• 05 February 2010

Doctors Who Want Their Medical Malpractice Exculpatory Agreements Enforced Should Use Confidential Contracts

Matthew J.B. Lawrence - Law Clerk for Judge Ginsburg (D.C. Circuit)

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Whether patients should be able to contract out of the malpractice system has been a hotly debated subject in law and economics and health law literature.  Advocates of patient choice argue that if the cost of having the option to bring a malpractice suit truly outweighs the benefit to a given patient, then that patient should be able to obtain lower fees by signing a malpractice exculpatory agreement prior to treatment, thereby contracting out of the malpractice system and avoiding the associated administrative costs and legal fees.  Still, there is not uniform endorsement of the idea of allowing such agreements.

The actual enforceability of medical malpractice exculpatory agreements remains an unsettled and underexplored question.  Courts treat general exculpatory agreements—like those signed at amusement parks—as they do any other contract, enforcing the contracts as long as they are entered into voluntarily.  But medical malpractice exculpatory agreements have been repeatedly invalidated, often under the mysterious “void-for-public-policy” rationale.  This Editorial outlines the basic arguments put forward in my Note exploring the enforceability of medical malpractice exculpatory agreements.  In the process, I set out a blueprint that medical providers might use to craft an enforceable medical malpractice exculpatory agreement.  I argue that the agreement with the best chances of being enforced is one that is not just optional for the patient and clearly worded, but also confidential.

Judicial Resistance to Medical Malpractice Exculpatory Agreements

Cases using the void-for-public-policy rationale to invalidate medical malpractice exculpatory agreements abound, while cases upholding the agreements are difficult to find.  However, it is unclear whether the resistance to these agreements is a result of something that renders them categorically void or, alternatively, of some quality of the specific subset of agreements that are actually brought to court.

New York follows the majority rule on medical malpractice exculpatory agreements, so an in-depth analysis of New York case law is illustrative.  When invalidating medical malpractice exculpatory agreements, New York courts seem to focus on the way medical malpractice agreements are presented and worded, rather than on the subject matter or parties to the agreement.  In case after case, the courts look beyond the mere fact that the agreement is between doctor and patient and relates to liability, instead scrutinizing the specific wording of the agreement, the presentation of the agreement, and the circumstances of the bargain before ruling on an agreement’s validity.

There is reason to believe a medical malpractice exculpatory agreement could be crafted such that a New York court (and presumably any court following the majority rule) would enforce it, in spite of the fact that most cases on record involving such agreements have found them to be void for public policy.  The cases suggest that it is neither the subject matter of nor the parties to medical malpractice exculpatory agreements that render them void for public policy, but rather some feature of their presentation and signing.  Unfortunately, the cases provide few clues as to what elements are problematic.

A Possible Culprit: Signaling Pressure in Medical Malpractice Exculpatory Agreements

A behavioral economic perspective reveals that medical malpractice exculpatory agreements create a somewhat intuitive problem that may underlie courts’ skepticism.  At the core of this problem is the signaling involved in the decision to sign (or not sign) a medical malpractice exculpatory agreement:  By refusing to sign such an agreement in exchange for a lower fee, a patient unequivocally signals to her doctor that:

(1) she is the sort of patient who would sue her doctor if injured negligently,


(2) she thinks there is at least some chance her doctor will make a mistake.

By refusing to sign an exculpatory agreement, the patient essentially says to the doctor, “No thanks, while I like saving money, I think there is a chance I’ll end up suing you.”

This signaling is problematic because we patients want our doctors to think we trust them.  Call it fairness, fear of retaliation, or altruism—the fact remains that many of us are uncomfortable with letting our doctors know that we have anything but the utmost faith in their abilities, even when we do have serious doubts.  This is why we are so hesitant explicitly to ask for a second opinion, even though we do not think twice about double-checking our diagnosis through anonymous means such as logging into WebMD or calling a doctor friend.  The same is true when it comes to deciding whether or not to sign a medical malpractice exculpatory agreement.  We know that if we do not sign, we will signal a lack of trust to our doctors, and this signaling effect puts pressure on us to sign, even if we otherwise would rather retain the right to sue for malpractice.

