North Carolina Supreme Court Denies Enforcement of Arbitration Agreement by Physician Against Patient to Whom Physician Did Not Provide Full Disclosure...

On January 27, 2017, the North Carolina Supreme Court held that a physician and his practice could not enforce an arbitration agreement against a patient where the physician and his practice did not make full disclosure to the patient of the nature and import of the arbitration agreement before or at the time it was presented to the patient for signature.  

The case, King v. Bryant, involved patient Robert King, who was scheduled to undergo surgery by Dr. Michael Bryant for a hernia repair.  At his first appointment with Dr. Bryant, Mr. King signed various intake forms while he sat in the waiting room, one of which was an arbitration agreement.  Later, after seeing Dr. Bryant, Mr. King also signed several insurance forms.  Mr. King admitted he did not read any of the documents before he signed them, but claimed that even if he had read the arbitration agreement in its entirety, he would not have understood it. 

Mr. King proceeded with the surgery, which resulted in a host of complications in the months that followed, including limited use of his right leg.  Shortly thereafter, Mr. King filed a medical malpractice suit and Dr. Bryant and his practice then tried to compel arbitration pursuant to the intake form signed by Mr. King.  The trial court denied the petition to compel arbitration.  The North Carolina Court of Appeals affirmed the trial court's decision and Dr. Bryant and his practice appealed to the North Carolina Supreme Court.  

In affirming the lower court's decision that the arbitration agreement was unenforceable, the North Carolina Supreme Court focused on the relationship between Dr. Bryant and Mr. King at the time Mr. King signed the arbitration agreement.  The court held that a fiduciary relationship   existed because Mr. King had placed special trust and confidence in Dr. Bryant by providing the practice with confidential medical information and because Mr. King relied on Dr. Bryant for his medical expertise and skill.  The court also noted that this fiduciary relationship existed independently of the customary physician-patient relationship.  Therefore, because Dr. Bryant and the practice had not fully disclosed to Mr. King the nature and import of the arbitration agreement, but instead simply presented it to him along with many other routine medical forms, they breached the fiduciary duty owed to Mr. King.

The King v. Bryant decision does not necessarily mean that physician practices should toss their arbitration agreement forms into the shredder or delete the arbitration provision from their other patient intake forms.  The North Carolina Supreme Court expressly stated that its decision should not be taken "to cast doubt upon the availability of physicians and patients, assuming that proper disclosure is made, to enter into appropriately drafted agreements" that include arbitration provisions.  Instead, the ruling seems to indicate that, because arbitration agreements substantially affect patients' legal rights, physician practices should fully disclose "the nature and import of the arbitration agreement" at the time it is presented to patients for signature. 

Although the decision was based on the existence of a fiduciary relationship between a physician and a patient, the North Carolina Supreme Court did not reach the issue of whether all health care providers are fiduciaries, so it is unclear whether health care providers other than physicians (such as dentists, optometrists, and hospitals) would have a fiduciary duty and, therefore, a duty to disclose to patients the import of the arbitration agreement.  Arguably, however, because patients usually provide most health care providers with confidential medical information and rely on those health care providers for health care expertise and skill, it is conceivable that a fiduciary duty could be extended to other health care providers.  So, to avoid Dr. Bryant's outcome, all health care providers, as part of the patient intake process, should carefully disclose to patients the existence of any arbitration provision contained in a patient intake form and the consequences of arbitration, including its binding nature and its substantial effect on the patient's legal rights.