-from industrialized coun-tries to developing countries 15 -the following observations revealthat trade in services is a two-way flow among many participatingcountries. For instance, foreigners regularly have sought healthcare in U.S. hospitals and facilities such as the Mayo Clinic for

9. Herman, supra note 2, at 2-3.10. Id. at 4.11. DELOITTE CTR. FOR HEALTH SOLUTIONS, MEDICAL TOURISM: CONSUMERS IN SEARCH

OF VALUE 6 fig. 5 (2008) [hereinafter DELOITrE], available at http://www.deloitte.com/assets/Dcom-UnitedStates/Local% 20Assets/Documents/us-chsMedicalTourismStudy(3).pdf (identifying the most popular locations for medical tourism in the world).

12. Herman, supra note 2, at 14. For example, a foreign commercial presence wouldarise if an Arizona hospital established a subsidiary in Mexico.

13. See id. at 18.14. Id. at 2.15. See Mark B. Burger, "The Technology Dog Ate My Job": The DogEat-Dog World of Off-

shore Labor Outsourcing, 16 FLA. J. INT'L L. 807, 817-18 (2004) (citing T.K. Bhaumik, Out-sourcing Outcry: West Should Compete, Not Whine, ECON. TIMES (Feb. 17, 2004), http://articles.economictimes.indiatimes.com/2004-02-17/news/27370823_1_outsourcing-outcry-global-isation-countries (last visited May 13, 2011)).

[Vol. 42

Healthcare Disputes Across National Boundaries

many decades. 16 Gary Hufbauer and Sherry Stephenson cite stud-ies affirming the bilateral nature of trade in health services. .17These studies also reveal that what one uses as the basis for mea-surement determines a country's ranking with respect to terms ofinsourcing and outsourcing activities.1 8

In a 2002 study that used the share of gross domestic product(GDP) to measure the value of services being outsourced abroad,developing countries ranked among the top outsourcers. 19 A 2004study using raw dollars ranked industrialized countries such as theUnited States, United Kingdom, Germany, France, and the Nether-lands among the top insourcers.20 In 2006, India had a higher rateof insourced skilled work than call-center work, underscoring thevariance in and two-way flow of the services trade.21 Just as withservices trade in general, the sub-sector of health services flowsback and forth at varying levels among its country participants. 22The present information available and offered below affirms thehealth services industry's emergence in the international marketplace and its potential to be one of the leading players in theglobal economy.

A. Cross-border Delivery of Health ServicesAs discussed above, the cross-border delivery of health services

encompasses a wide range of activities.23 Telemedicine constitutesthe bulk of these cross-border activities, 24 and is itself a sub-cate-gory covering a plethora of services. Defined as "the use of medicalinformation exchanged from one site to another via electroniccommunications to improve patients' health status,"25

telemedicine has the potential to perform essentially any medical

16. Glenn Cohen, Protecting Patients with Passports: Medical Tourism and the Patient-Protec-tive Argument, 95 IowA L. REv. 1467, 1471 (2010).

17. Gary Hufbauer & Sherry Stephenson, Services Trade: Past Liberalization and FutureChallenges, 10J. INT'L ECON. L. 605, 624-25 (2007).

18. See id.19. Id. Hufbauer & Stephenson cite examples such as Angola, the Democratic Repub-

lic of Congo, and Mozambique. Id. at 25. Significantly, the United States ranked 117thamong the countries examined in this study. Id.

20. Id.21. Id.22. Herman, supra note 2, at 5-7.23. Id. at 4.24. McLean, supra note 4, at 593 ("The global market for health care services is com-

posed of medical tourism and telemedicine.").25. About Telemedicine, AMERICAN TELEMEDICINE Ass'N, http://www.americantelemed.

org/i4a/pages/index.cfm?pageD=3331 (last visited May 3, 2011).

20101


service across distances. 26 Presently, trade in telemedicine includesa wide range of applications, including but not limited to: two-wayvideo conferencing; 27 electronic communications of diagnoses, sec-ond opinions, and consultations; and telehealth services such astelepathology, teleradiology, and telepsychiatry. 28

Several reasons account for the emergence and proliferation ofcross-border delivery of health services. The lack of access tohealthcare facilities that many patients face in different parts of theworld is a significant factor. 29 In both developing and industrial-ized countries, hospitals and health care providers are oftenlocated in urban areas, depriving patients in rural areas of medicalcare.30 Additionally, cross-border delivery of health services helpsto alleviate the stresses and shortages of medical professionals asso-ciated with providing round-the-clock medical care. 31

Spurred by these societal concerns and the economic benefitsfrom expansion into new markets, many countries are participantsin cross-border delivery of health services. 32 These countries are atvarying levels of economic development and experience differentdegrees of involvement as importers and/or exporters.33 Lior Her-man, an expert in international trade, has conducted trade patternstudies of several Organization for Economic Cooperation andDevelopment (OECD) countries that indicate no clear categoriza-tion of export or import countries, with few exceptions; instead,

26. McLean, supra note 4, at 605.27. What is Telemedicine & Telehealth, AMERICAN TELEMEDICINE ASS'N, http://www.

americantelemed.org/files/public/abouttelemedicine/What-Is Telemedicine.pdf (lastvisited May 3, 2011).

28. Chanda, supra note 7, at 158. For an in-depth analysis of telemedicine and itsbenefits, see John D. Blum, The Role of Law in Global E-Health: A Tool for Development andEquity in a Digitally Divided World, 46 ST. Louis U. L.J. 85, 85, 109 (2002); P. Greg Gulick, E-Health and the Future of Medicine: The Economic, Legal, Regulatory, Cultural, and OrganizationalObstacles Facing Telemedicine and Cybermedicine Programs, 12 ALB. L.J. Sci. & TECH. 351,352-53, 357-58 (2002); Thomas R. McLean, The Future of Telemedicine & Its Faustian Reli-ance on Regulatory Trade Barriers for Protection, 16 HEALTH MATRIX 443, 452 (2006); Susan E.Volkert, Telemedicine: RXfor the Future of Health Care, 6 MICH. TELECOMM. & TECH. L. RaV.147, 149 (2000).

29. Herman, supra note 2, at 4.30. Id.31. Id. The World Health Organization and the American Cancer Society have linked

health hazards to the graveyard shift. Amar Gupta, The 24-Hour Knowledge Factory: Can itReplace the Graveyard Shift?, COMPUTER, Jan. 2009, at 66, 66, available at http://web.mit.edu/lmp/news/Gupta.pdf. This also impacts medical professionals who must work as a conse-quence of such circumstances.

32. See Herman, supra note 2, at 5-8.33. See id.

[Vol. 42


most countries alternate between trade surpluses and deficits. 34

For instance, the United States engages in both offshoring andinsourcing activities. In 2004, the nation's telemedicine markethad an estimated worth of $380 million and grew at more than15% annual rate.35 Due to the domestic shortage of several physi-cian specialties, offshoring is a necessary practice.3 , For example,approximately three hundred U.S. hospitals offshore outsourceimaging services to cover for the shortage in radiologists 37 and onehundred U.S. hospitals use foreign healthcare providers forremote monitoring of Intensive Care Units (ICUs) to cover for theshortage in intensivists. 38 Additionally, U.S. hospitals provide med-ical services to countries in Central America and the Eastern Medi-terranean, including telediagnoses, surveillance, andconsultations. 39

Elsewhere, suppliers employ physicians in India at costs belowforeign physicians' wages. 40 Researchers estimate that India cur-rently serves 2% of the U.S. healthcare market.41 Further, health-care institutions in Bangladesh and Nepal outsource telepathologyservices to India.42 Similar to India's relationship with its neigh-bors, China-based health providers offer telediagnoses to patientsin Macao and several southeast Asian countries.

43

B. Consumption of Health Services AbroadAs discussed above, the consumption of health services in for-

eign countries is broadly termed as medical tourism, which involves"the act of traveling to another country to seek specialized or eco-nomical medical care, well being and recuperation of acceptable

34. Id. at 5. Most of these countries have high-income economies. See Members andPartners, ORG. FOR ECON. CO-OPERATION AND DEV., http://www.oecd.org/pages/0,341

7,en_

36734052_36761800 11111,00.html (last visited May 15, 2011); Herman, supra note 2,at 2.

35. Herman, supra note 2, at 4. This is likely a conservative estimate, as a 2006 federalreport observed that many U.S. health institutions underreport their offshoring activities.Sanjiv N. Singh & Robert M. Wachter, Perspectives on Medical Outsourcing and Telemedicine -Rough Edges in a Flat World?, 358 NEw ENG. J. MED. 1622, 1623 (2008), available at http://www.nejm.org/doi/pdf/10.1056/NEJMhle0707298.

36. Nicolas P. Terry, Under-Regulated Health Care Phenomena in a Flat World: MedicalTourism and Outsourcing, 29 W. NEw ENG. L. REV. 421, 444 (2007).

