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Medical Negligence Arbitration Proceedings Before Florida’s Division of Administrative Hearings

Administrative Law

Medical negligence arbitration proceedings, as an alternative to traditional civil tort actions, offer potential advantages to both plaintiffs (claimants) and defendants. Specifically, uncertainty and risk will be substantially reduced in many instances, making this alternative attractive to both parties. This article discusses the history of the medical negligence arbitration option, as well as the mandatory presuit process and the arbitration hearing itself, which is conducted under the auspices of Florida’s Division of Administrative Hearings.

During the 1980s, medical malpractice insurance premiums skyrocketed as the rapidly increasing cost of medical care, coupled with large jury verdicts, strained many insurers’ ability to remain solvent.1 With the passage of S.B. 85-175, lawmakers sought to create a mechanism to address the problem.2 In an attempt to remedy the situation, the legislature passed a law requiring a “presuit investigation” process and arbitration for all medical malpractice claims.3 As the legislature stated, “Medical malpractice liability insurance premiums have increased dramatically in recent years, resulting in increased medical care costs for most patients and functional unavailability of malpractice insurance for some physicians.”4 While discussed in greater detail below, the presuit investigation process essentially requires nascent litigants to engage in an informal discovery phase before filing a lawsuit.

T he 1988 revision of the presuit statute remained in place without any substantial changes until Gov. Bush, in 2003, signed an executive order creating a task force to examine Florida’s availability and affordability of medical malpractice insurance.5 The governor’s Select Task Force on Healthcare Professional Liability Insurance was charged with making recommendations for “protecting Floridians’ access to high quality and affordable healthcare.”6 The legislative plan seemed obvious: Create a way to save money by avoiding suit before judicial litigation and eliminate meritless claims. As stated in Jackson v. Morillo, 976 So. 2d 1125, 1128 (Fla. 5th DCA 2007): “The purpose of the medical malpractice presuit screening statute is to prevent the filing of medical malpractice claims that are not legitimate.” With this backdrop, the task force set forth recommendations that are the crux of this article — the voluntary binding arbitration process. The major recommendations encouraged mediation and requested a redefinition of damages in presuit arbitration to conform to damages under the Florida Wrongful Death Act.7

Understanding the Presuit Process
In order to understand the Division of Administrative Hearings’ (DOAH) role in medical malpractice arbitration proceedings, it is important to have an understanding of the presuit process. The presuit process set forth in F.S. Ch. 766 frequently precipitates the decision to engage in arbitration, or even settlement, the intent being that a diligent investigation by both parties will lead to a realistic evaluation of the claim.8

It is important to keep in mind that not every tort claim arising in the field of medicine is susceptible to the presuit process. The question of whether a particular claim falls under the presuit process depends solely on whether it is a claim for medical malpractice.9 A claim for medical malpractice means “a claim arising out of the rendering of, or the failure to render, medical care or services.”10 Thus, the main inquiry is whether the action resulted from any medical, dental, or surgical diagnosis, treatment, or care.11 Some actions that may not require the presuit process include loss of consortium claims, nursing home claims, psychologist claims, pharmacy claims, and health maintenance organization claims.12

In its entirety, the presuit process is to last 90 days, but can be extended by agreement of the parties.13 During this process, each side is required to make good-faith efforts to conduct informal discovery and reasonable investigations.14 Types of discovery that are typically utilized during this period are interrogatories, requests for production, unsworn statements, interviews with the claimant’s healthcare providers, and physical and mental examinations of claimants.15

Once the presuit investigation by the claimant is complete, the process requires that prior to filing suit, the claimant must first mail a notice of intent to each prospective defendant.16 The notice of intent is required to contain a verified medical opinion from a medical expert attesting that the care rendered by the defendant fell below the appropriate standard of care and that this negligence caused harm to the patient.17 The statutory language is specific and explains exactly who can act as a medical expert in issuing the opinion.18 While prospective defendants are not required to obtain a medical expert, they are required to investigate the claim in good faith and are well advised, if they are going to reject the claim, to obtain external review by a medical expert.

