In a surprising move, the Florida Supreme Court, by a majority decision, overruled two lower courts and invalidated an arbitration agreement. On January 23, 2009, Dr. Gary John Bowers performed surgery on Joseph Franks. There were no reported complications, and Mr. Franks was discharged to his home. On January 25, suffering pain, Mr. Franks went to the emergency room. A scan revealed that he had a hematoma. Mr. Franks was hospitalized and died several days later.
Following Mr. Franks’ death, his widow, Donna, filed a medical malpractice and wrongful death suit against Dr. Bowers and North Florida Surgeons. The defendants tried to enforce an arbitration clause in a financial agreement signed by Mr. Franks, but Mrs. Franks resisted, arguing that the arbitration agreement was invalid on the grounds of public policy in that it was inconsistent with the legislative intent behind Florida’s Medical Malpractice Act (MMA).
The Financial Agreement
The financial agreement contained two relevant provisions:
Non-economic damages would be capped at $250,000.
Any dispute would be decided by arbitration, even if one of the parties did not want arbitration.
The defendants argued that this agreement was binding and insisted on arbitration.
Under the MMA, if all parties agree to arbitration, non-economic damages are limited to $250,000. If one of the parties insists on going to trial, then the damages cap is higher, depending on the circumstances. However, when the case is arbitrated, there is an automatic admission of liability by the defendant.
The Supreme Court’s Decision
The court held that the admission of liability provides an important incentive for a plaintiff to arbitrate, in that it removes the requirement to prove negligence. There was no admission of liability in the financial agreement’s arbitration provision with Mr. Franks. By avoiding the incentive, it contravened the legislative intent of the MMA and so was void on public policy grounds.
The decision is limited to the facts of this particular case. The court did not say that all arbitration agreements in medical malpractice cases are invalid. Nevertheless, if you are a medical practitioner, you would do well to review your arbitration agreements in light of this decision.