THE 'MALPRACTICE CRISIS' REFERS TO THE UNPRECEDENTED INCREASE IN THE AMOUNT OF MEDICAL MALPRACTICE LITIGATION AND TO THE SPIRALING COSTS OF MALPRACTICE COVERAGE FOR PHYSICIANS. LEGISLATIVE RESPONSES TO THE PROBLEM HAVE INCLUDED CEILINGS ON DAMAGES, RESTRICTIONS ON CONTINGENCY FEES, SHORTENED STATUTES OF LIMITATIONS, MANDATORY SCREENING OF MALPRACTICE CLAIMS, AND VOLUNTARY, BINDING ARBITRATION. SCREENING AND ARBITRATION HAVE BECOME INCREASINGLY POPULAR ALTERNATIVES TO LITIGATION. BOTH MEASURES ARE AIMED AT REDUCING DELAYS, CUTTING LEGAL EXPENDITURES, AND DIMINISHING THE PRICE OF MALPRACTICE INSURANCE. THE MERITS OF SCREENING PANELS ARE COMPARED WITH THOSE OF ARBITRATION SCHEMES. MICHIGAN'S MALPRACTICE LEGISLATION IS ASSESSED WITHIN THE CONTEXT OF EXPERIENCES IN OTHER STATES. THE FOLLOWING ALTERNATIVES FOR REVISING MICHIGAN'S ARBITRATION STATUTE ARE SUGGESTED: (1) ADOPTING SCREENING AS A SUBSTITUTE FOR THE EXISTING ARBITRATION SYSTEM; (2) RETAINING BINDING ARBITRATION, BUT ON A MUTUALLY VOLUNTARY BASIS (ELIMINATING THE REQUIREMENT THAT INSURANCE CARRIERS MAKE THE AGREEMENT TO ARBITRATE A CONDITION PRECEDENT TO OBTAINING MALPRACTICE COVERAGE); AND (3) COMBINING VOLUNTARY, BINDING ARBITRATION WITH MANDATORY, NONBINDING SCREENING PANELS. THE THIRD ALTERNATIVE IS SAID TO OFFER THE BEST SOLUTION. (AUTHOR ABSTRACT MODIFIED--LKM)