Options Following the Presuit Process
At the conclusion of the presuit process, a prospective defendant must choose between one of four possibilities authorized by Ch. 766. The prospective defendant may reject the claim, make a settlement offer, offer to admit liability and proceed to arbitration on the issue of damages, or do nothing (which will be deemed a rejection of the claim).19 If the claim is rejected, the prospective defendant must submit a written opinion from a medical expert with any response rejecting the claim.20 However, if the prospective defendant chooses to admit liability and proceed to arbitration, DOAH’s jurisdiction is invoked, and an administrative law judge will be appointed to serve as the chief arbitrator.21

The Arbitration Hearing Process
As explained by the court in Estrada v. Mercy Hospital, Inc., 121 So. 3d 51, 53-54 (Fla. 3d DCA 2013): “[I]n a proceeding for voluntary binding arbitration of a medical negligence claim, the liability of the defendants is admitted, and the only issue is damages, which are set by a panel of three arbitrators, one selected by the claimant, one selected by the defendant, and an administrative law judge designated by the Division of Administrative Hearings who serves as the chief arbitrator.” If the parties contractually agree to proceed with the arbitration process, the claimant is prohibited from bringing a lawsuit against the defendant.22 The agreement creates a binding commitment to comply with the decision of the arbitration panel. A party invited to enter into arbitration must accept or reject the offer within 30 days.23

As authorized by F.S. §766.207(9), DOAH has adopted rules to promote the orderly and efficient conduct of medical malpractice arbitration assessment and allocation proceedings.24 The rules differ in many significant respects from the Florida Rules of Civil Procedure, and counsel embarking on a medical malpractice arbitration proceeding should familiarize themselves with the rules. This admonition is reinforced in DOAH’s initial order, which pointedly states: “[F]ailure to comply with those rules could have adverse consequences for the parties.”25

A medical malpractice arbitration proceeding is commenced by the parties filing with the DOAH clerk’s office an executed agreement to arbitrate the medical negligence claim. Upon receipt of the agreement and request for arbitration, the DOAH director will issue an order appointing the chief arbitrator (a DOAH administrative law judge), who in turn will issue an initial order advising the parties to comply with all applicable rules, including the nomination of their respective arbitrators and alternates. Once the parties have submitted their arbitrator nominees and the nominees have provided the required certification (attesting to their independence of all parties, witnesses, and legal counsel), the chief arbitrator will issue an order confirming the arbitrators and an order requiring input from the parties regarding the estimated number of days necessary to conduct the hearing, the proposed location of the hearing, and proposed mutually agreeable dates at least 90 days hence.26 After receipt of the parties input, the chief arbitrator will issue a notice of arbitration hearing scheduling the assessment arbitration hearing.

As in a typical civil suit, the parties may obtain discovery as provided in Fla. R. Civ. P. 1.280 through 1.400, provided that no party may serve any written interrogatories, requests for production or inspection, requests for admissions, or requests for physical or mental examinations later than 50 days before the assessment arbitration hearing or after such other date as the chief arbitrator may order. Motions to compel discovery must contain a statement certifying that the movant has conferred with the opposing parties in a good-faith effort to resolve by agreement each issue raised and that they have been unable to do so. All depositions of witnesses and all physical or mental examinations must be completed no later than 20 days before the arbitration hearing, unless the chief arbitrator sets a different time. Sanctions to enforce discovery include those provided by the Florida Rules of Civil Procedure, except contempt.