37. Id. at 445.38. Id. at 444-45.39. Chanda, supra note 7, at 158.40. McLean, supra note 4, at 606.41. Singh & Wachter, supra note 35, at 1623.42. Chanda, supra note 7, at 158.43. Id.

2010]


quality with the help of a support system." 4 4 Operating as anunregulated industry,45 the global medical tourism market reachedapproximately $60 billion in 2008, and was expected to grow to$100 billion by 2010.46 Over thirty-five countries serve more thanone million medical tourists annually. 47

Patients seek medical care abroad because of a lack of domesticaccess to a particular treatment or because a treatment is lessexpensive abroad than in their own countries. 48 These patients fallwithin three categories: (1) patients in developing countries seek-ing specialized or high-quality care in developing or industrializedcountries; (2) patients from industrialized countries seekingaffordable or alternative care in developing countries;49 (3)patients seeking medical services not offered in their home coun-tries due to moral or ideological reasons including abortion, fertil-ity treatments, and euthanasia. 50 Many destination hospitalsprovide greater incentives for foreign patients by obtaining accred-itation of quality care from the U.S.-based Joint Commission onAccreditation of Healthcare Organizations' (JCAHO) internationalarm, the Joint Commission International (JCI).51 Such accredita-tion signifies that a hospital meets uniform requirements estab-lished by international healthcare experts. 52 Additionally, manyforeign hospitals advertise that their physicians are U.S. board cer-tified or are trained at highly regarded U.S. medical schools.5 3

Just as with cross-border delivery of health services, many coun-tries engage at varying levels of offshoring and insourcing activities

44. DELOIrrE, supra note 11, at 6 fig. 5.45. Dana A. Forgione & Pamela C. Smith, Medical Tourism and Its Impact on the U.S.

Health Care System, 34 J. HEALTH CARE FIN. 27, 32 (2007).46. DELOTTE, supra note 11, at 6 fig. 5.47. Id.48. Nathan Cortez, Patients Without Borders: The Emerging Global Market for Patients and

the Evolution of Modern Health Care, 83 IND. L.J. 71, 77 (2008).49. Chanda, supra note 7, at 158.50. Puteri Nemie J. Kassim, Medicine Beyond Borders: The Legal and Ethical Challenges, 28

MED. & L. 439, 443 (2009); Levi Burkett, Comment, Medical Tourism: Concerns, Benefits, andthe American Legal Perspective, 28 J. LEGAL MED. 223, 229 (2007).

51. See The Joint Commission History, THE JOINT COMMISSION, 10-14, http://www.jointcommission.org/assets/I/18/JointCommissionHistory.pdf (last visited May 3, 2011)(explaining that JCAHO implements strict accreditation standards for all aspects of thehealthcare system, helping to create globally developed international standards for health-care, and details accredited hospitals against standardized national performancestandards).

52. See generally id. (detailing the various aspects of the development of the accredita-tion standards).

53. Burkett, supra note 50, at 230.

[Vol. 42


related to medical tourism. 54 With respect to the United States,foreign patients are drawn to the high-quality and specializedapproach of its healthcare system, while domestic patients aredriven away because of the system's high-costs relative to othercountries. 55 A 2008 Deloitte study estimated that by the end of2017, the United States will have treated approximately 561,000foreign patients. 56 In comparison, approximately 15.75 millionU.S. patients will have traveled abroad for treatment during thatsame time period.5 7 These cost-conscious consumers are drawn tocountries such as India, Thailand, and Singapore, which offer com-parable care for much lower prices-even as low as one-fifth ofU.S. prices. 58

Similar to the United States, other countries capitalize on theirmedical areas of specialty and market their services to attract for-eign patients; Latin American countries such as Brazil, Cuba, andMexico provide instructive examples. Brazil offers medical proce-dures, including cosmetic surgeries, at 40-50% of U.S. prices.5 9Cuba focuses on specialized hospitals offering high-quality care atcompetitive prices to target markets such as Latin America, theCaribbean, Europe, and Russia. 60 Mexico provides mainly dentaland cosmetic surgery at 25-35% of U.S. prices, and otherwise drawsU.S. patients due to its proximity. 61

In addition to Latin American countries, several Asian countrieshave emerged as pioneers in medical tourism. 62 Thailand is cur-rently regarded as the industry leader, successfully marketing its

54. See Herman, supra note 2, at 5-6, 9.55. See DELOITrE, supra note 11, at 5, 20.56. Id. at 21 fig. 19.57. Id. at 5 fig. 3. It is important to note that the Deloitte study does not indicate a

distinction between patients that obtain treatment only once or multiple times. Addition-ally, research on U.S. patient travel abroad has unearthed wide variations in estimates. SeeAMA COUNCIL OF MEDICAL SERVICES, MEDICAL TRAVEL OUTSIDE THE U.S. (2007), http://www.medretreat.com/templates/UserFiles/Documents/AMA%20Report%

2 0June% 2 02007.pdf. (estimating that 1.5 Million U.S. patients will have traveled abroad for medicalcare by 2020); How MANY AMERICAN MEDICAL TOURISTS ARE THERE?, INTERNATIONAL MEDI-CAL TRAVEL JOURNAL, http://www.imtjonline.com/articles/2009/how-many-americans-go-abroad-for-treatment-30016/ (last visited May 27, 2011) (noting extreme variations in esti-mates for U.S. patients traveling overseas by different institutions and studies).

58. See id. at 6 fig. 5.59. See id. at 6 fig. 5. As the U.S. dollar has traditionally been the default global cur-

rency, see Edieth Y. Wu, Recent Developments in the Currency War: The Euro, the Dollar, the Yen,and the Bemu, 15 CONN.J. INT'L L. 1, 12 (2000), the U.S. dollar will be used as a basis for thefollowing price comparisons and throughout this Article.

60. Chanda, supra note 7, at 158.61. DELOITrE, supra note 11, at 6 fig. 5.62. Burkett, supra note 50, at 226-28.

20101


hospitals to expatriates and foreign patients abroad.63 In 2006,Thailand treated 1.2 million foreign patients at an average of 30%of U.S. prices. 64 India is close on Thailand's heels and is the fastestgrowing medical tourist destination. 65 Patients from developedand developing countries are attracted to India for several reasons:specialty areas including neurology, cardiology, endocrinology,nephrology, and urology; surgical expertise; highly qualified medi-cal professionals; 66 and affordable treatment averaging at about20% of U.S. prices. 67 In Malaysia, foreign patients primarily visitfor cosmetic surgery and alternative medical care with treatmentaveraging at 25% of U.S. prices. 68

Recognizing the potential and profitability of medical tourism,several Asian governments have implemented new policiesdesigned to promote growth in this industry. In Korea, the govern-ment is involved in the planning stages of new medical facilitieswith international patients in mind.69 In Taiwan, the governmentpledged $318 million towards the development of medical ser-vices. 70 European countries also target their medical services topatients in neighboring and distant countries. Hungary attractsEuropean patients by offering dental and cosmetic surgery at 40-50% of U.S. prices.71 Several nations are attractive destinationsbecause they offer certain procedures unavailable in several sur-rounding European countries for moral reasons. 72 For instance,Norway permits euthanasia 73 and Slovenia performs fertilitytreatments.74

III. THE LEGITIMACY OF LITIGATION IN RESOLVING CROSS-BORDERMALPRACTICE CLAIMS ON A GLOBAL LEVEL

Notwithstanding the global reach of health services and theindustry's accompanying social and economic benefits, the indus-

63. Id. at 227.64. DELOrrTE, supra note 11, at 6 fig. 5.65. Cortez, supra note 48, at 90.66. Chanda, supra note 7, at 159.67. DELOIrrE, supra note 11, at 6 fig. 5.68. Id.69. Id. at 6.70. Id.71. Id.72. Kassim, supra note 50, at 443; Burkett, supra note 50, at 230.73. Kassim, supra note 50, at 444.74. Burkett, supra note 50, at 230.

[Vol. 42


try is far from reaching its full potential. 75 Herman's study ofOECD countries' trade in health services noted the discrepancybetween national and private healthcare expenditures and the rela-tively low trade in health services in relation to GDP.76 While theaverage ratio of total healthcare trade to GDP is 0.01% of totalGDP, the average ratio of national and private health expendituresto GDP rises well above 20%. 7 7 Furthermore, Herman notes thatwhile 80% of European-based health providers utilize advanced e-health infrastructures to store patients' data, only 0.7% of suchdata is transferred across national borders. 78 Thus, the lack of cor-respondence between these figures and the underutilization of e-health infrastructures point to the unmet capacity for internationaltrade in health services. 79

To account for such shortfalls, earlier scholarship in this areahas identified several trade barriers in the health services industry.These works note that the chief challenges for cross-border deliv-ery of health services include dissimilar licensing requirements formedical professionals and differing national and sub-national legalliability and regulatory regimes.8 0 Similar to the problems encoun-tered with cross-border delivery of goods and other types of ser-vices, the legal uncertainties of malpractice liability presents one ofthe major obstacles to medical tourism.s 1 Such legal limbo meritscloser examination, as health providers and consumers are hardpressed to find legal recourse resulting from differences in legaland regulatory regimes, and diverse cultural expectations.

