The Power Behind a Well-Drafted Mandatory Patient/Practitioner Mediation Clause

As part of the Fortune Club License Protection Program, the Fortune Law Firm drafts a mediation clause that Fortune Club members should be integrating into their new-patient paperwork and requiring all patients, new and returning, to sign (you’ll find that in Packet 3).

Although the importance of this simple clause is easy to overlook, a recent federal court case out of a Pennsylvania highlights just how powerful they can be to defendants (and in most cases where the patient and doctor will be the parties, the defendant will be you!).

Mandatory Mediation Clauses Generally

A mandatory mediation clause is a provision in a contract whereby the contracting parties agree that before litigating, the aggrieved party will first attempt to resolve the dispute by participating in mediation.

Although lawsuits and arbitrations are adversarial in nature, mediation is more of a collaborative process (though it can certainly feel adversarial) whereby the contracting parties enlist the aid of a third-party, the mediator, in hopes of arriving at an agreement that will settle all open disputes between them. The mediator has no authority to make any decisions in the case, but rather attempts to help the parties see each others’ perspectives, highlight the challenges and costs associated with litigation, and encourage each party to move closer to a compromise.. A successful mediation ends in a settlement of all issues, putting the entire matter behind both parties.

The Common Benefits of Mediation Clauses

When touting the benefits of mediation, legal practitioners are quick to highlight two main benefits of mediation over more traditional means of dispute resolution (i.e. litigation and arbitration): (1) if successful, mediation is much quicker and therefore less costly, and (2) whereas the outcome of litigation and arbitration are unpredictable, the parties control the outcome of mediation.

Both of these are true, to be sure, but there are two other often overlooked benefits of requiring mediation, one of which applies only to medical practitioners.

The Often Overlooked Benefits of Mediation Clauses

The word “mediation” gets most of the focus in “mandatory mediation clauses,” but the word “mandatory” can turn the clause more into a sword than a shield.

At risk of stating the obvious, the purpose of making mediation mandatory is to preclude litigation until mediation has been attempted.

That means if your patient, who has limited time to bring a claim in the first place (medical malpractice statutes of limitations are, though state dependent, often among the shortest of all limitations periods), must invite you to mediate as a prerequisite for bringing a claim.

If you can avoid litigation by reaching a swift resolution to the case, that’s all the better for both parties (believe it or not, most plaintiffs don’t want protracted litigation any more than you do).

But if the patient files a lawsuit before participating in mediation (which is their prerogative to propose for their claims), you’ve now got a very compelling argument for why the patient’s claim should be dismissed.

That’s exactly what happened in the Eastern District of Pennsylvania (Waldron et al v. SVHB Marketing LLC D/B/A Horse Power Brands et al; Case Number 2:23-cv-03485-MSG (E.D. Pa. March 20, 2024)).

That case, between several franchisees and a franchisor, involved some dissatisfied franchisees who had signed a mandatory mediation clause with the franchisor. Ignoring the clause, they filed a collective lawsuit. In response, the franchisor filed a motion to dismiss, pointing to the clause where the franchisees had agreed to mediate as a prerequisite to filing suit.

In a decision published just a few weeks ago, the Eastern District of Pennsylvania dismissed the case as the contractual prerequisites had not been met.

And that’s one of the huge, but often overlooked benefits of a mandatory mediation clause. And it applies equally to you as to any other party to a contract: if your patient sues you before convening a mediation, their case is subject to dismissal.

That’s pretty powerful. Especially if, as in most malpractice cases, the complaint is filed on the eve of the expiration of the statute of limitations. Mediation will be the patient’s last and only shot at anything because they will no longer be able to bring a claim (and how motivated will you be at that point to offer anything in settlement once you know their claims have no teeth?).

The second often overlooked benefit to a carefully drafted mediation clause, one that applies only to medical practitioners, is that in certain circumstances, a settlement reached due to mediation does not obligate the malpractice insurer to send a report with your name on it to the National Practitioner Data Bank.

So you win either way: if the plaintiff follows the contract and invites you to mediate, you’ve got an early chance to resolve the case quickly (and potentially cheaply) without having your name reported. If they do not, you’ve got every reason to believe the judge or arbitrator in your case will dismiss the claims.

The Take Away

If you don’t already have a mandatory mediation clause that you require all your patients to sign, or you have a generic one but not one we’ve drafted specifically for medical providers, it’s time to make a simple change that can have a powerful impact on your future chances of success in a claim brought by a patient.