By: Paul J. Giancola and Claudia E. Stedman, Snell & Wilmer
Healthcare providers and counsel frequently view arbitration agreements as more efficient and more cost-effective alternatives to litigation—and indeed, in many circumstances, this form of alternative dispute resolution can be a critical tool in managing costs and helping parties reach a compromise more efficiently. Recent Arizona case law on arbitration clauses in the context of medical malpractice cases serves as a reminder of the issues that counsel should be mindful of in drafting these contractual provisions for their healthcare clients.
Heaphy v. Willow Canyon Healthcare, Inc.
On May 18, 2021, the Arizona Court of Appeals ruled in Heaphy v. Willow Canyon Healthcare, Inc. that a wife acting in the capacity of her husband’s healthcare power of attorney (HPOA) did not have authority to bind her husband or his estate to an optional arbitration agreement when admitting him to a nursing home when the wife failed to indicate that she was the legal representative or agent. 251 Ariz. 358, 491 P.3d 1165 (Ct. App. 2021).
By way of background, in 2012, Charles Heaphy appointed his wife, Shirley Heaphy, as his HPOA. In 2017, Ms. Heaphy admitted her husband to Pueblo Springs Rehabilitation Center—a skilled nursing and rehabilitation center. The contract that Mrs. Heaphy signed with the facility included an optional arbitration agreement, asked for the signature of a “Legal Representative or Agent,” and “directed an agent signing in that capacity to also execute on the same page a separate ‘Acknowledge of Legal Representative or Agent.’” Id. at 1167. Mrs. Heaphy signed her husband’s name on the resident line and signed her own name on the adjacent signature line. She did not sign as the legal representative or the acknowledgment. Mr. Heaphy passed away a few weeks after he was admitted to Pueblo Springs.
In 2019, Mrs. Heaphy, acting in her capacity as personal representative of Mr. Heaphy’s estate and on behalf of all statutory beneficiaries (Plaintiff), sued Willow Canyon Healthcare—the owner of Pueblo Springs—and the doctor who treated Mr. Heaphy. Mrs. Heaphy alleged elder abuse, negligence, negligent hiring and supervision, and wrongful death. Id. at 1167-68.
Willow Canyon filed a motion to compel arbitration based on the contract with the skilled nursing facility that Mrs. Heaphy filled out when her husband was admitted. Plaintiff argued, however, that the contract was not enforceable because it was unconscionable, and that Mrs. Heaphy lacked authority to bind either the estate or the beneficiaries. The trial court denied the motion to compel arbitration, but held an evidentiary hearing to assess whether Mrs. Heaphy had the authority to sign the contract with Willow Canyon as her husband’s agent. The trial court held that the estate’s claims were not subject to the arbitration clause in the agreement with Willow Canyon because though Mrs. Heaphy was HPOA, she was not authorized to sign the contract on her husband’s behalf, and that it was procedurally unconscionable under the circumstances.
Willow Canyon appealed the trial court’s decision, arguing that Mrs. Heaphy had actual authority, either express or implied, to sign the agreement and, even if she lacked such authority, she should be equitably estopped from denying such authority, the agreement was not unconscionable, and the Federal Arbitration Act (FAA) preempted Arizona case law “holding that an arbitration agreement cannot bind non-signatories.” Id. at 1168.
The Arizona Court of Appeals stated that it was required to defer to the trial court’s factual findings absent clear error. Therefore, the Court affirmed the trial court’s decision to deny Willow Canyon’s motion to compel arbitration for the following reasons:
First, on the issue of express actual authority, the Court examined the plain language of the HPOA and found that it authorized Mrs. Heaphy to have full authority to make decisions regarding healthcare, but only limited authority “to seek damages from a healthcare provider for its failure to comply with Charles’s refusal of treatment or his wishes . . . .” Id. at 1169. Further, because the arbitration clause was optional and “not required for Charles to be admitted into Pueblo Springs, it was not a healthcare decision as contemplated by the HPOA.” Id.
Second, the Court found that Mrs. Heaphy lacked implied actual authority to bind her husband’s estate because the HPOA did not “expand the scope of her authority such as to encompass the optional” arbitration agreement.” Id. at 1170.
Third, the Court found that the elements of equitable estoppel were not met because, among other things, Mrs. Heaphy’s signing of the optional arbitration agreement “did not represent that she had authority to bind Charles and his estate, particularly when she did not sign the line provided for the ‘Legal Representative or Agent’ and the related acknowledgement on that page.” Id.
Fourth, the Court determined that the trial court’s decision was consistent with both Arizona law and the FAA and that the arbitration agreement was unenforceable because Mrs. Heaphy lacked authority to enter into it on behalf of her husband. Id. at 1171.
In summary, the Court of Appeals found that an HPOA is limited in scope and does not confer the legal authority for the HPOA to waive legal right such as trial by jury. In contrast, an appropriately drafted power of attorney and signed arbitration provision likely would have conferred the appropriate legal authority to require that Mr. Heaphy and his estate arbitrate. A potentially open question, but likely derivative of the first question is whether the beneficiaries would also be bound by the agreement to arbitrate.
