The evolution of physician credentialing into managed care selective contracting

American Journal of Law and Medicine

Volumn 22, Issue 2-3, 1996, Pages 173-203

  Blum, John D ^a  

^a LOYOLA UNIVERSITY CHICAGO   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ACCREDITATION; CONFERENCE PAPER; FINANCIAL MANAGEMENT; FORGERY; HEALTH INSURANCE; HUMAN RIGHTS; INFORMED CONSENT; LAW; LEGAL LIABILITY; MEDICAL FEE; PHYSICIAN;

CAPITATION FEE; CONTRACT SERVICES; CREDENTIALING; HOSPITAL-PHYSICIAN JOINT VENTURES; HUMANS; LIABILITY, LEGAL; MANAGED CARE PROGRAMS; MEDICAL STAFF PRIVILEGES; UNITED STATES;

EID: 0029848417     PISSN: 00988588     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Conference Paper

References (249)

1. Jerry F. Pogue, Capitation Strategies, INTEGRATED HEALTHCARE REP. (Integrated Healthcare Rep., Lake Arrowhead, CA), Dec. 1994, at 1.
2. Lauren M. Walker, Turn Capitation into a Moneymaker, MED. ECON., Mar. 13, 1995, at 58, 58 (providing a general overview on the details of capitation from a physician perspective).
3. Stephanie B. Byrne, Getting Real About Capitation, HOSP. & HEALTH NETWORKS, Sept. 5, 1995, at 66, 66; see also Mark E. Toso & Anne Farmer, Using Cost Accounting Data to Develop Capitation Rates, TOPICS HEALTH CARE FINANCING, Fall 1994, at 1, 2.
4. Stephanie B. Byrne, Getting Real About Capitation, HOSP. & HEALTH NETWORKS, Sept. 5, 1995, at 66, 66; see also Mark E. Toso & Anne Farmer, Using Cost Accounting Data to Develop Capitation Rates, TOPICS HEALTH CARE FINANCING, Fall 1994, at 1, 2.
5. Toso & Farmer, supra note 3, at 1. Capitation has already fallen out of favor in some markets and is being replaced by risk/reward models built on FFS payment. See Twin Cities Market Seen Moving Away from Capitation of Health Providers, 1 Managed Care Rep. (BNA) No. 21, at 509 (Dec. 6, 1995).
6. See Toso & Farmer, supra note 3, at 6, 9 (calculating capitation rates and discussing the negotiation of capitation contracts).
7. Id.
8. Id.
9. Leigh Page, Trailblazing, AM. MED. NEWS, Aug. 8, 1994, at 3.
10. Frank Cerne, Dollars & Sense: Creating Incentives to Effectively Manage Change, HOSP. & HEALTH NETWORKS, Apr. 5, 1994, at 28, 30.
11. Id.
12. Ken Terry, Look Who's Guarding the Gate to Specialty Care, MED. ECON., Aug. 22, 1994, at 124.
13. See, e.g., Clinical Roadmap Program Targets Practice Variations, PHYSICIAN MANAGER, Oct. 13, 1995, at 6.
14. If the Cap Fits . . . Wear It, AM. MED. NEWS, Oct. 9, 1995, at 10.
15. Paul R. DeMuro, Paying Specialists and Subspecialists on a Capitated Basis, HEALTHCARE FIN. MGMT., July 1995, at 33.
16. Terry, supra note 11, at 124.
17. John E. Billi et al., Potential Effects of Managed Care on Specialty Practice at a University Medical Center, 333 NEW ENG. J. MED. 979, 982-83 (1995).
18. Terry, supra note 11, at 124.
19. Id.
20. DeMuro, supra note 14, at 33.
21. Id.
22. Terry, supra note 11, at 131.
23. Id.
24. Id. at 129.
25. Id. at 130.
26. Id.
27. Id. at 129.
28. Id. at 124.
29. Id. at 130.
30. If the Cap Fits . . . Wear It, supra note 13, at 12, 14.
31. Donald C. Balfour, Physician Profiling: Linking Performance to Compensation in a Capitated Environment, GROUP PRAC. J., July-Aug. 1995, at 18; H. Gilbert Welch et al., Physician Profiling - An Analysis of Inpatient Practice Patterns in Florida and Oregon, 330 NEW ENG. J. MED. 607 (1994).
