The Scope of
Managed Care Liability
David M. Keepnews
As public attention has focused on managed care organizations (MCOs) and their role in the delivery, financing, and management of health care services, liability issues also have drawn growing interest. Efforts to specify liability for MCOs raise a number of important legal and policy issues about the relative responsibility and accountability of provider and payer, the role of the MCO in making treatment-related decisions, and basic questions about balancing financial and legal risk. In the following discussion, we examine some of the factual, legal, and policy issues related to MCO liability and identify some of the unresolved issues raised by extending liability for medical injury to MCOs.
The question of when MCOs are, or should be, liable for harm caused to patients has been the subject of court cases, public discussion, and policy initiatives. A proposal to establish enterprise liability for health plans (whereby plans would be solely liable for the malpractice of employed or affiliated health professions) was floated by President Clinton's health care reform task force in 1993, and a modified proposal—to pilot its use—was included in the administration's Health Security Act. State legislative proposals to establish or clarify MCO liability have been debated in several states, and in 1997, Texas and Missouri enacted laws to address
The author wishes to thank the following colleagues for their invaluable comments on earlier drafts of this chapter: Patricia Butler, Alice Gosfield, Karl Polzer, and David Shactman.