Considerations for Arbitration Clauses in the Context of Medical Malpractice
The current legal landscape is such that courts will try to enforce binding, pre-dispute arbitration agreements, even in the medical malpractice context. While there is strong public policy favoring arbitration agreements, there are common pitfalls that drafters of such agreements should watch out for.
Drafting Considerations & Unconscionability
From a practical standpoint, it is important to consider the sometime overlooked drafting and structure of arbitration clauses. In the context of medical malpractice claims, courts balance the public policy and efficiency considerations of arbitration agreements against the fact that patients or their caregivers may fail to comprehend what legal rights they are relinquishing by signing an arbitration agreement. Therefore, courts scrutinize arbitration provisions more closely than they would in a commercial context. Courts look at both substantive (overly oppressive terms or unduly harsh to one party) and procedural (the process for entering into the agreement) unconscionability.
An unconscionability claim can be successfully argued if an arbitration provision is unduly one-sided or makes medical care contingent on agreeing to arbitrate. In Gullett v. Kindred Nursing Centers West, LLC, the nursing center moved to compel arbitration pursuant to the contract between it and the Plaintiff. 241 Ariz. 532 (Ct. App. 2017). The Plaintiff opposed the motion, arguing that the arbitration agreement was substantively unconscionable if not procedurally unconscionable. Id. at 535. In evaluating whether the arbitration agreement was substantively unconscionable, the Court considered whether the “amount of permitted discovery is so low and the burden to obtain additional discovery so high that the litigant is effectively unable to vindicate their claim.” Id. at 536.
In Gullet, the Court found that because the arbitration agreement allowed for “30 interrogatories, 30 requests for production, 10 requests for admission, six lay depositions and two expert depositions,” the agreement was not substantially unconscionable. Id. at 537. The Court likewise disagreed with the Plaintiff on the procedural unconscionability claim, finding that because the arbitration agreement required the parties to find an impartial arbitrator or select from an approved list, there was mutuality and the agreement was fair. Id. at 539.
When writing an arbitration agreement, drafters should consider writing the provision out in bold type or capitalized letters to focus the signor’s attention and highlight the particular language so that the patient is put on notice that they are giving up certain legal rights. In the case of a particularly voluminous contract—as in the Heaphy case where the entire contract with the skilled nursing facility was almost 60 pages long—drafters may want to consider having the arbitration provisions set off in an entirely separate document from the rest of the agreement. Additionally, using plain, simple language is important in defending against a potential claim that the contract is unenforceable because the patient did not understand what he or she was signing.
Simply because a contract is one of adhesion does not make it automatically unenforceable. However, courts will consider “take it or leave it” agreements in light of whether the patient “knowingly consented to the clause and what the patient’s reasonable expectations of signing that provision were.” Broemmer v. Abortion Serv’s of Phoenix, Ltd., 173 Ariz. 148, 152 (1992). For this reason, when drafting an arbitration agreement, counsel may also want to include language clearly indicating that signing is an arbitration agreement is voluntary and that a patient’s medical care will not be contingent on whether they agree to arbitrate or not.
Drafting considerations go hand-in-hand with upholding the enforceability of an arbitration agreement. To avoid a claim that a contract is unconscionable, counsel and providers should evaluate the patient’s expectations and ensure that the patient has knowingly consented to the agreement. Patients should be informed of the arbitration agreement prior to consenting to the medical treatment or procedure. Terms that limit discovery or limit recovery of damages should likely be omitted. Finally, counsel should frequently review the terms of the arbitration agreement and update the language as necessary.
New Peer Review Decisions Confirm Basic Principles and Answer Some Questions
By: Karen Owens, Coppersmith Brockelman PLC
In two related cases before the Arizona Court of Appeals, the Court affirmed important Arizona peer review principles and answered some outstanding questions in this area of law. The predicate for both cases (and a third case, discussed at the end) was the decision of a hospital governing board to revoke the medical staff membership and privileges of a cardiologist (“Physician”) based on patient care issues, disruptive behavior, and alteration of medical records.
The Sharifi Memorandum Decision
In Sharifi, the trial court conducted judicial review of the hospital board’s revocation decision under A.R.S. § 36-445.02. The Court of Appeals upheld the trial court’s ruling affirming the hospital board’s revocation of the Physician’s medical staff membership and privileges. Relying on A.R.S. § 36-445.02, Hourani v. Benson Hospital, 211 Ariz. 427, 122 P. 3d 6 (App 2005), and other prior Arizona decisions, the Court noted the importance of peer review immunity and articulated the standard of review as review of “peer review proceedings for both procedural and substantive errors [employing] a deferential standard of review.”
