Arbitration Guidelines in Personal Injury Actions
Source: State Bar of Wisconsin Professionalism Committee, 2005
In preparing these guidelines, the Professionalism Committee is mindful of the wide diversity of settings in which arbitration occurs in Wisconsin, as well as local arbitration practices throughout the state. The Committee is also mindful that many arbitration systems and forums have well-developed standards of practice for arbitrators, including extensive programs of arbitrator training and supervision. It is not the intention of these guidelines to compete or conflict with, or to supplant, such programs or standards. Rather, these standards are narrowly focused on arbitrations involving personal injury or property damages actions where Wisconsin attorneys are serving as arbitrators. It is anticipated these guidelines will apply to arbitrations which are mandated by insurance contract language or agreed to by the parties in lieu of a trial.
These guidelines are not intended to function either as a code of ethics or as a set of procedural rules. Rather, they are intended to complement applicable ethics codes and procedures rules. No sanctions are provided herein for failure to comply with any of these standards.
The parties to arbitrations are entitled to have fair and impartial arbitrators decide their case on the facts presented and the applicable law.
The primary concern of these guidelines is to create both the reality and the perception of fairness in the arbitration process. Because they are focused on arbitration in lieu of trial, whether to the court or to a jury, it is important that the same considerations of impartiality and fairness that are of a concern in a trial setting remain paramount in arbitrations. The overriding concern is that arbitrators function and be perceived as independent and impartial decision makers, rather than as advocates for any party.
The concern with impartiality stems in part from the fact that many arbitration panels consist of three persons, two of whom are selected by the opposing parties. The fact that an arbitrator is selected by a party may create the impression that they are to serve as that party’s advocate on the arbitration panel. While it is certainly appropriate for parties to select arbitrators whose background and experience may incline them towards that party’s position, all arbitrators should make every effort in hearing the evidence and deliberating to act with objectivity and impartiality. Their role should be to decide the case before them on the evidence presented and the law governing that evidence. Arbitrators selected by the parties have a legitimate concern that the positions of both sides be fairly heard and considered, but arbitrators should not permit that consideration to convert them from neutral decision makers to advocates for the party who selected them.
The majority of arbitrations in personal injury actions involve three person panels. In many cases, that is determined by language in an insurance contract which provides that each party shall be entitled to select an arbitrator and the arbitrators selected by the parties will choose a third arbitrator to act as the chair. Parties should be entitled to stipulate to select a single arbitrator either by mutual agreement. This approach affords some cost savings, and avoids potential concerns with partiality on the part of an arbitrator selected by one of the parties. It does vest all of the decision-making authority in a single person and may be viewed as more comparable to a court trial than a jury trial. It is not our intention to suggest that one approach is preferable to the other. It seems appropriate for the parties to consider on a case-by-case basis which approach is best suited to their particular circumstance.
These general principals are expressed in a series of more specific guidelines. While we believe guidelines are important to ensure fairness and impartiality, the parties are free to depart from these guidelines by mutual agreement.
Arbitrators Should Disclose Any Actual or Potential Conflicts to the Parties.
Arbitrators should disclose any past or current associations which would create either the reality or the appearance of a conflict of interest. The specific intent is to ensure disclosure of such association, not to disqualify an arbitrator based upon any such an association, unless it would prevent the arbitrator from acting fairly and impartially. Disclosure should be made to both the other arbitrators and the lawyers for the parties at or before the time of the scheduling conference in order to permit the parties an opportunity to timely address any concerns the disclosure may create.
There Should Be No Ex Parte Communications Among Attorneys, Parties or Arbitrators.
a. The parties and their attorneys should refrain from any ex parte communications concerning the merits of the case with any of the arbitrators. The parties may, of course, provide sufficient information to permit an arbitrator to determine whether a conflict exists and may communicate concerning scheduling.
b. Arbitrators should refrain from any private communications concerning the merits of the case with another arbitrator, a party or an attorney. All communications concerning the merits of the case among arbitrators should involve all of the arbitrators.
c. Parties and their counsel should refrain from communicating to any of the arbitrators information concerning settlement discussions, high/low agreements, policy limits, or the amount of underlying coverage available in the case of underinsured motorist claims. There should be no communication on these subjects with any arbitrator. The intent is to ensure that the arbitrators are rendering a decision on the facts before them and are not being influenced by facts of an evidentiary nature which were not presented by the parties and would not be available to either a judge or a jury in a trial setting. The arbitrators may consider information of this sort if the parties agree to jointly communicate such information to the arbitrators.
A. Scheduling Conference Should Be Conducted to Establish Both the Ground Rules and the Timing for the Arbitration.
A scheduling conference should be conducted as soon as reasonably practicable after the arbitrators have been selected. It is preferable if the attorneys involved in the arbitration participate in the scheduling conference so that the ground rules governing the arbitration can be established and any specific concerns can be effectively addressed. The scheduling conference should address the deadlines for submission of materials and position papers, as well as the date of the arbitration. Any discovery concerns should be raised at this time. The manner in which the rules of evidence will be applied should also be established. In cases where there are three arbitrators, it should be determined whether any issues arising prior to the arbitration itself will be addressed by the full panel or may be handled by the panel chair at his discretion. After the scheduling conference, the panel chair or sole arbitrator should issue a scheduling order setting forth the agreements reached at the scheduling conference.
