Undisclosed Arbitration Clause in the Doctor-Patient Agreement Held Unenforceable

By Alex Stein

STEIN on Medical Malpractice has published a survey of noteworthy court decisions in the field for 2017. This survey includes an important decision, King v. Bryant, 795 S.E.2d 340 (N.C. 2017), that examines the validity of a doctor-patient agreement to arbitrate disputes over medical malpractice.

A front desk employee at a surgeon’s practice provided the patient with several intake forms to complete and sign while he waited to meet the surgeon. The forms included an agreement to arbitrate medical malpractice disputes, which the patient signed without reading (together with other documents) because he believed it to be “just a formality.” After an unsuccessful surgical procedure, the patient sued the surgeon in court for medical malpractice. The surgeon filed a motion to stay the action and enforce the arbitration agreement. The trial court denied the motion after finding the arbitration agreement unconscionable. The Court of Appeals affirmed that decision and the surgeon appealed to the North Carolina Supreme Court.

The Court decided that both the surgeon and his practice violated their fiduciary duty to the patient by failing to make “full disclosure of the nature and import of the arbitration agreement to him at or before the time that it was presented for his signature. Instead of specifically bringing this agreement, which substantially affected his legal rights in the event that an untoward event occurred during the course of the treatment that he received from defendants, to Mr. King’s attention and explaining it to him, defendants presented Mr. King with the arbitration agreement, which, at a minimum, could have been worded more clearly, in a collection of documents, thereby creating the understandable impression that the arbitration agreement was simply another routine document that Mr. King needed to sign in order to become a patient.” The Court reasoned that “regardless of whether a physician-patient relationship existed between Mr. King and Dr. Bryant at the time that the arbitration agreement was signed, there was a confidential relationship between them at that point. It is difficult for us to see how one could reach any conclusion other than that Mr. King reposed trust and confidence in Dr. Bryant, to whom he had been referred by his family physician for the purpose of receiving surgical treatment. … We hold that the arbitration agreement at issue in this case was obtained as a result of defendants’ breach of a fiduciary duty that they owed to Mr. King.”

The Court properly noted in this connection that its ruling aligns with the Federal Arbitration Act, as interpreted in AT&T Mobility v. Concepcion, 563 U.S. 333 (2011) and related decisions. “As those decisions clearly recognize,” it explained, “arbitration agreements are subject to invalidation based upon “‘generally applicable contract defenses, such as fraud, duress, or unconscionability,’ but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.” Id. at 351 (citing Concepcion, 563 U.S. at 339).

Hence, the decision to refrain from enforcing the arbitration agreement between the patient and the surgeon was not precluded by the doctrine of federal preemption.

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About Alex Stein

Alex Stein is a Professor of Law at Brooklyn Law School. Before joining Brooklyn, Alex was a Professor of Law at Cardozo Law School (2004-2016) and served for more than a decade at the Hebrew University of Jerusalem Faculty of Law (1991-2004). He also held visiting professorial appointments at Alabama, Columbia, Miami, and Yale Law Schools. In Fall 2016, he visited Harvard Law School, where he taught Torts and a seminar on Medical Malpractice. Alex's specialty areas include Torts, Medical Malpractice, Evidence, as well as general legal theory and economic analysis of law. He authors three books, An Analytical Approach to Evidence (with Ronald J. Allen et al.) (6th ed. 2016); Foundations of Evidence Law (2005) and Tort Liability under Uncertainty (2001, with Ariel Porat), and over sixty articles of which many have appeared in leading journals. Alex was one of the founding editors of Theoretical Inquiries in Law and is on the editorial board of the International Journal of Evidence & Proof. In 2013, he launched an e-journal STEIN on Medical Malpractice, http://www.steinmedicalmalpractice.com, that covers all significant developments in medical malpractice laws across the United States. He graduated from the Hebrew University of Jerusalem and earned a Ph.D. from the University of London.