The appellant Physician contended that there were numerous procedural defects in the in-hospital peer review proceedings. Citing the statute, the Court limited its review of these challenges to the administrative record to determine whether the hospital substantially complied with its Bylaws. In perhaps the most important procedural issue, the Physician challenged the hearing officer’s imposition of a time limit on the hearing. The Court upheld the time limit, noting that the hearing panel members said they felt they had enough information and that any timing problem was “entirely of [the Physician’s] own making.” The Court saw “no evidence that the time allotted was insufficient or resulted in prejudice.”
The Physician also challenged the revocation decision on the merits. The Court agreed with the trial court that it should not substitute its own judgment for the hospital board’s “where expertise is involved,” and upheld the hospital board’s substantive decision.
The Court made short work of the Physician’s separate contract claim. Acknowledging that the medical staff bylaws create a contract with staff, the Court said the statute barred any claims other than a claim for injunctive relief based on the record.
Finally, the Physician contended that he was entitled to a new trial based on declarations he belatedly presented to the trial court – declarations which alleged bias based on race and religion. The Court explained that the Physician needed to “cite to evidence in the record making it affirmatively probable the alleged bias or misconduct changed the outcome of the administrative proceeding.” The Court rejected the Physician’s claim, noting not only that the declarations were late and not in the record, but also that they failed to prove any actual bias.
While Sharifi is an unpublished memorandum, it still provides insight into the Court’s view of peer review principles and confirms some critical standards. And while memorandum decisions are not precedential, Arizona Supreme Court Rule 111(c) allows citation of memorandum decisions to in certain circumstances: to establish claim preclusion, issue preclusion, or law of the case; to assist the appellate court in deciding whether to issue a published opinion, grant a motion for reconsideration, or grant a petition for review; or for persuasive value if the memorandum was issued on or after January 1, 2015, no opinion adequately addresses the issue before the Court, and the citation is not to a de-published opinion or portion of an opinion.
Takieh Opinion
The Physician also filed a separate state court lawsuit alleging that the Chief of Staff, another cardiologist and cardiology group, the hospital‘s chief medical officer, and the hospital’s in-house attorney all had made defamatory statements about him. The trial court dismissed all but one cardiologist and the in-house attorney from the case, largely because the dismissed defendants’ actions and statements were made during peer review proceedings. The Physician did not challenge those dismissals.
However, in an amended complaint, the Physician alleged the following instances of defamation by the remaining defendants:
The Physician moved to compel the in-house attorney to disclose several categories of her own correspondence related to the peer review proceedings. The trial court refused to order a privilege log for peer review protected documents.
On the other hand, the trial court did order the in-house attorney to produce a log of her correspondence outside the peer review process. The in-house counsel submitted no log, explaining that all her communications in the matter were protected peer review materials. At this point, after the close of discovery, the Physician for the first time submitted affidavits from two former hospital employees (quite similar to the ones produced in the Sharifi case). In one of them, the affiant alleged she had heard the in-house attorney make disparaging remarks about the Physician (that he was a terrible doctor, an idiot, a danger to patients.) The other affiant alleged that she had heard other Physicians say the in-house attorney had encouraged them to make false statements about the Physician at the hearing. The in-house attorney moved to strike the affidavits as untimely, and the trial court agreed.
The trial court held on summary judgment that there was no dispute the Physician had administered blood thinners to a patient with a cerebral hemorrhage, and the other cardiologist’s alleged “idiot” statement was opinion and thus not actionable. The trial court further held that the Physician had failed to produce any admissible evidence showing the in-house attorney had made “any comments about him, defamatory or otherwise,” outside the peer review process.
The Court of Appeals affirmed both rulings. With respect to the cardiologist’s alleged comments, the Court agreed with the trial court that the “idiot” statement was opinion, and the record “lacked clear and convincing evidence that a reasonable listener could have understood [the cardiologist’s] ‘obvious’ statement as conveying an objective fact.” Regarding the defamation claim against the in-house attorney, the Court of Appeals affirmed the trial court’s decision refusing to order production of a privilege log for peer review privileged correspondence. The Court cited the “overriding public interest in peer-review proceedings” and the need for confidentiality to ensure candid peer review. The Court also agreed that the affidavits were not admissible evidence based on the Arizona discovery rules.
Ultimately, the Court affirmed the trial court’s conclusion that the Physician’s claim against the in-house attorney was groundless and pursued in bad faith. The in-house attorney was awarded attorney fees in both the trial court and appellate court.
Interestingly, in the two state court lawsuits arising from the peer review proceeding described in these cases, there were no depositions, no written discovery and no document production. Judicial review of the in-hospital administrative proceedings was limited to a review of the record, as set forth in the statute. While no one can prevent disgruntled physicians from naming individuals in lawsuits arising from peer review, the two cases are reassuring that Arizona law provides strong protection of the integrity of the peer review process.