8 2

Because the nationalities of the parties and the place of contractbreach or injury necessarily share no common situs, ambiguitiesabound surrounding appropriate jurisdiction, choice of law, and

75. See Thomas R. McLean, Telemedicine and the Commoditization of Medical Services, 10DEPAULJ. HEALTH CARE L. 131, 164 (2007).

76. Herman, supra note 2, at 6.77. Id. at 6-7.78. Id. at 7-8.79. Id.80. Kassim, supra note 50, at 448. It should be noted that in addition to trade barri-

ers, resistance to the globalization of health services may result from public policy consider-ations. Such a discussion is beyond the scope of this paper, but arguments againstglobalization include ethical considerations surrounding seeking treatment abroad forprocedures deemed illegal in one's home country, and unequal access to health care indeveloping countries as a result of a preference for foreign patients because of their abilityto pay more for services. Id. at 442-43.

81. Id. at 441, 445; McLean, supra note 75, at 164.82. Nathan Cortez, Recalibrating the Legal Risks of Cross-Border Health Care, 10 YALE J.

HEALTH POLY L. & ETHICS 1, 3-4 (2010).

2010]


enforceability of foreign awards.8 3 In order to understand thenature and scope of these legal barriers, this section will separatelyexamine the challenges for dispute resolution in (1) cross-borderdelivery of health services and (2) consumption of health servicesabroad.

A. Legal Barriers to Cross-Border Delivery of Health ServicesThe use of telemedicine across different national legal and regu-

latory regimes raises a variety of legal dilemmas. Two scenariosdemonstrate the difficulty in deciding which party should be heldliable, which judicial system has jurisdiction over the claim, whichlaws or regulations apply, and whether the selected laws or regula-tions adequately define the telemedicine transaction in question asmedical malpractice:8 4 (a) misdiagnosis or other injury by a health-care provider performing the telemedical service in a differentjurisdiction than where the patient is located; and (b) misdiagnosisor other injury resulting from technological error by telemedicaldevice, and not by human error.8 5 These matters are further com-plicated when including sub-national legal and regulatory regimesas part of the analysis. For example, many of the same issues arisewhen health services are delivered across state lines in the UnitedStates, as each state has the authority to regulate health profession-als who practice in their territories and differing procedural andsubstantive laws govern healthcare disputes in different states.8 6

Because no international agreements or protocols concerningtelemedicine exist there are no answers to the issues discussedabove. 7 The uncertainty exists because telemedicine is still toosmall and too new of an industry to attract international attentionand action.88 Irrespective of the reasons behind such neglect, busi-nesses and consumers suffer from higher transaction costs or forgoparticipation in cross-border trade of health services due to thelack of reliable legal remedies and protection.8 9

83. See id. at 4-7; Kassim, supra note 50, at 446-47.84. Singh & Wachter, supra note 35, at 1624.85. Kassim, supra note 50, at 447.86. See Gupta & Sao, supra note 4, at 113-16.87. Leah B. Mendelsohn, Comment, A Piece of the Puzzle: Telemedicine as an Instrument to

Facilitate the Improvement of Healthcare in Developing Countries?, 18 EMORY INT'L L. REv. 151,153 (2004).

88. Thomas R. McLean, The Offshoring of American Medicine: Scope, Economic Issues andLegal Liabilities, 14 ANNALS HEALTH L. 205, 248 (2005).

89. Kassim, supra note 50, at 441 (noting that "countries, like the United States, havenot been able to benefit as greatly from medical tourism because of increased legal liabilityand policy").

[Vol. 42


1. Potentially Liable Parties

In either of the liability scenarios described above, potentiallyliable parties may include a remote healthcare provider, any affili-ated local healthcare provider working in consultation or con-tracting with that remote healthcare provider,90 and the supplier ofthe telemedical device. 91 The ability of telemedicine to involve sev-eral parties in different locations and at varying capacities in thecourse of medical treatment complicates the nature and scope of adefendant's liability in malpractice claims.92 For instance, a plain-tiff pursuing a malpractice claim in the United States must prove,among other elements, that the defendant had a duty to thepatient arising out of a physician-patient relationship. 93 The depar-ture from the traditional face-to-face physician-patient relationshipin telemedical care makes it difficult to determine when such dutyarises and whether the standard of care is violated. 94

State case law from the United States has established that a physi-cian-patient relationship begins "[w] hen the professional servicesof a physician are accepted by another person for the purposes ofmedical or surgical treatment."95 In general, state courts interpretthis standard to mean that such a relationship is based primarily onimplied or express contract.96 If a patient goes to a local hospitalfor treatment, and that hospital outsources pathology services to anoffshore healthcare provider, it is unclear which parties haveformed a physician-patient relationship. 97 Another similardilemma may occur where a local hospital utilizes a telemedicaldevice that may be supplied by an offshore entity that treats apatient without the aid of any human assistance. While in theUnited States the "ostensible agency" doctrine may apply-makingthe hospital liable for acts of offshore healthcare providers-thelack of well-established case law leaves this question unanswered. 98

90. Heather L. Daly, Telemedicine: The Invisible Legal Barriers to the Health Care of theFuture, 9 ANNALS HEALTH L. 73, 99-101 (2000).

91. Id. at 100.92. Id.93. Id.94. Id.95. 1 STEVEN E. PEGALIS & HARVEY F. WACHSMAN, AMERICAN LAW OF MEDICAL MALPRAC-

TICE 24 (2d ed. 1992).96. Id. at 25.97. Singh & Wachter, supra note 35, at 1624.98. Id. The above considerations in determining an appropriate liable party similarly

apply to health care providers seeking to minimize their liability while engaging in cross-border telemedicine. In addition to facing such legal uncertainties, these health care prov-iders have the additional burden of finding malpractice insurers willing to cover such activ-

2010]


2. Determining Appropriate Jurisdiction to Litigate and Enforcea Claim

In addition to determining which parties are liable, the injuredparty has the challenge of selecting the appropriate forum that willlitigate and enforce the claim. The selected court must have juris-diction over the claim, as jurisdiction grants the court authority toprescribe, adjudicate, and enforce judgments against persons andproperty.99 Presently, the available options in countries such as theUnited States are legal proceedings in (1) plaintiff's domicile stateor (2) defendant's domicile state. A party's domicile is "the statewhere an individual habitually resides, or the state where a com-pany or legal person has its 'seat' or center of management."' 100 Asthe analysis below demonstrates, each option presents its own set ofdifficulties and uncertainties.

a. Establishing Jurisdiction in Plaintiffs Domicile StateShould the plaintiff decide to sue in his own domicile state, he

must be able to assert personal jurisdiction over the defendant andensure that any favorable judgment rendered will be enforced.' 01This requirement presents several difficulties for plaintiffs. Notonly do common and civil law countries have different approachesto asserting personal jurisdiction, but countries from either legalsystem also may make different determinations because of theirinterpretation of the laws in question.1 02 In civil law countries, adefendant may be sued in his domicile and in any jurisdictionwhere he commits a tort. 03 This guiding principle elicits a varietyof interpretations, with some national laws broadening its meaningto include an injury sustained by a plaintiff within a jurisdictionwhile others restrict its application to the act of committing atort.10 4 This distinction is crucial in telemedicine disputes where aforeign healthcare provider renders a telemedical service in a dif-ferent location than where the plaintiff suffers an injury resultingfrom that service. Additionally, some civil law countries have

ities with unknown risks. See Daly, supra note 90, at 99-100; Singh & Wachter, supra note35, at 1624.

99. RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES 401(1987).

100. Gary B. Born, Reflections on Judicial Jurisdiction in International Cases, 17 GA. J. INT'L& COmP. L. 1, 13 (1987).

101. Singh & Wachter, supra note 35, at 1624.102. See, e.g., Born, supra note 100, at 14.103. Id. at 13.104. Id. at 13-14.

[Vol. 42


enacted legislation broadening their reach of personal jurisdic-tion.' 05 In France, the French Civil Code grants its courts thepower to hear any case involving a French citizen. 10 6 Similarly,Luxembourg and the Netherlands grant their courts jurisdictionover almost all cases where parties are nationals or residents.

