Managed Care Liability

1
Managed Care Liability

• Vicarious

2
Tradl indemnity is hands off
MD
INDEMNITY INSURER
PATIENT
3
Traditional Indemnity Insurers

• Sells insurance, not medical care
• exercises no control over medical care
• NOT vicariously liable for negligence of
  patients MDs

4
Staff Model HMOs
HMO sales and finance dept. health
care team
P. pays premium
PATIENT
5
Staff Model HMO

• Full integration of insurance and treatment
  functions
• MDs are HMO employees
• Vicarious liability respondeat superior

6
Degrees of Integration(least to most)

• (NO) Traditional Indemnity Insurance
• (NO) Indemnity with Prospective Util Review
• PPO
• POS
• HMO (IPA)
• (YES) HMO (Staff)

7
Degrees of Integration(least to most)

• (NO) Traditional Indemnity Insurance
• (NO) Indemnity with Prospective Util Review
• PPO
• POS
• HMO (IPA)
• (YES) HMO (Staff)

8
IPA HMOs
HMO (sales finance)
HMO contracts with Hospital
HMO contracts with group of MDs (IPA) or with
individual MDs
PATIENT
9
Typical IPA-HMO cost-control

• patient is limited to affiliated physicians
• primary care doctor paid capitation/bonus
• primary care doctor acts as gatekeeper
• Pre-authorization required for some expensive
  treatments
• called prospective utilization review
• Increasingly HMO has policies/guidelines for some
  treatments

10
IPA Vicarious Liability

• 1. ostensible authority
• 1. Representation of agency hold out
• 2. Reliance by patient look to
• 2. master-servant relationship
• sufficient control of IPA doctors?

11
Boyd (505)

• HELD Ostensible Jury question
• Elements of ostensible authority in Penn?
• HMO covenantedto provide health care services.
  hold out?
• paid HMO, not MD
• limited choice of MD
• no choice of specialist
• Patient looked to HMO for care (509).

12
new Petrovich (Ill. 1999)

• Test? Hold out look to
• Handbook said
• HMO will provide all your health care needs
• comprehensive high quality services
• describes HMO MDs as your HMO physician, your
  HMO physicians office, etc.
• Master contract said
• MDs are NOT agents of HMO.

13
HMOs arguments

• Master contract informed her. Held?
• She never read the members handbook so could not
  rely on statements there. Held?
• She did not detrimentally rely bc employer only
  offered one plan. Held?
• What fact would rebut reliance?
• What if handbook says HMO merely provides
  access to panel of providers?

14
Relevance of control

• Plaintiffs often try to show how HMO attempted to
  control physicians with
• NOT RELEVANT to ostensible (misrep)
• only relevant for the master-servant theory of
  vicarious liability

15
new Master-Servant Liability?

• Rarely successful against IPAs, but
• Petrovich JURY issue. 3 relevant facts?
• 1. financial incentives
• 2. Quality assurance program or clinical
  protocols
• 3. limiting referrals to specialists
• What about MDs testimony that she did not feel
  constrained in making decisions?

16
Insurers Emulate HMOsPreferred Provider Orgs
(PPO)
MD
INDEMNITY INSURER
MD gives DISCOUNT or gets capitation
MD
PATIENT
17

• MD

• INDEMNITY
• INSURER

Insurer promises to give subscribers
an incentive to use panel physicians

• MD

• PATIENT

18
PPOs

• MD

• INDEMNITY
• INSURER

• MD

insurer pays a larger of the bills of the
panel doctors

• PATIENT

19
Apparent Authority Liability?

• Does PPO hold itself out as the provider?
• Contract
• sales brochures
• advertising
• Does consumer reasonably look to the PPO?

20
PPO similarities to IPA-HMO

• panel of preferred physicians
• primary care physician may be a gatekeeper
• prospective utilization review common
• capitation/bonus sometimes

21
PPO differences from HMO

• Insurer typically sells insurance not care.
• weaker hold out argument
• Patient can go outside the panel if willing to
  pay.
• Weaker look to case?
• PPP less likely to supervise medical decisions
  with guidelines than HMO

22
Prediction?

• commentators predict NO vicarious liability.
• plaintiff has strongest chance if the negligent
  MD was a preferred provider, esp if assigned to
  him by PPO.
• BUT court will still look to contract terms, etc,

23
Degrees of Integration(least to most)

• (NO) Traditional Indemnity Insurance
• (NO) Indemnity with Prospective Util Review
• (rarely??) PPO
• POSon your own (see posted slides)
• (Turns on facts) HMO (IPA)
• (YES) HMO (Staff)

24
ON YOUR OWNPoint of Service Plans (POS)

• POS HMO equivalent of PPO.
• allows patient to seek care outside of the HMOs
  panel
• HMO acts much like indemnity insurer for this
  care.
• typically, higher deductible and higher co-pay
  and lower reimbursed (say, 60 v. 100)

25
POS (Staff HMO)
HMO sales and finance dept. health
care team

• MD

Less coverage for out of plan MD
PATIENT
26
POS (IPA Model HMO)
HMO (sales finance)
HMO contracts with Hospital
HMO contracts with group of MDs (IPA) or with
individual MDs

• MD

PATIENT
27
POS Vicarious Liability

• facts in favor of ost. Agency liability?
• Does POS plan sells care? (hold itself out)
• prepaid care, rather than post hoc reimbursement
• But look at the brochures, contracts and ads to
  verify this.
• patient has limited choice (looks to plan)
• facts against?
• Patient can go outside the plan (less look to?)
• Conclusion? Could go either way re network MDs.
  More likely than PPO (?)