From 1996 to 1997, researchers at the RAND Corporation conducted the first phase of a two-phase project to evaluate the pattern of use of binding arbitration agreements by California health care plans and providers and their effect on dispute outcomes.

The research team conducted a literature review, surveyed California physicians and hospitals and interviewed representatives of stakeholder organizations, including medical malpractice insurers, health insurers, health maintenance organizations (HMOs) and relevant trade associations.

The project was part of the Robert Wood Johnson Foundation (RWJF) Improving Malpractice Prevention and Compensation Systems national program.

Key Findings: The following were among the findings reported by team members in Law and Contemporary Problems:

• Only nine percent of the surveyed physicians and nine percent of the surveyed hospitals said they use binding arbitration agreements.
• Although small, the percentage of physicians using agreements is increasing.
• The most common reason cited by physicians for using agreements was that the physician's insurer recommended their use.
• Lack of familiarity with binding arbitration agreements is the primary reason that physicians don't use them.
• Most HMOs incorporate arbitration agreements into their contracts with purchasers and enrollees.

Key Conclusions: Based on this information, the project team concluded that, contrary to expectations, the use of binding arbitration agreements in California was too limited to permit a valid empirical evaluation. The team did not seek funding for the second phase.