LIABILITY OF
MANAGED CARE PLANS FOR MEDICAL MALPRACTICE & CREDENTIALING/QA/UM EXPOSURE
(CONTINUED)
by Brock D. Phillips
Introduction
Theories of Malpractice
Liability Arising Directly Out of Plan Activities
Indirect or Vicarious
Liability of Plan For Malpractice of Panel Members
End of ERISA Preemption
for Claims of Malpractice
Liability Under ERISA
For Treatment Disincentives or Failure to Disclose Treatment Disincentives
Strategies to Reduce
Liability for Malpractice Claims
Suits by Providers
Against Plans for Wrongful Exclusion Expulsion
6. Strategies to Reduce Liability for
Malpractice Claims
There is an inevitable tension between the desire to
more aggressively "manage" care and control access to providers, and exposure to
potential liability for malpractice claims under theories of direct or vicarious
liability. To the extent that market forces continue to push Plans toward exerting greater
control over their providers and care which is delivered, Plans must accept the increased
risk of liability claims.
Some
strategies to reduce the potential burden of malpractice liability claims include:
1.
Obtaining appropriate insurance to cover malpractice risk;
2.
Have an effective and well qualified medical policy team which can carefully consider
policies on access to specialists, length of stays, level of intensity of in-patient care,
etc;
3.
Do real, meaningful credentialing of the Plan's panel of providers. This should include
periodic recredentialing to ensure that providers continue to qualify. This should also
include a program to deal with impaired providers. This duty may be contractually
delegated to IPAs or large medical groups with requirements that the groups defend or
indemnify the Plan if litigation arises;
4.
Evaluate the possible value of including a requirement in Plan documents for binding
arbitration or mediation of any malpractice disputes;
5.
Consider an external review process for controversial or high risk claims;
6.
Employ a good risk manager who can work with Plan providers to lower risk and improve
quality of care; and
7.
Involve knowledgeable counsel in policy decisions and high risk individual situations.
Counsel should ensure that the Plan is in compliance with the many state and federal laws
being enacted which dictate management of certain medical problems (for example length of
stay legislation, etc.)
7. Suits by Providers Against Plans
for Wrongful Exclusion Expulsion
All
of the above comments relate to the risk managed care Plans are now encountering
concerning malpractice claims from Plan members. An entirely separate problem arises out
of credentialing activities in the form of risk of litigation brought by disappointed
providers who are excluded or expelled from a Plan. A few of these cases have begun
appearing around the country and the frequency is certain to increase.
Generally,
claims by Providers against Plans for exclusion or expulsion are framed on antitrust or
due process grounds. Claims of this type are strongly analogous to medical staff
credentialing litigation and the courts are certain to rely on that body of law in
addressing similar litigation against Plans. While there is presently very little
appellate law on this issue, four cases warrant consideration.
In
the 1996 case of Napoletano v. CIGNA, the Connecticut Supreme Court considered
companion suits, one brought by a group of physicians who had been removed from CIGNA's
provider network, and a second suit brought by CIGNA plan members complaining of the same
action. The Connecticut Supreme Court concluded that these claims were not preempted by
ERISA and could proceed in to trial under Connecticut law. In finding no preemption by
ERISA, the Connecticut Supreme Court focused on the U.S. Supreme Court's recent decision
in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co..
In that decision the Supreme Court elaborated on the scope of ERISA preemption and its
language has provided support for those courts seeking to narrow the preemptive scope of
ERISA.
Connecticut's
neighbor New Hampshire also considered the issue of provider exclusion litigation in 1996.
In its decision in Harper v. Healthsource New Hampshire, Inc. the New Hampshire
Supreme Court held that a physician could maintain a claim for wrongful termination of his
provider status on the ground that the termination violated public policy. The application
of the public policy doctrine to an exclusion case was a creative and somewhat unexpected
approach. It's success warrants careful consideration.
Finally
California has recently seen three decisions relevant to this topic. In Delta Dental
Plan v. Banasky a California court of appeal held that due process requirements which
historically applied to medical staffs and other professional associations also applied to
expulsion from a managed care plan. In Ambrosino v. Metropolitan Life Insurance Company,
a federal judge determined that a plan's expulsion of a provider on charges of substance
abuse was violative of the clinician's due process rights where a fair hearing procedure
was not afforded the clinician.
The
most recent California case to address this question is Potvin v. Metropolitan Life
Insurance Company. In that case Dr. Louis Potvin, an obstetrician and gynecologist,
sued Metropolitan Life over his expulsion from a managed care provider panel. Potvin had
been a member of MetLife’s panel for approximately four years when his status was
reviewed under new criteria. When Potvin challenged his expulsion and demanded an
explanation, MetLife gave different explanations at different times, finally admitting
that the expulsion was based upon criteria which Metlife had established for malpractice
history. Potvin had four claims from a number of years previously, three of which had been
dropped and one of which had been settled despite Dr. Potvin’s claim that he had done
nothing wrong.
Dr.
Potvin’s claim was dismissed by the trial court on a motion for summary judgment
filed by MetLife, but he took the matter up on appeal. Dr. Potvin won in the court of
appeal, which largely relied on Delta Dental and Ambrosino in concluding
that Dr. Potvin had a right to some sort of due process hearing before being expelled from
the panel. MetLife appealed the decision to the California Supreme Court which has agreed
to hear the case. Amicus briefs have been filed by a large number of interested
organizations and the matter has not yet been set for oral argument. It seems reasonable
to assume it will be argued sometime later in 1999.
Each
of these decisions reflects angst within the medical community and the public over the
control which managed care Plans hold over the link between patients and providers. It
seems probable that due process requirements which now exist for medical staff
credentialing will be grafted on to procedures for exclusion or expulsion from managed
care panels. The extent to which even more novel and aggressive arguments on grounds like
public policy will take hold remains to be seen.
Finally
to this issue is the by now well known San Diego trial of Dr. Self versus his former
partners in which Dr. Self sued his IPA over his termination. Dr. Self is a pediatric
gastroenterologist who was a member of a large (77 members) pediatric group in San Diego.
There were long standing tensions between Dr. Self and the group which erupted when he was
finally terminated in 1995. Dr. Self claimed he was terminated because he was an advocate
for patient care that did not always meet the cost goals of the group. Dr. Self sued the
group primarily under a California statute (Business and Professions Code § 2056) that
forbids any entity to take action against a physician for patient advocacy. At the trial,
Dr. Self successfully portrayed himself as a patient advocate while his former partners
failed in their efforts to characterize him as an undisciplined physician who practiced
inefficient medicine.
Dr.
Self obtained a verdict awarding him compensatory damages. While the jury was deliberating
on an appropriate amount of punitive damages (entitlement to punitive damages had already
been determined in his favor) the case settled for a confidential amount, now widely
reported to exceed two million dollars.
(Revised May 1999)
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