Case Name: MORRIS v. METRIYAKOOL; JACKSON v. DETROIT MEMORIAL HOSPITAL
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1984-03-01
Citations: 418 Mich. 423
Docket Number: Docket Nos. 67480, 68208
Parties: MORRIS v METRIYAKOOL JACKSON v DETROIT MEMORIAL HOSPITAL
Judges: Levin, J., concurred with Kavanagh, J.
Reporter: Michigan Reports
Volume: 418
Pages: 423–487

Head Matter:
MORRIS v METRIYAKOOL JACKSON v DETROIT MEMORIAL HOSPITAL
Docket Nos. 67480, 68208.
Argued March 9, 1983
(Calendar Nos. 9, 10).
Decided March 1,1984.
Delores M. Morris brought an action in the Macomb Circuit Court against S. Metriyakool, M.D., and South Macomb Hospital, alleging medical malpractice. The court, George R. Deneweth, J., granted the defendants’ motion for dismissal on the ground that the plaintiff had agreed to submit claims or disputes arising out of her treatment to arbitration. The Court of Appeals, Cynar, J. (J. H. Gillis, J., concurring in the result; ■ Bronson, P.J., concurring in part and dissenting in part), affirmed, holding the malpractice arbitration act to be constitutional (Docket No. 46598). The plaintiff appeals.
Diane Jackson brought an action for medical malpractice in the Wayne Circuit Court against the Detroit Memorial Hospital and William J. Bloom, D.D.S. The court, Irwin H. Burdick, J., granted the defendants’ motion for accelerated judgment on the ground that the plaintiff had agreed to arbitrate such claims. The Court of Appeals, T. M. Burns, P.J., and Bronson and Pannucci, JJ., reversed, holding that the malpractice arbitration act prescribes the convening of an arbitration panel which is unconstitutionally biased, thereby denying a claimant due process (Docket No. 54337). The defendants appeal.
In opinions by Justice Kavanagh joined by Justice Levin, by Chief Justice Williams, and by Justice Ryan joined by Justice Brickley, the Supreme Court held:
The malpractice arbitration act does not deprive a claimant of the constitutional right to an impartial decisionmaker.
Justice Kavanagh wrote:
1. The malpractice arbitration act provides that a person may agree to arbitrate claims or disputes arising from health care or treatment by a health-care provider. The agreement may not be made a prerequisite to health care; if executed, it may be revoked; and the patient must be so informed. The act additionally provides that where arbitration is elected the arbitration panel is to be composed of an attorney, a physician or a hospital administrator or a licensee of the health-care profession involved if the claim is not against a physician, and a person who is not a licensee of the health-care profession involved, an attorney, or a representative of a hospital or an insurance company.
References for Points in Headnotes
[1-8] 61 Am Jur 2d, Physicians, Surgeons, and Other Healers §§ 374-376.
Validity and construction of state statutory provisions relating to limitations on amount of recovery in medical malpractice claim and submission of such claim to pretrial panel. 80 ALR3d 583.
2. The composition of the arbitration panel does not offend guarantees of due process. More than a general concern by physicians and hospital administrators with the cost and availability of malpractice insurance or the fact that physician and hospital administrator members of a panel are part of a class which is affected by a decision in a case involving other parties must be shown to render the probability of actual bias by the panel too high to be constitutionally tolerable. In these cases, no actual bias was shown, and there are no grounds sufficient to allow a conclusion that the panels would not act with honesty and integrity.
3. The form of an arbitration agreement is strictly controlled by the provisions of the act, and agreements conforming to the provisions are presumed valid. In these cases, the forms used were approved by the Commissioner of Insurance. Agreement to arbitrate is voluntary. Once the agreement is made, the burden of avoiding the agreement rests with the party seeking avoidance. The burden is not altered merely because the contract entails eschewal of constitutional rights. The sixty-day rescission period fully protects those who sign the agreement, allowing the patient to obtain desired treatment without being bound to its terms. It cannot be considered a contract of adhesion.
