Physician Sues AAA in Federal Court: Claims it Falsely Advertises Network of ‘Neutral’ Arbitrators

November 20, 2015

health-care-lawA doctor in California, who is arbitrating claims against Blue Cross, accused the American Arbitration Association (AAA) of falsely advertising “neutral” judges to resolve disputes between parties. In a suit filed in New York federal court on November 9, 2015, Douglas Hopper, M.D., claims that he has paid the association up to $101,000 for a guaranteed service that they did not provide.

Dr. Hopper alleged Monday that the New York-based organization AAA, which is handling his dispute resolution with Blue Cross over payments from patients, is unable to deliver the service it promises of providing a neutral third-party arbitrator.

Guaranteed Neutrality

To reinforce his claims, Dr. Hopper alleges that the AAA gives the false impression that it provides impartial arbitrators when those individuals are really independent contractors, hired on a job-by-job basis. Therefore, “neutrality” cannot be guaranteed. Dr. Hopper claims the AAA website promotes the individuals in its roster (or “network”) not as arbitrators but “neutrals” and claims that “AAA neutrals are held to the highest standards.”

Arbitration Procedures.

According to Dr. Hopper, the reason the AAA describes their arbitrators as “neutral” is because its procedures do not follow U.S. Supreme Court rules on arbitration. According to the suit, “The Supreme Court has held that arbitration procedures must follow all applicable statutes but the AAA rules do not follow this.”

“Take It Or Leave It” Contract?

According to the suit, Dr. Hopper hired the AAA to arbitrate claims against Blue Cross in order to recover about $34,000 that the insurer “forcibly recouped from payments due to him for the treatment of current patients.” He also claims that he was forced to arbitrate the matter after Blue Cross produced an adhesion contract in California state court, requiring him to arbitrate any billing disputes. An adhesion contract is a contract between two parties, where the terms and conditions are set by one of the parties, and the other party has little or no room to negotiate.

Violation of Business Law.

In the suit, Dr. Hopper claims the AAA violated New York General Business Laws. For example, Section 340, New York General Business Law states that “Deceptive acts or practices in the conduct of any business, trade or commerce in this state are hereby declared unlawful.” Also, Section 350, New York General Business Law bars false and misleading consumer advertising.

Breach of Contract was also added to the alleged violations in the suit. It stated that Dr. Hopper paid for the services and performed his end of the bargain, while the AAA did not provide the guaranteed services in return. To find out more details of the alleged violations, click here.

Equitable Relief.

Dr. Hopper asked the court to permanently deny the AAA from conducting any arbitration unless and until it replaces its system of “neutrals” who in fact are independent contractors. He is seeking $101,000 in compensation and $1 million in punitive damages.