Postscript: The Federal Court Case
In addition to the two state court actions discussed above, the Physician filed a complaint in federal court alleging under 42 U.S.C. § 1981 that the hospital system and multiple individuals discriminated against the Physician based on his race in terminating his physician services agreement (PSA). Takieh v. Banner Health, No. CV-10-05878-PHX-MTL (D. Arizona Jan. 27, 2021), aff’d. No. 21-15326 (9th Cir. Feb. 16, 2022). The District Court dismissed the case in an unpublished Order, finding that the Physician himself had alleged numerous non-discriminatory reasons for the termination of the PSA, and taking into account the trial court’s decision in Sharifi. The District Court refused to allow the Physician to amend his pleading, holding in part based on the Sharifi trial court decision that amendment would be futile. The Ninth Circuit Court of Appeals affirmed the District Court’s decision and reliance on Sharifi because it was relevant and provided non-discriminatory reasons for the PSA termination.
Director of Compliance and Privacy Officer – Atlas Healthcare Partners
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8 Ways Healthcare Attorneys Can Reduce Racial Disparities in Maternal Mortality
By: Marki Stewart, Coppersmith Brockelman PLC
Maternal mortality in the United States has more than doubled in the last 30 years—women living in the United States today are 50% more likely to die in childbirth than their mothers were a generation ago. Researchers estimate more than half of these deaths are preventable.
Alarmingly, the path to motherhood is significantly deadlier for women of color than it is for their white counterparts. Nationally, black women are three to four times as likely to die from pregnancy-related causes than white women, a disparity that has only widened in recent years.[i] Surprisingly, these disparities increase with age and education; data from the Centers for Disease Control and Prevention demonstrates that pregnancy-related deaths for black women with at least a college degree are five times higher than white women with a similar education.
Closer to home, the rates are likewise alarming. On October 22, 2021, the Arizona Society for Healthcare Attorneys (AzSHA) presented a panel discussion regarding the data in Arizona showing that women of color have higher rates of maternal mortality than their white peers. Native Americans have the highest maternal mortality rates in Arizona, at more than four times higher than white non-Hispanic women.[ii]
Although the causes of death vary—including cardiovascular diseases, hypertension, pulmonary embolism, and hemorrhage, among others—by and large, women die because they do not receive early, effective, and aggressive lifesaving treatment. Despite most preventable events being preceded by vital sign changes, structural racism and health care providers’ implicit biases may lead to delayed responses to clinical warning signs.[iii] A provider’s failure to quickly identify warning signs to rescue a pregnant woman or new mother can lead to catastrophic consequences.
Healthcare attorneys must help clients address this dire situation. Whether serving as general counsel for a hospital, counsel to a payor, or representing individual physicians or physician groups, attorneys can use their positions of power to influence key decisionmakers who directly impact this problem. Attorneys should impress upon their clients that increased maternal mortality for women of color is not only an issue of justice in healthcare, but any situation in which sub-standard care is provided also creates potential liabilities and must be urgently addressed.
Here are eight ways attorneys can leverage their influence to enact positive change:
Administered by the Arizona Hospital and Healthcare Association, AIM is a quality improvement initiative that helps hospitals implement Patient Safety Bundles, a series of evidence-based practices that reduce provider bias and ensure a timely and tailored response to a wide variety of objective clinical warning signs. In addition to addressing certain clinical symptoms, the Patient Safety Bundles address patient support, including standards for recognizing and treating perinatal depression and anxiety. Participating hospitals also provide valuable data to better understand the challenges in Arizona and track progress toward state and national goals.[iv]
Implicit bias training uses techniques to recognize and understand the magnitude of unconscious bias, helping to de-bias patient care. A variety of programs are available, and can be performed in-person or virtually, both free or for cost. The March of Dimes’ Breaking Through Bias in Maternity Care, a training session that can be done in-person or by virtual learning experience, provides an overview of implicit bias and personal assessment, strategies to mitigate racial bias in maternity care, and a plan for building a culture of equity within an organization.[v] Some healthcare organizations choose to perform internal implicit bias training sessions that are tailored to their needs.
Tragically, as with their mothers, black newborns die at three times the rate of white infants in the United States. Research demonstrates that black newborns cared for by black physicians have 50% reduced mortality compared to black newborns treated by white physicians. Furthermore, racial concordance with one’s physician can increase health care utilization among under-resourced communities.[vi] If the hospital or physician group finds it difficult to recruit providers of color, encourage them to start a scholarship program to invest in young medical and nursing students of color.
Doulas are non-clinical professionals who provide physical, emotional, and informational support to mothers before, during, and after childbirth. Data shows doulas increase patient satisfaction with the birthing process, decrease the risk of C-section, and decrease the risk of newborns being sent to the NICU.
Women who participate in group prenatal care with other women at similar gestation ages receive approximately 20 hours of prenatal care over the course of their pregnancies, compared to approximately two hours in traditional individual care settings. The American College of Obstetricians and Gynecologists determined that group prenatal care resulted in reductions in pre-term birth and NICU admissions, increased birth weight for infants, decreased emergency department visits in the third trimester, and increased patient satisfaction.