10 7

In comparison to civil law countries, their common law counter-parts adopt a flexible multi-factor approach to establish personaljurisdiction.108 Unlike the civil law reliance on territoriality, thecommon law system considers the principles of fairness and reason-ableness by examining the quantity and quality of contacts betweenthe defendant and forum state.109 The test utilized by U.S. courtsis a representative example, as it requires a finding of the followingthree elements: (1) the plaintiffs state has a long-arm statuteallowing for personal jurisdiction; (2) the defendant has minimumcontacts with the plaintiffs state, as evidenced by foreseeability ofliability and "purposeful availment" of the privileges and protec-tions of the laws of that state; and (3) the exercise of personal juris-diction is reasonable and does not violate "traditional notions offair play and substantial justice" guaranteed under the Due ProcessClause of the Fourteenth Amendment of the U.S. Constitution.

110

This test, like the civil law approach, is open to different interpreta-tions and offers no reliable outcome to either party in atelemedicine claim.11'

Even if a plaintiff succeeds in asserting the claim in his domicilestate, the defendant may utilize the common law doctrine of forumnon conveniens to dismiss the claim.11 2 Forum non conveniensempowers courts to dismiss cases under particular circumstances,and common law countries apply the doctrine differently from one

105. Id. at 14.106. Id.107. Id.108. Paul R. Dubinsky, Human Rights Law Meets Private Law Harmonization: The Coming

Conflict, 30 YALEJ. INT'L L. 211, 259-60 (2005).109. Id. at 260.110. See, e.g., Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-79 (1985); Hanson v.

Denckla, 357 U.S. 235, 251-53 (1958); World-Wide Volkswagen Corp. v. Woodson, 444U.S. 286, 291-98 (1980); Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 108-13(1987).

111. Several other common law countries have statutes governing transnational tortclaims. For instance, Great Britain asserts personal jurisdiction on a foreign defendant ifthe tort is committed within its territory. Born, supra note 100, at 12. As discussed above,the nature of several telemedical services in which several parties are involved in differentcapacities and locations makes it difficult to determine where the tort was committed.

112. See generally Martine Stfickelberg, Lis Pendens and Forum Non Conveniens at the HagueConference, 26 BROOK. J. INT'L L. 949, 954-95 (2001).

2010]


another.1 13 For example, Great Britain employs a two-step analysisthat first requires the defendant to prove that another appropriateforum is available and second that under the circumstances justicedemands jurisdiction of a British court. 114 In the United States,courts afford plaintiff domicilairies the presumption of conve-nience,115 but employ the doctrine after a finding that the defen-dant will experience an undue burden and an alternative, moreappropriate forum exists. 1 6 Thus, the existence and application ofsuch a doctrine present another barrier to the adjudication of theclaim in a plaintiff's domicile.

Furthermore, it is important to consider the existence of anycommercial or civil agreements that a country is a party to, as suchmembership may impact its rules regarding jurisdiction in relationto fellow member states. The Brussels Convention on the Jurisdic-tion of Courts and the Recognition and Enforcement ofJudgmentsin Civil and Commercial Matters (Brussels Convention), whichonly permits E.U. countries as members, is an instructive exam-ple. 117 The Brussels Convention prohibits a member state fromemploying "'exorbitant' jurisdictional devices" against defendantsdomiciled in fellow member states 1 8 and mandates enforcementof judgments rendered by fellow member state courts.' 19 Theserestrictions compelled common law member states such asEngland and Ireland to abandon their exercise of jurisdictionbased on serving process to a defendant member-domiciliary whilehe was physical present in their territories. 120

Consideration of agreements such as the Brussels Convention isalso important for enforcement of awards against a foreign defen-dant. Absent such regional agreements, no general consensusexists among countries to enforce each other's court-issueddecrees.' 21 The first international agreement on enforcement offoreign judgments, adopted by the 1971 Hague Conference, failed

113. Id. at 955.114. Id. at 955-56.115. Id. at 956.116. Cortez, supra note 82, at 11.117. Born, supra note 100, at 15.118. Id.119. Id. at 16.120. Dubinsky, supra note 108, at 258-59.121. StTackelberg, supra note 112, at 952. In addition to the Brussels Convention, other

regional agreements such as the Lugano Convention and the Inter-American Conventionon the Extraterritorial Validity of Foreign Judgments and Arbitral Awards commit memberstates to automatic enforcement of commercial and civil judgments. Id.

[Vol. 42


as it was ratified by only three countries. 122 Such overwhelmingrecalcitrance is owed to wariness by most countries in automaticallyenforcing a foreign decree without domestic judicial review. 123 Inthis respect, membership in regional agreements offers the advan-tage of enforcement of judgments against both member-domicil-iaries and non-member domiciliaries, in the event a member statecourt rendered the judgment.124

b. Establishing Jurisdiction in Defendant's Domicile State

In contrast with the effort to sue a defendant in a plaintiff's dom-icile state, no jurisdictional issues bar adjudication of a claim in adefendant's domicile state. Civil law countries consider a defen-dant's domicile to be a basis for jurisdiction for disputes involvingdomestic and international parties. 125 Similarly, in common lawcountries, the physical presence of the defendant or the defen-dant's property within its territories is sufficient to exercise jurisdic-tion. 126 A defendant domiciliary's use of forum non conveniensfor dismissal may, however, curtail the relative ease in bringingforth a claim in this forum.' 27

In the United States, defendant domiciliaries routinely and suc-cessfully employ this doctrine to dismiss tort claims by foreignplaintiffs. 128 Unlike a U.S. plaintiff domiciliary, a foreign plaintiffsforum selection is not given the presumption of convenience but isviewed as a strategic choice of law preference. 129 As a result, anoverwhelming number of forum non conveniens motions aregranted in situations where the alleged injury occurred in anothercountry. 1 0 This widespread practice provides a warning for pro-spective plaintiffs seeking to sue healthcare providers domiciled incommon law countries, particularly the United States.

13'

122. Id.123. Id.124. Born, supra note 100, at 16.125. Developments in the Law: State-Court Jurisdiction, 73 HARV. L. REV. 911, 913 (1960).126. Id. at 915.127. See generally Walter W. Heiser, Forum Non Conveniens and Retaliatory Legislation: The

Impact on the Available Alternative Forum Inquiry and on the Desirability of Forum Non Conveniensas a Defense Tactic, 56 KAN. L. REV. 609 (2008) (discussing how U.S. defendants are usingthe doctrine of forum non conveniens to dismiss lawsuits filed against them in the UnitedStates and how foreign countries are enacting retaliatory legislation to this U.S. practice).

128. Id. at 609.129. Id. at 613.130. Id. at 609.131. Plaintiffs must consider that medical malpractice claims are a subset of tort law

and the nature of telemedical services makes the location of injury a subject of dispute.The potential impact of a defendant domiciliary's use of forum non conveniens in other

2010]


In the event that a foreign plaintiff successfully brings suit in adefendant's domicile court, the plaintiff may face additional chal-lenges. Foreign patients will not only have to navigate an unfamil-iar legal system, but also adjust their cultural expectations to theforum state's remedies and procedures. 32 In particular, thosepatients hailing from industrialized countries are likely subject tomore onerous burdens of proof and relatively inadequate legalprotection afforded by developing countries.' 33 As a consequence,such challenges and shortcomings make litigation an undesirablesolution for many consumers.

3. Choice of Law and Adequacy of Existing Laws

In addition to identifying the appropriate liable parties and juris-diction, telemedicine disputes are complicated by choice of lawconsiderations and determinations of whether the selected law inquestion adequately resolves the legal issues raised bytelemedicine. There is no uniform approach to choice of lawdeterminations, as courts follow the particular rules adopted bytheir jurisdictions.13 For instance, Great Britain applies the lex locidelicti rule-the law of the place of injury governs the dispute-specifically applying the rule to personal injury and deathclaims. 135 In contrast, a minority of states in the United States fol-low the lex loci delicti rule, but the majority has adopted the "mostsignificant relationship" rule for tort claims, requiring a court tochoose whichever law has the "most significant relationship to theoccurrence and parties."'1 6 Factors include: place of injury; placeof conduct causing injury; parties' domiciles, residence, national-ity, place of incorporation, and place of business; and place whererelationship between the parties is centered.13 7 The ambiguitiessurrounding how telemedicine fits within the practice of medicine

countries is plausible, particularly because of the actions of several countries in response toU.S. forum non conveniens dismissals. See id. at 610. For instance, several countries haveenacted legislation barring their courts from hearing any action from domiciliary partiespreviously dismissed on forum non conveniens grounds by another country. Id.

132. Cortez, supra note 82, at 5.133. Cortez, supra note 48, at 106.134. See William Tetley, New Development in Private International Law: Tolofson v. Jensen

and Gagnon v. Lucas, 44 AM.J. CoMP. L. 647, 659-65 (1996) (comparing tort choice of lawrules in Canada to choice of law determinations in the United Kingdom, the United States,Australia, France, Switzerland, the European Union, Louisiana, and Quebec).

135. Id. at 659.136. Id. at 661-62.137. Id. at 662.

[Vol. 42


and the occurrence of injury allow for open-ended and contradic-tory interpretations of the outcomes of these tests.

