United States: Are "No Sue Agreements" Appropriate For My Practice?

Last Updated: December 18 2007
Article by William L. Weiner

Recently, a New Jersey OB/GYN practice began requiring that its prospective patients sign agreements requiring binding arbitration for disputes. The agreements, sometimes referred to as “No Sue Agreements,” also required patients to waive their rights to a jury trial and imposed a $250,000 cap on non-economic damages (i.e., pain and suffering). Such agreements are supported by the Obstetricians and Gynecologists Risk Retention Group of America (OGRRGA), a risk retention insurance carrier based in Montana. According to Michigan Lawyers Weekly, OGRRGA claims that it will reduce the premiums paid by its OB/GYN insureds by 50 percent if they require their patients to sign No Sue Agreements.

OGRRGA is not the only insurer asking for No Sue Agreements. In fact, Kaiser Permanente, a large insurer in California, adopted a similar approach years ago. Insurance industry experts have been quoted in a variety of publications as saying that physicians’ use of No Sue Agreements has gained in popularity, especially in states where efforts at tort reform have been unsuccessful.

Physicians in Pennsylvania, New Jersey, and other states may have started to wonder whether they should use No Sue Agreements in their practices. In order to answer this question, physicians must determine whether No Sue Agreements are enforceable in the state(s) in which they are to be used.

Some argue that the benefits of reducing professional liability insurance premiums outweigh any detriment to patients because reducing premiums helps patients by permitting OB/GYNs to continue to practice; and the patients who do not wish to sign No Sue Agreements are free to seek medical attention elsewhere. Others contend that No Sue Agreements are contracts of coercion and, therefore, are unenforceable because physicians are essentially telling their patients that they will not treat them unless they sign. On OGRRGA’s Web site, Kaiser Permanente’s administrator is quoted as saying that three cases decided by the U.S. Supreme Court since the year 2000 that deal with the scope of the Federal Arbitration Act will make it very difficult for a state court to find a private arbitration contract unconscionable.

However, states have the authority to govern the overall fairness and operation of the arbitration process and may impose specific requirements that can impact the enforceability of No Sue Agreements from state to state. For example, California has a $250,000 damages cap, which limits the effect of binding arbitration, and California law requires “statutory notice forms” that explain No Sue Agreements to patients. New Jersey, on the other hand, has no such notice requirement, which may cause New Jersey courts to view such agreements differently in terms of enforceability.

Also, the ways in which No Sue Agreements have been drafted and presented to patients, have led state courts in various jurisdictions to uphold or reject the agreements; although courts in some states have determined that patients may not waive their rights to recover damages for alleged medical malpractice because they lack informed consent and may be executing such waiver under duress. For instance, in 1996, the Utah Supreme Court rejected a No Sue Agreement that was presented to a patient just before surgery and where the patient did not have the time to read or discuss it with her physician (see Sosa v. Paulos, M.D., 924 P.2d 357 (Utah 1996)).

While courts typically frown upon adhesiontype (i.e., “take it or leave it”) contracts where the weaker party is unrepresented and asked to give up certain rights they would otherwise have without fully understanding the consequences, No Sue Agreements have been found to be enforceable by various courts in a variety of circumstances. For example, earlier this year, the California Supreme Court found that a No Sue Agreement entered into by a patient during an initial visit with a chiropractor still applied to a medical malpractice claim arising two years later from subsequent treatment for a different condition (see Reigelsperger v. Siller, 150 P.3d 764 (Cal. 2007)).

Likewise in 2006, the Mississippi Supreme Court upheld a No Sue Agreement in a wrongful death case, finding that the agreement provided the patient with a “fair opportunity and proper forum” to litigate his claims and that the agreement was binding on the deceased patient’s beneficiaries (see Cleveland, M.D. and Central Surgical Associates, PLLC v. Mann, 942 So.2d 108, 117 (Miss. 2006)). In 1996, the Tennessee Supreme Court, while cautioning that No Sue Agreements should be “closely scrutinized” to ensure they do not contain terms that are oppressive to patients, held that a No Sue Agreement does not violate public policy, finding it is “as advantageous in this relationship as in any other” (see Buraczynski v. Eyring, M.D., 919 S.W.2d 314, 316, 319 (Tenn. 1996)). However, some states, such as Georgia, prohibit parties in a medical malpractice case from entering into a No Sue Agreement until after a claim arises, and require that a patient have legal representation before executing any agreement.

Also, before “signing on” with an insurance carrier that promises a significant reduction in one’s professional liability insurance premiums in exchange for requiring patients to sign No Sue Agreements, physicians should first attempt to assure themselves of the financial health of any such carrier, including whether it is sufficiently capitalized and whether it is admitted and licensed in the state in which the physician practices. For example, in Pennsylvania, physicians that are insured by a non-admitted carrier, (i.e., an insurer not licensed to transact business in Pennsylvania, but one that can write coverage through a Pennsylvania-licensed excess and surplus lines broker), will find themselves without “back-up” coverage through the Pennsylvania Insurance Guaranty Association if their primary, non-admitted carrier becomes insolvent.

In order to have a reasonable chance of being found to be enforceable by a court, a No Sue Agreement must, among other things:

  • make clear the rights the patient is relinquishing
  • provide the patient with a reasonable opportunity to review, ask questions about, and revoke the agreement
  • not condition treatment upon the patient signing the agreement
  • make certain that the agreement otherwise complies with state law, including with respect to any limitations on damages, whether it may be entered into before a claim arises, and the extent to which it must specify particular arbitration rules and procedures

Before asking patients to sign No Sue Agreements, physicians should consult with their professional liability insurance carrier to determine whether they favor the use of such agreements, and should consult with legal counsel to determine whether the agreements are enforceable in the jurisdiction in which the physician practices; and, if so, under what circumstances.

For more information about this topic, contact a member of the Health Law Practice.

www.foxrothschild.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
William L. Weiner
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions