The Florida Supreme Court has ruled unenforceable a doctor’s financial and arbitration agreement with a patient prior to surgery because it lacked an admission of liability by the medical provider.
To be enforceable under Florida’s medical malpractice statute, such an agreement must include a concession of liability as an incentive for a claimant to settle through arbitration rather than go to court where a higher settlement could be possible, the court ruled.
Joseph Franks sought medical treatment from Dr. Gary John Bowers and North Florida Surgeons, P.A. (NFS). Subsequent to the surgery, Joseph suffered a large hematoma due to the external iliac vein being lacerated during surgery. He remained hospitalized until his death.
His wife, Donna Franks, filed a complaint against Bowers and NFS for medical malpractice resulting in wrongful death. Bowers and NFS moved to compel arbitration based on the financial agreement signed by Franks prior to his surgery.
The trial court entered the order compelling arbitration “with substantial reservations,” and the First District Court of Appeal affirmed on appeal. But on June 20 the high court overturned in a 6-2 opinion by Justice James Perry.
Donna Franks alleged that the financial agreement signed by her husband was void under the public policy of the state’s medical malpractice law, chapter 766, Florida Statutes (2008), because the agreement did not provide the same remedies as provided by the Legislature.
The state’s high court agreed with Franks and found that the limitations of damages clause of the arbitration provision of the financial agreement violates the public policy in the Medical Malpractice Act (MMA). It also found that the damages clause was not severable from the remainder of the arbitration provision.
Under the statute, Franks would be entitled to receive a maximum of $1 million if the case proceeded to court without either party seeking arbitration, or if Dr. Bowers and NFS refused to proceed with arbitration.
But under the financial agreement, Franks could only receive a maximum of $250,000.
The problem is that the agreement lacked the inherent concession of liability that would be an incentive for Franks to settle through arbitration rather than go to trial, the court said.
The court said that in passing the MMA, the Legislature rejected creating a no-fault system like workers compensation. Instead, lawmakers opted for a system where the claimant has an incentive, namely the concession of liability by the defendant, to choose arbitration.
Citing its previous St. Mary’s decision, the court said that the law makes it clear that the “benefit of the statutory cap on non-economic damages is solely reserved for a defendant who is conceding liability and participating in arbitration. ” It said this benefit is part of the statutory scheme to encourage the arbitration of medical negligence claims.
“The incentive provided to claimants to encourage arbitration is a necessary provision of the MMA. We therefore find that the Financial Agreement’s avoidance of the incentive contravenes the intent of the statute and, accordingly, the public policy of this state. Because the Legislature explicitly found that the MMA was necessary to lower the costs of medical care in this State, we find that any contract that seeks to enjoy the benefits of the arbitration provisions under the statutory scheme must necessarily adopt all of its provisions,” the court wrote.
Topics Florida
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