The Rules of Evidence Governing Civil Trials Should Also Govern in Arbitrations, Subject to the Agreement of the Parties and the Generally Accepted Principle that Written Reports and Records Will be Accepted in Lieu of Medical Testimony.
Arbitrations are conducted with less formality than courtroom proceedings, and that is often both appropriate and desirable. Written materials are customarily submitted to the arbitrators in advance and are often quite extensive. It is generally accepted that medical records, depositions, and other relevant written materials will be submitted to the arbitrators in advance of the hearing. These materials are generally received in evidence at the hearing without authentication. Written opinions from experts are generally accepted in lieu of testimony either in person or by deposition. This promotes a full review of the evidence by the arbitrators and significantly shortens the time that would otherwise be required for a hearing. It serves to promote efficiency and thus saves the parties time and money. The extent to which written materials will be accepted by the arbitrators as part of the evidentiary basis for their decision should be clearly established at the scheduling conference.
Subject to the foregoing paragraph, and to the attorneys’ right to vary the rules by agreement, the evidentiary standards which govern trials in our state should govern in arbitration hearings as well. The arbitrators may make allowances to provide reasonable latitude given the less formal nature of the proceeding, but those fundamental evidentiary standards which are intended to ensure the credibility and reliability of evidence should be adhered to unless the parties specifically stipulate to a waiver or relaxation of those rules. The burden of proof which applies in civil actions and the standards governing opinions rendered by experts, whether verbally or in writing, should be applied in arbitration absent an agreement by the parties to alter or relax those standards. The intent of this provision is to promote fairness and uniformity of practice, as well as to ensure that evidence is subject to reasonable scrutiny under known and accepted standards.
A. Arbitrators Are to Decide the Case Fairly and Impartially on the Facts Before Them and the Law Governing Those Facts
While the experience of arbitrators with jury trials will certainly influence their perceptions of a case, it is not the function of the arbitrators to attempt to speculate as to what a jury would do in the case before the arbitrators. Arbitrators are expected to bring to the arbitration their expertise as lawyers experienced in the area which is the subject of the arbitration. They are entitled to rely upon that experience and expertise in deliberating and reaching a just outcome. As neutral decision makers, they are to apply their independent judgment and experience in deciding the case based upon the law of our state and the evidence presented to them in the arbitration.
B. Arbitrators Should Not Act As Advocates in Questioning Witnesses
Arbitrators are entitled to ask questions of witnesses, in the same manner as judges. Arbitrators should exercise restraint in questioning. The arbitrators’ role should be to clarify particular issues rather than to bolster questioning by counsel for either party. While arbitrators have every right to use their expertise to ensure that critical issues are understood and addressed, their questioning should not be partisan in nature.
C. Arbitrators Should Refrain From Independent Investigation and Should Avoid Introducing into Deliberations Specific Knowledge or Information of an Evidentiary Nature that Would Not Be Available to Judges or Jurors.
Arbitrators are generally selected for a degree of knowledge and expertise which uniquely equips them to evaluate the evidence placed before them. Arbitrators should bring that knowledge and expertise to bear on the facts and it is expected that such expertise will influence their discussions and deliberations. Arbitrators should refrain from independent investigation or factual research which would influence their decision or the deliberations. Arbitrators should also refrain from introducing into the deliberations what is tantamount to unsworn evidence based on their personal experience with or knowledge of specific witnesses or other evidentiary matters. The concern of this provision is to ensure that cases are decided based upon evidence presented by the parties which the opposing party has a fair opportunity to address during the arbitration process through cross examination, or otherwise. The introduction of supplementary facts by an arbitrator during the course of deliberations is inconsistent with the goals of fairness and impartiality which are fundamental to the process.
D. Role of the Third Arbitrator.
In many arbitrations, the individual arbitrators chosen by the parties select a third arbitrator to act as chair. The role of the third arbitrator should be to promote a full and fair discussion of the issues and to ensure that the final decision is based upon a fair and equitable consideration of the evidence before the panel and law governing that evidence. While the arbitration process places a value on consensus, unanimity should not be achieved at the expense of what the third arbitrator believes to be a just outcome. In those instances where the arbitrators selected by the parties differ significantly in their view of the claim, the third arbitrator may adopt the view of one of the other arbitrators, seek to promote a consensus outcome which compromises those differences, or may seek to have one or more of the other arbitrators adopt his view of the case. The choice of how to proceed is properly left to the third arbitrator, but should be guided by an independent evaluation of the merits of the claim, having due consideration for the evidence presented, the law governing that evidence, and the position advanced by the other arbitrators.