After trying and failing this year to win a $250,000 cap on non-economic damages in medical malpractice cases, tort reformers in New York State are preparing a new legislative initiative for 2004: the arbitration clause.

The draft legislation would let physicians encourage their patients to sign binding arbitration agreements before being treated. Willing patients would waive their rights to go to court should a dispute arise later over treatment.

"It would result in significant costs savings and the stabilization and reduction of insurance premiums," said David Richman, partner in Uniondale-based Rivkin Radler, best known for its insurance defense work in medical cases.

But the state's powerful trial bar, which is known for stomping all over proposed tort reform packages, is already up in arms over the arbitration proposal.

"Disgusting," is what Michael Duffy, partner in Uniondale-based Duffy, Duffy & Burdo, called arbitration clauses. "For a medical practitioner to take a person at their time of need and present them with an ultimatum is just wrong," said Burdo,

Arbitration agreements have been standard in credit card and stock brokerage contracts for years. In recent months, tort reform advocates have been pushing state governments to enact legislation permitting arbitration clauses in health care, according to Robert Meade, senior vice president of the American Arbitration Association.

California, Illinois, Utah, Georgia and other states already allow doctors to enter agreements with patients that call for disputes to be settled by arbitrators. Tort reformers in New York and Florida now want to jump on the medical arbitration bandwagon.

Richman said New York needs a practical alternative to settling disputes instead of expensive, drawn-out court battles.

Dr. Jeffrey Ribner, a Binghamton neurologist and president of the Medical Society of the State of New York, said his group backs draft legislation that would move certain medical liability disputes from the court system into other less expensive forums, including arbitration.

Under current New York law, arbitration clauses aren't banned but they're not widely used. Physicians who try to rely on them may find that they don't stand up when patients challenge them in court. The proposed legislation would give doctors much more confidence that arbitration agreements they sign with patients will actually stick.

To get the arbitration process going, one of the parties in the dispute fills out an arbitration claim form. The other party responds and they exchange information relevant to the case. Then an arbitrator, who can be a retired judge, lawyer or an industry professional, hears both sides, studies the evidence and decides the case. The parties can hire an attorney to represent them, but it's not required. The arbitration decision, or award, is legally enforceable after it is reviewed by the courts.

Meade noted that while arbitration clauses are gaining momentum nationally, court challenges of their validity are common.

Chris McGrath, partner in New York City-based Sullivan Papain Block McGrath & Cannavo, said signing away your right to sue isn't what the justice system is about. "It's just outrageous," he said.

But Walter Olsen, senior fellow at the Manhattan Institute, a conservative think tank, said the sharp turn towards arbitration clauses is a sign that physicians are growing more and more desperate for a vehicle to control soaring medical malpractice insurance premiums - whether they've had a claim against them or not.

This year they joined the insurance industry in fighting for a $250,000 cap on non-economic damages on malpractice awards. But the bill did not pass either chamber in Albany.

Asked why lobbyists have been unable to push forward tort reform, Olsen and Mark Alesse, New York State director of the National Federation of Independent Business, pointed to the state Assembly's leadership, namely Speaker Sheldon Silver, D-Manhattan.

"He [Silver] has an undo and unfair influence over the matter," Alesse said. He described the state Legislature as a regime and said its "leaders are truly powerful. They can pass or stop virtually any bill at their whim. That's what happened to tort reform."

Olsen said Silver is beholden to the trial bar.

He and Alesse claimed Silver has a conflict of interest between his work as a state legislator and his of counsel position at New York City-based Weitz & Luxenberg, a firm described as a "national mass tort player."

Charles Carrier, spokesperson for the Silver, declined to comment on the type of legal work the speaker handles at the firm. He dismissed comments about a conflict of interest.

"There is no indication, not a shred of evidence that there is some type of problem," he said.

Carrier noted that U.S. Senate Majority Leader Bill Frist, R-Tennessee, is a doctor who often gets involved in medical law. Furthermore, Frist is the son of Thomas Frist and brother of Thomas Frist Jr., the founders of what was once the Hospital Corp. of America, or HCA. That company went on to become Columbia/HCA, The Healthcare Co., the nation's foremost private hospital company.

Carrier pointed out that Frist has made prescription drug legislation a top priority. "He's outspoken on health care subjects and has made prescription drug legislation his signature issue," he said.

Despite the coalition of medical and insurance industry interests lined up behind the tort reform banner, plaintiff attorneys in New York have an excellent record of killing off tort reform initiatives and winning big for their clients.

Last year, Sullivan Papain, which has 35 attorneys working out of offices in Manhattan, Mineola and Hackensack, N.J., raked in $130 million in settlements for clients. "The doctors continue to not police themselves and that's why we are winning," said McGrath, whose firm has about 2,500 active cases.

And since Duffy, Duffy & Burdo was founded about three years ago, the firm has reached settlements totaling about $100 million.

Plaintiff attorneys can be eligible for up to 30 percent of settlements up to $250,000 and smaller fractions of sums above that level.