EXECUTIVE SUMMARY

Mediation can be the right strategy for resolving disputes that could otherwise lead to litigation. The process can bring resolution more quickly and with lower costs than other options.

• Both parties should be open to pursuing mediation in good faith.

• Choose a well-qualified mediator.

• Mediation often allows parties to vent and address emotional issues more effectively than litigation.


Mediation is an effective strategy for resolving a range of disputes in healthcare, but success with this approach depends on understanding the process and selecting the right mediator. When carried out well, mediation can leave all parties more satisfied than they would have been with other resolutions.

Achieving good results from mediation depends largely on the preparation and attitude of the participants, says George B. Breen, JD, an attorney with the law firm of Epstein Becker Green in New York City. He has experience both as an attorney on behalf of a party participating in a mediation and as a mediator, principally dealing with healthcare issues.

“While mediations are often imposed on parties in litigation by court order, successful mediations are ones where parties have had the opportunity to evaluate their own positions and those of their adversary, and are willing, interested, and committed to participating in the process and in reaching a resolution,” Breen says. “Preparation is key both in ensuring that your client has expectations reasonably set [and] that the lawyer as advocate has a mastery of the facts.”

That means the lawyer needs to play “devil’s advocate” in advance of the session, Breen says, anticipating the positions to which a response may be needed and being ready with that response. Without that kind of preparation, client representatives may just be going through the motions, and the mediation will be unsuccessful.

“Similarly, there is a real need to try to make sure your mediator is as prepared as possible. A mediator prepared with a strong knowledge base in advance of a mediation can make a world of difference in the ultimate outcome,” Breen says.

Nonbinding Resolutions

Mediation is different from arbitration in that it is nonbinding, explains Matthew W. Wolfe, JD, partner with the Parker Poe law firm in Raleigh, NC. The mediator can suggest a resolution and the parties can agree to it during the mediation process, but that agreement is nonbinding, he says.

“With arbitration, the parties are putting the case in the hands of the arbitrator to make a decision that is legally binding,” Wolfe says. “There are jurisdictions and times where a court will require mediation before the parties proceed with litigation, which means they have to pursue mediation in good faith but they are not bound by what the mediator says. The mediator may determine the case is worth $2 million, but the parties can take it or leave it.”

Caution is advised with the rules of evidence as they apply to mediation, Wolfe says. Federal and state rules of evidence generally make inadmissible compromises and offers to compromise, which means statements during mediation cannot be used later at trial to prove liability, he says.

“However, statements made in mediation can be used in other ways besides proving liability, so it is important to have an attorney who understands these limitations and can make sure you are not increasing your exposure during the course of mediation,” Wolfe says.

Mediation can be the best option when there is a clear middle ground that the parties might reach with a little help, says Gary S. Qualls, JD, partner with the K&L Gates law firm in Research Triangle Park, NC. In such cases, Qualls advises clients to mediate early — before a lot of expenses are incurred and the parties dig in their heels.

“When the middle ground is not obvious, however, I’ve found that it can be a waste of time and effort to mediate too early,” he says. “When you mediate after you have done depositions and discovery, clients and attorneys are making more informed decisions about their risk/reward assessments. It’s kind of shocking sometimes to see how much your positions and expectations shift after what you learn in discovery.”

An Early Strategy

Mediation is particularly useful early on in the process, says Rupa S. Lloyd, JD, shareholder with the Gray Robinson law firm in Gainesville, FL. It can be useful, for example, when a legal claim is anticipated or threatened but not yet filed, she says. Mediation also can occur after litigation, provided the parties can set aside hard feelings and hear the other parties’ perspectives, she notes.

A key benefit of mediation is that the costs, time, and friction associated with mediation are generally far less than with litigation or arbitration, Lloyd says. It also provides an opportunity for parties to repair or improve their relationships, whereas litigation generally makes a bad relationship even worse.

“In healthcare, disputants often need to work together in the future, so the quality of their relationship is critical,” she says. “The downside of mediation is that it can be abused as a tool for discovery or intimidation, or can show up as a waste of time if one or both parties are not prepared to compromise.”

