Los Angeles Times Examines Kaiser Foundation Health Plan’s Binding Arbitration System

The Los Angeles Times yesterday examined reforms intended to improve the arbitration system used by Kaiser Foundation Health Plan to resolve legal disputes outside of court. More California insurance companies and physicians are moving toward a binding arbitration model similar to Kaiser's in an attempt to curb rising medical malpractice insurance premiums, according to the Times. The California Supreme Court six years ago ruled that the arbitration system was poorly regulated, prone to delays and generally partial to the HMO; after the ruling, the insurer created an Office of Independent Administrator to oversee the system, the Times reports. The mandatory arbitration system requires a private panel of up to three arbitrators -- in most cases, retired judges and lawyers -- who hear cases and make decisions that cannot be appealed. Patients are more likely to win a case in arbitration, but the amount of money they are awarded may be as much as 50% to 60% less than what a jury would award. According to recent Kaiser OIA reports, arbitrators are now appointed in about two months, compared with an average time of two years in the mid-1990s. In addition, the OIA has found that most patients who go through the process are satisfied with it. However, some critics say that the 25% of patients who went through arbitration in 2002 without an attorney representing them may feel overwhelmed. Some patient advocacy groups have proposed providing free medical experts to advise people who represent themselves during the process or limiting the number of cases an arbitrator can hear simultaneously. However, the limited information about the process is a "hurdle to reform," according to the Times. Although the Department of Managed Health Care has requested more information about decisions made in arbitration, Kaiser has not provided information because officials say it would "single out" the company (Costello, Los Angeles Times, 6/30).