LEGAL GUIDE
Written by attorney Christopher David Hinderliter | Nov 10, 2011

Avoid Signing Binding Pre-Dispute Arbitration Clauses

Agreeing to pre-dispute mandatory binding arbitration without knowing it is an increasing danger in all types of transactions. Most notably it is very common in the contracts that most of us have signed with our wireless telephone/data service providers such as Verizon and AT&T. A relatively recent and potentially more dangerous phenomenon is the placement of mandatory binding arbitration agreements in the huge stack of documents that people sign before seeing a physician or having surgery.

The dangers of mandatory binding arbitration are not well known to the vast majority of consumers or patients. Here is short a primer on what they mean and the implications they carry. When you agree to mandatory binding arbitration before incurring any harm or injury, you have waived your constitutional right to a trial in front of a jury of your peers. You have instead agreed to play by the rules of the person who drafted the agreement and at the same time allow any grievance you may have to be decided by a person or persons chosen by the other side. Read that again. You play by their rules and the person of their choice makes all of the decisions. These decisions include: Was the other person/company negligent, did that negligence harm you, and how much harm did you suffer, if at all.

If we are being honest, when you sign such agreements you are essentially giving a potential wrongdoer a free pass to harm you. This premise has been statistically well documented in the first example I provided, consumer contracts involving wireless telephone providers. In the vast majority of these cases, the companies win and claims are dismissed. And this makes sense. The arbitrators that are chosen by the companies to make decisions rely on the same companies to keep giving them cases to decide. The only glimmer of good news is that these types of disputes are usually fairly minor, although I do not think that makes the situation ‘right’. The same is not true for the second example, mandatory binding arbitration in the medical context. Although mandatory binding arbitration provisions unwittingly signed by medical patients is not the norm, I have heard of several recent examples. Most recently, a judge in Philadelphia struck down one of these provisions that had been signed by patients of a well known Philadelphia orthopaedic surgery practice group. The provision was struck down on a technicality because the arbitration rules cited in the agreement had never actually been written, so an essential element of the supposed agreement was impossible to enforce. There are certainly many different avenues to attack the validity and enforceability of pre-dispute mandatory binding arbitration agreements. But, there are smart lawyers, insurance companies, and health care institutions that are constantly reviewing the law and attempting to gain unfair advantages. The better course of action is to simply refuse to sign any such agreement. Why create the potential for a difficult fight even if it is statistically unlikely that you will be injured in a medical procedure? If a physician refuses to treat you if you do not first waive one of your fundamental constitutional rights, do you really want that person providing you medical care?

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