Open Mind Necessary

The key questions for determining when mediation is the right choice are whether the parties have sufficient information to propose and evaluate terms of agreement, and whether the parties are psychologically ready to put the dispute behind them, Lloyd says.

“Mediation is successful when parties come prepared to listen with an open mind and make compromises,” she says. (See the story in this issue for tips on successful mediation.)

To get the most from the mediation process, Lloyd advises finding a good, competent mediator with expertise in the healthcare field. A mediator who is not knowledgeable about the complex rules and regulations in the industry that might be relevant to a dispute will lack the requisite expertise to understand the issues and guide the parties in resolving them, she says. To be eligible to sit on the American Health Lawyers Association (AHLA) roster of mediators, the mediator must have completed a minimum of 20 hours of training.

“In the beginning, it is normal that parties are guarded and pessimistic. An effective mediator will be able to open up communication and develop faith in the process,” Lloyd says. “Generally, this is much easier if she speaks the parties’ language and can empathize with their situation.”

Be Open to Negotiation

A truism in mediation is that “People don’t care how much you know until they know how much you care,” Lloyd says. This means that in order for mediation to be successful, each side needs to be willing to open up and share their feelings in their private sessions with the mediator — including not only what they are most upset about, Lloyd says, but also what they might see as positives about the other side, and where they may be willing to meet the other side halfway.

Being open with the mediator and trusting that he or she will not share the confidences relayed in private sessions are critical for effectiveness to guide the parties to their points of common ground, Lloyd says.

“At the end of mediation, when offers are on the table and parties are digging in on their demands, the mediator often steps into more of an advisory role. The mediation may turn on the parties’ degree of trust and respect for her advice,” Lloyd says. “A well-established expert naturally commands more respect than a skilled but nonexpert mediator.”

Lloyd cautions that one should not rely on any oral promises made in mediation. For any resolution reached in mediation to be legally binding, the parties need to sign a written settlement agreement.

“This is a key distinction between mediation as compared with a trial or arbitration. There is no judge or arbitrator to set forth a binding decision,” she explains. “The parties and their counsel remain in control to ultimately determine and sign off on the agreements reached through the mediation process.”

Parties Likely More Satisfied

Mediation is underused in healthcare, says Carol Barkes, MBA, CPM, a mediator and conflict resolution expert in Boise, ID.

“Even if mediation doesn’t lead to resolution — which they almost always do — it leads to a better understanding. Conflicts often arise from misinformation or when people stop talking to each other,” she says. “Mediation is a cost-effective and easier way to get people to back off from that intense desire to get justice. It gets the issue de-escalated much faster than other options.”

Parties who mediate are typically more satisfied with the outcomes and abide by their agreements with a much higher rate than those who go to litigation, Barkes says.

Mediation helps facilitate a conversation that helps the conflicting parties come up with solutions that they created. Consequently, it is much easier to come up with a variety of creative solutions that are not possible through the legal process, Barkes says. Mediation is future-focused and aimed at getting the parties beyond their conflict, not about proving who is right or wrong — it is about finding resolutions, she says. When blame and judgment are removed, resolutions come much quicker, Barkes says.

It is typically a much faster process than litigation, which contributes to making mediation much more cost-effective, she says.

“It also allows the parties to talk to each other, which is something we find often does not happen prior to mediation,” she says. “And when people actually talk to each other a lot of misconceptions, hurt feelings, and anger dissipate.”

The best way to get the most out of mediation is to be open minded and more interested in the resolution than blame, Barkes says. Effective communication skills also are important, such as speaking briefly, seeking to understand, staying calm, and not lashing out.

Mediation can go astray if the mediator is not well-skilled, she says.

“Also, if attorneys are involved in the process and use mediation as a process to prelitigate their case and get locked into their positions, a key opportunity to talk and collaborate is lost,” she says. “I believe mediation should be used much more often than it is. Most cases can benefit from mediation, and even if a resolution is not found during the mediation, both parties will come away from the process with a much better understanding of the matter from both perspectives.”

Barkes believes that when a risk manager is looking for a mediator, content knowledge often is not as important as the ability of the mediator to be able to facilitate a productive conversation.

