The ethics of middle-class access to legal services and what we can learn from the medical profession's shift to a corporate paradigm

Fordham Law Review

Volumn 70, Issue 3, 2001, Pages 775-845

  Harris, George C ^a   Foran, Derek F ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; COST CONTROL; DOCTOR PATIENT RELATION; ETHICS; HEALTH INSURANCE; HEALTH MAINTENANCE ORGANIZATION; HUMAN; JURISPRUDENCE; LEGAL LIABILITY; MEDICAL ETHICS; MEDICAL SOCIETY; ORGANIZATION AND MANAGEMENT; PROFESSIONAL COMPETENCE; PROFESSIONAL PRACTICE; SOCIAL CLASS; UNITED STATES;

AMERICAN MEDICAL ASSOCIATION; COST CONTROL; ETHICS; ETHICS, MEDICAL; HEALTH MAINTENANCE ORGANIZATIONS; HUMANS; JURISPRUDENCE; LIABILITY, LEGAL; MANAGED CARE PROGRAMS; MANAGED COMPETITION; PHYSICIAN-PATIENT RELATIONS; PROFESSIONAL COMPETENCE; PROFESSIONAL CORPORATIONS; SOCIAL CLASS; UNITED STATES;

EID: 0035754118     PISSN: 0015704X     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (473)

1. George Bernard Shaw, The Doctor's Dilemma, in 1 Bernard Shaw: Complete Plays with Prefaces 110 (Dodd, Mead & Co. 1963) (1906).
2. See Mike France, Legal Clinics: Lights Go Out for Storefronts, Nat'l L.J., Dec. 12, 1994, at A1.
3. Edward S. Adams & John H. Matheson, Law Firms on the Big Board?: A Proposal for NonLawyer Investment in Law Firms, 86 Cal. L. Rev. 1, 10 (1998) (discussing the "fear of Sears" syndrome); see also Bernard Sharfman, Note, Modifying Model Rule 5.4 to Allow for Minority Ownership of Law Firms by Nonlawyers, 13 Geo. J. Legal Ethics 477, 481 (2000) (same).
4. Edward S. Adams & John H. Matheson, Law Firms on the Big Board?: A Proposal for NonLawyer Investment in Law Firms, 86 Cal. L. Rev. 1, 10 (1998) (discussing the "fear of Sears" syndrome); see also Bernard Sharfman, Note, Modifying Model Rule 5.4 to Allow for Minority Ownership of Law Firms by Nonlawyers, 13 Geo. J. Legal Ethics 477, 481 (2000) (same).
5. ABA Opinions of the Committee on Prof'l Ethics 1 (1967) (indicating Canon 34, which prohibited lawyers from partnering with non-lawyers was not adopted until 1928, twenty years after the original canons were adopted).
6. See Bruce A. Green, The Disciplinary Restrictions on Multidisciplinary Practice: Their Derivation, Their Development, and Some Implications for the Core Values Debate, 84 Minn. L. Rev. 1115, 1116 (2000).
7. See Canons of Prof'l Ethics, Canons 33-35 (1928).
8. See Canons 33-35; ABA Comm. on Ethics and Prof'l Responsibility, Formal Op. 8 (1925). Formal Opinion 8 concerned the propriety of a lawyer's employment with an automobile association that provided legal services to its members. See id. Opinion 10 dealt with the ethical implications of a lawyer-trust officer employed by a bank, representing that bank in proceedings involving the bank as trustee for minor heirs. See ABA Comm. on Ethics and Prof'l Responsibility, Formal Op. 10 (1926).
9. See Canons 33-35; ABA Comm. on Ethics and Prof'l Responsibility, Formal Op. 8 (1925). Formal Opinion 8 concerned the propriety of a lawyer's employment with an automobile association that provided legal services to its members. See id. Opinion 10 dealt with the ethical implications of a lawyer-trust officer employed by a bank, representing that bank in proceedings involving the bank as trustee for minor heirs. See ABA Comm. on Ethics and Prof'l Responsibility, Formal Op. 10 (1926).
10. See Canon 33 ("Partnerships between lawyers and members of other professions or non-professional persons should not be formed or permitted where any part of the partnership's employments consists of the practice of law.").
11. See Canon 34 ("No division of fees for legal services is proper, except with another lawyer, based upon a division of service or responsibility.").
12. Canon 35 states: The professional services of a lawyer should not be controlled or exploited by any lay agency, personal or corporate, which intervenes between client and lawyer. A lawyer's responsibilities and qualifications are individual. He should avoid all relations which direct the performance of his duties by or in the interest of such intermediary. Canon 35.
13. One of the Formal Opinions relied on for the codification, however, provided an "independent judgment" rationale. See Formal Op. 10, supra note 7. Opinion 10 proscribed a salaried lawyer-trust officer from representing a client in a trust proceeding. See id. The Committee on Professional Ethics opined as follows: As an employee his only duty is to his employer. As a lawyer he owes a duty to the Court and to the public, as well as to his client. Can he consistently act in these dual capacities at one and the same time? Being dependent on his employer's pleasure for his livelihood, can he properly observe that independence of judgment and action that are indispensable to the advocate in court? . . . He must be free to exercise his independent judgment as an attorney for the benefit of the interests he represents, which he could not be expected to do while under the domination of a third party as its salaried servant. Id.
14. Thomas R. Andrews, Nonlawyers in the Business of Law: Does the One Who Has the Gold Really Make the Rules?, 40 Hastings L.J. 577, 586 (1989) (quoting 52 Rep. of the A.B.A. 378 (1927)).
15. Id. (quoting Minority Report of F. W. Grinnel, 52 Rep. of the A.B.A. 378 (1927)).
16. Green, supra note 5, at 1139 (quoting Proposed Supplements to Canons of Professional Ethics, 13 A.B.A. J. 268 (1927)).
17. Id. at 1156.
18. Id. at 1135.
19. I. Maurice Wormser, Frankenstein Incorporated 164 (1931).
20. N.Y. Penal Law § 280 (1909); see Green, supra note 5, at 1120.
21. N.Y. Penal Law § 280 (1909); see Green, supra note 5, at 1120.
22. See Green, supra note 5, at 1119-20.
23. See id. at 1120.
24. See In re Co-Operative Law Co., 92 N.B. 15 (N.Y. 1910).
25. Green, supra note 5, at 1126 (quoting Petitioner's Appeal from Order at 23, In re Co-Operative Law Co., 92 N.E. 15 (N.Y. 1910) (affidavit of Charles J. McDermott)) (internal quotes omitted).
26. Id. at 1129 (quoting Samuel Marsh, In re Rendition of Legal Services and Practices of the Law by Business Corporations (1909), in Brief on Behalf of Attorney General, In re Co-operative Law Co., 92 N.E. 15 (N.Y. 1910)) (internal quotes omitted).
27. In re Co-Operative Law, 92 N.E. at 16 (upholding N.Y. Penal Law § 280 (1909)).
28. Andrews, supra note 12, at 585.
29. Id.
30. Id. at 586 n.59 (quoting 52 Rep. of the A.B.A. 374 (1927)) (internal quotes omitted).
31. Id. at 586.
32. Model Code of Prof'l Responsibility (1969).
33. ABA Comm'n on Multidisciplinary Practice, Report to the House of Delegates (June 8, 1999), http://www.abanet.org/cpr/mdpreport.html [hereinafter 1999 Final Report].
34. "A lawyer shall not form a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law." Model Code of Prof'l Responsibility DR 3-103(A) (emphasis added).
35. "A lawyer shall not share legal fees with a non-lawyer . . . ." DR 3-102(A) (emphasis added).
36. DR 5-107(C) stated: A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if: (1) A non-lawyer owns any interest therein . . . (2) A non-lawyer is a corporate director or officer thereof; or (3) A non-lawyer has the right to direct or control the professional judgment of a lawyer. DR 5-107(C) (emphasis added).
37. "A lawyer shall not permit a person who recommends, employs, or pays him to render legal services for another to direct or regulate his professional judgment in rendering such legal services." DR 5-107(B) (emphasis added).
38. See Andrews, supra note 12, at 589.
39. Model Code of Prof'l Responsibility EC 3-3.
40. EC 3-8 ("Since a lawyer should not aid or encourage a layman to practice law, he should not practice law in association with a layman or otherwise share legal fees with a layman.").
41. EC 5-23.
42. See Annotated Model Rules of Prof'l Conduct (1999).
43. Proposed Final Rule 5.4 provided in full: Rule 5.4 Professional Independence of a Lawyer A lawyer may be employed by an organization in which a financial interest is held or managerial authority is exercised by a nonlawyer, or by a lawyer acting in a capacity other than that of representing clients, such as a business corporation, insurance company, legal services organization or government agency, but only if: (a) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship; (b) information relating to representation of a client is protected as required by Rule 1.6; (c) the organization does not engage in advertising or personal contact with prospective clients if a lawyer employed by the organization would be prohibited from doing so by Rule 7.2 or Rule 7.3; and (d) the arrangement does not result in charging a fee that violates Rule 1.5. ABA Ctr. for Prof'l Responsibility, The Legislative History of the Model Rules of Professional Conduct: Their Development in the ABA House of Delegates 159 (1987) [hereinafter Legislative History]. Proposed Final Rule 5.4 was the last of three major drafts of Model Rule 5.4. For a discussion of the drafting process, and the opposition to Proposed Rule 5.4, see Susan Gilbert & Larry Lempert, The Nonlawyer Partner: Moderate Proposals Deserve a Chance, 2 Geo. J. Legal Ethics 383, 384-92 (1988).
44. Robert J. Kutak, The New Model Rules of Professional Conduct: A Report to the Bar, 68 A.B.A. J. 1019, 1023 (1982).
45. Gilbert & Lempert, supra note 40, at 391.
46. Id. at 392. Rule 5.4, as adopted, provides in relevant part: Rule 5.4 Professional Independence of a Lawyer (a) A lawyer or law firm shall not share legal fees with a nonlawyer. . . . (b) A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law. (c) A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services. (d) A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit . . . . Legislative History, supra note 40, at 163.
47. Gilbert & Lempert, supra note 40, at 383 (citing Geoffrey C. Hazard & W. William Hodes, The Law of Lawyering: A Handbook on the Model Rules of Prof'l Conduct 469 (1985)).
48. Gilbert & Lempert, supra note 40, at 383 (citing Geoffrey C. Hazard & W. William Hodes, The Law of Lawyering: A Handbook on the Model Rules of Prof'l Conduct 469 (1985)).
49. Legislative History, supra note 40, at 164.
50. See Press Release, ABA, ABA President Philip S. Anderson Appoints Commission on Multidisciplinary Practice (Aug. 4, 1998), at http://www.abanet.org/media/aug98/multicom.html.
51. Id.
52. John S. Dzienkowski & Robert J. Peroni, Multidisciplinary Practice and the American Legal Profession: A Market Approach to Regulating the Delivery of Legal Services in the Twenty-First Century, 69 Fordham L. Rev. 83, 129 (2000). The Commission's website is at http://www.abanet.org/cpr/multicom.html.
53. 1999 Final Report, supra note 30.
54. Id.
55. See id.
56. See id.
57. Id.
58. Id.
59. See Dzienkowski & Peroni, supra note 48, at 146.
60. ABA, House of Delegates Debate: The House Adopted a Revised Version of the Florida Bar Recommendation, at http://www.abanet.org/lpm/bodies/mdparticle 10797_body.html (last visited Oct. 4, 2001).
61. See Dzienkowski & Peroni, supra note 48, at 146.
62. ABA Comm'n on Multidisciplinary Practice, Report to the House of Delegates, at http://www.abanet.org/cpr/mdpfinalrep2000.html (last visited Oct. 18, 2001).
