Physicians Will Be Drawn into Lawsuits Against HMOs

Richard E. Anderson, MD, FACP, Chairman of the Board of Governors, The Doctors Company

Between Rounds^* panel statement
December 1998/January 1999

Physician anger against managed care is such that organized medicine is supporting efforts to remove the ERISA preemption. This anger is understandable—but the strategy will end up injuring us and the practice of medicine to a greater extent than it will HMOs and the managed care industry.

If the ERISA preemption falls, we will have another tidal wave of litigation—and this tidal wave will hit physicians as well as the managed care community. This fact is simply not understood by most doctors.

As the new wave of litigation breaks, physicians will be swept up into all of these lawsuits. No lawyer will sue the HMO and not the physician, so doctors will find themselves as codefendants with, in effect, the “devil.” Inevitably, there will be finger-pointing between the physician and the managed care organization—and juries will shrug their shoulders and convict both. Doctors who think they can stand aside and cast blame on managed care organizations are sadly mistaken. After all, the doctors have signed the contracts under which the problematic events occurred.

Moreover, physicians will find themselves with more restrictions on the practice of medicine, more checks on their authority, more auditing of the care they deliver, more outcomes analysis, more pre-authorizations—more of everything. If we say that managed care organizations are going to be responsible for medical decisions, the organizations will have to tighten—not loosen—their control on physicians. If we want to start suing HMOs for malpractice, we have to start expecting them to practice medicine.

Losing the ERISA preemption is deleterious not only for physicians, but for society as well. It will add an enormous new layer of cost into the health care system. And the more dollars that get diverted into litigation, the less money there is to go into patient care. Consider the consequences of a single outlier $500 million verdict. Instead of going to provide for the health care of all plan members, the money goes instead to one patient and his or her attorneys. However, only about one-third of the malpractice premium dollar ever reaches the injured patient. The rest goes to attorneys and administration. Even one or two large verdicts like that could bankrupt or cripple a company, creating an instant health care crisis for its policyholders.

As the litigation noose becomes tighter, meanwhile, the amount of defensive medicine will increase. A very conservative estimate by two Stanford economists sets the tab for defensive medicine right now in this country at about $50 billion a year. This number can only increase if there is more litigation.

Ostensibly, the point of opening the litigation floodgates is to improve health care. But this is the wrong way to do it. Physicians know that the dramatic increases in medical malpractice litigation over the past 25 years have seriously distorted the practice of medicine. Why would we expect the threat to work any better when it’s aimed against organizations? Moreover, the average malpractice lawsuit takes 3 1/2 years to reach resolution. This is an exceptionally poor vehicle for assuring access to care. For attorneys, however, this is not a problem. Increasing the amount of litigation is indeed an end in itself.

For all of these reasons, I think widening the scope of litigation against managed care companies is a bad idea. That is not to say we don’t need managed care reform. We do. As a society, we must come to grips with what we mean by the “right to health care.” If we want our health care system to cover everything—which will be the ultimate outcome of unlimited lawsuits—then let’s not get there through the wreckage of more lawsuits, bankrupt health care companies, more uninsured individuals, and a health care system that becomes ever less affordable. We must reach a basic consensus as a society, and then codify that consensus into strong laws that can be enforced immediately. Medical care should not be controlled via ad hominem, vigilante lawsuits. Litigation is a poor way to accomplish managed care reform. Physicians, from our own experience, should know better.

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