Chief Justice Williams, concurring, stated that the presence of a physician or a health-care provider on the arbitration panels in these cases was not shown by the plaintiffs to have resulted in such bias as to overcome the presumption of constitutionality of the malpractice arbitration act.
Justice Ryan, joined by Justice Brickley, wrote:
The malpractice arbitration act does not violate the Due Process Clause of the federal or state constitutions. The composition of a medical malpractice arbitration panel does not involve state action implicating the Due Process Clauses. Arbitration agreements prescribed by the act are not contracts of adhesion, do not involve constructive fraud, and are enforceable.
1. The decision whether to agree to submit a dispute arising out of the provision of health care to arbitration is the patient’s. If the patient decides to arbitrate, the dispute must be heard by a panel which includes an attorney, a doctor or representative of a health-care provider, and a person who is neither a doctor nor an attorney. The screening of candidates is done by both parties. The hearing, although informal, is procedurally much like civil litigation, and the decision of the panel may be appealed.
2. A person’s due process rights are violated where there is deprivation by the state or a private person who'may be fairly treated as the state (state action), of a constitutionally cognizable life, liberty, or property interest without due process of law. State action will be found where the state commands or encourages private action, where a private person performs traditionally exclusively governmental functions, or where the state and the private entities have a mutually dependent or symbiotic relationship. In these cases, the state has neither commanded nor encouraged arbitration; rather, it has created a system which provides for enforcement of a private decision to arbitrate where the agreement comports with the statutory form. The choice whether to arbitrate is private. The resolution of a private, civil dispute is not a traditionally exclusively governmental function; and a decision to arbitrate as allowed by the malpractice arbitration act does not create a symbiotic relationship between the state and-the health-care provider.
3. The arbitration agreements in this case were not contracts of adhesion. They were not made between parties of unequal bargaining power; the plaintiffs were free to accept or reject the offers to arbitrate or to revoke the agreements later. The agreements, while standardized, were not written by, nor designed for, the exclusive benefit of the defendants. Rather, the essential provisions were determined by the Legislature to provide a fair alternative to malpractice litigation. The agreements were not a necessary prerequisite to health care; nor were they offered under any threat of negative consequences if refused.
4. The inclusion of a doctor or representative of a health-care provider in the composition of the arbitration panels in these cases and the failure of the defendants to disclose the attitudes of doctors in general, the biases of the medical profession in general against medical malpractice plaintiffs, or the effect of malpractice arbitration awards on malpractice insurance rates was not constructive fraud. The composition was disclosed to the plaintiffs in literature which accompanied the arbitration agreement, and the defendants had no duty to disclose possible biases.
Morris is affirmed; Jackson is reversed.
Justice Cavanagh, dissenting, would hold that the statutory requirement that a medical malpractice arbitration panel include a health-care provider unconstitutionally deprives a person who enters into an agreement to arbitrate a dispute arising out of medical care of the right to a fair hearing before an impartial decisionmaker because of state action without due process of law. Parties to an arbitration agreement have no control over its terms. The state mandates the terms of the agreement and the procedures to be followed in arbitrating under the agreement, including appearance before and composition of the arbitration panel. Although the state may acquiesce in a person’s choice of methods for dispute resolution, it cannot mandate procedures for resolving disputes which abridge constitutional rights. He would affirm the judgment of the Court of Appeals in Jackson, and would reverse and remand to the trial court in Morris.
107 Mich App 110; 309 NW2d 910 (1981) affirmed.
110 Mich App 202; 312 NW2d 212 (1981) reversed.
Opinion by Kavanagh, J.
1. Physicians and Surgeons — Malpractice — Arbitration — Due Process.
The provision of the malpractice arbitration act that an arbitration panel be composed of an attorney, a licensee of the healthcare profession involved in a claim or a hospital administrator, and a person who is not a licensee of the health-care profession involved, an attorney, or a representative of a hospital or an insurance company, does not deprive a claimant of the constitutional right to an impartial decisionmaker (US Const, Am XIV; Const 1963, art 1, §17; MCL 600.5044[2]; MSA 27A.5044[2]).