32. Donald C. Balfour, Physician Profiling: Linking Performance to Compensation in a Capitated Environment, GROUP PRAC. J., July-Aug. 1995, at 18; H. Gilbert Welch et al., Physician Profiling - An Analysis of Inpatient Practice Patterns in Florida and Oregon, 330 NEW ENG. J. MED. 607 (1994).
33. Balfour, supra note 30, at 22-24.
34. CLARK C. HAVIGHURST, HEALTH CARE LAW AND POLICY 620-86 (1989).
35. For an extensive review of cases in the credentialing area, see Daniel H. White, Annotation, Exclusion of or Discrimination Against Physician or Surgeon by Hospital, 37 A.L.R.3D 645 (1971); see also ARTHUR F. SOUTHWICK, THE LAW OF HOSPITAL AND HEALTH CARE ADMINISTRATION 583-621 (2d ed. 1988).
36. For an extensive review of cases in the credentialing area, see Daniel H. White, Annotation, Exclusion of or Discrimination Against Physician or Surgeon by Hospital, 37 A.L.R.3D 645 (1971); see also ARTHUR F. SOUTHWICK, THE LAW OF HOSPITAL AND HEALTH CARE ADMINISTRATION 583-621 (2d ed. 1988).
37. 211 N.E.2d 253 (Ill. 1965), cert. denied, 383 U.S. 946 (1966); see EMANUEL HAYT ET AL., LAW OF HOSPITAL, PHYSICIAN AND PATIENT 133 (1972).
38. 211 N.E.2d 253; HAYT ET AL., supra note 34, at 133.
39. 301 N.W.2d 156, 174 (Wis. 1981).
40. Id.
41. For a detailed listing of related statutes and regulations focusing on credentialing, see Jack W. Shaw, Jr., Annotation, Hospital's Liability for Negligence in Selection or Appointment of Staff Physician or Surgeon, 51 A.L.R.3D 981 (1973).
42. See. e.g., MD. CODE ANN., HEALTH-GEN. § 19-319 (Supp. 1995).
43. Timothy S. Jost, The Joint Commission on Accreditation of Hospitals: Private Regulation of Health Care and the Public Interest, 24 B.C. L. REV. 835, 873 (1983).
44. JOINT COMM'N ON ACCREDITATION OF HEALTHCARE ORGS., COMPREHENSIVE ACCREDITATION MANUAL FOR HOSPITALS 101-24 (1989).
45. Jost, supra note 40, at 842-45.
46. SOUTHWICK, supra note 33, at 586-87.
47. JACK ZUSMAN, CREDENTIALING AND PRIVILEGING SYSTEMS 47-69 (1990).
48. Id. at 1-22.
49. See. e.g., Barrows v. Northwestern Memorial Hosp., 525 N.E.2d 50, 51 (Ill. 1988); Rao v. St. Elizabeth's Hosp., 488 N.E.2d 685, 687 (Ill. App. Ct. 1986).
50. See Kathleen M. Dorr, Annotation, Exclusion of, or Discrimination Against, Physician or Surgeon by Hospital, 28 A.L.R.5TH 107, §§ 3[c] & 5 (1995).
51. See id. § 3 [c].
52. See id.
53. Cf. McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973).
54. Michael R. Callahan, Credentialling Solutions in an Era of Health Care Reform 30-31 (Oct. 1995) (materials from the annual meeting of the Illinois Association of Health Care Attorneys) (on file with author).
55. Age Discrimination in Employment Act of 1967, 29 U.S.C. § 626(b) (1994); Older Workers Benefit Protection Act of 1990, 29 U.S.C. § 621 (1994).
56. For example, see Altman v. New York City Health & Hosps. Corp., No. 93 Civ. 882, 1993 U.S. Dist. LEXIS 4228 (S.D.N.Y. Apr. 2, 1993), aff'd, 999 F.2d 537 (2d Cir. 1993).
57. See, e.g., Lim v. Central DuPage Hosp., No. 89C7753, 1991 U.S. Dist. LEXIS 10291 (N.D. Ill. July 23, 1991); 18 U.S.C. § 1962 (1994). In a RICO argument, an adverse credentialing decision is seen as resulting from a pattern of racketeering activity. It must be shown that there was an enterprise that affects interstate commerce and the defendant's participation in the enterprise fostered a pattern of racketeering activity. See id.