Health insurers have a critical role to play because providers may not pursue necessary care if reimbursement will not follow. Payment policies that encourage good maternal care include an extension of AHCCCS coverage for pregnant women for up to one year after birth. Currently, when someone enrolled in AHCCCS gives birth, their coverage may expire just sixty days after their pregnancy ends, meaning that many low-income mothers are forced to forego necessary postpartum health care because they can’t afford the expense; indeed, almost 20% of maternal deaths occur 43 days to 1 year after delivery.[vii] Payors should also expand reimbursement for doulas, group prenatal care, home visits, and mental health treatment for pregnant and post-partum women. Some payors have begun to reimburse for implicit bias training, and others should follow suit. [viii] Payors can also provide outcome-based reimbursement incentives for providers to close gaps in maternal health.
The physical distance between Native American communities and hospitals makes it hard for Native women to access care; some studies show that Native American women have half as many prenatal visits as their white counterparts, making it difficult to identify health problems at an early stage. Hospitals and physicians can adopt a home visit program in which doulas, midwives, nurses, or social workers travel to the woman’s home to provide care and offer support on a wide variety of issues impacting social determinants of health.[ix]
Excellent examples of existing programs and tools include:
The United States’ increasing maternal mortality rate, borne largely on the backs of women of color, has become a public health crisis that all players in the health care industry should work to improve, including health care attorneys. AzSHA is committed to continue addressing this issue, and we welcome our members’ feedback and insight into creative ways that attorneys can help. If you are interested in collaborating with other attorneys on this issue, please reach out to Marki Stewart, at [email protected].
[i] See Khiara M. Bridges, Racial Disparities in Maternal Mortality, 95 N.Y.U. L. Rev. 1229 (2020).
[ii] A 2017 report from the Arizona Department of Health Services’ Maternal Mortality Review Program
demonstrates that Arizona’s maternal mortality rate is at 25.1 deaths per 100,000 live births (2012-2015). This
ranks Arizona 25th in the nation. Native American/Indigenous women died at four times the rate (70.8
per 100,000 live births) compared to White non-Hispanic women (17.4 per 100,000 live births) despite
Native Americans representing only 6.0% of the births. The maternal mortality rate for Hispanic/Latina
women was 22.4 per 100,000 live births while the maternal mortality rate for Blacks, Asian, and Pacific
Islander women combined was 44.0 per 100,000 live births. See ADHS maternal Mortality Action Plan, June 2019, available at https://azdhs.gov/documents/operations/managing-excellence/breakthrough-plans/maternal-mortality-breakthrough-plan.pdf.
[iii] For additional information about health care providers’ implicit biases impacting their perception of pain and treatment plans for patients of color, see “Racial Bias in Pain Assessment and Treatment Recommendations, and False Beliefs About Biological Differences Between Blacks and Whites,” Kelly M. Hoffman, et al., Proc Natl Acad Sci U S A. 2016 Apr 19; 113(16): 4296–4301, available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4843483/.
[iv] For more information about how to participate in AIM, see https://www.azhha.org/arizona_aim_collaborative.
[v] Further information about this training can be found here: https://ww.ahapac.org/system/files/media/file/2020/12/march-of-dimes-breaking-through-bias-maternity-care.pdf. Organizations can inquire about an in-person training session by completing this form: https://www.marchofdimes.org/professionals/implicit-bias-training-form.aspx.
[vi] “Physician-Patient Racial Concordance and Disparities in Birthing Mortality for Newborns,” Brad N. Greenwood, et al., PNAS September 1, 2020 117 (35) 21194-21200, available at: https://www.pnas.org/content/117/35/21194.
[vii] The Build Back Better package passed by the U.S. House of Representatives would mandate one year of postpartum Medicaid care. If enacted by the Senate without this provision, Arizona’s legislature would need to grant AHCCCS statutory authority to enact this change.
[viii] See https://www.forbes.com/sites/debgordon/2021/04/20/us-health-insurer-announces-new-plan-to-reduce-racial-disparities-in-maternal-health-by-50-in-five-years/?sh=3f6ad5b11ebd.
[ix] For more information on the benefits of home visits, see https://mchb.hrsa.gov/maternal-child-health-initiatives/home-visiting-overview. For information about reimbursement for home visits, see https://www.americanprogress.org/article/home-visiting-programs-vital-maternal-infant-health/.
[x] See https://www.acog.org/advocacy/policy-priorities/maternal-mortality-prevention.
[xi] See https://www.awhonn.org/education/hospital-products/post-birth-warning-signs-education-program/.
[xii] See https://www.ahrq.gov/hai/tools/perinatal-care/index.html.
[xiii] See https://www.ahrq.gov/patient-safety/patients-families/engagingfamilies/index.html.