63. Some members of the Commission would have compromised further and "added a specific requirement in the Recommendation that there be a lawyer majority ownership of an MDP . . . and that a primary purpose of the MDP be the delivery of legal services." Id.
64. See Dzienkowski & Peroni, supra note 48, at 148; N.Y. State Bar Ass'n Special Comm. on the Law Governing Firm Structure and Operation, Preserving the Core Values of the American Legal Profession: The Place of Multidisciplinary Practice in the Law Governing Lawyers 1-2 (2000). The fact that New York played a key role in scuttling the Committee's recommendation is no small irony, given the state's role in developing the prohibitions in the first place. See supra text accompanying notes 20-24, 28.
65. Dzienkowski & Peroni, supra note 48, at 147.
66. ABA, Recommendation, at http://www.abanet.org/cpr/mdprecom10f.html (last visited Oct. 18, 2001).
67. Id.
68. See Charles W. Wolfram, Modern Legal Ethics 55-58 (1986).
69. Dzienkowski & Peroni, supra note 48, at 149.
70. Two jurisdictions briefly flirted with rule changes that, like the Kutak Commission's proposal, would have allowed for corporate ownership and passive investment in legal service firms. North Dakota, in January 1986, approved a proposed version of Model Rule 5.4 modeled on the Kutak Commission proposal, but the state Supreme Court, without comment, refused to adopt the change and restored the restrictive language. See Gilbert & Lempert, supra note 40, at 400. The District of Columbia Bar Association Committee also proposed a rule that would have allowed for corporate ownership. See id. at 394. The Board of Governors modified the proposal, however, and District of Columbia Rule 5.4, as adopted, allows law firms to make non-lawyers partners and permits fee-sharing and partnerships between non-lawyers, only where the sole purpose of the partnership is to provide legal services. See District of Columbia Rules of Prof'l Conduct R. 5.4 (2000), reprinted in Nat'l Rep. on Legal Ethics (2001).
71. See Multidisciplinary Practice Comm'n, Status of Multidisciplinary Practice Studies by State (and Some Local Bars) (August 31, 2001), at http://www.abanet.org/ cpr/mdp-state_action.html.
72. Deborah C. Malamud, Affirmative Action, Diversity, and the Black Middle Class, 68 U. Colo. L. Rev. 939, 967-68 (1997).
73. Id. at 968.
74. Sam Roberts, Fitting In: Another Kind of Middle-Class Squeeze, N.Y. Times, May 18, 1997, § 4, at 1.
75. See id.
76. N.Y. City Council, Hollow In The Middle: The Rise and Fall of New York City's Middle Class (1997), at http://www.council.nyc.ny.us/finance/middleclass.htm.
77. Don Hayner, Life In The Middle, Chi. Sun-Times, Jan. 26, 1992, 1992 WL 3448490.
78. Jonathan Peterson, Who Is Considered Rich? It's the $100,000 Question, L.A. Times, Feb. 17, 1993, at Al.
79. See Roberts, supra note 70.
80. Id.
81. The Legal Services Corporation ("LSC"), a private nonprofit corporation established by Congress in 1974 to provide civil legal assistance, is required to establish maximum income levels for those eligible for free legal assistance. See 42 U.S.C. § 2996f(a)(2)(A) (1994); 45 C.F.R. § 1611.3(a) (2000). Section 1611.3(b) of the Corporation's Regulations establishes a maximum income level equivalent to 125% of the Federal Poverty Guidelines, which in turn are established by the Department of Health and Human Services. In 2001, to be eligible for LSC assistance, a family of four must have an income no higher than $22,063. See Legal Services Corporation, Federal Register Notices: 16 C.F.R. Part 1611 Eligibility: Income Level for Individuals Eligible for Assistance, at http://www.lsc.gov/FOIA/frn/fr161101.htm (last visited Oct. 14, 2001).
82. The Legal Services Corporation ("LSC"), a private nonprofit corporation established by Congress in 1974 to provide civil legal assistance, is required to establish maximum income levels for those eligible for free legal assistance. See 42 U.S.C. § 2996f(a)(2)(A) (1994); 45 C.F.R. § 1611.3(a) (2000). Section 1611.3(b) of the Corporation's Regulations establishes a maximum income level equivalent to 125% of the Federal Poverty Guidelines, which in turn are established by the Department of Health and Human Services. In 2001, to be eligible for LSC assistance, a family of four must have an income no higher than $22,063. See Legal Services Corporation, Federal Register Notices: 16 C.F.R. Part 1611 Eligibility: Income Level for Individuals Eligible for Assistance, at http://www.lsc.gov/FOIA/frn/fr161101.htm (last visited Oct. 14, 2001).
83. In 1999, 80% of American households made less than $79,375, and the ninety-fifth percentile began at $142,021. U.S. Census Bureau, Money Income in the United States, Current Population Reports, Consumer Income 1999, at xii, http://www. census.gov/prod/2000pubs/p60-209.pdf (last visited Oct. 4, 2001).
84. See, e.g., Talbot D'Alemberte, Calling the Role of Lawyers: Providing Service to All, 21 Cap. U. L. Rev. 861, 863 (1992) ("What lawyers have failed to do is to provide access to legal services for the poor and middle class."); Stephen Ellmann, Lawyering for Justice in a Flawed Democracy, 90 Colum. L. Rev. 116, 117 (1990) ("The unavailability of lawyers to many who need them is a chronic problem . . . ."); Lawrence J. Fox, A Nation Under Lost Lawyers: The Legal Profession at the Close of the Twentieth Century, Money Didn't Buy Happiness, 100 Dick. L. Rev. 531, 541 (1996) ("[A]mong the middle class, it is almost impossible to find lawyers to perform any services at affordable rates . . . ."); Quintin Johnstone, Lawyer Obligations to Moderate-Income Persons, 21 Cap. U. L. Rev. 845, 845 (1992) ("Lawyers are underserving or overcharging many persons of moderate income who are in need of legal services."); Thomas D. Morgan, Economic Reality Facing 21st Century Lawyers, 69 Wash. L. Rev. 625, 631 (1994) ("Middle-class clients have long been unable to afford legal services.").
85. See, e.g., Talbot D'Alemberte, Calling the Role of Lawyers: Providing Service to All, 21 Cap. U. L. Rev. 861, 863 (1992) ("What lawyers have failed to do is to provide access to legal services for the poor and middle class."); Stephen Ellmann, Lawyering for Justice in a Flawed Democracy, 90 Colum. L. Rev. 116, 117 (1990) ("The unavailability of lawyers to many who need them is a chronic problem . . . ."); Lawrence J. Fox, A Nation Under Lost Lawyers: The Legal Profession at the Close of the Twentieth Century, Money Didn't Buy Happiness, 100 Dick. L. Rev. 531, 541 (1996) ("[A]mong the middle class, it is almost impossible to find lawyers to perform any services at affordable rates . . . ."); Quintin Johnstone, Lawyer Obligations to Moderate-Income Persons, 21 Cap. U. L. Rev. 845, 845 (1992) ("Lawyers are underserving or overcharging many persons of moderate income who are in need of legal services."); Thomas D. Morgan, Economic Reality Facing 21st Century Lawyers, 69 Wash. L. Rev. 625, 631 (1994) ("Middle-class clients have long been unable to afford legal services.").
86. See, e.g., Talbot D'Alemberte, Calling the Role of Lawyers: Providing Service to All, 21 Cap. U. L. Rev. 861, 863 (1992) ("What lawyers have failed to do is to provide access to legal services for the poor and middle class."); Stephen Ellmann, Lawyering for Justice in a Flawed Democracy, 90 Colum. L. Rev. 116, 117 (1990) ("The unavailability of lawyers to many who need them is a chronic problem . . . ."); Lawrence J. Fox, A Nation Under Lost Lawyers: The Legal Profession at the Close of the Twentieth Century, Money Didn't Buy Happiness, 100 Dick. L. Rev. 531, 541 (1996) ("[A]mong the middle class, it is almost impossible to find lawyers to perform any services at affordable rates . . . ."); Quintin Johnstone, Lawyer Obligations to Moderate-Income Persons, 21 Cap. U. L. Rev. 845, 845 (1992) ("Lawyers are underserving or overcharging many persons of moderate income who are in need of legal services."); Thomas D. Morgan, Economic Reality Facing 21st Century Lawyers, 69 Wash. L. Rev. 625, 631 (1994) ("Middle-class clients have long been unable to afford legal services.").
87. See, e.g., Talbot D'Alemberte, Calling the Role of Lawyers: Providing Service to All, 21 Cap. U. L. Rev. 861, 863 (1992) ("What lawyers have failed to do is to provide access to legal services for the poor and middle class."); Stephen Ellmann, Lawyering for Justice in a Flawed Democracy, 90 Colum. L. Rev. 116, 117 (1990) ("The unavailability of lawyers to many who need them is a chronic problem . . . ."); Lawrence J. Fox, A Nation Under Lost Lawyers: The Legal Profession at the Close of the Twentieth Century, Money Didn't Buy Happiness, 100 Dick. L. Rev. 531, 541 (1996) ("[A]mong the middle class, it is almost impossible to find lawyers to perform any services at affordable rates . . . ."); Quintin Johnstone, Lawyer Obligations to Moderate-Income Persons, 21 Cap. U. L. Rev. 845, 845 (1992) ("Lawyers are underserving or overcharging many persons of moderate income who are in need of legal services."); Thomas D. Morgan, Economic Reality Facing 21st Century Lawyers, 69 Wash. L. Rev. 625, 631 (1994) ("Middle-class clients have long been unable to afford legal services.").
88. See, e.g., Talbot D'Alemberte, Calling the Role of Lawyers: Providing Service to All, 21 Cap. U. L. Rev. 861, 863 (1992) ("What lawyers have failed to do is to provide access to legal services for the poor and middle class."); Stephen Ellmann, Lawyering for Justice in a Flawed Democracy, 90 Colum. L. Rev. 116, 117 (1990) ("The unavailability of lawyers to many who need them is a chronic problem . . . ."); Lawrence J. Fox, A Nation Under Lost Lawyers: The Legal Profession at the Close of the Twentieth Century, Money Didn't Buy Happiness, 100 Dick. L. Rev. 531, 541 (1996) ("[A]mong the middle class, it is almost impossible to find lawyers to perform any services at affordable rates . . . ."); Quintin Johnstone, Lawyer Obligations to Moderate-Income Persons, 21 Cap. U. L. Rev. 845, 845 (1992) ("Lawyers are underserving or overcharging many persons of moderate income who are in need of legal services."); Thomas D. Morgan, Economic Reality Facing 21st Century Lawyers, 69 Wash. L. Rev. 625, 631 (1994) ("Middle-class clients have long been unable to afford legal services.").
89. Derek C. Bok, A Flawed System of Law Practice and Training, 33 J. Legal Educ. 570, 571 (1983).
90. Jimmy Carter, Remarks at the 100th Anniversary Luncheon of the Los Angeles County Bar Association (May 4, 1978), in 64 A.B.A. J. 840, 842 (1978) (criticizing the legal profession for excessive litigation and self-interest, and inadequate service to the poor and middle class).
91. See, e.g., Chief Justice William H. Rehnquist, The Legal Profession Today, 62 Ind. L.J. 151, 156 (1987) (lamenting lack of scholarship and calling for empirical studies on the legal profession's impact on consumers).
92. For a critique of the "legal needs" studies described in this section, see Deborah L. Rhode, The Rhetoric of Professional Reform, 45 Md. L. Rev. 274, 281 (1986). Rhode argues that: The "legal need" studies are problematic on several levels. From an empirical perspective, it is unclear precisely what is being measured. Any society generates a vast array of conflicts that could give rise to legal action. Whether they do is a function of the organization of the legal system and its broader cultural setting. Id.