With respect to motion practice, written motions are normally disposed of on the basis of the motion, together with any memoranda in support or in opposition, following the expiration of a seven-day response period. If the subject matter of the motion requires an earlier ruling, or if the chief arbitrator determines that oral argument is required, the movant may arrange a motion hearing, which may be by telephone. All motions must include a statement that the movant has conferred with all other parties of record and must state, as to each party, whether the party has any objection to the motion. The failure to include the required statement will result at best in a delayed ruling (while the chief arbitrator awaits a responsive filing from the other parties) or at worst, an order summarily denying the motion due to the omission. Motions in limine are often a useful tool in identifying and narrowing the issues to be resolved by the panel at hearing. They should be filed as early as possible so rulings can be obtained well in advance of the hearing.

Rule 60Q-3.022 requires the parties to file a prehearing stipulation by no later than 15 days prior to the scheduled commencement of the hearing. The stipulation is required to contain, among other things: A brief general statement of each party’s position; a list of all exhibits to be offered at the hearing, noting any objections thereto, and the grounds for each objection; a list of the names and addresses of all witnesses intended to be called at the hearing by each party; expert witnesses shall be designated; a concise, but detailed statement of those facts that are admitted and will require no proof at hearing, together with any reservations directed to such admissions; a concise statement of those issues of law on which there is agreement; and a concise statement of those issues of fact and law, which remain for determination.

The majority of medical malpractice arbitration proceedings filed with DOAH are settled prior to hearing.27 However, if the case is not settled, the hearing will convene as noticed. The hearing is jointly conducted by all of the arbitrators, but a majority determines any question of fact and renders a final decision. The chief arbitrator is responsible for deciding all evidentiary matters.28 The claimant, as the party asserting the right to recover damages, has the burden of proving by a preponderance of the evidence that it is entitled to recovery, and to establish the amount of damages to which it is entitled.29 Irrelevant, immaterial, or unduly repetitious evidence will be excluded, but all other evidence of a type “commonly relied upon by reasonably prudent persons in the conduct of their affairs” is admissible, whether or not such evidence would be admissible in a trial in Florida courts. Any part of the evidence may be received in written form, and all testimony of parties and witnesses must be made under oath.30 Hearsay evidence may be used for the purpose of supplementing or explaining other evidence, but it is not sufficient in itself to support a finding unless it would be admissible over objection in civil actions.31

As in a civil trial, the claimant will present its case-in-chief first, followed by the defendant’s case, and then rebuttal, if any. All witnesses are subject to cross examination. Since liability is not an issue, claimant expert witnesses typically include a physician who has examined the claimant and who will opine as to the current and likely future physical condition of the claimant, and an economist who will opine as to the present value of future medical expenses and wage loss and loss of future earning capacity. The claimant and members of claimant’s immediate family may testify as to the claimant’s loss of capacity to enjoy life as a result of the injury. Defendants typically present countervailing expert testimony from a physician and economist. It is unusual for the defendant medical service provider(s) to testify or even appear at hearing, since the circumstances surrounding the negligence of the injury is irrelevant and inadmissible. In fashioning their case presentations, counsel should bear in mind that while the arbitrators nominated by the claimant(s) and defendant(s) are typically very experienced in medical malpractice matters, it should not be assumed that the chief arbitrator will have a similar background.

Once all parties have rested their cases, the assessment arbitration panel will retire to discuss the evidence and to arrive at a determination. Unless the panel unanimously decides to defer entry of the arbitration award, the arbitration award will be announced on the record after the conclusion of the evidence.32 Any party may request that a specific finding of fact or conclusion of law on a significant issue be included in the language of the award to aid in appellate review. There is nothing in statute or rule that precludes an arbitrator who disagrees with the majority decision from including a dissenting statement in the award. An arbitration award and an allocation of financial responsibility are final agency action for purposes of F.S. §120.68. Appeals must be taken to the district court of appeal for the district in which the arbitration took place, are limited to review of the record, and otherwise proceed in accordance with F.S. §120.68.33