As alluded to earlier, only a handful of legal regimes haveaddressed telemedicine licensure and governance. 138 While morethan half of U.S. states have addressed telemedicine licensing, 139the international community is woefully behind-Malaysia is theonly country with a comprehensive telemedicine regime. 140 Malay-sia's Telemedicine Act of 1997 (Telemedicine Act) providesdetailed guidelines for telemedicine licensure and informed con-sent. 41 However, with the exception of informed consent require-ments, these laws fail to address the legal liability considerationsdiscussed above. 142 Furthermore, because no Malaysian courtshave decided any medical malpractice cases involvingtelemedicine, there are no interpretations or applications of theintent and parameters of the Telemedicine Act. 143

Such gaps and inconsistencies in telemedicine regulation at sub-national, national, and international levels complicate a court'sapplication of the facts of telemedicine cases to traditional mal-practice frameworks. As discussed above, 144 it is unclear whether aphysician-patient relationship arises from performance of atelemedical service. 145 Another area of legal ambiguity lies in theappropriate standard of care, as it is unclear whether technologicalinnovations and practices associated with telemedical servicesshould change such a standard or if courts should create a newstandard. 46 In the United States, the standard of care for onlinetreatment by physicians in a medical malpractice case is still unde-fined by many states. 147 Other issues include whether the duty of

138. See supra Part III.A.1.139. See Telemedicine Licensing Provisions by State, AM. C. OF RADIOLOGY, http://www.acr.

org/SecondaryMainMenuCategories/GR_- Econ/FeaturedCategories/state/state issues/TelemedicineLicensingProvisionsbyStateDoc8.aspx (last visited May 11, 2011).

140. Hsing-Hao WNu, Evolving Medical Service in the Information Age: A Legal Analysis ofApplying Telemedicine Programs in Taiwan, 27 MED. & L. 775, 784 (2008) (noting that Malay-sia's telemedicine law "specifically addresses legal issues concerning telemedicine, such aslicensure, informed consent and telemedicine, standard development").

141. See id.; Kassim, supra note 50, at 447 n.32.142. See Kassim, supra note 50, at 447.143. Id.144. See supra Part III.A.1.145. See Kassim, supra note 50, at 447.146. Id.147. Some states follow the FSMB's view that online treatment warrants the same stan-

dard of care as in-person treatment, and that sole use of an online questionnaire is unac-ceptable. See FED'N OF STATE MED. BDS. OF THE U.S., MODEL GUIDELINES FOR THEAPPROPRIATE USE OF THE INTERNET IN MEDICAL PRACTICE (2002), available at http://www.fsmb.org/pdf/2002-grpol-use-of-internet.pdf.

2010]


confidentiality and informed consent extends to telemedicalservices. 148

B. Legal Barriers to Consumption of Health Services AbroadMany of the legal barriers surrounding telemedical service

claims also impede successful adjudication of and recovery frommedical tourism malpractice claims. Just as with cross-borderteleiedicine service claims, no international regime exists for legalremedies resulting from unsatisfactory cross-border medicalcare. 149 The analysis below highlights the challenges that partiesconfront.

1. Potentially Liable Parties

There are several potential liable parties in a medical tourismclaim: foreign healthcare providers, 150 intermediaries, employers,and insurers. 15 1 Just as with cross-border telemedicine claims, how-ever, a plaintiff must overcome personal jurisdiction and forumnon conveniens challenges, which are discussed more fully belowwithin the context of medical tourism.

While procedural legal barriers impede pursuit of a foreignhealthcare provider defendant, the difficulty of finding and prov-ing theories of liability impede pursuit of the remaining potentialdefendants. 15 2 In the United States, intermediaries that serve asfacilitators for overseas care, employers, and insurers may be liablefor corporate negligence or failure to obtain informed consent.'53

For both of these claims, the difficulties in obtaining evidence in aforeign country and differences in regulatory and credentialingstandards between parties' countries make proving such claims adaunting enterprise. 54 In Great Britain, case law establishes nonon-delegable duty to patients, leaving no theory of liability inclaims against this insurer. 155 As a result, injured British patientsmust seek legal recourse against the place of treatment. 15 6

148. Kassim, supra note 50, at 447; see Singh & Wachter, supra note 35, at 1624.149. Kassim, supra note 50, at 445.150. Cortez, supra note 82, at 9. Foreign health care providers are logical defendants

because the injury causation and circumstances of treatment meet the elements of tradi-tional malpractice frameworks.

151. See id. at 9-19.152. See id.153. See id. at 15-18.154. Id.155. See Terry, supra note 36, at 464.156. Id.

[Vol. 42


Finally, charitable and government immunity for heath careinstitutions is another category of potential barriers worth not-ing.157 In the United States, state charitable immunity shields non-profit entities from liability under circumstances in accordancewith the relevant state law in question.158 As examples, some statecourts restrict immunity to nonpaying patients while others allowrecovery from non-trust hospital assets.' 59 In comparison, govern-ment immunity requires a government's consent in order to besued.1 60 In the United States, recent case law has shown theseimmunities have limited success as defenses for eligible parties. 16

2. Determining Appropriate Jurisdiction to Litigate and Enforcea Claim

As discussed above, an injured party may pursue a claim against aforeign healthcare provider in his domicile state or the defendant'sdomicile state. 162 Should a plaintiff choose his domicile state, hefaces the same challenges of establishing personal jurisdiction,defeating forum non conveniens motions, and enforcing anyfavorable judgments in a foreign court.163 These issues are unlikelyto arise if suit is brought in defendant's domicile, as issues regard-ing place of injury and whether it is in the chosen forum's interestare well settled.164 The major drawbacks to this second option,however, are similar to the challenges of defending a cross-bordertelemedicine claim in a foreign court.165

3. Determining Choice of Law

Even after jurisdiction is established, parties to the dispute mustaddress the additional challenge of choice of law determinations.Depending on the laws of the countries involved, a court's selec-tion may be pivotal in deciding the outcome and remedies availa-

157. SeeJohn F. Bales, III & Lisa A. DeMarco, Selected Topics in Medical Malpractice Litiga-tion, in HEALTH CARE. LAW 448 (BennettJ. Yankowitz & Richard A. Feinstein eds., 1993).

158. See id. at 449.159. Id. at 450.160. Id. at 449.161. See id. at 451.162. See supra Part III.A.2.163. See supra Part III.A.2.a.; Cortez, supra note 82, at 9-14 (discussing the challenges of

forum non conveniens and establishing personal jurisdiction). Cortez observes that thedearth of U.S. case law renders it unclear whether medical tourists can recover in U.S.courts. Id. at 8. Cortez speculates that the absence of such case law is due to private, out-of-court settlements. Id.

164. See Developments in the Law: State-Court Jurisdiction, supra note 125, at 913.165. See supra Part III.A.2.b.

2010]


ble. 166 As discussed earlier, each court adopts a different approachto determining choice of law.' 67 In the context of medical tourismclaims, the U.S. case Chadwick v. Arabian American Oil Co. demon-strates the dispositive impact choice of law. 168 In Chadwick, a Dela-ware district court followed the lex loci delicti rule in a medicalmalpractice claim by a U.S. plaintiff against a Saudi Arabian oilcompany incorporated in Delaware. 169 The plaintiff argued thedefendant was vicariously liable for malpractice committed by thedefendant's physician in Saudi Arabia. 70 The court used SaudiArabian law because of its adherence to the lex loci delicti rule anddismissed the action because Saudi law did not recognize vicariousliability.' 71

Furthermore, the differences in legal remedies and awardamounts among countries add to the uncertainty and stress of thelitigation process for the foreign plaintiff. For instance, Thailand'saverage recovery amount is $2500172 and its courts do not awardpain and suffering damages. 173 In contrast, the mean and medianrecoveries for successful U.S. malpractice plaintiffs are $311,000and $175,000 respectively.17 4 Such variations in substantive lawsand legal remedies not only further affirm the uncertainties associ-ated in pursing a cross-border malpractice claim using traditionaljudicial systems, but also the tremendous investment in money andtime of such a process.

IV. ARBITRATION AS AN APPROPRIATE INTERNATIONAL DISPUTERESOLUTION MECHANISM FOR CROSS-BORDER

HEALTH SERVICES CLAIMS

As demonstrated earlier, the fluid and changing nature of theinternational health services industry continues to create legaldilemmas and ambiguities that escape existing legal protectionsand remedies afforded by traditional judicial frameworks. Rigidjurisdictional and choice of law approaches are ill-equipped to

166. See Cortez, supra note 82, at 13.167. See supra Part III.A.3.168. See Cortez, supra note 82, at 13; Kassim, supra note 50, at 445-46.169. See Chadwick v. Arabian Am. Oil Co., 656 F. Supp. 857, 858 (D. Del. 1987).170. See id. at 858-59.171. See id. at 858-60. Scholars have also criticized other countries' laws relating to

malpractice, observing that countries such as Malaysia and Singapore have biased stan-dards that favor physicians in proving medical negligence. Kassim, supra note 50, at 446.

