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A Historic Review
By Dr. Charles F. Fenton III; Esq.
Historically, managed care companies have been afforded immunity from negligence and malpractice lawsuits. Several state and federal bars, including ERISA (Employee Retirement Income Security Act of 1974), have insulated managed care companies from liability relating to the treatment of patients.
Likewise, managed care companies have historically been immune from malpractice committed by a health care member of its panel of providers.
State Arena
On a state laws basis, the Corporate Practice of Law often insulated managed care companies from such liability.
The theory underlying this protection was essentially uncomplicated; since corporations are prohibited under the Corporate Practice of Law Doctrine from practicing medicine, they should not be held liable for medical negligence and malpractice.
Recent Updates
However, in recent years, it has become apparent that managed care companies do in fact “practice medicine.” These companies tell their panel of providers how to practice, whether it is in a generalized or specific field of medicine.
For example:
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They establish a formulary of approved drugs, limiting those medications available to their subscribers.
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They review and then approve or deny needed medical care.
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They create economic incentives for patients to be under treated or treated in a predetermined manner.
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They effectively minimize referrals to specialists, often at the peril of the patient subscriber and the health care provider seeking that consultation.
Federal Arena
In the Federal arena, ERISA has been the primary deterrent to suits against managed care companies.
Under the theory of Federal preemption, even the lowest Federal regulation takes precedence over any and all state laws. ERISA has however been described as possessing “Super-preemption.”
This term was coined to evince the special deference that courts have displayed to potential defendants who allege defensive protection based upon ERISA.
In the past, most providers ran into the ERISA preemption when a health plan governed by ERISA was contrary to a state law, such as state anti-discrimination law (i.e., a state law prohibiting insurance payment discrimination based on degree).
Assessment
In this context, physicians should understand that liability claims, such as medical malpractice claims, are state law causes of action. Since the Federal ERISA law trumps state laws, bringing a medical malpractice action against an ERISA entity is almost impossible.
Conclusion
Have you ever been involved in such an issue; and what was the outcome? Please comment.
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Filed under: Health Law & Policy | Tagged: Managed Care |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
Industry Leaders Voice Optimism on Curbing Defensive Medicine
Undertaking extensive efforts to improve the quality of care provided has not mitigated malpractice costs—including the cost of defensive medicine—for some providers, but it may in the future, representatives of several providers undertaking delivery reforms told a Senate panel.
For example, Dr. Lee Sacks, chief medical officer for Advocate Health Care, based in Oak Brook IL, recently told the Senate Finance Committee that the health system’s medical liability costs were $90 million in 2011, despite the broad use of a model quality improvement system since 2004. Sacks was joined by Dr. Richard Migliori, executive vice president of UnitedHealth Group, in expressing optimism that the expanded adoption of quality-improvement efforts, such as ACOs, will reduce the use of costly defensive medicine.
Any thoughts?
Source: Rich Daly, Modern Healthcare [5/23/12]
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