“In fact, I often find not knowing anything about the topic can be of huge value, as it gives me the opportunity to ask questions that shed light on something being overlooked or assumed while I am being educated,” she says. “Being able to manage the emotions, power, and direction of the conversation is a much more important skill set for which to look.”

Mediators also can model good communication skills, she says. Many people have a difficult time with conflict, and when it is about health or associated costs, emotions can be high.

“This can make it even harder for parties to communicate, as it generates a limbic response on our brains associated with fight or flight. When this part of our brains gets activated, the rational, genius part of our brain is shut down, and this makes it harder to find answers, even if we originally had them,” Barkes says. “Mediators can make a safe place for conversation and know how to manage emotions, making it easier for the parties to find bridges for resolution. They can model behavior that helps parties feel less stressed and safer.

Emotional Issues Addressed

The emotional issues in healthcare are greater than those in most other types of litigation, and that can make mediation the right strategy in many cases, says David L. Gordon, JD, shareholder with the law firm of Buchanan Ingersoll & Rooney in Princeton, NJ, and co-chair of the firm’s Litigation Section and the Healthcare Litigation practice group. Collectively, they mediate more than 30 cases a year.

“There are almost always significant medical conditions at issue with a question of whether the care caused or contributed to those issues. It is often hard for a family to understand that these issues may not be the result of negligence but may stem from their loved one’s underlying medical conditions,” Gordon says. “Moreover, the family sometimes is in denial about what happened to their loved one or may have regrets about decisions they made regarding their care.”

The damages permitted in lawsuits differ per state, but Gordon notes that families also struggle to understand what damages they are entitled to recover, the cost of litigation, the emotional toll of litigation, the length of litigation and the possibility of appeals, and the fact that they may lose and recover no damages.

Mediations give the families an opportunity to vent, sometimes cry, and hear from an experienced, retired judge about the risks, the damages, the costs, and the benefits of settlement that can give them closure, Gordon says. That message is much better sent from a neutral mediator than their own attorney who is a paid advocate, he says.

Not all cases settle at mediation, but most settle at some point, and the mediation plays a significant role in increasing those chances, he says.

“If the family or plaintiff is not respected at mediation, mediations can have a negative effect on the ultimate result — but most defendants have the experience and tact to prevent that from happening,” Gordon says. “Mediations are a significant tool in the world of professional liability litigation.”

Because it is contractual and nonbinding, mediation has little downside risk, says John C. Ivins Jr., JD, partner with the Hirschler Fleischer law firm in Richmond, VA. If the parties cannot agree to resolve their dispute in mediation, they simply proceed with the dispute process or litigation.

“In some instances, mediation may be the first time the parties have met or the first time the parties have been together since the dispute or litigation began. In all instances, this makes for a generally tense meeting,” Ivins says. “Where the parties have agreed to share their positions, this is done, formally, with the mediator guiding that process. Once positions are shared, each party retires to their own conference rooms, and the mediator moves between the rooms, conveying permitted information in an effort to resolve the dispute.”

In certain types of cases, such as personal injury, there is a benefit in allowing the injured parties to personally describe their injuries to the defendants who they contend are responsible, he says. That sharing can be cathartic, especially where there are explanations and the defendants come across as reasonable and interested in reaching a resolution. In other instances, the injured plaintiffs may have an unrealistic view of causation and damages, and the process can help to educate them, Ivins says.

Mediator Gains Understanding

As the mediation progresses, the mediator holds private meetings with each party, Ivins explains. The strengths and weaknesses of the party’s positions are shared with the mediator — and usually not shared with the opposing party.

“Because the mediator is prohibited from sharing any information the party has not authorized for sharing with the opposing party, the mediator oftentimes gains an overall understanding as to what issues are important or not important to each side — which knowledge can help the mediator shape the settlement discussions,” Ivins says.

It is important to ensure that the opposing party has the same interest in mediation, Ivins says. If they don’t, the mediation can be a waste of time and resources. Additionally, it is critical to establish rules that ensure that facts conceded in an effort to reach a successful mediation cannot be used against the party in litigation if the mediation fails, he says.