2. Physicians and Surgeons — Malpractice — Arbitration — Form of Agreement — Validity.
The form of an agreement to arbitrate under the malpractice arbitration act is strictly controlled, and agreements conforming to the provisions of the act are presumed valid (MCL 500.3060, 600.5041, 600.5042; MSA 24.13060, 27A.5041, 27A.5042).
3. Physicians and Surgeons — Malpractice — Arbitration.
An agreement to arbitrate is voluntary and cannot be made a prerequisite to health care; once the agreement is made, the burden of avoiding it rests with the party seeking avoidance, and the burden is not altered merely because the agreement entails eschewal of constitutional rights (MCL 600.5041, 600.5042; MSA 27A.5041, 27A.5042).
Opinion by Ryan, J.
4. Physicians and Surgeons — Malpractice — Arbitration — Due Process.
The malpractice arbitration act does not violate the Due Process Clause of the federal or state constitutions; the composition of a medical malpractice arbitration panel does not involve state action implicating the Due Process Clauses (US Const, Am XIV; Const 1963, art 1, §17; MCL 600.5040 et seq.; MSA 27A.5040 et seq.).
5. Physicians and Surgeons — Malpractice — Arbitration — Due Process — State Action.
The malpractice arbitration act neither commands nor encourages arbitration of disputes arising out of the provision of health care; rather, it provides a system for enforcement of a private decision to arbitrate where the arbitration agreement comports with the statutory form, and that does not amount to state action for due process purposes (US Const, Am XIV; Const 1963, art 1, § 17; MCL 600.5040 et seq.; MSA 27A.5040 et seq.).
6. Physicians and Surgeons — Malpractice — Arbitration — Contracts of Adhesion.
Arbitration agreements which comported with the requirements of the malpractice arbitration act were not contracts of adhesion; the parties were not unequal in bargaining power, the agreements were not written by, nor designed for, the exclusive beneñt of the health-care providers, and acceptance of the offer to arbitrate was not a prerequisite to health care (MCL 600.5040 et seq.; MSA 27A.5040 et seq.).
7. Physicians and Surgeons — Malpractice — Arbitration — Constructive Fraud.
The inclusion of a doctor or a representative of a health-care provider in the composition of medical malpractice arbitration panels and the failure of the health-care providers to disclose the possible biases of medical professionals in general against medical malpractice plaintiffs or the effect of malpractice arbitration awards on malpractice insurance rates was not con structive fraud where the composition of the panel was disclosed to the patients before they signed the agreements to arbitrate and where the health-care providers were not shown to have a duty to disclose possible biases (MCL 600.5040 et seq.; MSA 27A.5040 et seq.).
Dissenting Opinion by Cavanagh, J.
8. Physicians and Surgeons — Malpractice — Arbitration — Due Process.
The requirement that a medical malpractice arbitration panel include a health-care provider unconstitutionally deprives a person who enters into an agreement to arbitrate a dispute arising out of medical care of the right to a fair hearing before an impartial decisionmaker because of state action without due process of law (US Const, Am XIV; Const 1963, art 1, §17; MCL 600.5040 et seq.; MSA 27A.5040 et seq.).
Lopatin, Miller, Freedman, Bluestone, Erlich, Rosen & Bartnick (by Steven G. Silverman) for plaintiffs Morris and Jackson.
Kitch, Suhrheinrich, Smith, Saurbier & Drutchas, P.C. (by Donald A. Ducastel), for defendant South Macomb Hospital, and (by Stephen M. Kelley and Gregory G. Drutchas), for defendants Detroit Memorial Hospital and Bloom.
Schureman, Frakes, Glass & Wulfmeier (by Edward C. Reynolds, Jr.), for defendant Metriyakool.
Amici Curiae:
Nancy A. Baerwaldt, Commissioner of Insurance, and Nederlander, Dodge & McCauley, P.C. (by Victor T. Adamo and Patrick B. McCauley), for Physicians Insurance Company of Michigan.
