Finance issue brief: insurer liability: year end report-2002

Area of Science:

• Health Law
• Medical Malpractice
• Insurance Regulation

Background:

• Health plans denying payment for procedures or physician referrals raise questions about practicing medicine.
• Patient harm resulting from such denials prompts inquiries into health plan liability for medical malpractice.
• Managed care industry's power is under scrutiny due to physician and patient pressure.

Purpose of the Study:

• To examine the legal and ethical boundaries between insurance judgment and medical practice by health plans.
• To explore the potential for extending medical malpractice liability to insurance carriers and plans.
• To analyze legislative responses in various states addressing health plan accountability.

Main Methods:

• Analysis of legislative debates and actions in 35 states during 1999 and subsequent years.
• Review of existing state laws, particularly those prohibiting the 'corporate practice of medicine'.
• Examination of legal theories such as 'vicarious liability' in the context of health insurance disputes.

Main Results:

• A significant number of states (35 in 1999, at least 32 currently) are considering the issue of health plan liability.
• Traditional legal protections for health insurers ('corporate practice of medicine' bans) are being challenged.
• Legislative proposals aim to expand malpractice liability beyond individual practitioners to insurance entities.

Conclusions:

• The line between insurance decision-making and medical practice is increasingly blurred for health plans.
• There is a growing legislative trend towards holding health plans accountable for patient harm.
• Future legal frameworks may shift to include direct malpractice liability for insurance carriers.