Almost any type of dispute/litigation can be the subject of mediation, Ivins says. The keys to effective mediation are having an experienced mediator who meets the criteria for resolving that dispute and conducting mediation at a point in time when the facts and law are relatively well-developed, he says.

“Some mediators are also very good at staying involved when the parties’ mediation is unsuccessful, especially where the mediator knows that the parties are not as far apart as they may believe they are,” Ivins says. “In those instances, a mediation may end, but through the efforts of the mediator, pick back up again at a later time and then result in a successful conclusion.”

Information Needed for Success

Parties generally like the idea of mediating early in order to save money that would otherwise be expended in the litigation process. However, when mediation occurs before the basic facts have been developed through discovery or before the experts have produced reports, Ivins says, the process will be difficult due to the number of unknown factors needed to evaluate the case’s worth. Without sufficient information, it is difficult for the parties to properly assess what the reasonable payment/value range should be in order to resolve the dispute, he says.

“On the other hand, where the facts are well-developed, the damages are easily identifiable, and the legal theories and defenses are well-understood, a case may be mediated at a much earlier time in the dispute/litigation process,” Ivins says. “For the best success, do not mediate too early, retain an experienced mediator, realistically evaluate the case ahead of time, and ensure that all persons who must approve of any resolution are either personally present or are otherwise available prior to and during the mediation.”

Mediation can be most appropriate in business disputes, such as those between payors and payees or between practitioners and the hospital, says Robert Shaw, JD, an attorney with the Smith Anderson law firm in Raleigh, NC. All parties have a motivation to resolve the dispute privately, with little advantage to a jury trial, he says.

The cost of mediation can be a stumbling block, Shaw says. Although it is far less expensive than litigation, mediation does require expenses that may cause parties to question why they can’t just hash things out through their lawyers.

“Mediation requires paying your attorney as well as the mediator and preparing a mediation statement, all of which can be expensive and time-consuming, as well,” Shaw says. “The parties involved generally have to meet physically for the mediation, so if there is travel involved, that is another expense that can be a hindrance.”

A typical mediator’s fee is from $250 to $500 per hour, says Wendy Lappin Barragree, JD, senior counsel with the Chamberlain Hrdlicka law firm in Philadelphia. Mediation may take several hours or an entire day, and even with associated costs like attorneys and research added to the mediator’s fee, it will still be a good deal when compared to litigation, she says.

“I have clients who come to me and say ‘It’s not about the money, it’s about the principle.’ I tell them that I’m happy to stand with them all the way to the end on principle, but principle is expensive,” Barragree says.

“Those people can sometimes be shown that mediation is a better route to satisfaction by assuring them they will get to say their piece and be heard. If they are hell-bent on standing on principle to the bitter end and getting a pound of flesh, mediation is not going to be useful.”

SOURCES

• Carol Barkes, MBA, CPM, Mediator and Conflict Resolution Expert, Boise, ID. Email: carol.barkes@mediaambassadors.com.

• George B. Breen, JD, Epstein Becker Green, New York City. Phone: (202) 861-1823. Email: gbreen@ebglaw.com.

• David L. Gordon, JD, Shareholder, Buchanan Ingersoll & Rooney, Princeton. NJ. Phone: (609) 987-6854. Email: david.gordon@bipc.com.

• John C. Ivins Jr., JD, Partner, Hirschler Fleischer, Richmond, VA. Phone: (804) 771-9587. Email: jivins@hf-law.com.

• Wendy Lappin Barragree, JD, Senior Counsel, Chamberlain Hrdlicka, Philadelphia. Phone: (610) 772-2319.

• Rupa S. Lloyd, JD, Gray Robinson, Gainesville, FL. Phone: (352) 376-6400. Email: rupa.lloyd@gray-robinson.com.

• Gary S. Qualls, JD, Partner, K&L Gates, Research Triangle Park, NC. Phone: (919) 466-1182. Email: gary.qualls@klgates.com.

• Robert Shaw, JD, Smith Anderson, Raleigh, NC. Phone: (919) 821-6779. Email: rshaw@smithlaw.com.

• Matthew W. Wolfe, JD, Partner, Parker Poe, Raleigh, NC. Phone: (919) 835-4687. Email: mattwolfe@parkerpoe.com.