Kerr, Russell & Weber (by A. Stewart Kerr and Daniel G. Beyer) for Wayne County Medical Society and Michigan State Medical Society.

Opinion:
Kavanagh, J.
These cases concern arbitration of medical malpractice claims. The most significant issue presented is whether the malpractice arbitration act of 1975, MCL 600.5040 et seq.; MSA 27A.5040 et seq., deprives plaintiffs of constitutional rights to an impartial decisionmaker. We hold that it does not.
Plaintiff Diane Jackson was treated in November, 1977, at defendant Detroit Memorial Hospital by defendant Dr. William J. Bloom for a dental malady. At that time, plaintiff agreed to submit to arbitration "any claims or disputes (except for disputes over charges for services rendered) which may arise in the future out of or in connection with the health care rendered to me by this hospital, its employees and those of its independent staff doctors and consultants who have agreed to arbitrate". In August, 1979, plaintiff brought action for malpractice against defendants in the Wayne Circuit Court. Defendants moved for accelerated judgment, on the basis of the agreement to arbitrate. After a hearing, the court found the act constitutional and, finding no duress, mistake, or incompetency in the execution of the agreement, granted defendants' motion.
The Court of Appeals reversed, holding that MCL 600.5044(2); MSA 27A.5044(2) violates the constitutional guarantee of due process by " 'forcing the litigant to submit his or her claim to a tribunal which is composed in such a way that a high probability exists that such tribunal will be biased against the claimant without mandating the use of an arbitration form explicitly detailing the nature of the panel's makeup' ". Jackson v Detroit Memorial Hospital, 110 Mich App 202, 204; 312 NW2d 212 (1981), quoting Morris v Metriyakool, 107 Mich App 110, 134; 309 NW2d 910 (1981) (Bronson, J., dissenting in part and concur ring in part). The Court also held that the arbitration agreement is not a contract of adhesion and that, on the present facts, it is not unconscionable. Defendants applied for leave to appeal, and plaintiffs sought leave to cross-appeal, which we granted. 412 Mich 885 (1981).
In the second case before us, plaintiff Delores M. Morris was admitted to defendant South Macomb Hospital on November 9, 1976. At the time of her admission, plaintiff executed an agreement similar to the one executed by plaintiff Jackson to arbitrate any claims against defendant hospital and defendant Dr. S. Metriyakool arising out of her treatment for a hysterectomy. Subsequently, plaintiff brought suit against defendants alleging negligence in the surgical procedure, which caused her to develop peritonitis, and negligence in failing to promptly diagnose and treat the condition. Defendants each moved to submit plaintiff's claims to arbitration in accordance with the agreement. The trial court dismissed plaintiff's complaint with prejudice, but without prejudice to her right to file a claim for arbitration.
The Court of Appeals rejected plaintiff's argument that the composition of the arbitration panel was unconstitutionally biased. It also held that the act does not unconstitutionally or unconscionably deprive a patient of a meaningful opportunity to decide whether to relinquish access to a court and a jury trial. The Court further held that the agreement was not a contract of adhesion. Judge Bronson dissented from the holding of constitutionality. Morris v Metriyakool, supra. We granted plaintiff's application for leave to appeal. 412 Mich 884 (1981).
The malpractice arbitration act provides that a patient "may, if offered, execute an agreement to arbitrate a dispute, controversy, or issue arising out of health care or treatment by a health care provider", MCL 600.5041(1); MSA 27A.5041(1), or by a hospital, MCL 600.5042(1); MSA 27A.5042(1). A patient executing such an agreement with a health-care provider may revoke it within 60 days after execution, MCL 600.5041(3); MSA 27A.5041(3), or, in the case of a hospital, within 60 days after discharge, MCL 600.5042(3); MSA 27A.5042(3), options which must be stated in the agreement. All such agreements must provide in 12-point boldface type immediately above the space for the parties' signatures that agreement to arbitrate is not a prerequisite to the receipt of health care. MCL 600.5041(5), 600.5042(4); MSA 27A.504K5), 27A.5042(4).
