WHAT
PHYSICIANS NEED TO KNOW ABOUT MANAGED CARE AND MEDICAL MALPRACTICE
Managed health care has
increased the exposure physicians face for medical malpractice. This increased exposure
has primarily been created by risk-sharing agreements and pre-authorization requirements
utilized by managed care plans to reduce health care costs.
Managed Care Risk
Sharing Agreements
The most significant area
of concern for physicians has been the use of capitation and other risk-sharing agreements
where physicians are accused of allowing their clinical judgments to be affected by their
own economic self-interest. Patient advocates argue that in physician risk-sharing
agreements, less medical care equals more profit for the physician. A commonly cited
example is the primary care physician who acts as a "gatekeeper" by limiting
access by patients to more costly specialists.
In medical malpractice
cases, accusations that a physician has an economic disincentive to provide needed medical
care are normally excluded by the court because the only issue in a medical malpractice
case is whether the physician acted within the standard of care in not furnishing the
allegedly necessary medical care. Motive is not normally relevant to this deciding this
issue.
However, the law states
that physicians owe their patients a fiduciary duty to act only in their best interests. A
physician who allows his or her own economic self-interest to affect his or her clinical
judgment would arguably be a breach of that fiduciary duty. Thus, accusations of improper
economic self-interest affecting clinical judgment may give rise to novel legal theories
of liability such as breach of fiduciary duty or unfair business practices in addition to
the normal allegations of professional negligence.
New legal theories for
use against physicians may allow patient advocates to avoid the effect of legislative tort
reforms in the medical malpractice area. For example, physicians in California are
protected in malpractice cases by a special state law commonly known as MICRA which limits
awards for pain and suffering, allows future damages to be paid periodically, and allows
physicians to show that the patient’s medical bills have been paid by insurance. A
physician who is accused of a breach of fiduciary duty may not be permitted to take
advantage of these legal protections. Loss of these legal protections can be critical to
the physician if there is the potential for a significant jury award for pain and
suffering. Furthermore, there may be a question if an award based on a violation of a
fiduciary duty is covered by the physician’s professional liability insurance policy.
Equal in importance is
the consideration that accusations of economic self-interest, which would normally not be
admissible as evidence in a malpractice action, would be presented to the jury. Such
evidence would undoubtedly be harmful to the physician’s defense, especially in light
of the overwhelming unpopularity of managed care in our society.
To defend themselves from
accusations of economic self-interest, physicians must demonstrate to juries that their
clinical judgments are not affected by their risk-sharing reimbursement agreements with
managed care plans. Every aspect of the risk-sharing agreement between the physician and
his or her independent practice association, and the managed care plan must be carefully
scrutinized to identify possible problem areas and potential defenses. Physicians must be
prepared to educate and defend the concepts of managed care and risk-sharing agreements to
juries through the use of expert witnesses.
In addition, physicians
caught in these difficult situations should consider adopting the legal defenses created
by a federal law known as ERISA that have been successfully utilized by managed care
plans. Physicians may be able to argue that the broad preemption provisions of ERISA apply
not only to employee benefit plans, but also to independent practice associations that
have contracted with the plans to provide benefits where the particular managed care plan
is a benefit of the patient’s employment.
Pre-Authorization
Requirements by Managed Care Plans
Pre-authorization
requirements and drug formularies by managed care plans also create additional problems
and concerns for physicians in medical malpractice cases. If a managed care plan refuses
to provide plan benefits for an allegedly needed medical procedure or particular drug
recommended by the physician, the physician could be held liable for the managed care
plan’s refusal if the procedure is not performed or the drug not prescribed.
For example, if a
physician recommends a particular diagnostic procedure that the managed care plan refuses
to pre-authorize on the ground that the procedure is unnecessary or an alternative
procedure is less costly but equally effective, the physician may be held liable if there
is a poor outcome that could have been avoided had the originally recommended procedure
been done. The Wickline v. State of California case in California suggests that
physicians cannot abrogate their professional duties and evade liability because of
reimbursement decisions by managed care plans. Accordingly, the physician may be faced
with the unfortunate choice of either abiding by the decision of the managed care plan or
providing free professional services that will not be compensated by the managed care
plan.
Tactical Defenses
Available to Physicians
In these kinds of
malpractice cases where the physician and the managed care plan are at odds, the physician
may choose to file a cross-complaint against the managed care plan and allege that their
refusal to pre-authorize was tantamount to engaging in the practice of medicine. The
cross-complaint allows the physician to share liability for the alleged malpractice with
the managed care plan.
However, the decision to
sue a managed care plan and add another adverse party to the litigation can create
additional problems for physicians. Furthermore, it is not clear whether the law will
consider pre-authorization decisions as engaging in the practice of medicine and permit a
managed care plan to be sued for medical malpractice. In any event, the patient may have
already named the managed care plan as a co-defendant in the lawsuit.
Conclusion
In conclusion, physicians
in medical malpractice cases must be prepared for allegations that their clinical
decisions were affected by managed care. Those physicians should be aware of the concerns
addressed in this article and fully prepared to directly address those concerns from the
very beginning during his or her defense in the medical malpractice action.