58. See James F. Blumstein & Frank A. Sloan, Antitrust and Hospital Peer Review, 51 LAW & CONTEMP. PROBS. 7, 8, 31 (1988) (discussing the court's reluctance to grant learned professions broad exemption from antitrust liability).
59. See generally id. (outlining the application of antitrust law to hospital peer review decisions).
60. Id.
61. Husain v. Helene Fuld Medical Ctr., 1990-2 Trade Cas. (CCH) ¶ 68,905 (D.N.J. Dec. 8, 1989).
62. 486 U.S. 94 (1986) (holding that the state-action doctrine does not protect physicians from federal antitrust liability for their activities on hospital peer review committees); 42 U.S.C. § 11101 (1994). As credentialing is a peer review type function, it is covered under HCQIA.
63. ILL. ANN. STAT. ch. 225, para. 60/5 (Smith-Hurd 1993).
64. McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973); see, e.g., FLA. STAT. ANN. § 768.40(4) (West 1981).
65. ZUSMAN, supra note 44, at 15.
66. Deborah S. Kolb et al., Economic Credentialing, TOPICS HEALTH CARE FINANCING, Spring 1993, at 58; J. Bruce Ryan et al., Financial Analysis of Medical Staff Development Plans, TOPICS HEALTH CARE FINANCING, Spring 1993, at 1. There is now a movement in California to develop a standard physician credentialing form to eliminate the need for physicians to complete multiple applications. The new form, referred to as the California Participating Physician Application, is seen as a first step toward centralized credentialing. Jeannine Mjoseth, Standardized Credentialing Form Advanced to Cut Duplicative Efforts, 5 Health L. Rep. (BNA) No. 21, at 771, 771-72 (May 23, 1996).
67. Deborah S. Kolb et al., Economic Credentialing, TOPICS HEALTH CARE FINANCING, Spring 1993, at 58; J. Bruce Ryan et al., Financial Analysis of Medical Staff Development Plans, TOPICS HEALTH CARE FINANCING, Spring 1993, at 1. There is now a movement in California to develop a standard physician credentialing form to eliminate the need for physicians to complete multiple applications. The new form, referred to as the California Participating Physician Application, is seen as a first step toward centralized credentialing. Jeannine Mjoseth, Standardized Credentialing Form Advanced to Cut Duplicative Efforts, 5 Health L. Rep. (BNA) No. 21, at 771, 771-72 (May 23, 1996).
68. Deborah S. Kolb et al., Economic Credentialing, TOPICS HEALTH CARE FINANCING, Spring 1993, at 58; J. Bruce Ryan et al., Financial Analysis of Medical Staff Development Plans, TOPICS HEALTH CARE FINANCING, Spring 1993, at 1. There is now a movement in California to develop a standard physician credentialing form to eliminate the need for physicians to complete multiple applications. The new form, referred to as the California Participating Physician Application, is seen as a first step toward centralized credentialing. Jeannine Mjoseth, Standardized Credentialing Form Advanced to Cut Duplicative Efforts, 5 Health L. Rep. (BNA) No. 21, at 771, 771-72 (May 23, 1996).
69. Kolb et al., supra note 63, at 58; Ryan et al., supra note 63, at 1.
70. Billi et al., supra note 16, at 979 (referring to network models and combined models used in analyzing the number of subscribers a large academic medical center's HMO would need to preserve the current level of revenue for specialists).
71. See Mark R. Chassin et al., Variations in the Use of Medical and Surgical Services by the Medicare Population, 314 NEW ENG. J. MED. 285 (1986) (discussing variations in use by Medicare population in 1981); John E. Wennberg, Dealing with Medical Practice Variations: A Proposal for Action, HEALTH AFF., Summer 1984, at 6.
72. See Mark R. Chassin et al., Variations in the Use of Medical and Surgical Services by the Medicare Population, 314 NEW ENG. J. MED. 285 (1986) (discussing variations in use by Medicare population in 1981); John E. Wennberg, Dealing with Medical Practice Variations: A Proposal for Action, HEALTH AFF., Summer 1984, at 6.
73. See generally Clark C. Havighurst, Practice Guidelines for Medical Care: The Policy Rationale, 34 ST. LOUIS U. L.J. 777 (1990) (presenting an excellent overview of the underlying policy issues driving the quality improvement trend's use of clinical practice guidelines).
74. See, e.g., Bruce T. Gipe, A New Method for Direct Cost Analysis: A Study of the Hospital Costs for Patients with Respiratory Disease, COST QUALITY Q.J., July 1995, at 13, 13-20.
