Healthcare Subject Matter Expertise – An Arbitrator’s Blessing or Curse?

April 10, 2012

     Today I listened to a roundtable discussion on “Handling Healthcare Arbitration Effectively” presented by the American Health Lawyers Association. The Panel offered valuable practical tips on drafting an arbitration clause and effectively representing a client in arbitration. From my perspective, the most interesting portion of the discussion concerned the role of healthcare industry expertise in the process of arbitrator selection.

     One of the Panelists expressed the belief that experience with healthcare business and legal issues is rarely necessary for an arbitrator to effectively decide a case, so  long as he or she is “experienced in handling complex commercial cases.” In his view, an experienced arbitrator can learn all he needs to know about the healthcare law affecting a case in legal counsel\’s briefs and oral arguments.

     I beg to differ. I do not believe that I can become an expert at anything by tomorrow. More importantly, even assuming an arbitrator can absorb the basic, “black letter law” on a given issue during the presentation of a case, it is impossible for that arbitrator to have any grasp of the nuances or “feel” of the law as it is applied in the real world. Often, it is in that nuanced, “gray” area of healthcare law and practice that the outcome of an arbitration must be decided.

     Another Panelist addressed the process of selecting an arbitrator where industry expertise is desired, but there is a need to evaluate the potential arbitrators\’ “orientation.” I think this was a polite way of saying that some clients may fear an arbitrator will be biased against them if the arbitrator\’s legal career was mostly spent “on the other side of the fence.” Thus, for example, parties in a payor-provider dispute might look differently at potential arbitrators who had mainly represented health insurers versus those who had primarily represented hospitals. Although I certainly can understand this as a visceral reaction, it doesn\’t really hold up to scrutiny.

     If parties want an arbitrator with subject matter expertise, they will be hard pressed to find one who has not had a successful legal practice primarily on one side or the other of the transactions and disputes typical in that field (think labor v. management, plaintiff v. defendant, insurer v. insured). So unless only one of the parties to an arbitration is concerned about the arbitrator\’s “orientation,” there will be no agreement on an arbitrator with industry expertise.

     More importantly, the focus on a potential arbitrator\’s “orientation” ignores the fact that the arbitrator is holding himself out as a neutral – with full awareness of the fact that setting personal feelings (if any) aside is essential to performing that service ethically and professionally. This is no different from the duty of a sitting judge in maintaining his neutrality. Unless an actual conflict of interest exists, judges and arbitrators should be assumed to be neutral – it is the essence of what they do. Would a person seeking to pursue this line of work expect to have much success if his or her decisions were skewed toward one category of litigants versus another?

     Far better than attempting to predict the effects of a potential arbitrator\’s “orientation” is seeking the opinion of the marketplace on whether he or she is  honest, open-minded and fair. Arbitrators who fail this market test will not be around for long.

[Image: Flower vendors in the Main Arcade, Pike Place Market, Seattle, Washington. To be allowed to sell here, vendors must grow the flowers themselves; by Joe Mabel, October 10, 2008]