At Law: Between Doctor and Patient

Abstract

The rapid evolution of the health care system is radically reshaping the relationships of hospitals and other providers, physicians, nurses, and other professionals, insurers and payers/ patients, and government. It is also generating some bitter political and legal battles. Many of the former involve the struggles on Capitol Rib and in statehouses across the nation between managed care firms and health care institutions and professionals, while patients continue to seek relief in the courts from what they regard as the adverse consequences of the new structures for organizing and paying for their health care. Some of the sharpest criticisms from the medical community have been aimed at so-called "gag clauses" in the contracts that managed care firms have with physicians that restrict what physicians can say to their patients and at the use of capitation to pay physicians for their services. The gag clauses are either denied by managed care companies or defended on the ground that they aim only to prevent physicians from disparaging the very companies that are sending them patients. Organized medicine has been quite successful in making such clauses seem a major assault on the physician-patient relationship and in restricting companies' ability to impose them. Though H.R. 3222, the grandly titled Hippocratic Oath and Patient Protection Act of 1996, had not yet been adopted when Congress recessed in August informed observer's predict that its basic provisions will be included in legislation passed before the session ends. Physicians have been less public in raising complaints about changes in the means of financing health care, though many are worried about the adverse effects of capitation on their ability to practice medicine in the style to which they have become accustomed. Compared to gag clauses, which seem inherently distasteful, capitation is really just another way of distributing the risk inherent in any insurance scheme. With traditional health coverage, an insurance company promises that for a fixed monthly premium it will reimburse subscribers for a specified portion of the cost of their health care. Under capitation, a physician or other provider promises for a fixed monthly payment to provide that care. The details of the insurer-physician contract determine who bears the risk and who stands to profit the most, but such matters do not provoke much public reaction. Medical associations can thus win the support of patients in getting rid of gag clauses, but recognize that capitation is among the changes at the heart of the new world of health care which aim to cut waste and hold down health care spending - and which enjoy broad public support. Increasingly, however, the potentially negative effects of managed care have raised concerns among state officials who traditionally have had primary responsibility for licensing and monitoring individual practitioners and groups and regulating insurance. Likewise, patients injured by medical malpractice have long relied on state tort law both to receive redress for the harm they have suffered and to deter future wrongdoing. When problems with medical care result from the policies of the institution within which the physician practices, that institution can also be held directly liable, as well as vicariously liable if the physician is its employee or agent. Yet some provisions of the federal Employee Retirement Income Security Act (ERISA) have the effect - probably unintended when the statute was passed - not just of tying regulators' hands but even of preventing state tort suits against managed care companies by patients aggrieved by the effects of the companies' decisions. The courts have tried to chart a path through the thicket of law and policy, but thus far have created rules of dubious value. In the oddest twist, managed care companies sometimes have to follow a litigation strategy of arguing that they have denied patients benefits to which they are arguably entitled. …