For those who have elected arbitration, the act requires a three-member panel composed of an attorney, who shall be chairperson, a physician, preferably from the respondent's medical specialty, and a person who is not a licensee of the healthcare profession involved, a lawyer, or a representative of a hospital or an insurance company. MCL 600.5044(2); MSA 27A.5044(2). Where the claim is against a hospital only, a hospital administrator may be substituted for the physician. If the claim is against a health-care provider other than a physician, a licensee of the health-care profession involved shall be substituted.
Defendants Detroit Memorial Hospital and Dr. Bloom appeal from the holding that the presence of the medical member unconstitutionally created a biased panel. First, they argue that because the state does not compel arbitration, but only regulates it, state action is not involved.
A basic requirement of due process is a "fair trial in a fair tribunal". In re Murchison, 349 US 133, 136; 75 S Ct 623; 99 L Ed 942 (1955); Withrow v Larkin, 421 US 35, 46; 95 S Ct 1456; 43 L Ed 2d 712 (1975). Essential to this notion is a fair and impartial decisionmaker. Crampton v Dep't of State, 395 Mich 347, 351; 235 NW2d 352 (1975). The Due Process Clause, US Const, Am XIV; Const 1963, art 1, § 17, limits state action. Dow v State of Michigan, 396 Mich 192, 202; 240 NW2d 450 (1976). Private conduct abridging individual rights does not implicate the Due Process Clause unless to some significant extent the state, in any of its manifestations, has been found to have become involved in it, see Burton v Wilmington Parking Authority, 365 US 715; 81 S Ct 856; 6 L Ed 2d 45 (1961), or to have compelled the conduct, Flagg Bros, Inc v Brooks, 436 US 149, 164; 98 S Ct 1729; 56 L Ed 2d 185 (1978). See also Jackson v Metropolitan Edison Co, 419 US 345; 95 S Ct 449; 42 L Ed 2d 477 (1974).
We find it unnecessary, however, to determine here whether the state has significantly involved itself in the challenged action because, even if we were to find so, we have concluded that the composition of the arbitration panel does not offend guarantees of due process.
In holding the act unconstitutional, the Court of Appeals in Jackson agreed with Judge Bronson's partial dissent in Morris that the arbitration panel presents too high a probability of actual bias to be constitutionally tolerable. In his partial dissent in Morris, Judge Bronson found the statute creating the panel unconstitutional because the medical member of the arbitration panel had such an interest in the outcome that there is too great a risk that he will not be impartial. Judge Bronson cited two affidavits submitted in Morris from malpractice insurance underwriters. They averred that any hospital administrator or physician would have a direct and substantial interest in the outcome of arbitrated cases because the cost and availability of medical malpractice insurance would be affected. Judge Bronson also said that the act in question is supported by health-care professionals, which indicates that they believe they will fare better under this type of system. He also concluded that anti-plaintiff attitudes exist among large numbers of doctors. "Their 'function and frame of reference' may be expected to make them partisans of their professional colleagues." Morris, 107 Mich App 129 (Bronson, J., dissenting in part and concurring in part).
No showing of actual bias on the part of a particular arbitration panel is claimed, the parties having appealed from motions for accelerated judgment and no arbitration panel having been convened. That does not prevent a party from claiming that the risk of actual bias is too high to be constitutionally tolerable. "[0]ur system of law has always endeavored to prevent even the probability of unfairness." Murchison, supra, 349 US 136. "In pursuit of this end, various situations have been identified in which experience teaches that the probability of actual bias on the part of the judge or decisionmaker is too high to be constitutionally tolerable." Withrow, supra, 421 US 47. Included in those situations is that of a decision-maker who has a direct or substantial pecuniary interest in the outcome of the controversy. E.g., Gibson v Berryhill, 411 US 564; 93 S Ct 1689; 36 L Ed 2d 488 (1973); see Crampton, supra, 395 Mich 351-355.