Damages Awardable in the Arbitration Proceeding
In an arbitration hearing, the claimant is entitled to both economic and noneconomic damages.34 However, the award for noneconomic damages is statutorily capped.35 Once the defendant accepts arbitration, fault has been deemed admitted for purposes of the action, and the arbitration panel will assess damages only.36 Economic damages include past and future medical expenses and 80 percent of wage loss and loss of earning capacity, offset by any collateral source payments.37 However, economic damages are awarded as provided by general law, including the Wrongful Death Act.38 Noneconomic damages are limited to a maximum of $250,000 per incident and are calculated on a percentage basis with respect to capacity to enjoy life.39

As stated in North Miami Medical Center v. Prezeau, 793 So. 2d 1142, 1144 (Fla. 3d DCA 2001), the “statutory cap of $250,000 on noneconomic damages awarded in arbitration of medical malpractice claims is part of the statutory scheme to encourage the arbitration of medical negligence claims.” According to St. Mary’s Hosp., Inc. v. Phillipe, 769 So. 2d 961, 967 (Fla. 2000), it is important to realize that the noneconomic damages cap of $250,000 “per incident” in the arbitration provisions of the Medical Malpractice Act limited the recovery of each claimant individually to $250,000, and does not limit total recovery of all claimants in the aggregate to $250,000. Since the statutory meaning of “claimant” and “per incident” was ambiguous, the Florida Supreme Court had to refer to legislative history and equal protection concerns to determine that the cap applied individually to claimants. The Third District Court of Appeal later discussed this in Deno v. Lifemark Hosp. of Florida, Inc., 45 So. 3d 959, 960 (Fla. 3d DCA 2010). Here, the court found that the noneconomic damages cap of $250,000 “per incident” in statute governing voluntary binding arbitration of medical negligence claims limits recovery to $250,000 per claimant, per incident — not per claimant, per defendant.

When determining net economic damages, which typically include lost earnings and past and future medical expenses, it is important to draw attention to the Estrada case.40 At hearing, Ms. Estrada sought lost-wage damages based on her estimated lifespan prior to her illness (pre-injury life expectancy), which was estimated to be at 82 years of age.41 In response, Mercy Hospital argued that Estrada was “essentially trying to craft a way of having a personal injury claim survive death of the injured party” and, therefore, damages should be awardable only up to her projected post-illness lifespan, which would be significantly shorter.42 In arriving at an award, the arbitration panel agreed with Mercy Hospital, limiting Estrada’s damages to her projected post-injury lifespan.

On appeal, however, the court reversed and held with Estrada. The court observed that in an action for medical malpractice based on a delayed diagnosis and treatment of breast cancer, damages for loss of earning capacity should have been based on the patient’s pre-injury life expectancy since her survivors and heirs will be precluded from recovery for medical negligence after her death.43 The court further noted that while a decedent’s survivors may, in an action for wrongful death, recover the value of future loss of support and services and the decedent’s estate may recover loss of prospective net accumulations, under Florida law, a subsequent wrongful death action is barred if the personal injury litigation results in a judgment favorable to the injured person based on the same tortious conduct.44

Constitutional Challenges
F.S. Ch. 766 and the presuit process mandated therein spawned constitutional challenges. In Bonati v. Allen, 911 So. 2d 285, 287 (Fla. 2d DCA 2005), the Second District Court of Appeal stated that the statute should be construed in a manner that favors access to courts. The access to courts issue was revisited by the Fifth District in Pierrot v. Osceola Mental Health, Inc., 106 So. 3d 491, 493 (Fla. 5th DCA 2013), in which the court concluded that the presuit requirements of the Medical Malpractice Act had the potential to restrict a plaintiff’s constitutional right of access to courts. Thus, while the statute remained intact, it must be construed narrowly and ensure access to the courts.