75. Id.
76. See Welch et al., supra note 30, at 607.
77. Id.
78. See id. at 607, 610-11.
79. Steven Findlay, Profiling Systems Aim to Eliminate Second-Guessing of Doctors, BUS. & HEALTH, Apr. 1993, at 58; Jim Montague, Profiling in Practice; Comparing Physician Practice Profiles, HOSP. & HEALTH NETWORKS, Jan. 20, 1994, at 50.
80. Steven Findlay, Profiling Systems Aim to Eliminate Second-Guessing of Doctors, BUS. & HEALTH, Apr. 1993, at 58; Jim Montague, Profiling in Practice; Comparing Physician Practice Profiles, HOSP. & HEALTH NETWORKS, Jan. 20, 1994, at 50.
81. Marshall Ruffin, Physician Profiling: Trends and Implications, PHYSICIAN EXECUTIVE, Nov. 1995, at 34, available in LEXIS, News Library, ASAPII File.
82. See generally Anne Arundel Gen. Hosp., Inc. v. O'Brien, 432 A.2d 483, 488 (Md. Ct. Spec. App. 1981) (finding that a hospital had no obligation to grant privileges to a group of radiologists after their exclusive contract had expired).
83. Julie Johnsson, Magic Carpet Ride? An Exclusive Provider Deal May Seem Enchanted - Until the Insurer Pulls the Rug Out, AM. MED. NEWS, June 13, 1994, at 23, 24.
84. Howard Larkin, States Battle Denial of Privileges by Exclusive Contract, AM. MED. NEWS, July 11, 1994, at 5.
85. Johnsson, supra note 76, at 24.
86. See Garibaldi v. Applebaum, 653 N.E.2d 42, 43 (Ill. App. Ct. 1995).
87. See id.; Gonzalez v. San Jacinto Methodist Hosp., 880 S.W.2d 436, 438 (Tex. Ct. App. 1994).
88. See Patel v. Scotland Memorial Hosp., No. 3:94CV00284, 1995 U.S. Dist. LEXIS 5258, at *5-6 (M.D.N.C. Mar. 31, 1995).
89. 867 P.2d 1057 (Kan. 1994).
90. 30 Cal. Rptr. 2d 603, 608 (Ct. App. 1994).
91. Id.
92. For example, see Gonzales v. San Jacinto Methodist Hosp., 880 S.W.2d 436 (Tex. Ct. App. 1994).
93. ILL. ANN. STAT. ch. 210, para. 85/10.4 (Smith-Hurd Supp. 1996).
94. Mary T. Koska, Review Exclusive Contracts in Light of Recent Challenges: Hospitals' Contracts with Physicians, HOSPS., Apr. 20, 1992, at 38; Michael A. Morrisey & Deal C. Brooks, The Myth of the Closed Medical Staff, HOSPS., July 1, 1985, at 75.
95. Mary T. Koska, Review Exclusive Contracts in Light of Recent Challenges: Hospitals' Contracts with Physicians, HOSPS., Apr. 20, 1992, at 38; Michael A. Morrisey & Deal C. Brooks, The Myth of the Closed Medical Staff, HOSPS., July 1, 1985, at 75.
96. AMERICAN MEDICAL ASS'N, PROCEEDINGS OF THE HOUSE OF DELEGATES, 47TH INTERIM MEETING 51 (Dec. 5-8, 1993) [hereinafter AMA PROCEEDINGS].
97. AMERICAN MEDICAL ASS'N, PROCEEDINGS OF THE HOUSE OF DELEGATES, 47TH INTERIM MEETING 51 (Dec. 5-8, 1993) [hereinafter AMA PROCEEDINGS].
98. Id. at 52.
99. John D. Blum, Economic Credentialing Moves from the Hospital to Managed Care, J. HEALTH CARE FIN., Fall 1995, at 60, 61.
100. Albert Trentalance, Economic Credentialing Is Here to Stay, PHYSICIAN EXECUTIVE, Sept. 1994, at 38, available in LEXIS, News Library, ASAPII File.
101. Final Summary Judgment in Favor of the Defendant, Rosenblum v. Tallahassee Memorial Regional Medical Ctr., Inc., No. 91-589 (Fla. Cir. Ct. June 18, 1992).