Such a pecuniary interest is claimed here — the decisionmaker's interest in lower malpractice insurance premiums will influence his decision to wards reducing the number and size of malpractice awards. In their affidavits, the underwriters averred that physicians and hospital administrators have a vested interest in the medical malpractice claims made against others; the claims made do aifect the rate of insurance premiums and the availability of insurance. Premium rates for all doctors, they averred, are generally determined by the number of all claims, settlements, and judgments against physicians and hospitals in Michigan. The effect of an arbitration award on insurance rates is thus said to be direct and substantial.
This situation is aggravated, contends plaintiff Jackson, by the composition of the advisory committee, which selects the pool of candidates from which all members of the arbitration panel are chosen. The statute provides:
"An arbitration advisory committee is created within the bureau of insurance and shall be appointed by the commission and shall consist of 18 members. One-half of the advisory committee shall be broadly composed of licensed physicians and other health care providers, licensed hospital or institutional health care providers, malpractice insurance carriers and licensed legal practitioners. One-half shall be broadly composed of nongovernmental, nonlawyer, nonhealth care provider, and noninsurance carrier persons. The committee may appoint 1 or more specialized subcommittees with the approval of the commissioner." MCL 500.3054; MSA 24.13054.
The medical part of the committee, which includes the malpractice insurance carriers and health-care providers, has a direct interest in reducing the number and size of malpractice awards. There is a substantial possibility, plaintiff Jackson insists, that they will select candidates who are similarly inclined.
All that has been shown here with any degree of certainty is that there is a relationship between the number and size of malpractice awards on the one hand, and the cost and availability of malpractice insurance on the other. This may be taken for granted. It may also be assumed that, because physicians and hospital administrators are concerned with the cost and availability of malpractice insurance, they are members of a class which is affected by the decision in a case between other parties. See Tumey v Ohio, 273 US 510, 522; 47 S Ct 437; 71 L Ed 749; 50 ALR 1243 (1927). More than that must be shown, however, to make out a case which offends due process.
In Tumey, the village mayor was disqualified from sitting as a judge where he was compensated from fines imposed for violation of the state prohibition act. The Court concluded that the mayor "had a direct, personal, pecuniary interest in convicting the defendant who came before him for trial, in the twelve dollars of costs imposed in his behalf, which he would not have received if the defendant had been acquitted." Tumey, p 523.
In Ward v Monroeville, 409 US 57; 93 S Ct 80; 34 L Ed 2d 267 (1972), although the mayor was not directly compensated from fines imposed for traffic offenses, he held wide executive powers and was responsible for village finances. The Court disqualified the mayor from sitting as a judge because the mayor's executive responsibilities for village finances might have made him partisan to maintain the high level of contribution from the may- or's court. Revenue from fines, costs, and fees collected in the mayor's court annually contributed almost half of the total village revenues.
Also, in Gibson, supra, the Court affirmed the district court's finding that the Alabama Board of Optometry was biased and could not provide a fair and impartial hearing to optometrists charged with unprofessional conduct for working for a corporation. The board was composed solely of independent doctors not employed by corporations. The Court held that the board had a substantial pecuniary interest in the proceedings because what was sought was the revocation of the licenses of nearly half of all optometrists in the state which, if successful, would possibly redound to the personal benefit of members of the board.
In the present case, by contrast, it has not been demonstrated that the medical members of these panels have a direct pecuniary interest or that their decision may have any substantial effect on the availability of insurance or insurance premiums. We have been shown no grounds sufficient for us to conclude that these decisionmakers will not act with honesty and integrity. We look for a pecuniary interest which creates a probability of unfairness, a risk of actual bias which is too high to be constitutionally tolerable. It has not been shown here.
Plaintiff Jackson also argues that as a class physicians and hospital administrators possess a subliminal bias against patients who claim medical malpractice.