Associate General Counsel – Office of Administrative Legal Services
The Office of Administrative Legal Services (OALS) is looking for a highly motivated individual to join our team as an Associate General Counsel. This position works collaboratively to provide legal…
DECEMBER 7, 2021 PROGRAM ANNOUNCEMENT
Surprise Medical Billing & Price Transparency
Time: 12:00 noon to 1:00 pm
Place: Cisco WebEx
Surprise billing occurs when a patient receives an unexpected bill from a health care provider or facility because the patient did realize that the provider or facility was not an “in-network” provider under their health plan.
In December 2020, Congress adopted the Consolidated Appropriations Act, 2021 (“the “CCA”), which includes a special rule-the “No Surprises Act”. The Act is designed to protect consumers from “surprise” medical bills for services beginning January 1, 2022. To implement the law, on July 1, 2021, the Office of Personnel Management, Department of Treasury, Department of Health and Human Services, the Department of Labor issued the interim final rule “Requirements Related to Surprise Billing: Part I “and on September 30, 2021, the agencies issues another interim final rule- “Requirements Related to Surprise Billing: Part II. The comment period for Part II expires on November 29, 2021.
The interim final rule includes requirements applicable to group health plans and health insurance issuers; certain types of health care providers and health benefits plans offered under the Federal Employees Health Benefits Act. Under the Act, nonparticipating providers, facilities and air ambulance providers are prohibited from balance billing patients for medical bills from emergency services, non-emergency services performed by nonparticipating providers at participating health care facilities and for air ambulance services.
Price transparency requires disclosure of price data. Hospital and provider charges often vary significantly depending upon location, plan contract and cash pay. We will provide an overview of Price Transparency and the Act and its implementing regulations, with the impact on plans, providers, and consumers along with how the rule impacts Arizona’s 2017 Surprise Out-of-Network balance billing law.
Lindsay Knutson is an Associate Director with BRG’s Health Analytics practice. Lindsay leads teams in complex data analytics and compliance audits to help healthcare companies and their legal counsel resolve business challenges and disputes. Lindsay has led the data analytics for hundreds of engagements for payors, providers, life sciences companies, and liability insurers. Lindsay provides expert testimony and litigation support services and is a certified professional coder (CPC-A) through the AAPC.
Paul Giancola is a partner at Snell & Wilmer, LLP and an adjunct at the Sandra Day O’Conner College of Law where he teaches Health Care Fraud Investigations. Paul’s health care practice is focused on providing regulatory counsel on fraud and abuse laws, compliance, government investigations and audits, contractual matters, cybersecurity and privacy, and transactional health care matters including joint ventures, practice/entity formation, acquisition and separations, ambulatory surgery centers and laboratories. Paul also has extensive experience in medical staff and peer review matters.
Due to the current social distancing recommendations, this program will be held via video conference through Cisco WebEx. This program will be $10 for members and $15 for non-members.
To register, please visit our website https://azsha.org/, click upcoming programs, on the right you will see a button that says “Register for Next Program Pay Now”. This button will take you to a screen with multiple payment options. Please select your membership level. If you are a member, please login and proceed with the payment process. If you are not a member, you will have to create a username and password to continue with the payment process.
Once you have registered online, you will receive a calendar invite containing the WebEx link. Please note, you don’t need to sign up for a WebEx Account to join a meeting.
The State Bar of Arizona does not approve or accredit CLE activities for the Mandatory Continuing Legal Education requirement. This activity may qualify for up to 1 hour of CLE credit, 0 hours of ethics, toward your annual requirement for the State Bar of Arizona.
NOVEMBER 9, 2021 PROGRAM ANNOUNCEMENT
Connecting our Communities: Implementing a statewide, closed-loop referral system to address Social Determinants of Health
Time: 12:00 noon to 1:00 pm
Place: Cisco WebEx
Heath Current teamed with AHCCCS and, in collaboration with 2-1-1 Arizona operated by Solari, are implementing a single, statewide closed-loop referral system called CommunityCares to address social determinants of health (SDOH) needs in Arizona. This new technology platform is designed to connect healthcare and community service providers to streamline the referral process, foster easier access to vital services and provide confirmation when social services are delivered. Learn more about the program, its goals, features, and the progress thus far, including how and when health information may be shared with AHCCCS-registered community service agencies (CSAs)—a registered health care provider type in Arizona, as well as community based organization (CBOs) in compliance with state and federal health information laws, like HIPAA.
Speaker Biographies:
Dana Flannery is the Senior Policy Advisor for AHCCCS and Assistant Director of the Division of Community Advocacy and Intergovernmental Relations (DCAIR). As senior policy advisor to the director of AHCCCS, Dana Flannery serves as a conduit between the agency’s divisions and the executive team, and a source of guidance for the agency’s director, two deputy directors, and chief medical officer. As assistant director of DCAIR, Dana oversees the AHCCCS Office of Individual and Family Affairs, the Office of Human Rights, the agency’s intergovernmental/tribal relations and communications team, and several other committees and councils. Dana brings more than seventeen years of experience in the behavioral health field, ten of which have been with the State of Arizona. During that time, she has become a leader in public health policy for a wide variety of populations. With colleagues, she helped to develop the Arizona Peer Advancement Career Academy as well as several advocacy training courses, led stakeholder engagement for major agency initiatives, and assisted in health policy development that has a direct impact on members. Dana is a graduate of Arizona State University.