102. Id. at 4-5.
103. Id. at 4; John D. Blum, Evaluation of Medical Staff Using Fiscal Factors: Economic Credentialing, J. HEALTH & HOSP. L., Mar. 1993, at 65, 68-69.
104. Unilateral Change in Staff Credentials Violates Hospital's Contractual Duties, 4 Health L. Rep. (BNA) No. 41, at 1578 (Oct. 19, 1995). In this case, a breach of contract action was brought against the hospital by 29 physicians who argued that the bylaws were violated when hospital ICU and SCU privileges were changed without medical staff approval. Id. at 1578-79.
105. Mike Mitka, What Makes a PHO Go?, AM. MED. NEWS, June 20, 1994, at 15.
106. Frederick B. Abbey & K. Michael Treash, Jr., Reasons Providers Form PHO's, HEALTHCARE FIN. MGMT., Aug. 1995, at 38.
107. Id. at 38, 40.
108. Id. at 38-39.
109. Id. at 42.
110. The HPO is in fact very close to a PHO, except that the hospital partner may exert more control over the arrangement. An MSO is an organization that leases facilities, equipment, etc. or provides management services to a physician entity. A PO is a physician organization that is fairly generic in nature and can pursue single or multiple activities, but is physician-owned and -operated.
111. Mitka, supra note 96, at 16.
112. Laura Buterbaugh, The Hospital and Me: Friends and PHOs; Physician-Hospital Organizations, MED. WORLD NEWS, Sept. 15, 1993, at 36, 40.
113. Mitka, supra note 96, at 15-16.
114. Buterbaugh, supra note 103, at 41.
115. Mitka, supra note 96, at 16. A book of business means that a physician has patients he or she can bring into the managed care entity.
116. Sandra L. Breisch, Look Out for Landmines: Hospital Purchases of Physician Practices Can Be Fraught with Peril, AM. MED. NEWS, Feb. 14, 1994, at 19.
117. Id. at 20.
118. Id.
119. Deborah S. Kolb & Judith L. Horowitz, Managing the Transition to Capitation, HEALTHCARE FIN. MGMT., Feb. 1995, at 64, 66.
120. PHYSICIAN PAYMENT REVIEW COMM'N, 1995 ANNUAL REPORT TO CONGRESS 345-49 (1995).
121. Health Care Report Cards: Profiles of All Major Report Cards, Performance Reports, Shopping Guides, and Consumer Satisfaction Surveys, ACCOUNTABILITY NEWS FOR HEALTH CARE MANAGERS (Atlantic Info. Servs., Washington D.C.), 1995.
122. NATIONAL COMM. FOR QUALITY ASSURANCE, HEALTH PLAN EMPLOYER DATA AND INFORMATION SET AND USERS MANUAL VERSION 4.0 (Washington D.C.: 1995).
123. Id.
124. Linda O. Prager, Payers, Providers Open to AMA Profiling Ventures, AM. MED. NEWS, Mar. 25, 1996, at 1.
125. PHYSICIAN PAYMENT REVIEW COMM'N, supra note 111, at 349-57.
126. Id. at 349.
127. NATIONAL COMM. FOR QUALITY ASSURANCE, STANDARDS FOR ACCREDITATION 27-31 (NCQA, Washington D.C., 1995) [hereinafter NCQA STANDARDS].
128. Sara Shapiro, Cracking Down on Credentialing, MANAGED HEALTHCARE, June 1995, at 30.
129. NCQA STANDARDS, supra note 118, CR 5.0-5.7, at 27-28.
130. Id. CR 7.1-7.3, at 28.
131. Id. CR 5.0, at 27; see also NATIONAL COMM. FOR QUALITY ASSURANCE, 1996 REVIEW GUIDELINES 73 (1996).
132. Id. CR 8.0, at 28.
133. Id. CR 8.1, at 28.
134. Id. CR 10.0, at 29.
135. Id. CR 15.0, at 31.
136. Shapiro, supra note 119, at 32.
137. Id.
138. Id.
139. NATIONAL COMM. FOR QUALITY ASSURANCE, CVO CERTIFICATION PROGRAM 1995-1996, at 22-45 (1996).
140. Id.
141. Id.
142. 45 C.F.R. § 60.2 (1995).
143. 42 U.S.C. § 11111(a)(1).
144. PHYSICIAN PAYMENT REVIEW COMM'N, supra note 111, at 344.
145. Id.
146. 604 A.2d 1053, 1059 (Pa. Super. 1992).
