What Recourse?—Liability for Managed Care Decisions and the Employee Retirement Income Security Act

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Massachusetts Medical Society




Should managed-care organizations be accountable to patients injured by the company's negligence or wrongdoing? The general rule is that all organizations, including managed-care organizations, are legally liable for causing personal injury as a result of their own negligence or the negligence of their employees or agents.1-4 However, as most observers of the U.S. health care system know by now, there is an exception to this basic legal rule of accountability. The Employee Retirement Income Security Act of 1974 (ERISA) has been interpreted to grant health benefit plans provided by employers or unions (and the managed-care organizations that sell or administer them) immunity from ordinary tort liability for their own negligence with respect to members of the plan.5,6 Whether to end that immunity is the chief point of contention in the debate in Congress about a patients' bill of rights.

The U.S. Supreme Court, in the case of Pegram v. Herdrich, gave the managed-care industry protection from one form of liability, but the June 2000 decision may intensify public demand for an end to immunity under ERISA.7

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