93. See Marc Galanter, Delivering Legality: Some Proposals for the Direction of Research, 11 Law & Soc'y Rev. 225, 226 (1976) [hereinafter Galanter, Delivering Legality] (describing legal needs as a social construct, and not some "Archimedean starting point against which we can measure the adequacy of legal services"). For a critical view of the rhetoric and perceived wisdom surrounding the "litigation explosion," see Marc Galanter, Reading the Landscape of Disputes: What We Know and Don't Know (and Think We Know) About Our Allegedly Contentious and Litigious Society, 31 UCLA L. Rev. 4 (1983).
94. See Marc Galanter, Delivering Legality: Some Proposals for the Direction of Research, 11 Law & Soc'y Rev. 225, 226 (1976) [hereinafter Galanter, Delivering Legality] (describing legal needs as a social construct, and not some "Archimedean starting point against which we can measure the adequacy of legal services"). For a critical view of the rhetoric and perceived wisdom surrounding the "litigation explosion," see Marc Galanter, Reading the Landscape of Disputes: What We Know and Don't Know (and Think We Know) About Our Allegedly Contentious and Litigious Society, 31 UCLA L. Rev. 4 (1983).
95. See Galanter, Delivering Legality, supra note 84.
96. See Barbara A. Curran & Francis O. Spalding, The Legal Needs of the Public 1 (1974); Roger C. Cramton, Delivery of Legal Services to Ordinary Americans, 44 Case W. Res. L. Rev. 531, 541-42 (1994) (citing Barbara A. Curran, Report on the 1989 Survey of the Public's Use of Legal Services, in Two Nationwide Surveys: 1989 Pilot Assessment of the Poor & Public Generally 55 (1989)).
97. See Barbara A. Curran & Francis O. Spalding, The Legal Needs of the Public 1 (1974); Roger C. Cramton, Delivery of Legal Services to Ordinary Americans, 44 Case W. Res. L. Rev. 531, 541-42 (1994) (citing Barbara A. Curran, Report on the 1989 Survey of the Public's Use of Legal Services, in Two Nationwide Surveys: 1989 Pilot Assessment of the Poor & Public Generally 55 (1989)).
98. See Barbara A. Curran & Francis O. Spalding, The Legal Needs of the Public 1 (1974); Roger C. Cramton, Delivery of Legal Services to Ordinary Americans, 44 Case W. Res. L. Rev. 531, 541-42 (1994) (citing Barbara A. Curran, Report on the 1989 Survey of the Public's Use of Legal Services, in Two Nationwide Surveys: 1989 Pilot Assessment of the Poor & Public Generally 55 (1989)).
99. See Cramton, supra note 86, at 541 n.23.
100. Id. at 542.
101. Id.
102. Id. at 542 n.28 (alteration in original).
103. Inst. for Survey Research, Temple U., Findings of the Comprehensive Legal Needs Study (1994) [hereinafter Comprehensive Legal Needs Study].
104. Inst. for Survey Research, Temple U., Legal Needs Among Low-Income and Moderate-Income Households: Summary of Findings from the Comprehensive Legal Needs Study 4-6 (1994), reprinted in Comprehensive Legal Needs Study, supra note 91 [hereinafter Legal Needs Study Summary].
105. Inst. for Survey Research, Temple U., Legal Needs Among Low-Income and Moderate-Income Households: Summary of Findings from the Comprehensive Legal Needs Study 4-6 (1994), reprinted in Comprehensive Legal Needs Study, supra note 91 [hereinafter Legal Needs Study Summary].
106. Id. at 3.
107. The study designers chose to place the high point of "moderate" income at the top one-fifth of the population. See id.
108. Id. at 8.
109. ABA Consortium on Legal Services and the Public, Legal Needs and Civil Justice: A Survey of Americans, Major Findings from the Comprehensive Legal Needs Study 2, http://www.abanet.org/legalservices/ladown/legneedstudy.pdf (last visited Nov. 8, 2001).
110. Legal Needs Study Summary, supra note 92, at 10.
111. Id. at 20.
112. Id. at 26.
113. Id. But see Joyce Palomar, The War Between Attorneys and Lay Conveyancers - Empirical Evidence Says "Cease Fire!", 31 Conn. L. Rev. 423, 438 (1999). Palomar found the following: [A] major reason for not having a lawyer in a home purchase transaction is the parties' desire to avoid the expense. Of 132 homebuyers surveyed in 1990 in Columbus, Ohio, most stated that expense was their reason for not hiring a lawyer. Twenty-three percent of 107 homebuyers questioned in a 1993 New Jersey survey responded similarly. Id. (citations omitted).
114. Legal Needs Study Summary, supra note 92, at 32.
115. D. Michael Dale, The State of Access to Justice in Oregon (2000), http://www.orbar.org/Research/home.html.
116. The Oregon study "examine[d] the civil legal needs of low (up to 125% of poverty) and moderate-income (between 125% and 200% of poverty) households." Id. at 3.
117. Id. at 5. For example, the ABA's 1994 study reported 47% of low-income households had a legal need, statistically indistinguishable from the reported 52% of legal needs for moderate-income households. See Legal Needs Study Summary, supra note 92, at 8. Moderate-income households did turn to a lawyer for help in greater numbers a reported 39% of the time, however, compared to 29% for low-income households. See id. at 20.
118. Dale, supra note 102, at 19.
119. Id. at 29.
120. Id. at 34.
121. Id. at 32.
122. Id. at 38.
123. Access to Justice Working Group, Cal. Bar Ass'n, And Justice For All: Fulfilling the Promise of Access to Civil Justice in California: Executive Summary (1996), at http://www.calbar.org/2bar/3acc/4acc07.htm.
124. Id.
125. Mark D. Killian, Study: Legal Needs Going Unmet, Fla. B. News, Mar. 15, 1995, available at http://www.afn.org/∼afn54735/legalneeds1.html (discussing findings of the Florida Comprehensive Legal Needs Study).
126. Colo. Bar Ass'n, Report of the Legal Services/Pro Bono Committee of the Judicial Advisory Council (1998), http://www.cobar.org/mandpb/unmet.htm.
127. N.Y. Bar Ass'n, The Report of the New York State Bar Association Commission on Providing Access to Legal Services for Middle Income Consumers (1996), http://www.nysba.org/downloadables/report.pdf.
128. See id.
129. See id.
130. Id. app. The most common reason given (24%) for the inability to get a lawyer was that one "could not afford the legal services." Id.
131. Id. (indicating statement in "The Survey" section).
132. Id.
133. Id.
134. See Gillian K. Hadfield, The Price of Law: How the Market for Lawyers Distorts the Justice System, 98 Mich. L. Rev. 953, 957 (2000).
135. See id.
136. See Bob Doucette, Day Care Loses Appeal in Discrimination Suit, Saturday Oklahoman, June 2, 2001, LEXIS, The Daily Oklahoman.
137. Court Upholds Discrimination Ruling Against University, Black Issues in Higher Education, June 21, 2001, at 17.
138. See David Margolick, When a Firm Tries to Cut Corners; It is Caught in Copyright Embarrassment, N.Y. Times, Dec. 6, 1991, at B7.
139. See Katharine Q. Seelye, Financial Holdings Stay Steady for Clinton, But Legal Fees Soar, N.Y. Times, May 18, 1999, at A18.
140. See Editorial, An Unmourned Death, L.A. Times, Feb. 25, 1999, at B8.
141. Richard H. Sander & E. Douglass Williams, Why Are There So Many Lawyers? Perspectives on a Turbulent Market, 14 L. & Soc. Inquiry 431, 439 (1989).
142. John P. Heinz & Edward O. Laumann, Chicago Lawyers: The Social Structure of the Bar 380 (1982).
143. Id. The idea that the legal profession is a stratified one, in spite of its formal unity, is not a new one. As early as 1921, a study on legal education commissioned by the ABA recommended that law be formally divided into two "based on divisions already present in the profession." Jerry Van Hoy, Franchise Law Firms and the Transformation of Personal Legal Services 5 (1997) (citing A. Z. Reed, Training for the Public Profession of the Law (1921), which proposed that "[o]ne bar, comprised of lawyers trained at expensive, full-time law schools, would serve the needs of business; a separate bar of lawyers, trained at night law schools, would include probate, criminal, and trial practices"); see also Jerold S. Auerbach, Unequal Justice: Lawyers and Social Change in Modern America (1976) (arguing profession is characterized by cleavage between elite, white Protestant lawyers and status-seeking, working-class ethnic and racial minorities); Jerome E. Carlin, Lawyers on Their Own: A Study of Individual Practitioners in Chicago 17 (1962) (discussing split between high-status attorneys at corporate law firms and marginalized solo practitioners).
144. Id. The idea that the legal profession is a stratified one, in spite of its formal unity, is not a new one. As early as 1921, a study on legal education commissioned by the ABA recommended that law be formally divided into two "based on divisions already present in the profession." Jerry Van Hoy, Franchise Law Firms and the Transformation of Personal Legal Services 5 (1997) (citing A. Z. Reed, Training for the Public Profession of the Law (1921), which proposed that "[o]ne bar, comprised of lawyers trained at expensive, full-time law schools, would serve the needs of business; a separate bar of lawyers, trained at night law schools, would include probate, criminal, and trial practices"); see also Jerold S. Auerbach, Unequal Justice: Lawyers and Social Change in Modern America (1976) (arguing profession is characterized by cleavage between elite, white Protestant lawyers and status-seeking, working-class ethnic and racial minorities); Jerome E. Carlin, Lawyers on Their Own: A Study of Individual Practitioners in Chicago 17 (1962) (discussing split between high-status attorneys at corporate law firms and marginalized solo practitioners).
145. Heinz & Laumann, supra note 129, at 40.
146. John P. Heinz et al., The Changing Character of Lawyers' Work: Chicago in 1975 and 1995, 32 L. & Soc'y Rev. 751, 767 (1998).
147. See U.S. Bureau of the Census 1976, 1996a, quoted in Heinz et al., supra note 132, at 767 n.23.
148. See id.
149. See id.
150. See id.
151. See Marc Galanter & Thomas M. Palay, Why the Big Get Bigger: The Promotion-to-Partner Tournament and the Growth of Large Law Firms, 76 Va. L. Rev. 747 (1990).
152. See id. at 749.
153. See id.
154. See id.
155. See id.
156. America's Highest Grossing Law Firms in 2000, Am. Law., July 2001, available at Westlaw, 7/2001 Am. Law. 1.
157. See Clara N. Carson, The Lawyer Statistical Report: The U.S. Legal Profession in 1995, at 7 tbls. 4 & 5 (1999).
158. See Marc Galanter, "Old and in the Way": The Coming Demographic Transformation of the Legal Profession and Its Implications for the Provision of Legal Services, 1999 Wis. L. Rev. 1081, 1088.
159. See Robert L. Nelson, Partners with Power: The Social Transformation of the Large Law Firm 349-55 (1988).
160. See id.; see also Robert MacCrate, "The Lost Lawyer" Regained: The Abiding Values of the Legal Profession, 100 Dick. L. Rev. 587 (1996). MacCrate noted that: New areas of law and regulation, largely designed by lawyers, created whole new fields for legal services, such as the environment, occupational health and safety, nuclear energy, discrimination and individual rights, health and mental health care, biotechnology, and the development and use of computers. At the same time, economic activity vastly expanded, new business enterprises multiplied, and the number of transactions in every segment of the economy proliferated. MacCrate, supra, at 600-01.
161. See id.; see also Robert MacCrate, "The Lost Lawyer" Regained: The Abiding Values of the Legal Profession, 100 Dick. L. Rev. 587 (1996). MacCrate noted that: New areas of law and regulation, largely designed by lawyers, created whole new fields for legal services, such as the environment, occupational health and safety, nuclear energy, discrimination and individual rights, health and mental health care, biotechnology, and the development and use of computers. At the same time, economic activity vastly expanded, new business enterprises multiplied, and the number of transactions in every segment of the economy proliferated. MacCrate, supra, at 600-01.
