Texas Wesleyan Law Review


Carl Giesler

Document Type



This paper examines Corporate Health and argues the policy wisdom of imposing malpractice liability on MCOs. Part II chronicles the effective control MCOs exercise over medical care decisions. Part III discusses states' non-tort regulations of MCOs and their ineffectiveness in making MCOs accountable for that control. Part IV then argues that the policy behind MCO tort liability makes sense and that Congress should clearly authorize states to impose malpractice liability on MCOs whose decisions negatively impact patients' medical treatment. Tort liability forces MCOs to consider the nonmonetary costs of negligent medical necessity decisions borne by man- aged care consumers and then incorporate them into their assessment of the trade-offs between health care cost and quality. It also makes MCOs respect and adhere to the treatment quality levels demanded by society. The public has evidenced its desire to contain the rise in health care costs through its embrace of managed care. Nonetheless, by society's continued enforcement of standards of care through the imposition of malpractice liability on physicians and other providers, it has also revealed the level below which it does not want-and will not tolerate-health care quality to fall. Though critics can debate whether custom-based standards of care make sense and whether a tort regime is effective, no reason exists to exempt MCOs-the decisions of which affect patient care levelsfrom adhering to them while enforcing them against physicians and other providers. Tort liability forces MCOs to respect those levels as they work to make health care more efficient and will not lead to unreasonable increases in malpractice litigation and health insurance costs. Part V reflects the recent trends in state legislation to address accountability and liability of HMOs. Part VI explains the Texas tortbased approach to MCO accountability for medical determinations, discussing the THCLA and its evaluation in Corporate Health. Part VII concludes the paper with a call for Congress to enact legislation or amend ERISA so that states can unreservedly enforce medical negligence standards against MCOs. While courts have narrowed the extent of ERISA's preemption of state law, federal and state decisions on ERISA's implication for state MCO tort liability are inconsistent. Undoubtedly, the resulting uncertainty makes some state legislatures wary of imposing malpractice liability on MCOs. Clarification from Congress would likely embolden mores states to follow Texas' lead.



First Page


Last Page