Clause in Health Care Plans Blocks Lawsuits
Arbitration Clauses in Health Care Plans Prevent Malpractice Suits

Feb. 24, 2005 — Two years ago, 66-year-old Clorinda Mesa of Los Angeles was taken to the emergency room after hitting her head in a fall.

She was treated and released the same day.

"She had some complaints and we had some concerns," said Grace Rosilas, Mesa's daughter, "but they assured us that she was OK. We took her home."

Four days later, Mesa died from internal bleeding that her daughter says doctors should have detected.

But when Rosilas tried to take them to court, she discovered an arbitration clause in her mother's health care coverage that waived the right to a trial by jury.

"It bound the whole family, so we won't get our day in court," she said. "Yeah, I'm angry."

Arbitration or Trial?

Millions of Americans are governed by arbitration clauses that block them from taking their grievances to a jury.

But some medical professionals say arbitration is nothing to be angry about.

"The more money we spend on legal process, the less money we have to spend on patients," said Dr. David Lerman of the Southern California Permanente Medical Group.

Because of the secret nature of arbitration, it's not clear whether arbitration is in fact cheaper than jury trials.

But it is pretty clear that health care providers would oppose arbitration if the awards cost them more than a trial.

The industry argues that the patients are the ones who would suffer most without arbitration.

"I think it's reasonable and fair and it keeps the costs down and it gets these things handled much more quickly," said Hal Daub from the American Health Care Association. "I think those are all advantages to the person who may be injured."

The health care industry also prefers arbitration over trials because the emotions at play before a jury in a courtroom are largely absent before an arbitrator in a conference room.

Doctors say reputations can be unfairly maligned in open court, but the secrecy of arbitration keeps many malpractice cases from public view.

'That's Not America'

The doctor who delivered 3-year-old Niaomi Franco is accused of malpractice by her parents.

Because the child was deprived of oxygen at birth, she has cerebral palsy, is mentally impaired and will need special care as long as she lives.

But her case will never see the inside of a court room because of an arbitration clause in her grandfather's health coverage.

"She's been denied her fundamental constitutional right to trial by jury because her grandfather happens to get health care from a big corporation," said Russell Kussman, Franco's attorney. "That's not America — or I hope it's not America."

A lone arbitrator will hear Niaomi's story in May.

ABC News' Dean Reynolds filed this report for "World News Tonight."