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Court ruling could change practices
A recent Pennsylvania appeals court ruling could lead to more malpractice lawsuits against HMOs when physicians in their networks are negligent.
An Oct. 5, 1998, decision in Shannon v. McNulty, MD, and HealthAmerica Pennsylvania determined the Pittsburgh-based HMO HealthAmerica of Pennsylvania could be sued for medical malpractice because it had corporate liability in the death of a premature infant.
"That has substantial implications for managed care companies," says Charles Artz, a health care law attorney and principal of Artz and Associates in Harrisburg, PA. Artz primarily represents physicians.
The decision means HMOs have a responsibility to recruit and ensure the quality of physicians who contract with them because they may be held responsible if the physicians are negligent, Artz says, adding that this is a huge change from current malpractice decisions.
Pennsylvania courts in 1991 had opened the doors for hospitals to be held responsible under corporate liability in the case of Thompson v. Nason Hospital. In this case, the court said the injured party does not have to establish the negligence of a third party because the hospital owes nondelegable duty directly to the patient.
The appeals court referred to the HealthAmerica decision, using the same four general areas of corporate liability.
The Oct. 5 decision also held HealthAmerica responsible under vicarious liability because a family member of the premature infant had called the HMO’s nurse employees on a telephone triage line for medical guidance, and they gave her bad advice. This part of the decision could affect all managed care organizations that have nurses on call or medical triage lines.
Thus, the HMO was hit twice by the decision, Artz says.
"Employers can be held liable for vicarious liability where they are responsible for their employees," he explains. "But corporate liability means they’re liable for what their independent contractors do."
The HealthAmerica decision could cause some profound changes in how HMOs deal with physicians, and some of these changes might be positive.
"I believe this ruling is going to make HMOs work with physicians on quality parameters, and utilization is a part of quality," says Marc J. Schneiderman, MD, past president of the Pennsylvania Academy of Family Physicians in Harrisburg, and the president of the Allegheny Chapter of the Pennsylvania Academy of Family Physicians.
"No HMO wants patient care sacrificed," he says. "But on a personal level, the HMOs are constantly bringing numbers to physicians that we over-refer, over-utilize tests."
When they show a physician these utilization numbers, the implication is that the physician should try to change his or her utilization patterns because the patterns are outside the norm in comparison to other physicians, Schneiderman says.
"When you ask them to show you the charts and show you where you can cut costs, they never do," he adds.