147. 781 S.W.2d 58, 59 (Mo. 1989).
148. See Schleier v. Kaiser Found. Health Plan, 876 F.2d 174, 178 (D.C. Cir. 1989); see also Howard v. Sasson, Civ. A. No. 95-0068, 1995 U.S. Dist. LEXIS 14373 (E.D. Pa. Oct. 3, 1995).
149. Diana J. Bearden & Bryan J. Maldgen, Emerging Theories in Liability in the Managed Care Industry, 47 BAYLOR L. REV. 285, 309-12 (1995).
150. See 547 A.2d 1229 (Pa. Super. 1988); see also Decker v. Saini, No. 88-361768, 1991 WL 277590 (Mich. Cir. Ct. Sept. 17, 1991).
151. See McClellan v. Health Maintenance Org., 604 A.2d 1053 (Pa. Super. 1992); Elsesser v. Hospital of Phila. College of Osteopathic Medicine, 795 F. Supp. 142 (E.D. Pa. 1992).
152. See Dunn v. Praiss, 656 A.2d 413, 416 (N.J. 1995).
153. Deven C. McGraw, Financial Incentives to Limit Services: Should Physicians Be Required to Disclose These to Patients?, 83 GEO. L.J. 1821, 1828-29 (1995).
154. Plaintiff's Third Amended Complaint, Ching v. Gaines, No. 137656, at 5-6 (Cal. Super. Ct. Apr. 5, 1995).
155. Id. at 6.
156. See 42 C.F.R. § 417.124(b) (1994).
157. CAL. HEALTH & SAFETY CODE § 1363 (West Supp. 1990).
158. BARRY R. FURROW ET AL., HEALTH LAW CASES, MATERIALS AND PROBLEMS 321-45 (2ded. 1991).
159. See generally Moore v. Regents of the Univ. of Cal., 793 P.2d 479, 483 (Cal. 1990) ("a reasonable patient would want to know whether a physician has an economic interest that might affect [the physician's] professional judgment"), cert. denied, 499 U.S. 936 (1991).
160. MASS. GEN. L. ch. 176B, § 7 (Supp. 1996); id. ch. 176G, § 6; id. ch. 1761, § 2; Alison Bass, New Law Bans Gag Rules on Doctors: Health Insurers' Contracts at Issue, BOSTON GLOBE, Jan. 23, 1996, at 1.
161. For example, see Wickline v. State, 239 Cal. Rptr. 810 (Ct. App. 1986); E. Haavi Morreim, Cost Containment and the Standard of Medical Care, 75 CALIF. L. REV. 1719 (1987); Rachel Kreier, Playing the Liability Lottery, AM. MED. NEWS, Apr. 15, 1996, at 11.
162. For example, see Wickline v. State, 239 Cal. Rptr. 810 (Ct. App. 1986); E. Haavi Morreim, Cost Containment and the Standard of Medical Care, 75 CALIF. L. REV. 1719 (1987); Rachel Kreier, Playing the Liability Lottery, AM. MED. NEWS, Apr. 15, 1996, at 11.
163. No. CIV.A.94-5052, 1995 WL 605483, at *1 (E.D. Pa. Oct. 13, 1995).
164. Id.
165. See Gadson v. Newman, 807 F. Supp. 1412, 1415 (C.D. Ill. 1992); see also Johnston v. Anchor Org., 621 N.E.2d 137 (Ill. App. Ct. 1993).
166. Fraud: Underutilization in Managed Care New Target of Joint Fraud Efforts, 4 Health L. Rep. (BNA) No. 47, at 1809 (Dec. 7, 1995).
167. 29 U.S.C. §§ 1001-1461 (1994).
168. Id. § 1132(a)(1)(B).
169. Id.; see also id. § 1144(a).
170. 965 F.2d 1321 (5th Cir.), cert. denied, 113 S. Ct. 812 (1992).