172. Cortez, supra note 82, at 4.173. Kassim, supra note 50, at 446.174. Cortez, supra note 82, at 4.

[Vol. 42


resolve disputes arising from the cross-border movement of peopleand health services.1 75 Existing substantive legal principles have yetto provide adequate theories of liability for injuries and damagesarising from innovations in medical care and delivery of health ser-vices. 176 Such legal uncertainties and ambiguities call for a uni-form means of redress that is more flexible and predictable thanlitigation in a courtroom. Given such needs, arbitration offers apotential solution. Arbitration, a form of alternative dispute reso-lution (ADR), has been successfully utilized on an internationallevel, 177 is more efficient and adaptive to changes in the health ser-vices industry than litigation and has the authority and bindingforce of a court decree.178 The analysis below will serve two pur-poses: (1) discuss additional concerns with the existing medicalmalpractice system; and (2) analyze the potential of arbitration asan international framework for resolving medical malpracticeclaims.

A. Medical Malpractice Litigation Is an Inefficient and IneffectiveMethod of Deterrence and Compensation in

the International Sphere

The process of medical malpractice litigation is not only toocostly and inefficient,1 79 but also poorly compensates injuredpatients.180 Only about forty cents out of every dollar paid in mal-practice insurance premiums goes to injured patients while theremainder goes towards administrative and litigation expenses. 81

Additionally, for every dollar an injured patient receives in com-pensation, fifty-four cents goes towards administrative expenses.1

8 2

In addition to inefficient allocation of costs and compensation,medical malpractice litigation is biased against patients and dis-courages them from bringing claims.'8 3 For example, epidemio-logical studies of medical injury and malpractice claims indicate

175. See supra Part III.176. Id.177. See Martha Neil, International Arbitration Has Become a Lucrative Field After Decades of

Disfavor, ABAJ., Sept. 2002, at 28, 28.178. See Keith Maurer, Mediation, Arbitration, and "I'm Sony" Programs, 47 FOR THE DEF.

37, 37-38 (2005).179. See Cortez, supra note 82, at 20.180. THE SYNTHESIS PROJECT, RESEARCH REP. No. 8, UNDERSTANDING MEDICAL MALPRAC-

TICE INSURANCE: A PRIMER 7 (2006) [hereinafter SYNTHESIS PROJECT], available at http://www.rwjf.org/pr/synthesis/reportsand-briefs/pdf/noO_primer.pdf.

181. Id.182. Cortez, supra note 82, at 20.183. See SYNTHESIS PROJECT, supra note 180, at 7.

2010]


that only about 2% of injuries due to medical negligence becomemalpractice claims.184 Also, the Institute of Medicine estimatesthat between 44,000 and 98,000 U.S. patients die in hospitals asresult of preventable medical errors, but a vast majority of thesepatients' families do not sue. 8 5 Furthermore, defendants prevailin most cases. 186 In the United States, juries overwhelmingly findin favor of physicians at a rate of nearly 80%. 187

Finally, medical malpractice litigation fails to deter negligentcare because it does not address medical error.188 An at-faulthealthcare provider experiences no financial set-back from anycompensation owed to an injured patient, as that provider's insur-ance carrier (1) is responsible for defending and/or settling theclaim; (2) compensates the patient for damages or settlementamount; and (3) does not raise the premium resulting from anyclaims against that provider. 189 Insurers base healthcare providerpremiums primarily on geographical region of practice rather thanincidence of malpractice. 190 The absence of any financial penaltyarising from fault also diminishes the effectiveness of other deter-rent measures, such as the requirement to report insurance pay-ments of claims to the National Practitioner Data Bank.1 1

B. The Domestic Use of Alternative Dispute Resolution in MedicalMalpractice Claims Supports the Viability of an Arbitration

Framework Across BordersIn addition to the inefficiencies and ineffectiveness of medical

malpractice litigation, the current use in several countries of ADRin medical malpractice claims supports reconsideration of the useof traditional judicial frameworks.192 The primary forms of ADR inquestion are mediation and arbitration.1 9 3 Mediation involves aneutral third party, known as a mediator, who facilitates negotia-tions between parties to a dispute but has no authority to render a

184. Id.185. Cortez, supra note 82, at 19.186. Kenneth A. DeVille, The Jury Is Out: Pre-Dispute Binding Arbitration Agreements for

Medical Malpractice Claims, 28J. LEGAL MED. 333, 368 (2007).187. Id.188. See SYNTHESIS PROJECT, supra note 180, at 7.189. Bales & DeMarco, supra note 157, at 392.190. Id. at 392.191. Id. at 393.192. See infra Part IV.B.1.193. See Katherine Benesch, The Increasing Use of Arbitration and Mediation in Adjudicat-

ing Healthcare Cases, N.J. LAw., Apr. 2007, at 28, 28.

[Vol. 42


decision. 194 In comparison, arbitration is a private streamlinedadjudication process involving a neutral third party, known as anarbitrator, whose role is similar to that of a judge-ensuring com-pliance with procedural rules and rendering an enforceable judg-ment.195 Unlike litigation, parties to the dispute contractuallyagree to a set of procedural and substantive rules to govern theprocess and to decide who will serve as an arbitrator.

1 96

1. National and Sub-National Governments' MeasuresPromoting the Use of ADR

Several national and sub-national governments have enacted leg-islation or established administrative agencies encouraging or man-dating the use of ADR.197 In the United States, governments areincreasingly recognizing arbitration as a legitimate dispute resolu-tion alternative to medical malpractice litigation. 19 Federal andstate judicial systems encourage the resolution of healthcare casesby ADR, as courts direct cases to these forums with parties' con-sent.199 Additionally, when parties enter into a written contractwith an arbitration clause and one party seeks litigation, most fed-eral courts return the case to arbitration.200 When the arbitrationclause is upheld and an arbitration organization is identified in thecontract, that organization's rules and procedures will govern theclaim. 20 1 A variety of arbitration organizations with a nationalreach are able to preside over these cases, including: National Arbi-tration Forum, American Health Lawyers Association, AmericanArbitration Association (AAA), and Judicial Arbitration and Media-tion Services. 202

In addition to federal and state courts encouraging ADR overlitigation, some state legislatures have gone an extra step in enact-ing laws requiring medical malpractice claims to be arbitrated, or

194. Maurer, supra note 178, at 37.195. Id.196. William S. Fiske, Comment, Should Small and Medium-Size American Businesses

"Going Global" Use International Commercial Arbitration ?, 18 TRANSNAT'L LAw. 455, 458 (2005).197. See, e.g., Nancy M. Simone, Medical Malpractice Litigation: A Comparative Analysis of

the United States and Great Britain, 12 SUFFOLK TRANSNAT'L L.J. 577, 597 (1989); Cortez, supranote 82, at 23-24.

198. Simone, supra note 197, at 597.199. Benesch, supra note 193, at 29. These referred cases must be governed by rules of

the jurisdiction in which they were filed. Id.200. Id.201. DeVille, supra note 186, at 338.202. Id. at 337.

20101


for arbitration panels to include physicians. 203 The MarylandHealth Care Malpractice Claims Act, for example, requires court-ordered mediation or mandatory arbitration. 204 According to thestate's legislators, the reasoning behind such legislation is four-fold: (1) prevent non-meritorious claims in litigation because weakclaims are exposed in arbitration; (2) promote settlement of meri-torious claims because arbitration encourages settlement; (3) pro-mote accuracy in decisions because arbitration leads to moreaccurate decisions; and (4) promote predictability because arbitra-tion awards are more predictable and reasonable. 205 Arbitration isrequired in medical injuries in which a healthcare provider isinvolved. 20 6 A panel comprised of a lawyer, a healthcare provider,and a lay person presides over the claim. 20 7

Some governments go beyond promoting or mandating privateADR and establish administrative agencies as an alternative to liti-gation. India's 1986 Consumer Protection Act (the Act) led to thecreation of Consumer Disputes Redressal Agencies (consumerforums), which offer cheaper and faster non-judicial forums vestedwith the legitimacy of courts.208 These consumer forums includeadjudication of medical malpractice claims and allow patients tosue private and public physicians for negligent care.2 09 Empow-ered with the same capacity as a civil court, these consumer forumsoperate similar to judicial proceedings, but with a panel of mem-bers with judicial and nonjudicial backgrounds rendering deci-sions in place of a jury.210 While these consumer forums weredesigned by the respective governments to resolve a claim withinapproximately half a year, the forums usually resolve a claim withintwo to three years-much faster than other methods of claim reso-lution.211 Additionally, India's consumer forum framework may bemore effective in deterring negligent care than traditional mal-practice litigation because the forums publish decisions on the

203. Christopher J. Marchand, Arbitration and Long-Term Health Care, MD. B.J., July/Aug. 2005, at 32, 35.

204. See id. at 34, 36.205. Id. at 35.206. Id.207. Id.208. See Cortez, supra note 82, at 23 (noting that consumer forums were "intended to

create a fair, efficient alternative").209. Id. at 26.210. Id. at 24-25.211. Id. at 27. Relative to the ten-year or more recovery period in India's litigation

system and the U.S. recovery period of four to five years for malpractice claims, such adelay is arguably a relatively minor weakness of this system. Id. at 24, 27.