162. See Cramton, supra note 86, at 544.
163. See id.
164. See, e.g., Benjamin Hoorn Barton, Why Do We Regulate Lawyers?: An Economic Analysis of the Justifications for Entry and Conduct Regulation, 33 Ariz. St. L.J. 429, 483 (2001); Derek A. Denckla, Nonlawyers and the Unauthorized Practice of Law: An Overview of the Legal and Ethical Parameters, 67 Fordham L. Rev. 2581 (1999).
165. See, e.g., Benjamin Hoorn Barton, Why Do We Regulate Lawyers?: An Economic Analysis of the Justifications for Entry and Conduct Regulation, 33 Ariz. St. L.J. 429, 483 (2001); Derek A. Denckla, Nonlawyers and the Unauthorized Practice of Law: An Overview of the Legal and Ethical Parameters, 67 Fordham L. Rev. 2581 (1999).
166. See Annotated Model Rules of Prof'l Conduct R. 5.4 (1999); supra Part I.
167. Michael Trebilcock & Lilla Csorgo, Multi-Disciplinary Professional Practices: A Consumer Welfare Perspective (Aug. 4, 1999) (on file with the Fordham Law Review).
168. Hadfield, supra note 121, at 956.
169. Id.
170. Id. at 993.
171. Stephen Gillers, What We Talked About When We Talked About Ethics: A Critical View of the Model Rules, 46 Ohio St. L.J. 243, 268 (1985).
172. See supra Part II.C.
173. See Andrews, supra note 12, at 620. Parallel ethical prohibitions in the AMA code of ethics were struck down by a 1979 FTC decision. See infra text accompanying notes 232-40.
174. Letter from Jeffrey I. Zuckerman, to Robert F. Stephen, C.J. of the Supreme Court of Kentucky 5-6 (June 8, 1987), quoted in Andrews, supra note 12, at 620 (omissions in original).
175. See Bates v. State Bar, 433 U.S. 350, 361 (1977).
176. See Andrews, supra note 12, at 620.
177. Between 1977 and 1989 the Gross National Product grew by 260%, whereas the legal services industry grew by some 480%. See Nelson, supra note 145, at 345 (citing Robert E. Litan & Steven Salop, More Value for the Legal Dollar: A New Look at Attorney-Client Fees and Relationships 2 (Aug. 1992) (unpublished paper presented at Annual Meeting of ABA)).
178. Between 1977 and 1989 the Gross National Product grew by 260%, whereas the legal services industry grew by some 480%. See Nelson, supra note 145, at 345 (citing Robert E. Litan & Steven Salop, More Value for the Legal Dollar: A New Look at Attorney-Client Fees and Relationships 2 (Aug. 1992) (unpublished paper presented at Annual Meeting of ABA)).
179. See supra Part II.B.
180. See Sander & Williams, supra note 128, at 441.
181. Gillers, supra note 155, at 268.
182. See Dzienkowski & Peroni, supra note 48, at 117; Stephen Gillers, The Anxiety of Influence, 27 Fla. St. U. L. Rev. 123, 135 (1999); Katherine L. Harrison, Comment, Multidisciplinary Practices: Changing the Global View of the Legal Profession, 21 U. Pa. J. Int'l Econ. L. 879, 913-14 (2000); Laurel S. Terry, Redefining Lawyers' Work: Multidisciplinary Practice, A Primer on MDPs: Should the "No" Rule Become a New Rule?, 72 Temp. L. Rev. 869, 891 (1999).
183. See Dzienkowski & Peroni, supra note 48, at 117; Stephen Gillers, The Anxiety of Influence, 27 Fla. St. U. L. Rev. 123, 135 (1999); Katherine L. Harrison, Comment, Multidisciplinary Practices: Changing the Global View of the Legal Profession, 21 U. Pa. J. Int'l Econ. L. 879, 913-14 (2000); Laurel S. Terry, Redefining Lawyers' Work: Multidisciplinary Practice, A Primer on MDPs: Should the "No" Rule Become a New Rule?, 72 Temp. L. Rev. 869, 891 (1999).
184. See Dzienkowski & Peroni, supra note 48, at 117; Stephen Gillers, The Anxiety of Influence, 27 Fla. St. U. L. Rev. 123, 135 (1999); Katherine L. Harrison, Comment, Multidisciplinary Practices: Changing the Global View of the Legal Profession, 21 U. Pa. J. Int'l Econ. L. 879, 913-14 (2000); Laurel S. Terry, Redefining Lawyers' Work: Multidisciplinary Practice, A Primer on MDPs: Should the "No" Rule Become a New Rule?, 72 Temp. L. Rev. 869, 891 (1999).
185. See Dzienkowski & Peroni, supra note 48, at 117; Stephen Gillers, The Anxiety of Influence, 27 Fla. St. U. L. Rev. 123, 135 (1999); Katherine L. Harrison, Comment, Multidisciplinary Practices: Changing the Global View of the Legal Profession, 21 U. Pa. J. Int'l Econ. L. 879, 913-14 (2000); Laurel S. Terry, Redefining Lawyers' Work: Multidisciplinary Practice, A Primer on MDPs: Should the "No" Rule Become a New Rule?, 72 Temp. L. Rev. 869, 891 (1999).
186. See Terry, supra note 165, at 891; see also Michael J. Meyers, "Elder-Comp, L.L.C.": A Multi-disciplinary Prototype for Tomorrow's Elder Law Practice, 45 S.D. L. Rev. 540 (1999-2000) (noting the "fragmented" nature of the market for professional services and arguing that senior citizens need integrated professional services, and pointing to MDP prohibition as a big problem); Louise G. Trebek & Jennifer J. Farnham, Social Justice Collaboratives: Multidisciplinary Practices for People, 7 Clinical L. Rev. 227, 228-29 (2000) (arguing that low- and moderate-income people need integrated professional practices).
187. See Terry, supra note 165, at 891; see also Michael J. Meyers, "Elder-Comp, L.L.C.": A Multi-disciplinary Prototype for Tomorrow's Elder Law Practice, 45 S.D. L. Rev. 540 (1999-2000) (noting the "fragmented" nature of the market for professional services and arguing that senior citizens need integrated professional services, and pointing to MDP prohibition as a big problem); Louise G. Trebek & Jennifer J. Farnham, Social Justice Collaboratives: Multidisciplinary Practices for People, 7 Clinical L. Rev. 227, 228-29 (2000) (arguing that low- and moderate-income people need integrated professional practices).
188. See Terry, supra note 165, at 891; see also Michael J. Meyers, "Elder-Comp, L.L.C.": A Multi-disciplinary Prototype for Tomorrow's Elder Law Practice, 45 S.D. L. Rev. 540 (1999-2000) (noting the "fragmented" nature of the market for professional services and arguing that senior citizens need integrated professional services, and pointing to MDP prohibition as a big problem); Louise G. Trebek & Jennifer J. Farnham, Social Justice Collaboratives: Multidisciplinary Practices for People, 7 Clinical L. Rev. 227, 228-29 (2000) (arguing that low- and moderate-income people need integrated professional practices).
189. Burnele V. Powell, Flight from the Center: Is It Just or Just About Money?, 84 Minn. L. Rev. 1439, 1467 (2000).
190. See Trebilcock & Csorgo, supra note 151 (listing potential cost savings for consumers using MDPs are in searching, contracting, coordinating, monitoring, and information costs).
191. See supra text accompanying note 89.
192. Dale, supra note 102, at 34.
193. Inst. for Survey Research, Temple U., Legal Needs Among Moderate-Income Households: Findings from the Comprehensive Legal Needs Study 52 (1994), reprinted in Comprehensive Legal Needs Study, supra note 91.
194. Inst. for Survey Research, Temple U., Legal Needs Among Moderate-Income Households: Findings from the Comprehensive Legal Needs Study 52 (1994), reprinted in Comprehensive Legal Needs Study, supra note 91.
195. Id. at 53.
196. See Richard Zorza, Re-Conceptualizing the Relationship Between Legal Ethics and Technological Innovation in Legal Practice: From Threat to Opportunity, 67 Fordham L. Rev. 2659, 2659-60 (1999).
197. In August 2000, more than half of all households (51%) in the United States had computers, a 58% increase in twenty months, and 41.5% of U.S. households had Internet access. U.S. Dep't of Commerce, Falling Through the Net: Toward Digital Inclusion, A Report on Americans' Access to Technology Tools 1 (2000), http://www.ntia.doc.gov/ntiahome/digitaldivide. The share of individuals using the Internet was at 44.4% in August 2000, an increase of 32.7% in twenty months. Id. at 33. Internet access in middle-income households rose more rapidly than in any other income bracket. Over 46% of households with income between $35,000 and $49,999 had Internet access in August 2000, up from 29.5% in 1998. Id. at 8. Households with incomes between $50,000 and $74,999 climbed from 43.9% to 60.9% in the same time period, while households with incomes over $75,000 went from 60.3% to 77.7% with Internet access. Id. Internet access in rural households is also climbing rapidly, with 38.9% having Internet access in August 2000, an increase of 75% in twenty months. Id. at 5.
198. Id. at 48.
199. Julee C. Fischer, Note, Policing the Self-Help Legal Market: Consumer Protection or Protection of the Legal Cartel?, 34 Ind. L. Rev. 121, 123 (2000).
200. Catherine J. Lanctot, Attorney-Client Relationships in Cyberspace: The Peril and the Promise, 49 Duke L.J. 147, 151 (1999).
201. Matthew Benjamin, Legal Self-Help: Cheap Counsel for Simple Cases, U.S. News & World Rep., Feb. 12, 2001, at 54; Anne Colden, Self-Help Law Customers Courted Technology Making Services More Accessible, Denver Post, Feb. 12, 2001, LEXIS, The Denver Post; Jennifer Lee, Dot-Com, Esq.: Legal Guidance, Lawyer Optional, N.Y. Times, Feb. 22, 2001, at G1.
202. Matthew Benjamin, Legal Self-Help: Cheap Counsel for Simple Cases, U.S. News & World Rep., Feb. 12, 2001, at 54; Anne Colden, Self-Help Law Customers Courted Technology Making Services More Accessible, Denver Post, Feb. 12, 2001, LEXIS, The Denver Post; Jennifer Lee, Dot-Com, Esq.: Legal Guidance, Lawyer Optional, N.Y. Times, Feb. 22, 2001, at G1.
203. Matthew Benjamin, Legal Self-Help: Cheap Counsel for Simple Cases, U.S. News & World Rep., Feb. 12, 2001, at 54; Anne Colden, Self-Help Law Customers Courted Technology Making Services More Accessible, Denver Post, Feb. 12, 2001, LEXIS, The Denver Post; Jennifer Lee, Dot-Com, Esq.: Legal Guidance, Lawyer Optional, N.Y. Times, Feb. 22, 2001, at G1.
204. See William Hornsby, Improving the Delivery of Affordable Legal Services Through the Internet: A Blueprint for the Shift to a Digital Paradigm (2000), at http://www.lawschoolconsortium.net/hornsby@20article.htm (on file with the Fordham Law Review).
205. Firm Internet Access Nears 100 Percent, 61 Or. State B. Bull. 7 (2000) (citing ABA 1999 Legal Technology Survey Report).