171. Id. at 1321.
172. Id.
173. See Dukes v. U.S. Healthcare, Inc., 57 F.3d 350, 357 (3d Cir. 1995).
174. See Warner v. Ford Motor Co., 46 F.3d 531, 535 (6th Cir. 1995). Typically medical malpractice cases filed against an ERISA-qualified plan are brought in state courts. Defendants generally seek to remove these actions to the federal courts arguing that a complete preemption of state law is mandated by ERISA's § 502, and that the federal district court has original subject matter jurisdiction. In order for a claim to be removable, the well-pleaded complaint rule must generally be satisfied. This rule requires that a federal question be presented on the face of the plaintiff's complaint. Clearly, a plaintiff who seeks a state remedy will not be apt to argue the presence of a federal question, and even the inclusion of anticipatory defenses to the defendant's likely preemption argument does not create a federal question. In Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1986), the Supreme Court established an exception to the well-pleaded complaint rule, holding that state common law claims are to be treated as federal claims provided that the claim falls within the bounds of the civil enforcement actions outlined in §502 of ERISA. Id. at 64-65. It is clear from Metropolitan Life that a state claim cannot be automatically removed to federal court by a general argument that such claims are inherently federal in nature. Id.
175. 29 U.S.C. § 1132(a)(1)(B).
176. 29 U.S.C. § 1144(a). For recent analysis of the impact of ERISA's § 514(a), see Pacificare of Okla., Inc. v. Burrage, 59 F.3d 151 (10th Cir. 1995).
177. Metropolitan Life, 481 U.S. at 66.
178. 57 F.3d 350 (3d Cir. 1995).
179. Id. at 352.
180. Id.
181. Id. at 355.
182. Id.
183. Id.
184. Id. at 357-58.
185. Id. at 357.
186. Id. at 359-61.
187. Id. at 356.
188. 29 U.S.C. § 1144(a).
189. Pacificare of Okla., Inc. v. Burrage, 59 F.3d 151, 154-55 (10th Cir. 1995) (providing extensive citations to cases that have interpreted § 514(a) preemption).
190. See Kerney v. U.S. Healthcare, Inc., 859 F. Supp. 182 (E.D. Pa. 1994).
191. Pacificare of Okla., Inc., 59 F.3d at 154 (citing Schachter v. Pacificare of Okla., Inc., No. CIV-94-C-203 (N.D. Okla. Mar. 16, 1995)).
192. Id.
193. Under ERISA, health plans have a fiduciary duty to act solely in the interests of the participants and beneficiaries. In a recently filed New York case, a plaintiff alleges that Aetna Health Plans violated its fiduciary duty by switching its physician contracts from FFS to capitation. The plaintiff alleges that her children's pediatrician refused to accept Aetna's capitated arrangement, and informed his patient of sixteen years that he would not be able to continue treating her children under the HMO plan. The plaintiff is asking a federal court to enjoin Aetna from interfering with physician contracts, and to drop the use of physician incentive arrangements. The suit is a novel one which faces an uphill battle, in that the change to capitation may inconvenience the beneficiary, but it is not a denial of coverage or an action that excludes the practitioner. Robert Kazel, Suit Questions Legality of Aetna's Capitation, BUS. INS., Jan. 15, 1996, at 37. There may be situations in which changes in reimbursement policy will result in large practitioner defections from a plan to an extent where such a policy shift could be characterized as a breach of fiduciary duty.
194. Bruce W. Clark, Negotiating Successful Managed Care Contracts, HEALTHCARE FIN. MGMT., Aug. 1995, at 27.
195. NCQA STANDARDS, supra note 118, at 31.
196. Phoebe Carter, Annotation, Liability for Interference with Physician-Patient Relationship, 87 A.L.R.4TH 845 (1991).
197. It is interesting to consider whether a property right argument could be mounted by a plan member physician if the MCO switches reimbursement from FFS to capitation, hurting the physician who is unable to adjust. Chances are, the MCO contract would allow for change in reimbursement, but in the event such change violated the practitioner agreement, the breach may be the basis of a property rights argument.
198. NCQA STANDARDS, supra note 118, at 31.
199. Mutual Release and Settlement Agreement, Medical Soc'y of the Dist. of Columbia v. Blue Cross and Blue Shield Ass'n, Civ. A. No. 94-1426, at 3 (June 12, 1995) [hereinafter Settlement Agreement].
200. Capital Blues, D.C. Medical Society Settle Selection. Quality Issues Dispute, 4 Health L. Rep. (BNA) No. 24, at 914 (June 15, 1995).
201. Settlement Agreement, supra note 189, at 3-5.
202. Id. at 8.
203. Id. at 4.
204. Id. at 5.
205. Under New Jersey law, hospitals are treated as quasi-public entities, thus allowing physicians who have been adversely affected by hospital credentialing decisions to bring due process type actions. In order for that right to be extended to the managed care arena, MCOs would have to be viewed by the courts as quasi-public in nature. Perhaps MCO entities which are licensed could be thought of as quasi-public, but those that are just financial conduits may not be.
