Legal Aspects of Health Care
With the advent and proliferation of Medical Care Organizations (MCOs), patient complaints, such as malpractice suits which were formerly directed against doctors or hospitals, on perceived undesirable health care are now aimed at those MCOs or Health Maintenance Organizations (HMOs) or entities deriving for themselves juridical personalities as full-fledged corporations (Dumoff, 1995; Havighurst, 2000; Rosenbaum & Hirsh, 2001).
If the word ‘corporate’ is added after ‘versus’ and before ‘vicarious’ the comparison can be made very clear: for distinguishing between corporate criminal liability versus ‘corporate’ vicarious liability resulting from negligence of an health care organization (HCO)`s employee.
Where complaining patients need only to establish or confirm that that negligent employee does indeed have worker-employee relationship with the HCO, then under the longstanding principle of respondeat superior, the HCO then is corporate vicariously, or exclusively (similar in concept to command responsibility in the military), liable (Dumoff, 1995; Havighurst, 2000; SAGE, 1997). Even government health systems such as the Veterans Administration, academic and public hospitals with full-time medical staffs, and staff-model HMOs are fully accountable for the negligence of their employed medical doctors (Rosenbaum & Hirsh, 2001; SAGE, 1997).
When HCOs have advertised or assured the quality of its affiliated staff, under the doctrine of ostensible (or apparent) agency sometimes called agency by estoppel, when reliance is present, HCOs are held corporate vicariously liable for the negligence of its merely affiliated or non-employee medical doctors (Dumoff, 1995; Havighurst, 2000; Rosenbaum & Hirsh, 2001; SAGE, 1997). Even when courts have ordered some hospitals to staff themselves with certain medical doctor services, obviously without any marketing activities; these same courts have held those hospitals corporate vicariously liable for those physicians’ malpractice (Rosenbaum & Hirsh, 2001; SAGE, 1997).
Or, merely when the HMO’s staff medical doctors select consulting specialists—repeated vicarious claims against the HMO were still possible (SAGE, 1997).
Whereas, whether HC0 employees are involved or not, the HC0, for its offenses is corporate criminally liable or corporate directly liable for the direct consequences of its actions as well, if it can be proven that the HCO: first, it did not closely scrutinize the credentials of its staff physicians possibly through systematic hospital peer review procedures, or second, it failed to monitor performance to ensure that minimum standards of patient-care are maintained (Dumoff, 1995; Havighurst, 2000; Rosenbaum & Hirsh, 2001; SAGE, 1997).
Recently, a Medicare HMO member was awarded $1.1 million by an arbitrator, including $100,000 in punitive damages, for injuries resulting from delays in diagnosing renal failure (SAGE, 1997).
Corporate criminal liability or corporate direct liability will likewise most likely be imposed on the health insurers of HMOs based on their negligent utilization review or their use of flawed clinical practice guidelines (Dumoff, 1995; Havighurst, 2000; Rosenbaum & Hirsh, 2001; SAGE, 1997).
0r on HMOs heavy-handed physician financial incentives where a jury awarded $3 million (reduced under MICRA to $700,000) for failure to refer for diagnosis of colon cancer, based in part on evidence of financial incentives to deny care (SAGE, 1997).
The HCO agent, or HCO employee knows that his HCO corporation will assume full responsibility for liabilities (Dumoff, 1995; SAGE, 1997).
However, the fully independent contractor (FICs), if as, an example, a medical doctor, has four options:
First, he can take out for himself full malpractice insurance (SAGE, 1997).
Second, he can accept “channeled” malpractice insurance money from an HCO, on the condition that the HCO be definitely not liable for anything and with the HCO contracting the doctors making sure that there is no employer-employee relationship between them. Examples are the Jewish Philanthropic Hospital Association in New York City and the Harvard Medical Institutions in Boston which for many years have sponsored “channeling” programs (Dumoff, 1995; SAGE, 1997).
Third, some integrated HCOs have deliberately assumed liability for their affiliated physicians by underwriting and defending judgments arising from malpractice affecting their patients: for example, Kaiser Foundation Health Plan, a group-model HMO that contracts with but does not employ physicians, defends the Permanente Medical Group, a physician partnership (SAGE, 1997).
And finally, fourth, recently, more loosely organized health care networks and health systems have offered to bear responsibility for malpractice as a way to attract and retain medical doctors (SAGE, 1997).
References:
Dumoff, A. (1995). Malpractice Liability of Alternative/Complementary
Health Care Providers: A View From the Trenches.
Havighurst, C. C. (2000). Vicarious Liability: Relocating Responsibility For The Quality Of Medical Care. AJLM, 26(1).
Rosenbaum, S., & Hirsh, H. a. J. (2001). An Overview of Legal Developments in Managed Care
Case Law
Rand Rosenblatt, Sylvia Law, and Sara Rosenbaum, Law and the American Health Care System (Foundation Press, NY, NY, 1997; 2000-2001 supplement), Ch. 2J.
SAGE, W. M. (1997). ENTERPRISE LIABILITY AND THE EMERGING MANAGED HEALTH CARE SYSTEM. 60 Law & Contemp. Probs, 159.