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Law and Contemporary Problems




“Enterprise medical liability” is a term used to describe a system in which health care organizations bear responsibility for medical malpractice in addition to or instead of individual health professionals. Enterprise liability is in many senses a natural outgrowth of the increasing dependence of medical practice on institutional resources and expertise. Proposals for enterprise liability surfaced briefly from the academic literature into the political spotlight during the 1993-94 health care reform debate. At that time, objections to the concept as a basis for medical malpractice liability, even in a restructured health care system, were nearly universal.

Just five years later, many of the groups vehemently opposing the Clinton malpractice reform have become vigorous supporters of managed care liability. Moreover, courts and legislatures are holding managed care organizations accountable for malpractice in ways superficially compatible with the Clinton proposal. In the process, however, enterprise liability has been transformed from a theory without a movement to a movement without a theory. This article explores why this happened, whether it is likely to be a transitory phase or a sustained trend, and what it portends for the public policy objectives of medical tort law.

Part II of this article describes the theoretical justifications for imposing liability for medical malpractice on managed care organizations, emphasizing proposals that were made in connection with the national health care reform debate. Part III explains why enterprise liability failed to attract support in 1993-94. Part IV discusses the very different attitudes that prevail in 1998, and details the legal manifestations of the current movement to expand malpractice liability in managed care. Parts V and VI of the article analyze the relationship among theoretical constructs of enterprise liability, the reality of today’s managed care marketplace, and the legal response managed care has provoked. Specifically, Part V outlines several respects in which the market and the legal system have moved away from characteristics that previously made enterprise liability desirable, and Part VI identifies potentially significant trends that could lead to a rapprochement between our health care system and the public policy justifications for extending malpractice liability to managed care organizations. Finally, Part VII suggests that federal legislation is necessary for malpractice liability to serve socially constructive purposes in managed care, and identifies a set of principles that should guide future legislative action.

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Duke University School of Law

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