206. One recent illustration of the profession's resistance to self-help computer technology occurred in Texas, when that state's Unauthorized Practice of Law Committee managed to convince a federal judge that the sale of Quicken Family Lawyer constituted the unauthorized practice of law. See Unauthorized Practice of Law Comm. v. Parsons Tech., Inc., No. Civ.A.3:97:CV-2859H, 1999 WL 47235 (N.D. Tex. Jan. 22, 1999). That decision, if upheld, would have resulted in a blanket ban on the distribution of legal self-help software within Texas. The Texas legislature acted quickly to overrule Parsons, however, amending its unauthorized practice statute to expressly exclude the distribution of self-help software from the definition of the practice of law. See Tex. Gov. Code Ann. § 81.101(c) (Vernon Supp. 2001).
207. See generally Fischer, supra note 176. A recent celebrated example of the online "lay legal expert" is one Marcus Arnold, a fifteen-year old boy from Perris, California who became the number one ranked "law expert" on the AskMe.Com website in the summer of 2000. See Michael Lewis, Faking It, N.Y. Times, July 15, 2001, § 6, at 32, 35.
208. See generally Fischer, supra note 176. A recent celebrated example of the online "lay legal expert" is one Marcus Arnold, a fifteen-year old boy from Perris, California who became the number one ranked "law expert" on the AskMe.Com website in the summer of 2000. See Michael Lewis, Faking It, N.Y. Times, July 15, 2001, § 6, at 32, 35.
209. See John H. Matheson & Peter D. Favorite, Multidisciplinary Practice and the Future of the Legal Profession: Considering a Role for Independent Directors, 32 Loy. U. Chi. L.J. 577, 599 (2001).
210. Adams & Matheson, supra note 3, at 30 (discussing the benefits of allowing law firms access to equity markets).
211. Integration of legal services with other professional services - truly multidisciplinary practice - would further increase the efficiencies resulting from this harnessing of modern information technology. Legal services could be bundled with related professional services and offered to consumers in an integrated package or menu. Consider H&R Block's Internet venture, www.hrblock.com, which provides its customers with access to tax professionals, investment specialists, or mortgage brokers, all with one click of the mouse. See H&R Block, at http://www.hrblock.com (last visited Oct. 19, 2001). Given the increasing presence of the middle classes online, there is every reason to expect H&R Block's customers would take advantage of its legal services division, if one were permitted.
212. See Testimony of David A. Swankin, Citizen Advocacy Center (Mar. 24, 1999), at http://www.abanet.org/cpr/swankin.html ("[T]hose who would retain the current restrictions do so in the name of consumer protection, when quite the opposite is the case.").
213. In re Opinion No. 26 of the Comm. on the Unauthorized Practice of Law, 654 A.2d 1344, 1360-61 (N.J. 1995).
214. See Paul Starr, The Social Transformation of American Medicine 200-04 (1982).
215. Id. at 201-02.
216. Id. at 204; Jeffrey F. Chase-Lubitz, The Corporate Practice of Medicine Doctrine: An Anachronism in the Modern Health Care Industry, 40 Vand. L. Rev. 445, 456 (1987).
217. Starr, supra note 188, at 204-06.
218. The lot of the physician in the early nineteenth century was not a good one. See Chase-Lubitz, supra note 190, at 449. Though a great deal of disparity existed among physicians of the day, many had only a mediocre standard of living, and the profession's standing in society was low. Id. at 448. Additionally, physicians faced serious competition for patients from "'irregulars,' - quacks and healing sectarians." Id. The practice of medicine was considered by many to be an "inferior occupation." Id. Dissatisfied with their situation, physicians held a national medical convention in 1846 and subsequently formed the AMA. Id. at 449. The AMA set out to improve the status of its members and to establish the "preeminence of the 'regular' medical profession." Id. It did so by adopting and enforcing a code of ethics that distinguished its members from less reputable practitioners, supporting licensing legislation that limited competition and regulated the quality of its members, and pushing for educational reform. Id. at 455. By the turn of the twentieth century, the AMA had "brought public respect and greater financial reward to physicians and established the regular medical profession's virtual control over medical care." Id.
219. See id. at 458.
220. In re Am. Med. Ass'n, 94 F.T.C. 701, 897 (1979) (internal quotes omitted).
221. Id. at 897-98 (internal quotes omitted).
222. Id. at 898 (internal quotes omitted).
223. Id. (internal quotes omitted).
224. See Brian P. Battaglia, The Shift Toward Managed Care and Emerging Liability Claims Arising from Utilization Management and Financial Incentive Arrangements Between Health Care Providers and Payers, 19 U. Ark. Little Rock L.J. 155, 157 n.11 (1997); Theodore N. McDowell, The Medicare-Medicaid Anti-Fraud and Abuse Amendments: Their Impact on the Present Health Care System, 36 Emory L.J. 691, 693-94 n.9 (1987).
225. See Brian P. Battaglia, The Shift Toward Managed Care and Emerging Liability Claims Arising from Utilization Management and Financial Incentive Arrangements Between Health Care Providers and Payers, 19 U. Ark. Little Rock L.J. 155, 157 n.11 (1997); Theodore N. McDowell, The Medicare-Medicaid Anti-Fraud and Abuse Amendments: Their Impact on the Present Health Care System, 36 Emory L.J. 691, 693-94 n.9 (1987).
226. Battaglia, supra note 198, at 157-58 n.11 (noting the committee concluded that each income segment studied "failed to receive the amount of medical services necessary for good care"); McDowell, supra note 198, at 693-94 n.9.
227. Battaglia, supra note 198, at 157-58 n.11 (noting the committee concluded that each income segment studied "failed to receive the amount of medical services necessary for good care"); McDowell, supra note 198, at 693-94 n.9.
228. Am. Med. Ass'n, 94 F.T.C. at 898.
229. The minority report stated that "[a]ny method of furnishing medical care which degrades the medical profession through unfair competition or inadequate compensation . . . must be condemned." Id. (internal quotes omitted).
230. Id. at 899 (internal quotes omitted).
231. Id. (quoting AMA Principles of Medical Ethics 1934) (internal quotes omitted).
232. Starr, supra note 188, at 216.
233. See Sara Mars, The Corporate Practice of Medicine: A Call for Action, 7 Health Matrix 241 app. A (1997); see also Cal. Bus. & Prof. Code § 2400 (West Supp. 2001) (stating that a corporation can have no professional rights); Colo. Rev. Stat. § 12-36-134(7) (2001) (prohibiting corporations from practicing medicine).
234. Chase-Lubitz, supra note 190, at 464-65.
235. See Parker v. Board of Dental Exam'rs, 14 P.2d 67 (Cal. 1932); People v. United Med. Serv., Inc., 200 N.E. 157 (Ill. 1936); State v. Winneshiek Co-Op Burial Ass'n, 22 N.W.2d 800 (Iowa 1946); People v. Woodbury Dermatological Inst., 85 N.E. 697 (N.Y. 1908).
236. See People v. Pacific Health Corp., 82 P.2d 429 (Cal. 1938); Bennett v. Indiana State Bd., 7 N.E.2d 977 (Ind. 1937); People v. Carroll, 264 N.W. 861 (Mich. 1936); State v. Buhl Optical Co., 2 N.E.2d 601 (Ohio 1936).
237. See Silver v. Lansburgh & Bros., 111 F.2d 518, 519 (D.C. Cir. 1940); Funk Jewelry Co. v. State, 50 P.2d 945 (Ariz. 1935); Parker v. Board of Dental Exam'rs, 14 P.2d 67 (Cal. 1932); Winberry v. Hallihan, 197 N.E. 552 (Ill. 1935); State v. Boren, 219 P.2d 566 (Wash. 1950).
238. State Bd. of Optometry v. Gilmore, 3 So. 2d 708 (Fla. 1941); Neill v. Gimbel Bros., 199 A. 178 (Pa. 1938); State ex rel. Loser v. National Optical Stores Co., 225 S.W.2d 263 (Tenn. 1949); State v. Superior Court, 135 P.2d 839 (Wash. 1943).
239. 92 N.E. 15 (N.Y. 1910).
240. See, e.g., Liberty Mut. Ins. Co. v. Hyman, 759 A.2d 894, 899 (N.J. Super. L. Div. 2000); Bartron v. Codington County, 2 N.W.2d 337, 344 (S.D. 1942).
241. Edward P. Richards & Thomas R. McLean, Physicians in Managed Care: A Multidimensional Analysis of New Trends in Liability and Business Risk, 18 J. Legal Med. 443, 446 (1997).
242. E. Haavi Morreim, Redefining Quality by Reassigning Responsibility, 20 Am. J.L. & Med. 79, 80 (1994).
243. Id.
244. Id. at 79.
245. Id. at 80.
246. Id. at 81.
247. In re Am. Med. Ass'n, 94 F.T.C. 701, 917 (1979).
248. Morreim, supra note 214, at 84 n.21.
249. See Gail B. Agrawal, Resuscitating Professionalism: Self-Regulation in the Medical Marketplace, 66 Mo. L. Rev. 341, 346 (2001). The Medicare and Medicaid programs were a part of Lyndon Johnson's "Great Society" election platform in 1964. See Jack K. Kilcullen, Groping for the Reins: ERISA, HMO Malpractice, and Enterprise Liability, 22 Am. J.L. & Med. 7, 17 (1996).
250. See Gail B. Agrawal, Resuscitating Professionalism: Self-Regulation in the Medical Marketplace, 66 Mo. L. Rev. 341, 346 (2001). The Medicare and Medicaid programs were a part of Lyndon Johnson's "Great Society" election platform in 1964. See Jack K. Kilcullen, Groping for the Reins: ERISA, HMO Malpractice, and Enterprise Liability, 22 Am. J.L. & Med. 7, 17 (1996).
251. Kilcullen, supra note 221, at 17.
252. Between 1967 and 1970 Medicare hospital expenditures rose an average of 18.1% annually, while the overall inflation rate was 5.2%. See id. at 18 n.92 (citing Karen Davis et al., Health Care Cost Containment 16 (1990)).
253. Health Maintenance Organization Act of 1973, 42 U.S.C. § 300e-1 (2001).
254. MCOs vary widely in their "approach, financing, physician involvement, and philosophy." Kate T. Christensen, Ethically Important Distinctions Among Managed Care Organizations, 23 J.L. Med. & Ethics 223, 223 (1995). Perhaps the most important distinction is between for-profit organizations, which trade shares publicly, and nonprofit organizations, which are governed by the rules of charitable organizations. Id. For-profit HMOs organize relationships with their physicians in one of three basic ways: the staff model, the group model, and the independent practice association ("IPA") model. Diana Joseph Bearden & Bryan J. Maedgen, Emerging Theories of Liability in the Managed Health Care Industry, 47 Baylor L. Rev. 285, 292 (1995). In a staff model HMO, the corporation employs physicians directly as salaried employees. Id.; James P. Freiburg, The ABCs of MCOs: An Overview of Managed Care Organizations, 81 Ill. B.J. 584, 586 (1993). In a group model, the HMO enters into a contract with a group of physicians, who are independent contractors, to provide medical services to the HMO's members on a "capitated" basis-that is, the physicians are paid a fixed amount on a monthly basis for all HMO enrollees assigned to that physician no matter how many enrollees actually receive treatment. Bearden & Maedgen, supra, at 292; see also 42 C.F.R. § 417.1 (2000). In the IPA model, individual practitioners who contract with HMOs are reimbursed on a discounted fee-for-service basis, rather than on a capitated basis, and no periodic limits are imposed on the total fees charged. Freiburg, supra, at 586; see also 42 C.F.R. § 417.1 (2000).