As with the presuit process, there have been several constitutional challenges to the arbitration provisions of Ch. 766, in particular, the cap on noneconomic damages45 and the denial of access to the courts and right to trial by a jury.46 However, in 1993, two Florida Supreme Court decisions held that the statute was not a denial of access or the right to trial by a jury. In HCA Health Servs. of Fla., Inc. v. Branchesi, 620 So. 2d 176, 177 (Fla. 1993), the court held that F.S. §§766.207 and 766.209 do not violate the right of access to the courts. And in Univ. of Miami v. Echarte, 618 So. 2d 189, 191 (Fla. 1993), the court ruled that the statutory cap on noneconomic damages in medical malpractice claims when the parties submit to arbitration “do not violate the right to trial by jury, equal protection guarantees, substantive or procedural due process rights, single subject requirement, taking clause, or nondelegation doctrine.”

Advantages and Disadvantages of Arbitration
Medical malpractice arbitration offers incentives that may be attractive to both claimants and defendants. Incentives for both parties are that no jury is seated and each side is allowed to nominate one of the three arbitrators.47 Defendants are guaranteed a cap on noneconomic damages, avoid the risk of punitive damages, and are able to have the claim resolved in a far less expensive setting.48 Claimant incentives include quick, less expensive proceedings, payment of attorneys’ fees and costs by the defendant, and elimination of liability as an issue.49 A s stated in Echarte :

[A] claimant who accepts a defendant’s offer to have damages determined by an arbitration panel receives the additional benefits of 1) the relaxed evidentiary standard for arbitration proceedings as set out by [F.S. §]120.58 (1989); 2) joint and several liability of multiple defendants in arbitration; 3) prompt payment of damages after the determination by the arbitration panel; 4) interest penalties against the defendant for failure to promptly pay the arbitration award; and 5) limited appellate review of the arbitration award requiring a showing of “manifest injustice.”50

In conclusion, counsel representing would-be litigants in a medical malpractice action should not overlook the potential benefits and protections available to their clients through the binding arbitration process.

1 Glenn M. Burton, Florida Medical Malpractice Handbook §2.1-2.9 (2006).

2 Id. at §2.1.

3 Id. For purposes of this article, medical malpractice and medical negligence claims will be referred to as “medical malpractice claims.” The statutory framework for the Medical Malpractice Act was originally created under F.S. Ch. 768, but was renumbered in 1988 to Ch. 766, where it is still found today. See Fla. Stat. §§766.101, et seq.

4 Fla. Stat. §766.201(1)(a) (2003).

5 Fla. Exec. Order No. 02-041 (Aug. 28, 2002).

6 Fla. Exec. Order No. 02-041 (Aug. 28, 2002); see Estate of McCall v. United States, 134 So. 3d 894 (Fla. 2014) (for a summary of the task force’s actions).

7 Glenn M. Burton, Florida Medical Malpractice Handbook §2.1 (2006).

8 Id.

9 Id. at §2.2 (“There are two components to answering this question. The first component is whether the prospective defendant is included within the ambit of F.S. Ch. 766. If so, the second component is whether the claim is the type of claim covered under the statute. Not all claims against a health care provider are subject to the mandates of F.S. Chapter 766.”).

10 Edward J. Carbone, Presuit Nuts‘n Bolts, Insight from Carlton Fields 1 (2011).

11 Id.

12 Glenn M. Burton, Florida Medical Malpractice Handbook §2.2 (2006).

13 Fla. Stat. §766.106(3)(a), (4) (2014).

14 Fla. Stat. §766.106(3) (2014).

15  Fla. Stat. §766.106(6) (2014).

16 Fla. Stat. §766.106(2)(a) (2014).

17 Fla. Stat. §766.203(2), (3) (2014).

18 Fla. Stat. §766.202(6) (2014).

19 Fla. Stat. §766.106(3)(b)(1)-(3) (2014); see also Edward J. Carbone, Presuit Nuts‘n Bolts, Insight from Carlton Fields 10 (2011).