Blueprint for an Enforceable Medical Malpractice Exculpatory Agreement

In my full Note, I discuss the plausibility of the assumption that courts’ skepticism toward medical malpractice exculpatory agreements is related to the signaling pressure identified above.  Assuming that this encumbrance to patient decisionmaking does underlie judicial suspicion of these agreements, it is possible to set out a blueprint for an exculpatory agreement that avoids signaling pressure, thereby alleviating courts’ concerns.

First, courts have clearly stated that patients must actually understand what they are signing in order to be able to waive the right to sue for malpractice.  Furthermore, courts have stated that because medical care is a necessary service, doctors cannot present malpractice waivers on a take-it-or-leave-it basis.  Thus, as a preliminary matter, any agreement that hopes to be enforced must be nonadhesive (optional) and clearly worded.

Such an agreement would still be subject to the signaling encumbrance identified above.  To cure this defect and avoid claims that a patient’s decision was not really voluntary, a medical provider hoping to create an enforceable medical malpractice exculpatory agreement would need to find a way to insulate the patient’s decision from signaling.  This could be done by making the patient’s decision confidential.  By guaranteeing the patient a zone of privacy around her decision to sign—at least vis-à-vis her doctor—a medical provider presenting a patient with a medical malpractice exculpatory agreement could guarantee that the patient’s decision was not influenced by fear of how the doctor might respond.

Contracting over malpractice confidentially would not be difficult.  The simplest method would be to utilize direct contracting between patients and managed care providers.  The doctor would only know that some patients from the managed care provider withheld the malpractice right and some did not.  She would not find out whether a given patient had decided to withhold the right unless that patient chose to sue ex post.

Even without an intermediary, contract law leaves plenty of room for a doctor and patient to enter into a traditional contract confidentially.  The doctor could present and explain two fee arrangements—one including an exculpatory agreement, one not—as two separate offers.  She could then invite the patient’s confidential acceptance of either offer, so as to remain in the dark about the patient’s decision.  Such an arrangement would be perfectly legal:  The Restatement (Second) of Contracts makes clear that the offeror may invite acceptance by whatever reasonable means she designates in making the offer, be it performance or, in this case, acceptance delivered confidentially to a third party.

Of course, even if the contract were formed confidentially, the patient may want a guarantee that her decision would remain confidential.  Confidentiality and privacy clauses are common elements of contracts, and, in this case, both offered contracts need only include clauses that guarantee confidentiality, and perhaps provide some warranty in the event that confidentiality is breached.  In addition, they might designate an independent third party—such as the doctor’s malpractice insurance company—to maintain the confidentiality of the agreement.  Again, the doctor would never find out whether a patient had signed or not, unless that patient decided to sue.


This Editorial has focused on signaling effects and confidential contracting in the context of medical malpractice exculpatory agreements, but these ideas might be applicable to other situations.  Within health law, it might be that patient choice would be facilitated in many other highly sensitive areas by using the law to make patient decisions confidential, even vis-à-vis the family doctor.  Decisions like the choice to use birth control, get an STD test, or seek out a second opinion come to mind.  Beyond the medical arena, confidential contracts might be utilized anywhere a special relationship of trust between two parties is in conflict with the signaling caused by standard contracts. Such uses might include contracts in the employment context and contracts regarding legal representation.dingbat



Copyright © 2010 New York University School of Law.

Matthew J.B. Lawrence received his J.D. in 2009 from New York University Law School. He is now clerking for Judge Douglas H. Ginsburg of the D.C. Court of Appeals.

This Legal Workshop Editorial is based on the following Student Note: Matthew J.B. Lawrence, In Search of an Enforceable Medical Malpractice Exculpatory Agreement: Introducing Confidential Contracts as a Solution to the Doctor-Patient Relationship Problem, 84 N.Y.U. L. REV. 850 (2009).

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