[Vol. 42


Internet, alerting consumers to healthcare providers with adversejudgments against them.212

The major criticisms of these consumer forums lie in the pecu-liar challenges patients face in proving malpractice 213 and thesmall compensation awards the consumer forum panels dis-pense.214 India's healthcare community makes it difficult forpatients to obtain experts willing to testify to a colleague's negli-gence and to retrieve from local hospitals medical records and rel-evant information related to their treatment.215 While this critiquemay be valid, the observation that recovery awards are inadequateto satisfy expectations of those from industrialized countries maybe off-set by the fact that these awards correspond with India's lowcosts of medical treatment. 216

Great Britain offers an instructive example of a governmentimplementing administrative agencies for the purposes of deter-ring negligent care.21 7 One of these agency forums is the HospitalComplaints Procedure, which offers a statutory remedy for patientsbringing medical injury claims before a consultant or regionalmedical officer.218 This procedure enables patients to express con-cerns and prevent similar future injuries.21 9 Another notable Brit-ish forum is the General Medical Council, which deals with seriouscomplaints and enables patients to seek sanctions against healthcare providers. 220 Although it must be noted that British patientsmay be unlikely to sue because their taxes go towards the cost ofhealth care, 221 the administrative process of addressing patientconcerns and the implementation of sanctions are worth consider-ing as part of a potential overarching international health serviceslegal regime.

2. Non-Government Actors' Preference and Use of ADR

In parallel with government efforts to promote ADR as a methodfor dispute resolution, several businesses and consumers in the

212. See Recent Consumer Court Decisions-Part 1 2011, CONSUMER LAW INDIA (Feb. 10,2011), http://consumerlaw.in/recent-consumer-court-decisions-part-l- 2 011/, for an exam-ple of a forum decision published on the Internet.

213. Cortez, supra note 82, at 28.214. Id. at 31.215. Id. at 28-29.216. Id. at 23.217. Simone, supra note 197, at 593.218. Id. at 592-93.219. Id. at 593.220. Id. at 594-95.221. Id. at 590.

2010]


healthcare industry have contractually consented to arbitration as ameans of redress. 222 A notable example is Kaiser Permanente (Kai-ser), a California-based nonprofit health management organiza-tion (HMO), which has mandated arbitration among its memberssince 1971.223 To further encourage speed and efficiency, Kaiserpays for neutral arbitrators' fees and expenses when claims aregreater than $200,000, claimants waive their state statutory right tothree arbitrators and waive objection to Kaiser paying these fees. 224As of 2009, Kaiser paid for these fees in 85% of cases. 225 In thesame year, 91% of these cases were medical malpracticedisputes. 226

The most recent annual report on Kaiser's arbitration system,conducted in 2009, revealed that a majority of participants, includ-ing neutral arbitrators and parties to the dispute, felt the process"was better than going to court."227 The time frame for disputeresolution averaged twelve months, 228 in comparison to the four tofive year average for payouts from litigation in the United States. 229Just as significantly, Kaiser compensated half its claimants by set-tling the dispute in a majority of these cases, with a median awardof $377,589.230 In comparison, a 2006 National Practitioner DataBank report calculated that the median award arising out of litiga-tion was $175,000 per patient.2 31

Furthermore, it is significant to note that arbitration and media-tion are common in business-to-business disputes in the healthcareindustry.232 Business entities such as healthcare providers, payors,

222. See, e.g., OFFICE OF THE INDEP. ADM'R, FIRST ANNUAL REPORT OF THE OFFICE OF THEINDEPENDENT ADMINISTRATOR OF THE KAISER FOUNDATION HEALTH PLAN, INC. MANDATORYARBITRATION SYSTEM FOR DISPUTES WITH HEALTH PLAN MEMBERS: MARCH 29, 1999 - MARCH28, 2000, at 1 n.1 (2000) [hereinafter FIRST ANNUAL REPORT], available at http://www.oia-kaiserarb.com/oia/Forms%20&%20Reports/annrptyrl

.PDF.223. Id. In 1997, Kaiser handed administrative control of its arbitration process to an

independent body in response to a California Supreme Court decision that cited Kaiser'sself-administration approach as the source of undue delay in resolving claims. Id. at i.

224. Id. at 24.225. OFFICE OF THE INDEP. ADM'R, ELEVENTH ANNUAL REPORT OF THE OFFICE OF THE

INDEPENDENT ADMINISTRATOR OF THE KAISER FOUNDATION HEALTH PLAN, INC. MANDATORYARBITRATION SYSTEM FOR DISPUTES WITH HEALTH PLAN MEMBERS: JANUARY 1, 2009 - DECEM-BER 31, 2009, at i (2010) [hereinafter ELEVENTH ANNUAL REPORT], available at http://www.oia-kaiserarb.com/oia/Forms/2009%2OAnnual%2OReport.pdf.

226. Id. at 12.227. Id. at i.228. Id. at iv.229. Cortez, supra note 82, at 27.230. ELEVENTH ANNUAL REPORT, supra note 225, at iii.231. Cortez, supra note 82, at 19.232. Benesch, supra note 193, at 28.

[Vol. 42


managed care plans, and other health-related companies are typi-cal participants. 233 Healthcare lawyers trained and experienced inarbitration and mediation handle many large healthcare disputesinvolving, but not limited to, large reimbursements, managed care,and complex healthcare contract disputes. 234 Business-to-con-sumer disputes related to long-term care are also common in thissub-sector of the health industry.23 5 Thus, the familiarity that somany players have in the healthcare industry with arbitration andmediation lends support to the feasibility and success of transfer-ring business-to-consumer medical malpractice claims to theseforums.

C. Arbitration of Cross-Border Medical Malpractice Claims Offers anEfficient and Effective Method to Achieve Public Policy Goals

In addition to government support and familiarity among par-ticipants in the healthcare industry with ADR, this section willdemonstrate that arbitration has the potential to achieve the publicpolicy goals of accurate judgments, just compensation, and deter-rence of negligent medical care. The below analysis of the featuresand processes of arbitration will highlight the ways in which arbi-tration is a viable alternative to litigation for cross-border medicalmalpractice claims.

1. Arbitration Agreements and Awards are Binding AcrossJurisdictions Under Regional and International Treatiesor Customary Law

The greatest advantage arbitration has over litigation in resolv-ing cross-border disputes is the enforceability of arbitration agree-ments and awards in foreign jurisdictions. 236 As discussed above,an arbitrator has the authority to render an enforceable, final deci-sion.237 These agreements and decisions are binding on the par-ties, all jurisdictions empowered by legislation enabling courts toenforce arbitration awards, 238 and all countries that are members

233. Id.234. Id. at 30.235. Id.236. JOSEPH LOOKOFSKY, UNDERSTANDING THE CISG 1.4 (3d (worldwide) ed. 2008).237. Maurer, supra note 178, at 37.

238. S. Spencer Elg, Health Care Arbitration Agreements in Tennessee, TENN. B.J., Oct. 2009,at 15, 16.

2010]


to various regional and international treaties recognizing othermembers' arbitration awards. 239

Alternatively, if a country is a non-signatory to the relevant trea-ties, arbitration agreements and awards may still be enforced undercustomary law through Friendship Commerce and NavigationTreaties (FCN treaties) 240 or general principles of comity.2 4 1 Mem-ber countries of FCN treaties will enforce arbitration awards of fel-low member countries as long as enforcement does not violate amember country's public policy. 242 When an award is made in astate that is neither a member of an FCN treaty or any relevantcommercial arbitration treaty, enforcement may be sought underthe principle of comity. 243 This principle appeals to a country'ssense of international duty and regard for the rights of personsunder another nation's laws.244

Parties who contract to resolve disputes through arbitrationavoid jurisdictional and choice of law concerns because they con-sent to a set of procedural and substantive rules to govern the pro-cess and the choice of an arbitrator. 245 Arbitration operates muchlike pre-trial and trial phases of litigation, in which parties may filecounter and cross-claims throughout this process. 246 A combina-tion of arbitration statutes, agency rules, and the contract enteredinto by parties binding them to arbitration govern procedural andsubstantive rules.2 47

239. Karim Benyekhlef & Fabien GCtlinas, Online Dispute Resolution, LEx ELECrRONMCA,Summer 2005, at 51, http://www.lex-electronica.org/articles/vl0-2/BenyekhlefGelinas.pdf.

