Managed Care and the Judicial System: Another Avenue for Reform?

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Over the past several years the judiciary has become a major venue for challenging managed care. This article examines the present and potential effect of such litigation, focusing on the recent Supreme Court decision in Pegram v. Herd rich and class action litigation filed under the Racketeer Influenced and Corrupt Organizations Act. The author concludes that although court-based reforms are a necessary and pragmatic response to managed care, they can result in only incremental changes. Litigation also cannot resolve the larger conflicts that result when a social welfare service such as health care is provided through a corporate model. Social workers need to look beyond the "next best" reform of managed care and advocate for more fundamental solutions to the inequities and inefficiencies in the provision of health care.

Keywords

advocacy health care judicial reform managed care

With the advent of managed care, the provision of health care has been transformed from "a purely professional undertaking to a business providing professionals services" (Abraham & Weiler, 1994, p. 395). The infusion of commercial and marketing principles into the provision of health services has changed the terms of the health care debate. What business model works best, and not whether a business model works at all, has frequently become the focus as social workers and other health care professionals attempt to tame, transform, or accommodate managed care, often all at the same time. "Managing managed care" has become an art unto itself as social workers and others are advised how to negotiate business contracts with managed care companies (MCOs) (Gibelman & Whiting, 1999), use conflict resolution techniques to resolve managed care disputes (Strom-Gottfried, 1998), or implement agency-based administrative practices that ensure quality service delivery within a managed care context (Galambos, 1999). Such t echniques and strategies are a necessary and pragmatic response to managed care.

At the same time, the larger issue of the desirability of treating health care as a commodity rather than a social service must be addressed. Although the fee-for-service system that preceded managed care was not without its faults or its own preoccupation with profit, managed care has raised the "corporatization" of health care to new and unprecedented heights (Schamess, 1998). Complaints abound that profit-driven health care has resulted in reduced access to care, especially for vulnerable groups, and the denial of necessary medical services to patients in general, causing physical harm and even death. These complaints and others have generated a different response to managed care, one that seeks not to accommodate it but reform it.

One of the prime venues where this challenge is taking place is the judicial system. Within the past few years, lawsuits have been filed against nearly every major managed care company. Litigation strategies have undergone a transformation, from suits that focus narrowly on individual cases of patient harm to dozens of nationwide class actions that challenge such basic managed care business practices as linking medical decisions to financial considerations. In June 2000, the Supreme Court entered the fray, issuing a decision in Pegram v. Herdrich that provides a glimpse of how the judicial system is likely to view efforts to reform managed care.

The judiciary has a rich tradition of playing a role--often a radical one--in shaping social welfare policy. From such diverse areas as civil rights, child welfare, education, and abortion, the judiciary has had a major influence on many of our institutions and policies. Whether or not it is having a similar effect on health care policy, and in particular managed care, is the subject of this article. Also addressed is the role of the social worker in judicial-based reforms.

Both health care professionals and consumers have engaged in extensive litigation covering a wide range of managed care practices (Trueman, 2000). …