We interpret this as a claim made out under Crampton, supra. In Crampton, we held that the probability of actual bias was too high where a prosecutor and a police officer sat on an appeal board to review the revocation of Crampton's driver's license for refusal to submit to a chemical test upon arrest for driving under the influence of intoxicating liquor. Police officers and prosecutors are full-time law enforcement officials, we said, deeply and personally involved in the fight against law violators. "[T]hey are identified and aligned with the state as the adversary of the citizen who is charged with violation of the law. Their function and frame of reference may be expected to make them 'partisan to maintain' their own authority and that of their fellow officers." Crampton, supra, 395 Mich 357.
We do not believe that the medical members of these panels are so identified and aligned with respondents in malpractice cases that they may be expected to favor the respondents. Physicians and other health care professionals are trained in the medical arts and are oath-bound to treat the ill. Hospital administrators are trained in the proper functioning of hospitals. Neither physicians nor hospital administrators have professional interests that are adverse to patients or even malpractice claimants on a consistent, daily basis. Any identity of interest with respondents is not so strong as to create a subliminal bias for one side and against the other.
"All questions of judicial qualification may not involve constitutional validity. Thus matters of kinship, personal bias, state policy, remoteness of interest, would seem generally to be matters merely of legislative discretion." Tumey, supra, 273 US 523. We are not persuaded that these arbitration panels deprive plaintiffs of fair and impartial decisionmaking.
Plaintiffs next argue that the arbitration agreement waives constitutional rights to a jury trial and access to a court. Because these fundamental rights are waived, they say, the burden should rest with the defendants to show a valid contract, which they can only do by showing that the waiver was made voluntarily, knowingly, and intelligently. The burden of showing a voluntary waiver is not an easy one, argue plaintiffs, because the arbitration agreement was offered at the time of admission to the hospital in an atmosphere infected with implicit coercion. Additionally, plaintiffs argue that a knowing and intelligent waiver will not be easily shown because the defendants are chargeable with constructive fraud. Constructive fraud is said to arise out of the agreement's failure to highlight the fact of waiver, failure to disclose the composition of the arbitration panel (even though this information is contained in an informational booklet accompanying the agreement), and failure to disclose the attitudes of physicians in general, that they and hospital administrators may be biased and the reasonable probability that insurance rates are affected by awards.
The defendants respond that we should not consider any of these arguments because they were not raised in the lower courts. The only issues properly preserved for appeal, defendants argue, besides the due process question about the panel's composition, are whether the arbitration agreement is a contract of adhesion and whether it is unenforceable as unconscionable.
Some of the issues briefed by plaintiffs are raised for the first time in this appeal. Ordinarily we would not consider these questions, but, because the same or similar issues are pending in other cases in the lower courts, we address plaintiffs' contentions. Johnston v Michigan Consolidated Gas Co, 337 Mich 572, 580; 60 NW2d 464 (1953).
Answering the merits of plaintiffs' questions, defendants contend that arbitration is a matter of contract and that one who signs a written agreement is presumed to understand it. The act pre sumes a conforming agreement to be valid, MCL 600.5041(7), 600.5042(8); MSA 27A.5041(7), 27A.5042(8). Therefore, the burden of disproving this arbitration agreement rests with plaintiffs. Moreover, say defendants, the burden of establishing a constitutional violation rests with the party asserting it. The arbitration agreement and informational booklet reasonably indicated that arbitration was an exclusive alternative to trial by jury. Plaintiffs expressly waived their rights to trial by jury. Arbitration is voluntary and not required, which the agreement plainly states in capital letters above the signature. The form of the agreement and the information booklet is strictly controlled, MCL 500.3053, 500.3060, 600.5041, 600.5042; MSA 24.13053, 24.13060, 27A.5041, 27A.5042, and was approved by the Michigan Commissioner of Insurance.
Plaintiffs, contend defendants, have failed to demonstrate that they were coerced into signing the agreement. Answering the argument of constructive fraud, defendants say that the information booklet given to plaintiffs states that a doctor or hospital administrator serves on the arbitration panel. A chart in the booklet also states that a court case is heard by a judge and jury while an arbitration case is heard by the three-member panel.