Kathryn Greene is the Privacy Officer for the Arizona Health Care Cost Containment System (AHCCCS). As the Privacy Officer, she ensures AHCCCS’s compliance with HIPAA, 42 C.F.R. Part 2, and other federal and state privacy laws. Kathryn has over 18 years’ experience as a Privacy Officer, having previously served as the Chief Privacy Officer for the Arizona Department of Economic Security and the Privacy Officer and System Security Officer for the Arizona Department of Child Safety prior to her position with AHCCCS five years ago.
Andrew Terech is the Director of Social Determinants of Health for Health Current, Arizona’s Health Information Exchange. He is a licensed associate counselor and has over 13 years of experience working in various leadership roles in behavioral healthcare and integrated healthcare settings. His passion for helping people led him to Health Current where he is leading a team to implement a statewide SDOH referral program aimed at improving access to vital social services.
Due to the current social distancing recommendations, this program will be held via video conference through Cisco WebEx. This program will be $10 for members and $15 for non-members.
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Update on Arbitration Clauses in Medical Malpractice Cases
By: Paul J. Giancola and Claudia E. Stedman, Snell & Wilmer
Healthcare providers and counsel frequently view arbitration agreements as more efficient and more cost-effective alternatives to litigation—and indeed, in many circumstances, this form of alternative dispute resolution can be a critical tool in managing costs and helping parties reach a compromise more efficiently. Recent Arizona case law on arbitration clauses in the context of medical malpractice cases serves as a reminder of the issues that counsel should be mindful of in drafting these contractual provisions for their healthcare clients.
Heaphy v. Willow Canyon Healthcare, Inc.
On May 18, 2021, the Arizona Court of Appeals ruled in Heaphy v. Willow Canyon Healthcare, Inc. that a wife acting in the capacity of her husband’s healthcare power of attorney (HPOA) did not have authority to bind her husband or his estate to an optional arbitration agreement when admitting him to a nursing home when the wife failed to indicate that she was the legal representative or agent. 251 Ariz. 358, 491 P.3d 1165 (Ct. App. 2021).
By way of background, in 2012, Charles Heaphy appointed his wife, Shirley Heaphy, as his HPOA. In 2017, Ms. Heaphy admitted her husband to Pueblo Springs Rehabilitation Center—a skilled nursing and rehabilitation center. The contract that Mrs. Heaphy signed with the facility included an optional arbitration agreement, asked for the signature of a “Legal Representative or Agent,” and “directed an agent signing in that capacity to also execute on the same page a separate ‘Acknowledge of Legal Representative or Agent.’” Id. at 1167. Mrs. Heaphy signed her husband’s name on the resident line and signed her own name on the adjacent signature line. She did not sign as the legal representative or the acknowledgment. Mr. Heaphy passed away a few weeks after he was admitted to Pueblo Springs.
In 2019, Mrs. Heaphy, acting in her capacity as personal representative of Mr. Heaphy’s estate and on behalf of all statutory beneficiaries (Plaintiff), sued Willow Canyon Healthcare—the owner of Pueblo Springs—and the doctor who treated Mr. Heaphy. Mrs. Heaphy alleged elder abuse, negligence, negligent hiring and supervision, and wrongful death. Id. at 1167-68.
Willow Canyon filed a motion to compel arbitration based on the contract with the skilled nursing facility that Mrs. Heaphy filled out when her husband was admitted. Plaintiff argued, however, that the contract was not enforceable because it was unconscionable, and that Mrs. Heaphy lacked authority to bind either the estate or the beneficiaries. The trial court denied the motion to compel arbitration, but held an evidentiary hearing to assess whether Mrs. Heaphy had the authority to sign the contract with Willow Canyon as her husband’s agent. The trial court held that the estate’s claims were not subject to the arbitration clause in the agreement with Willow Canyon because though Mrs. Heaphy was HPOA, she was not authorized to sign the contract on her husband’s behalf, and that it was procedurally unconscionable under the circumstances.
Willow Canyon appealed the trial court’s decision, arguing that Mrs. Heaphy had actual authority, either express or implied, to sign the agreement and, even if she lacked such authority, she should be equitably estopped from denying such authority, the agreement was not unconscionable, and the Federal Arbitration Act (FAA) preempted Arizona case law “holding that an arbitration agreement cannot bind non-signatories.” Id. at 1168.
The Arizona Court of Appeals stated that it was required to defer to the trial court’s factual findings absent clear error. Therefore, the Court affirmed the trial court’s decision to deny Willow Canyon’s motion to compel arbitration for the following reasons:
First, on the issue of express actual authority, the Court examined the plain language of the HPOA and found that it authorized Mrs. Heaphy to have full authority to make decisions regarding healthcare, but only limited authority “to seek damages from a healthcare provider for its failure to comply with Charles’s refusal of treatment or his wishes . . . .” Id. at 1169. Further, because the arbitration clause was optional and “not required for Charles to be admitted into Pueblo Springs, it was not a healthcare decision as contemplated by the HPOA.” Id.
