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SIGNIFICANT DECISION FOR MALPRACTICE ARBITRATION AGREEMENTS

In recent blog posts, I discussed the limiting impact that arbitration agreements can have on damages as it pertains to victims of medical malpractice and nursing home negligence. Often times, patients or residents enter into arbitration agreements without understanding or knowing that the agreement caps the economic liability on behalf of the doctor or nursing home. In some instances, the economic caps are even lower than the statutory guidelines that the Florida Legislature has established.

The Florida Supreme Court however, ruled last week that when a damages clause of an arbitration provision of a Financial Agreement fails to provide the same remedies as provided by the Legislature, the damages clause violates the public policy pronounced by the Legislature in the Medical Malpractice Act (MMA), and therefore renders the Financial Agreement void. Franks v. Bowers v. Bowers, M.D. No. SC11-1258, June 20, 2013.

In the Franks case, Joseph Franks sought medical treatment from Dr. Gary J. Bowers and North Florida Surgeons, P.A. During surgery Mr. Franks suffered a large retroperitoneal hematoma at the operative site due to the external iliac vein being lacerated. As a result Mr. Frank died and his wife brought a complaint for medical malpractice resulting in wrongful death.

In response to the wrongful death lawsuit, the defense moved to enforce the arbitration agreement that provided that any non-economic damages would be capped at $250,000. This cap is in contrast to Florida's legislative caps (Florida Statute 766.207), which would have entitled the Franks to receive a maximum of $1 million. As a result, the defense filed a Motion to Enforce the arbitration clause. This Motion to Enforce was granted by the trial court, and later upheld by the Appellate Court. As a result, the Plaintiff (victim's wife) appealed to the Supreme Court.

The Florida Supreme Court held that "we do not take lightly the freedom of contract, but we find that the Financial Agreement blatantly contravenes the intent provided by the Florida Legislature." The Supreme Court went on to rule that "The incentive provided to claimants to encourage arbitration is a necessary provision of the MMA. We therefore find that the Financial Agreement's avoidance of the incentive contravenes the intent of the statute and, accordingly, the public policy of this state. Because the Legislature explicitly found that the MMA was necessary to lower the costs of medical care in this State, we find that any contract that seeks to enjoy the benefits of the arbitration provisions under the statutory scheme must necessarily adopt all of its provisions."

The Franks case represents a significant bright line test for Plaintiff's when dealing with medical malpractice arbitration agreements that attempt to cap damages. The Franks decision represents the need to scrutinize the arbitration agreement to identify whether it contravenes the intent of Florida's statute as it may result in the arbitration agreement being set aside.

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