255. MCOs vary widely in their "approach, financing, physician involvement, and philosophy." Kate T. Christensen, Ethically Important Distinctions Among Managed Care Organizations, 23 J.L. Med. & Ethics 223, 223 (1995). Perhaps the most important distinction is between for-profit organizations, which trade shares publicly, and nonprofit organizations, which are governed by the rules of charitable organizations. Id. For-profit HMOs organize relationships with their physicians in one of three basic ways: the staff model, the group model, and the independent practice association ("IPA") model. Diana Joseph Bearden & Bryan J. Maedgen, Emerging Theories of Liability in the Managed Health Care Industry, 47 Baylor L. Rev. 285, 292 (1995). In a staff model HMO, the corporation employs physicians directly as salaried employees. Id.; James P. Freiburg, The ABCs of MCOs: An Overview of Managed Care Organizations, 81 Ill. B.J. 584, 586 (1993). In a group model, the HMO enters into a contract with a group of physicians, who are independent contractors, to provide medical services to the HMO's members on a "capitated" basis-that is, the physicians are paid a fixed amount on a monthly basis for all HMO enrollees assigned to that physician no matter how many enrollees actually receive treatment. Bearden & Maedgen, supra, at 292; see also 42 C.F.R. § 417.1 (2000). In the IPA model, individual practitioners who contract with HMOs are reimbursed on a discounted fee-for-service basis, rather than on a capitated basis, and no periodic limits are imposed on the total fees charged. Freiburg, supra, at 586; see also 42 C.F.R. § 417.1 (2000).
256. MCOs vary widely in their "approach, financing, physician involvement, and philosophy." Kate T. Christensen, Ethically Important Distinctions Among Managed Care Organizations, 23 J.L. Med. & Ethics 223, 223 (1995). Perhaps the most important distinction is between for-profit organizations, which trade shares publicly, and nonprofit organizations, which are governed by the rules of charitable organizations. Id. For-profit HMOs organize relationships with their physicians in one of three basic ways: the staff model, the group model, and the independent practice association ("IPA") model. Diana Joseph Bearden & Bryan J. Maedgen, Emerging Theories of Liability in the Managed Health Care Industry, 47 Baylor L. Rev. 285, 292 (1995). In a staff model HMO, the corporation employs physicians directly as salaried employees. Id.; James P. Freiburg, The ABCs of MCOs: An Overview of Managed Care Organizations, 81 Ill. B.J. 584, 586 (1993). In a group model, the HMO enters into a contract with a group of physicians, who are independent contractors, to provide medical services to the HMO's members on a "capitated" basis-that is, the physicians are paid a fixed amount on a monthly basis for all HMO enrollees assigned to that physician no matter how many enrollees actually receive treatment. Bearden & Maedgen, supra, at 292; see also 42 C.F.R. § 417.1 (2000). In the IPA model, individual practitioners who contract with HMOs are reimbursed on a discounted fee-for-service basis, rather than on a capitated basis, and no periodic limits are imposed on the total fees charged. Freiburg, supra, at 586; see also 42 C.F.R. § 417.1 (2000).
257. MCOs vary widely in their "approach, financing, physician involvement, and philosophy." Kate T. Christensen, Ethically Important Distinctions Among Managed Care Organizations, 23 J.L. Med. & Ethics 223, 223 (1995). Perhaps the most important distinction is between for-profit organizations, which trade shares publicly, and nonprofit organizations, which are governed by the rules of charitable organizations. Id. For-profit HMOs organize relationships with their physicians in one of three basic ways: the staff model, the group model, and the independent practice association ("IPA") model. Diana Joseph Bearden & Bryan J. Maedgen, Emerging Theories of Liability in the Managed Health Care Industry, 47 Baylor L. Rev. 285, 292 (1995). In a staff model HMO, the corporation employs physicians directly as salaried employees. Id.; James P. Freiburg, The ABCs of MCOs: An Overview of Managed Care Organizations, 81 Ill. B.J. 584, 586 (1993). In a group model, the HMO enters into a contract with a group of physicians, who are independent contractors, to provide medical services to the HMO's members on a "capitated" basis-that is, the physicians are paid a fixed amount on a monthly basis for all HMO enrollees assigned to that physician no matter how many enrollees actually receive treatment. Bearden & Maedgen, supra, at 292; see also 42 C.F.R. § 417.1 (2000). In the IPA model, individual practitioners who contract with HMOs are reimbursed on a discounted fee-for-service basis, rather than on a capitated basis, and no periodic limits are imposed on the total fees charged. Freiburg, supra, at 586; see also 42 C.F.R. § 417.1 (2000).
258. MCOs vary widely in their "approach, financing, physician involvement, and philosophy." Kate T. Christensen, Ethically Important Distinctions Among Managed Care Organizations, 23 J.L. Med. & Ethics 223, 223 (1995). Perhaps the most important distinction is between for-profit organizations, which trade shares publicly, and nonprofit organizations, which are governed by the rules of charitable organizations. Id. For-profit HMOs organize relationships with their physicians in one of three basic ways: the staff model, the group model, and the independent practice association ("IPA") model. Diana Joseph Bearden & Bryan J. Maedgen, Emerging Theories of Liability in the Managed Health Care Industry, 47 Baylor L. Rev. 285, 292 (1995). In a staff model HMO, the corporation employs physicians directly as salaried employees. Id.; James P. Freiburg, The ABCs of MCOs: An Overview of Managed Care Organizations, 81 Ill. B.J. 584, 586 (1993). In a group model, the HMO enters into a contract with a group of physicians, who are independent contractors, to provide medical services to the HMO's members on a "capitated" basis-that is, the physicians are paid a fixed amount on a monthly basis for all HMO enrollees assigned to that physician no matter how many enrollees actually receive treatment. Bearden & Maedgen, supra, at 292; see also 42 C.F.R. § 417.1 (2000). In the IPA model, individual practitioners who contract with HMOs are reimbursed on a discounted fee-for-service basis, rather than on a capitated basis, and no periodic limits are imposed on the total fees charged. Freiburg, supra, at 586; see also 42 C.F.R. § 417.1 (2000).
259. See Jacob S. Hacker & Theodore R. Marmor, How Not To Think About "Managed Care," 32 U. Mich. J.L. Reform 661, 669 (1999) ("Perhaps the most defensible interpretation of 'managed care' is that it represents a fusion of two functions that once were regarded as largely separate: the financing of medical care and the delivery of medical services."); Jonathan P. Weiner & Gregory de Lissovoy, Razing a Tower of Babel: A Taxonomy for Managed Care and Health Insurance Plans, 18 J. Health Pol. Pol'y & L. 75, 78 (1993) ("What usually distinguishes the managed care plans from those that are more traditional is that there is a party that takes responsibility for integrating and coordinating the financing and delivery of services across what previously were fragmented provider and payer entities.").
260. See Jacob S. Hacker & Theodore R. Marmor, How Not To Think About "Managed Care," 32 U. Mich. J.L. Reform 661, 669 (1999) ("Perhaps the most defensible interpretation of 'managed care' is that it represents a fusion of two functions that once were regarded as largely separate: the financing of medical care and the delivery of medical services."); Jonathan P. Weiner & Gregory de Lissovoy, Razing a Tower of Babel: A Taxonomy for Managed Care and Health Insurance Plans, 18 J. Health Pol. Pol'y & L. 75, 78 (1993) ("What usually distinguishes the managed care plans from those that are more traditional is that there is a party that takes responsibility for integrating and coordinating the financing and delivery of services across what previously were fragmented provider and payer entities.").
261. Chase-Lubitz, supra note 190, at 482. Some commentators argue that the HMO Act in fact preempts state corporate practice prohibitions, since Congress could hardly have allowed the obvious barrier posed by these prohibitions to HMO development to stand. See Philip C. Kissam & Ronald M. Johnson, Health Maintenance Organizations and Federal Law: Toward a Theory of Limited Reformmongering, 29 Vand. L. Rev. 1163, 1218 (1976).
262. Chase-Lubitz, supra note 190, at 482. Some commentators argue that the HMO Act in fact preempts state corporate practice prohibitions, since Congress could hardly have allowed the obvious barrier posed by these prohibitions to HMO development to stand. See Philip C. Kissam & Ronald M. Johnson, Health Maintenance Organizations and Federal Law: Toward a Theory of Limited Reformmongering, 29 Vand. L. Rev. 1163, 1218 (1976).
263. 42 U.S.C. § 300e-10 (2001). Section 300e-10(a) states: In the case of any entity - (1) which cannot do business as a health maintenance organization in a State in which it proposes to furnish basic and supplemental health services because that State by law, regulation, or otherwise - (A) requires as a condition to doing business in that State that a medical society approve the furnishing of services by the entity, (B) requires that physicians constitute all or a percentage of its governing body, (C) requires that all physicians or a percentage of physicians in the locale participate or be permitted to participate in the provision of services for the entity, (D) requires that the entity meet requirements for insurers of health care services doing business in that State respecting initial capitalization and establishment of financial reserves against insolvency, or (E) imposes requirements which would prohibit the entity from complying with the requirements of this subchapter, and (2) for which a grant, contract, loan, or loan guarantee was made under this subchapter or which is a qualified health maintenance organization for purposes of section 300e-9 of this title (relating to employees' health benefit plans), such requirements shall not apply to that entity so as to prevent it from operating as a health maintenance organization in accordance with section 300e of this title. 42 U.S.C. § 300e-10(a).
264. Mars, supra note 205, at 260 app.
265. Chase-Lubitz, supra note 190, at 470; see Lisa Rediger Hayward, Revising Washington's Corporate Practice of Medicine Doctrine, 71 Wash. L. Rev. 403, 413 (1996).
266. Chase-Lubitz, supra note 190, at 470; see Lisa Rediger Hayward, Revising Washington's Corporate Practice of Medicine Doctrine, 71 Wash. L. Rev. 403, 413 (1996).
267. One commentator counts five states that, at least in the mid-90s, were actively enforcing the doctrine. Hayward, supra note 230, at 413. Another commentator has called the surviving corporate practice prohibitions "legal landmines, remnants of an old and nearly forgotten war, half-buried on a field fast being built up with new forms of health care organizations." Arnold S. Rosoff, The Corporate Practice of Medicine Doctrine: Has its Time Passed?, 12 Health L. Dig. 1, 3-4 (Supp. Dec. 1984). For a discussion of the sporadic recent applications of the doctrine, see Chase-Lubitz, supra note 190, at 470-74.
268. One commentator counts five states that, at least in the mid-90s, were actively enforcing the doctrine. Hayward, supra note 230, at 413. Another commentator has called the surviving corporate practice prohibitions "legal landmines, remnants of an old and nearly forgotten war, half-buried on a field fast being built up with new forms of health care organizations." Arnold S. Rosoff, The Corporate Practice of Medicine Doctrine: Has its Time Passed?, 12 Health L. Dig. 1, 3-4 (Supp. Dec. 1984). For a discussion of the sporadic recent applications of the doctrine, see Chase-Lubitz, supra note 190, at 470-74.
269. One commentator counts five states that, at least in the mid-90s, were actively enforcing the doctrine. Hayward, supra note 230, at 413. Another commentator has called the surviving corporate practice prohibitions "legal landmines, remnants of an old and nearly forgotten war, half-buried on a field fast being built up with new forms of health care organizations." Arnold S. Rosoff, The Corporate Practice of Medicine Doctrine: Has its Time Passed?, 12 Health L. Dig. 1, 3-4 (Supp. Dec. 1984). For a discussion of the sporadic recent applications of the doctrine, see Chase-Lubitz, supra note 190, at 470-74.
270. Section 6 of the Principles of Medical Ethics stated that "[a] physician should not dispose of his services under terms or conditions which tend to interfere with or impair the free and complete exercise of his medical judgment and skill or tend to cause a deterioration of the quality of medical care." In re Am. Med. Ass'n, 94 F.T.C. 701, 896 (1979). The AMA Judicial Council made it clear that Section 6 prohibited both certain contract-type practices, and physicians working for for-profit medical service enterprises. Id. at 896-97. Section 6 listed the types of contract arrangements considered unethical by the Judicial Council. Id. Opinion 5 of Section 6 prohibited a physician from "dispos[ing] of his professional attainments or services to any hospital, corporation or lay body . . . under terms or conditions which permit the sale of the services of that physician by such agency for a fee." Id.
