Alternative Dispute Resolution Underused in Most Hospitals
July 1, 2025
By Greg Freeman
Hospitals have been slow to make use of alternative dispute resolution (ADR) agreements to avoid litigation and bring about more satisfactory conclusions to claims.
Other industries have adopted ADR more robustly and have seen good results, says Jason E. Bring, JD, partner with the law firm of Arnall Golden Gregory in Atlanta.
“I think hospitals in particular underutilize alternative dispute resolution agreements. Those agreements are widely used in other facets of our healthcare system, including, most significantly, the long-term care section for nursing homes. They use ADR programs,” he says. “These are agreements that say, ‘Hey, we’re going to resolve any dispute not through the court system, but through first, usually mediation and then arbitration.’ If mediation is not successful, arbitration allows someone to take that and have the dispute settled, not by a judge and jury, but instead by a single arbitrator, or sometimes a panel of three.”
The arbitrator usually is an attorney or a retired judge familiar with those matters. The arbitration is confidential, fast, reduces costs, and keeps things confidential, Bring says.
“That takes away the prospect of a nuclear verdict, and that’s what most providers fear the most. When you get into nuclear verdicts, which means verdicts over $10 million, those can threaten the very viability of an organization, you get it outside of insurance coverage. And for some hospitals or systems that are scraping by that can tilt them into a position that is in the red.”
ADR also is more confidential than a court proceeding, he notes. Despite the benefit, hospitals are reluctant to use ADR, and Bring suspects that is because healthcare leaders do not understand the potential.
There is a lack of familiarity, he says. The nursing home industry adopted ADR a long time ago, and compared to nursing homes, hospitals are generally held in higher esteem by members of the community, Bring says. Hospitals might be more confident in the jury system, whereas nursing homes know that the general public has a disdainful view of their quality of care, he explains.
Also, traditional defense counsels tend to want to use the process that they are most familiar with. The ADR process is not taught much in law school, Bring says.
“Certainly, I think it’s a missed opportunity,” he says. “At a minimum, hospitals should be carefully considering whether and why they aren’t using an ADR process.”
Effective dispute resolution and strategic litigation can control legal costs for hospitals and health systems while also allowing them to recover revenue, says Mackenzie S. Wallace, JD, partner with the Thompson Coburn law firm in Dallas.
Smart legal strategy includes approaching disputes with payers and physicians through the right procedural and contractual lenses. She offers these two examples that can make a real effect:
- Managed care litigation against payers: Large health systems and provider organizations are actively pursuing litigation against insurance payers with whom they are in- and out-of-network where there are underpaid or denied claims, as well as significant billing and accounts receivable disputes. These cases can lead to the recovery of funds the provider is rightfully owed and can, in turn, help to fund other costly litigation. While these cases require an upfront investment, with the right strategy, it can result in recovering money that would otherwise go uncollected.
- Crafting dispute resolution procedures in agreements with payers and physicians: Incorporating thoughtful dispute resolution mechanisms in contracts with payers and physicians can make a significant difference. Considerations for resolution provisions include arbitration, a more cost-effective alternative to state court; joinder provisions, helpful in consolidating related disputes; and fee-shifting provisions, depending on the state.
Sources
- Jason E. Bring, JD, Partner, Arnall Golden Gregory, Atlanta. Telephone: (404) 873-8162.
Email: [email protected]. - Mackenzie S. Wallace, JD, Partner, Thompson Coburn, Dallas. Telephone: (972) 629-7124. Email: [email protected].
Greg Freeman has worked with Relias Media and its predecessor companies since 1989, moving from assistant staff writer to executive editor before becoming a freelance writer. He has been the editor of Healthcare Risk Management since 1992 and provides research and content for other Relias Media products. In addition to his work with Relias Media, Greg provides other freelance writing services and is the author of seven narrative nonfiction books on wartime experiences and other historical events.
Hospitals have been slow to make use of alternative dispute resolution (ADR) agreements to avoid litigation and bring about more satisfactory conclusions to claims.
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