20 Fla. Stat. §766.203(3) (2014).

21 Fla. Stat. §766.207(2), (4) (2014).

22 Fla. Stat. §766.207(7) (2014).

23 Fla. Stat. §766.207(3) (2014).

24 Fla. Admin. Code R. 60Q-3.026 (2014). While this article focuses primarily on the conduct of an assessment arbitration hearing, in which more than one defendant has participated in the assessment arbitration proceeding, any defendant against whom an arbitration award has been made may initiate an allocation proceeding to determine the extent to which each co-defendant will be held responsible for the award; Fla. Admin. Code R. 60Q-3.026(1).

25 See, e.g., Rost v. Tallahassee Medical Center, Inc., DOAH Case No. 14-4002MA, Notice Regarding Applicable Rules and Service of Pleadings (Aug. 25, 2014); see also Tallahassee Memorial Regional Medical Center, Inc. v. Kinsey, 655 So. 2d 1191 (1995).

26 Fla. Stat. §766.207(4) (2014). In the event of multiple plaintiffs or multiple defendants, the arbitrator selected by the side with multiple parties shall be the choice of those parties. If the multiple parties cannot reach agreement as to their arbitrator, each of the multiple parties shall submit a nominee, and the director of the Division of Administrative Hearings shall appoint the arbitrator from among such nominees.

27 Fla. Admin. Code R. 60Q-3.022(2014) (providing that no later than 10 days before the assessment arbitration hearing, the parties or their attorneys are to meet to discuss the possibility of an amicable resolution of the proceeding).

28 Fla. Stat. §766.207(7)(l) (2014).

29 See Dep’t of Transp. v. J.W.C. Co., Inc. , 396 So. 2d 778 (Fla. 1st DCA 1981).

30 Fla. Stat. §120.569(2)(g) (2014).

31 Fla. Stat. §120.57(1)(c) (2014).

32 Fla. Admin. Code R. 60Q-3.024 (2014).

33 Fla. Stat. §766.212(1) (2014).

34 Glenn M. Burton, Florida Medical Malpractice Handbook §2.2 (2006).

35 Fla. Stat. §766.207(7) (b) (2014).

36 Glenn M. Burton, Florida Medical Malpractice Handbook §2.2 (2006).

37 Fla. Stat. §766.207(7) (a) (2014).

38 Fla. Stat. §766.207(7) (2014).

39 Fla. Stat. §766.207(7)(b) (2014).

40 Estrada, 121 So. 3d at 54. In this case, Ms. Estrada was diagnosed with stage-three breast cancer on or about September 2010. Two years prior to the diagnosis, Ms. Estrada visited Dr. Agarwal for a routine mammogram. At the original visit, this type of cancer should have been easily noticed and reported, but was not and finally worsened to the point where it would reoccur and was incurable. In knowing this, Ms. Estrada sued Mercy Hospital and Dr. Agarwal for negligence, claiming that Agarwal failed to report evidence of the microcalcification during a routine mammogram more than two years earlier. Both defendants chose to admit liability and proceed to arbitration.

41 Id. at 55.

42 Id. at 53.

43 Id. at 55.

44 Id.

45 Glenn M. Burton, Florida Medical Malpractice Handbook §2.2 (2006).

46 Id.

47 Fla. Stat. §766.207(4) (2014).

48 Id.

49 Glenn M. Burton, Florida Medical Malpractice Handbook §2.2 (2006).

50 Echarte, 618 So. 2d at 194.

W. David Watkins is an administrative law judge of the Florida Division of Administrative Hearings. He regularly serves as chief arbitrator in medical negligence arbitration proceedings before DOAH.

Richard Lavery is a third-year law student at Florida State University College of Law and clerked with DOAH during the Fall 2014 semester. He plans on practicing law in Florida after passing the bar and is interested in practicing in the field of health law.

The authors gratefully acknowledge the assistance of FSU law student Valerie Little in the preparation of this article.

This column is submitted on behalf of the Administrative Law Section, Daniel E. Nordby, chair, and Stephen Emmanuel, editor.

Administrative Law