Second, the Court found that Mrs. Heaphy lacked implied actual authority to bind her husband’s estate because the HPOA did not “expand the scope of her authority such as to encompass the optional” arbitration agreement.” Id. at 1170.
Third, the Court found that the elements of equitable estoppel were not met because, among other things, Mrs. Heaphy’s signing of the optional arbitration agreement “did not represent that she had authority to bind Charles and his estate, particularly when she did not sign the line provided for the ‘Legal Representative or Agent’ and the related acknowledgement on that page.” Id.
Fourth, the Court determined that the trial court’s decision was consistent with both Arizona law and the FAA and that the arbitration agreement was unenforceable because Mrs. Heaphy lacked authority to enter into it on behalf of her husband. Id. at 1171.
In summary, the Court of Appeals found that an HPOA is limited in scope and does not confer the legal authority for the HPOA to waive legal right such as trial by jury. In contrast, an appropriately drafted power of attorney and signed arbitration provision likely would have conferred the appropriate legal authority to require that Mr. Heaphy and his estate arbitrate. A potentially open question, but likely derivative of the first question is whether the beneficiaries would also be bound by the agreement to arbitrate.
Considerations for Arbitration Clauses in the Context of Medical Malpractice
The current legal landscape is such that courts will try to enforce binding, pre-dispute arbitration agreements, even in the medical malpractice context. While there is strong public policy favoring arbitration agreements, there are common pitfalls that drafters of such agreements should watch out for.
Drafting Considerations & Unconscionability
From a practical standpoint, it is important to consider the sometime overlooked drafting and structure of arbitration clauses. In the context of medical malpractice claims, courts balance the public policy and efficiency considerations of arbitration agreements against the fact that patients or their caregivers may fail to comprehend what legal rights they are relinquishing by signing an arbitration agreement. Therefore, courts scrutinize arbitration provisions more closely than they would in a commercial context. Courts look at both substantive (overly oppressive terms or unduly harsh to one party) and procedural (the process for entering into the agreement) unconscionability.
An unconscionability claim can be successfully argued if an arbitration provision is unduly one-sided or makes medical care contingent on agreeing to arbitrate. In Gullett v. Kindred Nursing Centers West, LLC, the nursing center moved to compel arbitration pursuant to the contract between it and the Plaintiff. 241 Ariz. 532 (Ct. App. 2017). The Plaintiff opposed the motion, arguing that the arbitration agreement was substantively unconscionable if not procedurally unconscionable. Id. at 535. In evaluating whether the arbitration agreement was substantively unconscionable, the Court considered whether the “amount of permitted discovery is so low and the burden to obtain additional discovery so high that the litigant is effectively unable to vindicate their claim.” Id. at 536.
In Gullet, the Court found that because the arbitration agreement allowed for “30 interrogatories, 30 requests for production, 10 requests for admission, six lay depositions and two expert depositions,” the agreement was not substantially unconscionable. Id. at 537. The Court likewise disagreed with the Plaintiff on the procedural unconscionability claim, finding that because the arbitration agreement required the parties to find an impartial arbitrator or select from an approved list, there was mutuality and the agreement was fair. Id. at 539.
When writing an arbitration agreement, drafters should consider writing the provision out in bold type or capitalized letters to focus the signor’s attention and highlight the particular language so that the patient is put on notice that they are giving up certain legal rights. In the case of a particularly voluminous contract—as in the Heaphy case where the entire contract with the skilled nursing facility was almost 60 pages long—drafters may want to consider having the arbitration provisions set off in an entirely separate document from the rest of the agreement. Additionally, using plain, simple language is important in defending against a potential claim that the contract is unenforceable because the patient did not understand what he or she was signing.
Simply because a contract is one of adhesion does not make it automatically unenforceable. However, courts will consider “take it or leave it” agreements in light of whether the patient “knowingly consented to the clause and what the patient’s reasonable expectations of signing that provision were.” Broemmer v. Abortion Serv’s of Phoenix, Ltd., 173 Ariz. 148, 152 (1992). For this reason, when drafting an arbitration agreement, counsel may also want to include language clearly indicating that signing is an arbitration agreement is voluntary and that a patient’s medical care will not be contingent on whether they agree to arbitrate or not.
Drafting considerations go hand-in-hand with upholding the enforceability of an arbitration agreement. To avoid a claim that a contract is unconscionable, counsel and providers should evaluate the patient’s expectations and ensure that the patient has knowingly consented to the agreement. Patients should be informed of the arbitration agreement prior to consenting to the medical treatment or procedure. Terms that limit discovery or limit recovery of damages should likely be omitted. Finally, counsel should frequently review the terms of the arbitration agreement and update the language as necessary.