Managed care organizations (MCOs) routinely make decisions regarding utilization of health services, with an expectation of protection from liability through the Employee Retirement Income Security Act of 1974 (ERISA). An MCO decision to deny services to a patient may expose the physician to liability, while ERISA often shields the MCO from liability. A recent United States Supreme Court decision, New York State Conference of Blue Cross and Blue Shield Plans v Travelers, as well as legislation on the state and federal levels, may resolve this area of friction between physicians and MCOs. We reviewed federal and state laws, as well as relevant case law and legal commentaries. The Travelers decision raised the threshold for ERISA preemption, decreasing the protection once afforded to MCOs. The American Medical Association, many state legislatures, and some members of Congress have recognized ERISA preemption and its protection of MCOs as a source of potential risk to patient care and increased liability for physicians. The problems created by the interaction of ERISA and managed care appear headed for a legislative resolution on the federal and state levels. This will significantly affect the interaction of MCOs with patients and physicians.