We reject plaintiffs' allocation of the burden of proof to defendants. The burden of avoiding these arbitration agreements, as with other contracts, rests with those who would avoid them. The act states that an agreement to arbitrate which includes the statutory provisions shall be presumed valid. MCL 600.5041(7), 600.5042(8); MSA 27A.504K7), 27A.5042(8).
The burden of showing some ground for rescind ing or invalidating a contract is not altered merely because the contract entails eschewal of constitutional rights. Plaintiffs' allegations of coercion, like other contract defenses of mistake, duress, and fraud, must be proven by the party seeking to avoid the contract on such grounds.
Plaintiff Jackson contends that the arbitration agreement is a contract of adhesion, the terms of which exceeded her reasonable expectations. She claims that by not stating explicitly that court access with the right to jury trial was waived, this fact was in effect concealed and hence the contract is unconscionable.
Contracts of adhesion are characterized by standardized forms prepared by one party which are offered for rejection or acceptance without opportunity for bargaining and under the circumstances that the second party cannot obtain the desired product or service except by acquiescing in the form agreement. Steven v Fidelity & Casualty Co of New York, 58 Cal 2d 862, 879; 27 Cal Rptr 172; 377 P2d 284 (1962), see Allen v Michigan Bell Telephone Co, 18 Mich App 632; 171 NW2d 689 (1969), lv den 383 Mich 804 (1970), Zurich Ins Co v Rombough, 384 Mich 228, 232-233; 180 NW2d 775 (1970) , and cf. Cree Coaches, Inc v Panel Suppliers, Inc, 384 Mich 646, 649; 186 NW2d 335 (1971). Regardless of any possible perception among patients that the provision of optimal medical care is conditioned on their signing the arbitration agreement, we believe that the sixty-day rescission period, of which patients must be informed, fully protects those who sign the agreement. The patients' ability to rescind the agreement after leaving the hospital allows them to obtain the desired service without binding them to its terms. As a result, the agreement cannot be considered a contract of adhesion.
We also reject plaintiffs claim that the arbitration agreement is unconscionable. According to the record before us, the arbitration agreement signed by plaintiff Jackson is six paragraphs long. The first sentence of the first paragraph begins, "I understand that this hospital and I by signing this document agree to arbitrate any claims or disputes". The first two sentences of the second paragraph state:
"I understand that Michigan Law gives me the choice of trial by judge or jury or of arbitration. I understand that arbitration is a procedure by which a panel that is either mutually agreed upon or appointed decides the dispute rather than a judge or jury."
This was not a long contract covering different terms, only one of which, obscured among many paragraphs, concerned arbitration. Arbitration was the essential and singular nature of the agreement. We do not believe that an ordinary person signing this agreement to arbitrate would reasonably expect a jury trial. We also reject plaintiffs' argument that the agreement is unconscionable for failure to highlight these terms. See Williams v Walker-Thomas Furniture Co, 121 US App DC 315, 319; 350 F2d 445; 18 ALR3d 1297 (1965).
Finally, both plaintiffs ask that we find constructive fraud and hold that the agreements are unconscionable because of failure of the contracts to disclose the composition of the panel, the attitudes of physicians, the fact that the medical member of the panel may be intrinsically biased against plaintiffs, and the reasonable probability that malpractice rates are affected by awards in medical malpractice cases.
We decline. We do not believe that the agreements are unconscionable for failing to include plaintiffs' recommendations. Nor do we believe that defendants have breached a legal or equitable duty which has had the effect of deceiving plaintiffs, nor have defendants received an unmerited benefit. Goodrich v Waller, 314 Mich 456, 462; 22 NW2d 862 (1946).
In Jackson, we reverse the finding of unconstitutionality and reinstate the order of the trial court submitting the matter to arbitration.
In Morris, we affirm.
No costs, a public question.
Levin, J., concurred with Kavanagh, J.