Managed care organizations can be held liable for physicians' care
Legal cases have significantly affected how health plans operate with regard to their credentialing practices. There are several ways in which managed care organizations can be held liable for their actions or for the actions of their providers related to the care received by members.
Take for example the 1998 court case, Boyd v. Albert Einstein Medical Center, Health Maintenance Organization of Pennsylvania, Dr. Rosenthal, Dr. Dornstein and Dr. Cohen (Surgeon) 547 A.2d 1229. Chardella Boyd underwent a breast biopsy during which the chest wall was perforated, causing a hemothorax, and requiring two days of hospitalization. Over the next several weeks, the patient experienced chest pain and other symptoms that were treated by both her surgeon and primary care physicians. Her condition worsened, and Mrs. Boyd subsequently died as a result of a myocardial infarction. A Pennsylvania Superior Court found that the health maintenance organizatoin (HMO) was negligent for not overseeing the physicians and hospital that were acting as its agents (or employees) when providing medical care. This was based on the theory of ostensible or apparent agency, meaning that the HMO was responsible or liable for another because of the appearance of control. This decision was based on the fact that the HMO advertised that it evaluated physician competency and based on documents it provided to its members, in which it identified itself as the care provider and guaranteed the quality of care.
Other landmark cases that set legal precedent within the managed care industry include Harrell v. Total Health Care, Inc. 781 S.W. 2d 58 (Mo. 1989) and McClellan v. Health Maintenance Organization of Pennsylvania 604 A. 2d 1053 (Pa. 1992).
Source: Credentialing for Managed Care