271. Id. at 996-1018.
272. Id. at 701.
273. Id. at 1017.
274. Id. at 1018.
275. Id. at 917.
276. Id. at 954.
277. Id. at 956.
278. Id. (quoting National Society of Professional Engineers v. United States, 435 U.S. 679, 696 (1978)).
279. See Am. Med. Ass'n v. FTC, 638 F.2d 443, 453 (2d Cir. 1980); Am. Med. Ass'n v. FTC, 455 U.S. 676 (1982). The section of the FTC Order relevant to corporate ownership of medical services is quoted in full as follows: It is further Ordered that respondent American Medical Association . . . do forthwith cease and desist from: A. Restricting, regulating, impeding, advising on the ethical propriety of, or interfering with the consideration offered or provided to any physician in any contract with any entity that offers physicians' services to the public, in return for the sale, purchase or distribution of his or her professional services, except for professional peer review of fee practices of physicians; B. Restricting, interfering with, or impeding the growth, development or operations of any entity that offers physicians' services to the public, by means of any statement or other representation concerning the ethical propriety of medical service arrangements that limit the patient's choice of a physician; C. Restricting, interfering with, or impeding the growth, development or operations of any entity that offers physicians' services to the public, by means of any statement or other representation concerning the ethical propriety of participation by non-physicians in the ownership or management of said organization; and D. Inducing, urging, encouraging, or assisting any physician, or any medical association, group of physicians, hospital, insurance carrier or any other non-governmental organization to take any of the actions prohibited by this Part. In re Am. Med. Ass'n, [1979-1983 Transfer Binder: F.T.C. Complaints & Orders] Trade Reg. Rep. (CCH) ¶ 21,955, at 22,418-19 (May 19, 1982).
280. Judicial Council, AMA, Principles of Medical Ethics (1958), available at http://www.ama-assn.org/ama/upload/mm/369/1957_principles.pdf [hereinafter 1957 Principles].
281. AMA, Principles of Medical Ethics § 6 (2001), available at http://www.ama-assn.org/ama/upload/mm/369/2001_principles.pdf [hereinafter Revised Principles] (indicating most recent revisions to the Principles of Medical Ethics).
282. Tom J. Manos, Take Half an Aspirin and Call Your HMO in the Morning -Medical Malpractice in Managed Care: Are HMOs Practicing Medicine Without a License?, 53 U. Miami L. Rev. 195, 202 (1998).
283. Id.
284. Id.
285. Thomas William Malone & Deborah Haas Thaler, Managed Health Care: A Plaintiffs Perspective, 32 Tort & Ins. L.J. 123, 125 (1996).
286. Between 1993 and 1997, health care costs stabilized at 13.5% of the gross domestic product ("GDP"), a substantial enough achievement given that health care expenditures rose from 8.9% of GDP in 1980 to 12.1% of GDP in 1990. Erica Worth Harris, The Regulation of Managed Care: Conquering Individualism and Cynicism in America, 6 Va. J. Soc. Pol'y & L. 315, 321 (1999). Health care inflation, which was 18.6% in 1988, dropped to approximately 2% in 1993. Id. This cost control has apparently not, however, translated into increased access to medical care. In 1987, 12.9% of the population was uninsured for medical care; that figure had increased to 16.3% in 1998.
287. See Walter L. Stiehm, Poverty Law: Access to Healthcare and Barriers to the Poor, 4 Quinnipiac Health L.J. 279, 285 n.24 (2001).
288. Council on Ethical and Judicial Affairs, AMA, Ethical Issues in Managed Care, 273 J. Am. Med. Ass'n 330, 331 (1995) [hereinafter Ethical Issues].
289. Id.
290. First, managed care subscribers are limited in their choice of physician to those physicians who have contracted with, or are employed by, the MCO. See id. at 330. Second, patient choice is limited because MCOs "deny[] access to . . . medical specialists until the subscriber has obtained the approval of a primary care physician." Id. Third, MCOs impede continuing physician-patient relations when an employer changes plans, or the employee herself changes jobs. Harris, supra note 248, at 343. The restrictions on patient choice "prevent[] a trust relationship from being established between doctor and patient." Id. at 343-44.
291. So-called prospective utilization review involves the use of an independent review to determine if the treating physician's decision is necessary and cost-effective. Deven C. McGraw, Financial Incentives to Limit Services: Should Physicians be Required to Disclose These to Patients?, 83 Geo. L.J. 1821, 1826 (1995). The use of a third party to oversee physician decisions is a "direct and visible interference in [physician] clinical decision-making." Id. at 1830. As another commentator has said, "[i]n managed care's arsenal of cost-control weaponry, probably none is more potent . . . than superseding the physician's autonomy by a managerial-review process in which armies of claims clerks, administrators, . . . and technocrats of every description insinuate themselves into a complex system that authorizes, delivers, and pays for medical services."
292. Gerald W. Grumet, Health Care Rationing Through Inconvenience: The Third Party's Secret Weapon, 321 New Eng. J. Med. 607, 608 (1989).
293. Treatment directives, also known as clinical practice guidelines, are "systematically developed statements to assist practitioner and patient decisions about appropriate health care for specific clinical circumstances." Arnold J. Rosoff, The Role of Clinical Practice Guidelines in Health Care Reform, 5 Health Matrix 369, 370 (1995) (quoting Inst. of Med., Clinical Practice Guidelines: Directions for a New Program 8 (Marilyn J. Field & Kathleen N. Lohr eds., 1990)). Developed in response to observed substantial variations in practice approaches, MCOs have latched on to treatment directives as yet another cost-control mechanism, and "rigid protocols or standards of care" are now issued with increasing frequency.
294. Mark A. Hall, Institutional Control of Physician Behavior: Legal Barriers to Health Care Cost Containment, 137 U. Pa. L. Rev. 431, 450-51 (1988);
295. see John D. Ayres, The Use and Abuse of Medical Practice Guidelines, 15 J. Legal Med. 421, 437 (1994). MCOs may make adherence to practice guidelines a contractual condition of employment for physicians or deny reimbursement for treatment decisions going beyond the guidelines.
296. See Ayres, supra, at 437;
297. Hall, supra, at 450 n.66.
298. A major controversy erupted in the mid-1990s over the use by MCOs of so-called "gag clauses," provisions in MCO-physician contracts which limit the physician's discretion in providing certain information to patients. See Joan H. Krause, The Brief Life of the Gag Clause: Why Antigag Clause Legislation Isn't Enough, 67 Tenn. L. Rev. 1 (1999). MCO use of gag clauses led to a swift political response, and by 1999 almost every state had passed legislation banning the use of gag clauses in MCO contracts. Id. at 2. Subtler restrictions on physician-patient communication still exist, however. MCOs may employ de facto unwritten restrictions on the discussion of certain treatment options. See id. at 13. MCOs may also utilize the "termination without cause" clauses that are common in MCO-physician contracts to prohibit physician disclosure. Id. at 13-14. Indeed, the General Accounting Office ("GAO") has stated that "it is the contractual relationship itself -its short duration and provision for termination without cause - that may make physicians feel constrained from speaking entirely openly with their patients." Id. (quoting U.S. General Accounting Office, GAO/HEHS-97-175, Managed Care: Explicit Gag Clauses Not Found in HMO Contracts, But Physician Concerns Remain (1997)). Finally, in giving physicians financial incentives to under-treat patients, or otherwise avoid costly treatment, MCOs can expect physicians to "internalize the incentive structure and impose their own restrictions on interactions with patients." Id.
299. Stephen R. Latham, Regulation of Managed Care Incentive Payments to Physicians, 22 Am. J.L. & Med. 399, 406 (1996).
300. Id. at 402.
301. In a capitation system, the HMO remunerates a participating primary care physician at a flat rate for each enrolled patient for a specific period of time. Allison Faber Walsh, Note, The Legal Attack on Cost Containment Mechanisms: The Expansion of Liability for Physicians and Managed Care Organizations, 31 J. Marshall L. Rev. 207, 218 (1997). Physicians are paid a pre-determined rate based on the number of subscribers to the plan and receive the same amount of money per payment period regardless of the services provided to patients, or the costs of those services. Id. If a subscriber has no need for medical services in the payment period, the physician nonetheless receives his fixed payment. Id. Likewise, if a patient requires medical service in excess of the amount contracted for, no additional payment is given, and the physician must "take the loss" on the difference. Id. Bonuses reward cost-effective physicians in a variety of ways, taking into account factors such as physician cost-effectiveness, physician time, patient encounters and satisfaction, and malpractice history.
302. Latham, supra note 255, at 403. One study found that in 1996, approximately 40% of California physicians had bonus clauses in their managed care contracts.
303. Kevin Grumbach et al., Primary Care Physicians' Experience of Financial Incentives in Managed-Care Systems, 339 New Eng. J. Med. 1516, 1516 (1998). Under a withholding scheme, the HMO withholds a percentage of the capitated payment or fee and places it into a risk pool which "acts as a buffer, insuring that the total amount set aside for patient care under the plan is not exceeded."
304. Latham, supra note 255, at 404. If any funds remain at the end of the payment period, they are distributed to the participating physicians. Id. The existence of a pool of withheld funds provides physicians with an incentive to keep costs low, so that they can take advantage of the distribution. See id.
305. In 1992, the Health Care Financing Administration ("HCFA") reported that no researcher has found "a link between the quality of care provided under the Medicare and Medicaid programs and the structure of physician incentive plans," nor is any link established between increased morbidity and mortality rates among managed care patients compared with fee-for-service patients. Latham, supra note 255, at 407 n.84 (quoting HCFA Proposed Regulations, 57 Fed. Reg. 59,024, 59,026 (1992)). A 1987 study of more than 1500 individuals who were randomly assigned to either an HMO or to a traditional fee-for-service insurance plan concluded that while the HMO costs were lower than the fee-for-service plan, there were "no significant differences in health between individuals in the two plans three years after the study began." David Orentlicher, Health Care Reform and the Patient-Physician Relationship, 5 Health Matrix 141, 162 (1995).
306. In 1992, the Health Care Financing Administration ("HCFA") reported that no researcher has found "a link between the quality of care provided under the Medicare and Medicaid programs and the structure of physician incentive plans," nor is any link established between increased morbidity and mortality rates among managed care patients compared with fee-for-service patients. Latham, supra note 255, at 407 n.84 (quoting HCFA Proposed Regulations, 57 Fed. Reg. 59,024, 59,026 (1992)). A 1987 study of more than 1500 individuals who were randomly assigned to either an HMO or to a traditional fee-for-service insurance plan concluded that while the HMO costs were lower than the fee-for-service plan, there were "no significant differences in health between individuals in the two plans three years after the study began." David Orentlicher, Health Care Reform and the Patient-Physician Relationship, 5 Health Matrix 141, 162 (1995).
307. See, e.g., Jay Greene, Family Sues HMO for Torture for Denying Care, Charleston Gazette, June 13, 1997, LEXIS, The Charleston Gazette; David S. Hilzenrath, Backlash Builds Over Managed Care: Frustrated Consumers Push for Tougher Laws, Wash. Post, June 30, 1997, at A1; David R. Olmos, Texas Regulators Assail Kaiser on Physicians, Care, L.A. Times, Apr. 24, 1997, at D1; Robert Pear, Expense Means Many Can't Get Drugs for AIDS, N.Y. Times, Feb. 16, 1997, at A1; Elisabeth Rosenthal, Patients with Difficult Illnesses Fight New H.M.O.'s to Get Help, N.Y. Times, July 15, 1996, at A1.
