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Florida’s recent ruling on arbitration clauses provides a crucial distinction in determining whether such clauses are void as against public policy, and providers may have the opportunity to include arbitration clauses in their patient consent forms.

On March 6, 2024, Florida’s Fourth District Court of Appeals reversed and remanded Florida’s Fifteenth Circuit Court ruling of Piero Palacios v. Sharnice Lawson. The Court of Appeals ruled that the parties’ arbitration agreement did not contradict the Legislature’s intent of Florida’s Medical Malpractice Act (the “MMA”), but rather reflects the parties’ choice to arbitrate claims entirely outside of the MMA’s framework. Therefore, the Court found that the agreement was not void as against public policy.

Background

In this case, the plaintiff registered online with SmileDirectClub to receive orthodontic treatment. The defendant, who is an orthodontist affiliated with SmileDirectClub, treated the plaintiff remotely. The plaintiff later claimed the defendant was negligent for failing to discover and treat the plaintiff’s periodontal disease. During the plaintiff’s registration process with SmileDirectClub, she accepted the following arbitration agreement:

“I hereby agree that any dispute regarding the products and services offered through SmileDirectClub and/or by my affiliated dental professionals, including but not limited to medical malpractice disputes, will be resolved through final and binding arbitration before a neutral arbitrator and not by lawsuit filed in any court. . . . I understand that I am waiving any right I might otherwise have to a trial by jury. . . . I agree that the arbitration shall be conducted by a single, neutral arbitrator selected by the parties and shall be resolved using the rules of the American Arbitration Association.”

The plaintiff filed a complaint alleging medical malpractice after the parties completed the MMA’s pre-litigation investigation process. When the defendant moved to compel binding arbitration pursuant to the arbitration clause in the agreement with SmileDirectClub, the plaintiff argued that the arbitration agreement was void as against public policy because it was inconsistent with the terms of voluntary binding arbitration under the MMA.

The trial court ruled in favor of plaintiff’s argument that the arbitration agreement was void as to public policy.

Florida's Medical Malpractice Act

The Florida Legislature enacted the MMA as an effort reduce the consistently rising medical malpractice insurance premiums by decreasing the costs of defending such claims. The MMA requires prompt determination of the merits of claims through a pre-litigation investigation process and encourages arbitration to determine damages for non-frivolous claims.

The MMA provides several incentives for both parties of a suit. For defendants, non-economic damages are limited to $250,000 per incident and punitive damages are prohibited. On the other hand, claimants are incentivized by the defendant’s concession of liability, a relaxed evidentiary standard to evaluate damages, and prompt payment of the arbitration award with interest.

Previous Rulings from the Florida Supreme Court

The lower court relied on previous rulings from the Florida Supreme Court, Franks and Hernandez, to conclude that the arbitration agreement between the plaintiff and SmileDirectClub was void and against public policy. However, the Fourth District Court of Appeals identified a distinction between the agreement at issue in this case and the agreements at issue in previous rulings.

In Franks, the parties’ agreement was consistent with the MMA by requiring medical malpractice claims to be submitted to binding arbitration under the Florida Arbitration Code and limited non-economic damages to $250,000 per incident. However, the agreement removed the claimant’s incentives to submit claims to arbitration under the MMA and limited the claimant’s recovery of non-economic damages without requiring the defendant to admit liability. For these reasons, the Florida Supreme Court determined this agreement was void as against public policy.

In Hernandez, the parties’ agreement included that the provisions of the MMA would apply to any claim for medical malpractice, but if the parties did not mutually agree to arbitration under the MMA, then the claim would be submitted to binding arbitration under the Florida Arbitration Code. The Florida Supreme Court determined that the agreement was void as against public policy because it appeared to incorporate the MMA, but did not provide the same benefits to the claimant in exchange for relinquishing the right to a jury trial.

Fourth District Court of Appeals Analysis

However, the Fourth District Court of Appeals explained that the agreement at issue between plaintiff and SmileDirectClub is materially different from the agreements in Franks and Hernandez because the parties exercised their freedom to contract around the MMA by agreeing to arbitrate medical malpractice claims entirely outside of the MMA’s framework. Here, the parties’ agreement did not incorporate or appear to incorporate any of the provisions of the MMA. Additionally, the parties did not pick and choose which provisions of the MMA to include in their agreement or attempt to enjoy the benefits of the arbitration provisions in the MMA without adopting all of MMA’s provisions. Therefore, the agreement between plaintiff and SmileDirectClub was not void as against public policy and enforceable by law.

BMD Considerations

Providers should review all consent forms and patient agreements at least annually. If you are considering incorporating an arbitration provision into your consent forms, we recommend that you seek legal counsel. If you have any questions about the new Florida ruling or wish to have your consent forms and other documents reviewed, please contact BMD Vice President Amanda Waesch at alwaesch@bmdllc.com or Attorney Amanda Kilway at ackilway@bmdllc.com.