240. See Treaty of Friendship, Commerce and Navigation, U.S.-Kor., art. V(2), Nov. 28,1956, 8 U.S.T. 2217 [hereinafter U.S.-Korea Treaty]; Treaty of Friendship, Commerce andNavigation, U.S.-W. Ger., art. VI(2), Oct. 29, 1954, 7 U.S.T. 1839 [hereinafter U.S.-W. Ger-many Treaty]; Treaty of Friendship, Commerce and Navigation, U.S.-Japan, art. IV(2), Apr.2, 1953, 4 U.S.T. 2063 [hereinafter U.S.-Japan Treaty]; Treaty of Friendship, Commerceand Navigation, U.S.-Greece, art. VI(2), Aug. 3, 1951, 5 U.S.T. 1829 [hereinafter U.S.-Greece Treaty].

241. 81 AM. JUR. Trials 236 (2001).242. See, e.g., U.S.-Japan Treaty, supra note 240, art. IV(2); U.S.-Greece Treaty, supra

note 240, art. VI(2).243. 81 AM. JUR. Trials 236 (2001).244. Id. While there is no consensus on the definition of comity, this principle is

understood as "not only a theoretical but also a legal justification for the resolution ofconflict of laws problems [where] a court in one country may apply the laws of anothercountry by virtue of comity." Donald Earl Childress III, Comity as Conflict: Resituating Inter-national Comity as Conflict of Laws, 44 U.C. DAvis L. Rav. 11, 13 (2010).

245. Fiske, supra note 196, at 458.246. DeVille, supra note 186, at 338-39.247. Elg, supra note 238, at 16.

[Vol. 42


2. An Arbitrator's Decision-Making Powers and ExpertiseResolve Legal Ambiguities and Uncertainties of Cross-Border Health Services Claims

Another key attribute of arbitration is its procedure of selectingqualified decision-makers for evaluating complex, specialized casessuch as medical malpractice claims. 248 Arbitrators are more appro-priate decision-makers than juries because parties to the disputemost often select arbitrators who have a background and expertisein the subject matter of the dispute. 249 Parties in medical malprac-tice cases typically select arbitrators from a list of qualified candi-dates.250 Furthermore, all national laws, institutional rules, andinternational arbitration treaties require arbitrators to be neutraland independent in their decision-making. 251

In the global and ever-changing industry of health services, it iscrucial to have decision-makers who are neutral and independent,and able to adapt existing substantive legal principles to new con-flicts and ambiguities that arise from continuous transformationsto medical care. 252 As discussed above, technological advances inthe cross-border delivery of telemedical services have impacted thelegal relationships of healthcare providers and consumers, and thestandard of care owed to the latter.2 53 Just as important, the global-ization of health services has created even more variation in thestandard of care, as one country's assessment of acceptable caremay be deemed unacceptable by another country.254 Given theseconsiderations, expertise in healthcare enables decision-makers tohave realistic expectations of defendants and to make more accu-rate and informed judgments of whether a medical practitionerviolated the relevant standard of care. 255

The participation of parties in the process of selecting decision-makers in an arbitration system also contributes to a sense of confi-dence and fairness in the process. 25 6 The process of choosing anarbitrator customarily requires each party to select his own arbitra-

248. DeVille, supra note 186, at 369.249. Id. at 341; Ljiljana Biukovic, International Commercial Arbitration in Cyberspace: Recent

Developments, 22 NW. J. INT'L L. & Bus. 319, 344 (2002).250. DeVille, supra note 186, at 338.251. Biukovic, supra note 249, at 344.252. See McLean, supra note 88, at 252.253. Id.254. Id. at 252-53.255. DeVille, supra note 186, at 341.256. Thomas J. Stipanowich, Contract and Conflict Management, 2001 Wis. L. REV. 831,

871 (2001).

2010]


tor, and then the selected arbitrators together decide upon a thirdarbitrator who serves as the only neutral judge.25 7 The selection ofarbitration panels for medical malpractice disputes follows the cus-tomary selection process. 25 8 While this approach is not the sole, ornecessarily the best method, the interests of all parties are repre-sented at all stages, thereby diminishing suspicions of bias in theselection process.

3. Arbitration Offers a Forum for Adjudication That Is MoreNeutral and Fair than Litigation

Evidence suggests that the decision to use an arbitration panelover a judge and jury in adjudicating medical malpractice claimswould offer a more neutral forum. First, arbitration dilutes suspi-cions of bias towards any one party by removing the claim fromeither party's domicile court.259 Second, arbitration may reduce oreliminate the well-documented bias thatjudges and juries have fordefendant healthcare providers. In the United States, for example,juries side with the defendant in nearly 80% of medical malprac-tice claims. 260 Such bias towards the defendant is not isolated tothe United States, as other countries' judicial systems share thesame perspective. Several Indian courts have expressed criticism ofpatients who bring medical malpractice claims.261 Thailand's judi-cial system is also hostile to medical malpractice suits-the low rateof tort litigation and dramatic decrease in tort claims in the pasttwenty years in certain provinces are indicative of such hostilityagainst plaintiffs. 262 Such bias towards defendants, in combinationwith evidence that a vast majority of injured parties do not sue, 2 6 3underscores the failure of litigation in meeting the public policygoals of just punishment and compensation.

While the above observations indicate arbitration would serve asa more neutral forum, it is worth noting that there are shortcom-ings in this process. Some studies show that plaintiffs prevail moreoften in arbitration than litigation, 264 and therefore the process

257. Elg, supra note 238, at 16.258. DeVille, supra note 186, at 338.259. Neil, supra note 177, at 28.260. DeVille, supra note 186, at 368. Notably, two decades of studies conducted in the

United States confirm that defendants win an overwhelming majority of these disputes.David A. Hyman & Charles Silver, Medical Malpractice Litigation and Tort Reform: It's the Incen-tives, Stupid, 59 VAND. L. REv. 1085, 1107 (2006).

261. Cortez, supra note 82, at 36.262. Id. at 45-46.263. SvNTHESlS PROJECT, supra note 180, at 7; Cortez, supra note 82, at 19.264. Maurer, supra note 178, at 41.

[Vol. 42


may be biased towards plaintiffs. But such an outcome should beconsidered within the context of the arbitration process. Unlikelitigation, both parties play a role in selecting the decision-makersand a defendant healthcare provider arguably has an advantagebecause it has gone through arbitration more often and is there-fore able to design the process to suit its needs.26

5

In contrast, arbitrators may be biased towards businesses becausebusinesses are repeat clients. 266 Although the findings that plain-tiffs have a higher rate of recovery in arbitration than litigationundercuts this critique, it is worthwhile to consider arrangementsor mechanisms that discourage an appearance of or actual bias.For an instance, an initial critique of Kaiser's arbitration system wasthat the HMO's policy of paying for neutral arbitrator fees wouldresult in the tribunal's bias towards the HMO. 267 To resolve thissituation, Kaiser's independent arbitration administrative body rec-ommended that counsel from both parties work out a voluntaryarrangement or revise Kaiser's rules so that payment appears tocome from a neutral source. 268

4. Arbitration Offers an Efficient and Faster Resolution ofMedical Malpractice Claims

In addition to providing predictability in the decision-makingprocess and a more neutral forum for aggrieved parties, arbitrationoffers a faster, more efficient, and more flexible approach thantraditional courts to resolving unique or particular issues of medi-cal malpractice claims for several reasons. First, the arbitrator orrelevant procedural rules limit discovery time and procedures.

269

Second, there is no jury because the arbitrator serves as a factfinder in the decision-making process and usually has expertise inthe area of the dispute. 270 Third, although the arbitrator has widediscretion for his decisions, he is bound to follow the proceduraland substantive rules of law of the arbitration agreement.

27'

Finally, the grounds on which a party may appeal are much morelimited than those provided to an appellate court and such limitedappellate rights facilitates faster and more certain resolution of the

265. DeVille, supra note 186, at 373.266. Id.267. FiRST ANNUAL REPORT, supra note 222, at 31.268. Id.269. DeVille, supra note 186, at 338. Parties typically require an arbitrator's permission

to take depositions. Marchand, supra note 203, at 34.270. Marchand, supra note 203, at 35.271. DeVille, supra note 186, at 338.

2010]


dispute.2 72 Arbitrator decisions are "virtually unreviewable" onappeal, including mistakes of law, procedure, and evidence. 273Appeals usually only succeed in instances of fraud, exceeding thescope of the arbitration agreement, or blatant disregard for thelaw.274 As a result of such truncated procedures, aggrieved partieswho prevail receive a greater portion of the judgment and withinan earlier time frame than in litigation. 275

Another related, but disputed, benefit to such a streamlined pro-cess is lower costs. Proponents of arbitration assert that itdecreases transaction costs for all parties involved as claims areheard more quickly and the discovery process is less lengthy thantraditional trials.276 However, arbitration costs are not nec

Date post:	12-Nov-2015
Category:	Documents
Upload:	anca-o
View:	220 times
Download:	2 times