206. See Delta Dental Plan v. Banasky, 33 Cal. Rptr. 2d 381, 384 (Ct. App. 1994).
207. See Ascherman v. St. Francis Memorial Hosp., 119 Cal. Rptr. 507 (Ct. App. 1975).
208. 33 Cal. Rptr. 2d at 385.
209. Id.
210. 674 A.2d 962, 964 (N.H. 1996).
211. Id. at 963.
212. Id.
213. Id. at 964.
214. Id. at 965-66.
215. Id.
216. Id. at 966-67.
217. See generally Increasing Antitrust Challenges Will Parallel HMO Growth, Experts Say, 3 Health L. Rep. (BNA) No. 16, at 513 (Apr. 21, 1994) (asserting that antitrust litigation will target HMOs more and more as they increase their market share).
218. Id. at 514.
219. Thomas L. Greaney, Managed Competition, Integrated Delivery Systems and Antitrust, 79 CORNELL L. REV. 1507 (1994).
220. Id. at 1537-43.
221. No. 95 av. 6631 (S.D.N.Y. filed Aug. 21, 1995).
222. Id.
223. Id.
224. Greaney, supra note 209, at 1541.
225. See Carter, supra note 186, § 10[a], at 877-78.
226. Id.
227. Id. § 10[b], at 879.
228. Patricia Jacobsen, Prohibition Against Corporate Practice of Medicine: Dinosaur or Dynamic Problem, in HEALTH LAW HANDBOOK 67, 67-68, 78-98 (1993).
229. Federal HMO Act, 42 U.S.C. § 300e (1994); see also Medical Practice Act of 1987, ILL. ANN. STAT. ch. 225, paras. 60/1-60/4 (Smith-Hurd 1993).
230. 42 U.S.C. §§ 11101-11152 (1994); 42 U.S.C. §§ 12101-12213 (1994).
231. Any Willing Provider Bills Proliferate at State Level, 3 Health L. Rep. (BNA) No. 46, at 1683 (Dec. 1, 1994).
232. Terese Hudson, State Laws: A Stumbling Block for System Integration, HOSP. & HEALTH NETWORKS, Apr. 20, 1994, at 40, 40.
233. Any Willing Provider Bills Proliferate at State Level, supra note 221, at 1683.
234. Id. at 1684.
235. See Any Willing Provider Provisions and Laws (Resolution 718, A-93), in AMA PROCEEDINGS, supra note 88, at 25.
236. 995 F.2d 500, 505 (4th Cir.), cert. denied, 114 S. Ct. 579 (1993).
237. Id. (citing Blue Cross and Blue Shield v. St. Mary's Hosp. of Richmond, Inc., 426 S.E.2d 117, 121 (Va. 1993)).
238. 883 F. Supp. 94, 104 (M.D. La. 1995).
239. S. 2196, 103d Cong., 3d Sess. (1994); H.R. REP. No. 4527, 103d Cong., 2d Sess. (1994); AMA Proposal Requires Health Plans to Give Consumers Coverage, Cost Data, 3 Health L. Rep. (BNA) No. 21, at 698 (May 26, 1994).
240. S. 2196, 103d Cong., 2d Sess. § 4(5)-(6).
241. Id. § 4(6)(B).
242. Id. §4(6)(B)(II).
243. N.J.A.B. 1393, 207th Leg., 1st Annual Sess. (1996).
244. TEXAS ADMIN. CODE tit. 28, §§ 3.3703, 3.3705, 11.1601 (1996).
245. Id. § 11.1601(a).
246. Id. §§ 3.3705(4), 11.1601(b).
247. Id. § 3.3703(1).
248. Id. § 11.1601(a) (unless otherwise prohibited by Texas Insurance Code art. 21.52B).
249. Recently a group of five Houston physicians sued Aetna Life Insurance Company arguing that they were unfairly dropped from the insurer's PPO. The U.S. District Court for the Southern District of Texas ruled that it had no jurisdiction in the case because Texas law does not provide a private cause of action to enforce PPO regulations. According to the Fifth Circuit, only the Texas Department of Insurance has the authority to enforce PPO rules. Texas Medical Ass'n v. Aetna Life Ins. Co., 80 F.3d 153 (5th Cir. 1996).