308. See, e.g., Jay Greene, Family Sues HMO for Torture for Denying Care, Charleston Gazette, June 13, 1997, LEXIS, The Charleston Gazette; David S. Hilzenrath, Backlash Builds Over Managed Care: Frustrated Consumers Push for Tougher Laws, Wash. Post, June 30, 1997, at A1; David R. Olmos, Texas Regulators Assail Kaiser on Physicians, Care, L.A. Times, Apr. 24, 1997, at D1; Robert Pear, Expense Means Many Can't Get Drugs for AIDS, N.Y. Times, Feb. 16, 1997, at A1; Elisabeth Rosenthal, Patients with Difficult Illnesses Fight New H.M.O.'s to Get Help, N.Y. Times, July 15, 1996, at A1.
309. See, e.g., Jay Greene, Family Sues HMO for Torture for Denying Care, Charleston Gazette, June 13, 1997, LEXIS, The Charleston Gazette; David S. Hilzenrath, Backlash Builds Over Managed Care: Frustrated Consumers Push for Tougher Laws, Wash. Post, June 30, 1997, at A1; David R. Olmos, Texas Regulators Assail Kaiser on Physicians, Care, L.A. Times, Apr. 24, 1997, at D1; Robert Pear, Expense Means Many Can't Get Drugs for AIDS, N.Y. Times, Feb. 16, 1997, at A1; Elisabeth Rosenthal, Patients with Difficult Illnesses Fight New H.M.O.'s to Get Help, N.Y. Times, July 15, 1996, at A1.
310. See, e.g., Jay Greene, Family Sues HMO for Torture for Denying Care, Charleston Gazette, June 13, 1997, LEXIS, The Charleston Gazette; David S. Hilzenrath, Backlash Builds Over Managed Care: Frustrated Consumers Push for Tougher Laws, Wash. Post, June 30, 1997, at A1; David R. Olmos, Texas Regulators Assail Kaiser on Physicians, Care, L.A. Times, Apr. 24, 1997, at D1; Robert Pear, Expense Means Many Can't Get Drugs for AIDS, N.Y. Times, Feb. 16, 1997, at A1; Elisabeth Rosenthal, Patients with Difficult Illnesses Fight New H.M.O.'s to Get Help, N.Y. Times, July 15, 1996, at A1.
311. See, e.g., Jay Greene, Family Sues HMO for Torture for Denying Care, Charleston Gazette, June 13, 1997, LEXIS, The Charleston Gazette; David S. Hilzenrath, Backlash Builds Over Managed Care: Frustrated Consumers Push for Tougher Laws, Wash. Post, June 30, 1997, at A1; David R. Olmos, Texas Regulators Assail Kaiser on Physicians, Care, L.A. Times, Apr. 24, 1997, at D1; Robert Pear, Expense Means Many Can't Get Drugs for AIDS, N.Y. Times, Feb. 16, 1997, at A1; Elisabeth Rosenthal, Patients with Difficult Illnesses Fight New H.M.O.'s to Get Help, N.Y. Times, July 15, 1996, at A1.
312. John V. Jacobi, Patients at a Loss: Protecting Health Care Consumers Through Data Driven Quality Assurance, 45 U. Kan. L. Rev. 705, 714 (1997).
313. In re Am. Med. Ass'n, 94 F.T.C. 701, 803 (1979).
314. See discussion infra Part IV.B.1.
315. See discussion infra Part IV.B.2.
316. See Agrawal, supra note 221, at 408 ("Professional standards have evolved to acknowledge the legitimacy of cost considerations in clinical decisions.").
317. See Revised Principles, supra note 243; Council on Ethical and Judicial Affairs, AMA, Current Opinions, E-8.05 ("The contractual relationships that physicians assume when they . . . agree to provide services to the patients of an insurance plan are varied. Income arrangements may include hourly wages[,] . . . annual salaries[,] . . . and share[s] of group income. . . . Arrangements also usually include a range of fringe benefits . . . ."). The Current Opinions herein cited are available at the American Medical Association's website at either http://www. Ama-assn.org/apps/pf_online/pf_online?f_n=browse&doc=policyfiles/E-8.00.HTM (last visited Oct. 18, 2001) or http://www.ama-assn.org/apps/pf_online/pf_online?f_n =browse&doc=policyfiles/E-2.00.HTM (last visited Oct. 18, 2001).
318. There are four components to the AMA's Code of Ethics: (1) The Principles of Medical Ethics, (2) Fundamental Elements of the Patient-Physician Relationship, (3) The Reports of the Council on Ethical and Judicial Affairs, and (4) The Current Opinions of the Council on Ethical and Judicial Affairs. See AMA, Code of Medical Ethics and CEJA Reports, at http://www.ama-assn.org/ama/pub/category/2503.html (last visited Nov. 4, 2001). The Principles of Medical Ethics is much like a constitution, and the Council on Ethical and Judicial Affairs develops the meaning of the principles in its opinions. Each opinion of the Council is keyed to a certain Principle.
319. See E-8.051 ("The application of capitation to physicians' practices can result in the provision of cost-effective, quality medical care.").
320. Id. E-2.09.
321. Id. E-8.02, E-8.021. A medical director is a physician "employed by third-party payers in the health care delivery system . . . or by entities that perform medical appropriateness determinations on behalf of payers." Id. E-8.021. Physicians functioning as medical directors are warned that whenever they make decisions affecting individual or group patient care, "they are functioning within the professional sphere of physicians and must uphold ethical obligations, including those articulated by the AMA's Code of Medical Ethics." Id.
322. Id. E-8.05.
323. Revised Principles, supra note 243. The other revisions were made in 1912, 1957, and 1980. Tanya Albert, AMA's Principles of Medical Ethics May be Infused with New "Lofty Ideas," Am. Med. News, Jan. 1/8, 2001, http://ama-assn.org/sci- pubs/amnews/pick_01/prsa0101.htm (last visited Oct. 16, 2001).
324. Revised Principles, supra note 243. The other revisions were made in 1912, 1957, and 1980. Tanya Albert, AMA's Principles of Medical Ethics May be Infused with New "Lofty Ideas," Am. Med. News, Jan. 1/8, 2001, http://ama-assn.org/sci-pubs/amnews/pick_01/prsa0101.htm (last visited Oct. 16, 2001).
325. Council on Ethical and Judicial Affairs, AMA, Current Opinions, E-8.13.
326. Id. E-8.02.
327. Id. E-2.09.
328. Id. E-8.054.
329. In a subtle shift of emphasis, the AMA recently revised its Principles of Medical Ethics, replacing language stating that "the responsibilities of the physician extend not only to the individual, but also to society" with "a physician must recognize responsibility to patients first and foremost, as well as to society." Revised Principles, supra note 243; 1957 Principles, supra note 242.
330. Council on Ethical and Judicial Affairs, AMA, Current Opinions E-2.03.
331. Id. E-8.13(2)(a).
332. Id. E-8.13(2)(d).
333. Id. E-8.03.
334. Id. E-8.13(3).
335. Id. E-8.054(2).
336. Id. E-8.051(1)-(2).
337. Id. E-8.051(2); see also id. E-8.054 (describing factors physicians should use to evaluate compensation packages so as to ensure correct incentives and avoid conflicts).
338. Id. E-8.13(3)(b).
339. Id. E-8.13(2)(f); see also id. E-8.132 ("If the . . . HMO does not permit referral . . . when the physician believes that the patient's condition requires such services, the physician should so inform the patient so that the patient may decide whether to accept the outside referral at his or her own expense . . . .").
340. See id. E-8.13(3)(a). "Any incentives to limit care must be disclosed fully to patients by plan administrators upon enrollment and at least annually thereafter." Id. (emphasis added). "Patients must be informed of financial incentives that could impact the level or type of care they receive. This responsibility should be assumed by the health plan to ensure that patients are aware of such incentives prior to enrollment." Id. E-8.054(4) (emphasis added).
341. Id. E-8.054(4).
342. Id. (emphasis added); see also AMA Council on Judicial and Ethical Affairs, Financial Incentives and the Practice of Medicine 4 (Dec. 1997), http://www.ama-assn.org/ama1/up.PDF (on file with the Fordham Law Review) ("A compelling argument can be made for disclosure prior to enrollment in a health plan, as the structure of financial inducements could influence the patient's decision to purchase a specific form of coverage.").
343. Susan M. Wolf, Health Care Reform and the Future of Physician Ethics, Hastings Center Rep., Mar.-Apr. 1994, at 28.
344. See Timothy Stoltzfus Jost, The Necessary and Proper Role of Regulation to Assure the Quality of Health Care, 25 Hous. L. Rev. 525 (1988). Jost described: Professionals and institutions who deliver care that deviates from the standard of adequate care established by the profession and that results in injury to patients face retrospective review that may result in the forced payment of money damages. By forcing providers themselves to pay costs caused by their mistakes, the malpractice system in theory requires them to take all precautions that cost less than the cost that lack of precaution would impose on others. Id. at 572.
345. Prosser & Keeton on Torts § 32, at 187 (5th ed. 1984) [hereinafter Prosser].
346. See id.
347. See Bernard Friedland, Managed Care and the Expanding Scope of Primary Care Physicians' Duties: A Proposal to Redefine Explicitly the Standard of Care, 26 J.L. Med. & Ethics 100 (1998); E. Haavi Morreim, Medicine Meets Resource Limits: Restructuring the Legal Standard of Care, 59 U. Pitt. L. Rev. 1, 21-22 (1997).
348. See Bernard Friedland, Managed Care and the Expanding Scope of Primary Care Physicians' Duties: A Proposal to Redefine Explicitly the Standard of Care, 26 J.L. Med. & Ethics 100 (1998); E. Haavi Morreim, Medicine Meets Resource Limits: Restructuring the Legal Standard of Care, 59 U. Pitt. L. Rev. 1, 21-22 (1997).
349. Gerald B. Hickson, Commentary: Don't Let Primary Care Physicians Off the Hook So Easily, 26 J.L. Med. & Ethics 113, 114 (1998) (arguing that "all parties engaged in health services delivery . . . [should] share risk for any adverse outcome").
350. Id. at 113.
351. Robert A. Clifford, Physicians' Liability in a Managed Care Environment, Health Law., Oct. 1997, at 5; see Wickline v. State, 192 Cal. App. 3d 1630, 1645 (1986); Long v. Great West Life & Annuity Ins. Co., 957 P.2d 823, 832 (Wyo. 1998).
352. 192 Cal. App. 3d 1630 (1986).
353. Id. at 1645.
354. Id. at 1645-46.
355. See discussion supra Part IV.A.
356. The doctrine of informed consent is premised on the idea that every person has the right to determine what shall be done to her own body; it requires physicians to inform patients of the risks involved in a proposed treatment. See Prosser, supra note 292, at 190.
357. Moore v. Regents of the Univ. of Cal., 793 P.2d 479, 483 (Cal. 1990) (emphasis added).
358. See Walsh, supra note 257, at 236-38 (summarizing Ching v. Gaines, No. CV-137656 (Cal. Sup. Ct. Nov. 15, 1995)).
359. See id. at 237.
360. See Bearden & Maedgen, supra note 225, at 346.
361. William A. Chittenden, III, Malpractice Liability and Managed Health Care: History and Prognosis, 26 Tort & Ins. L.J. 451, 481 (1991) (summarizing Bush v. Dake, No. 86-25767 NM-2, slip. op. (Mich. Cir. Ct., Saginaw County Apr. 27, 1989)).
362. See, e.g., Sweede v. CIGNA Healthplan, 1989 WL 12608 (Del. Super. Feb. 2, 1989) (granting physician's motion for summary judgment on issue of punitive damages); Madsen v. Park Nicollet Med. Ctr., 419 N.W.2d 511, 515 (Minn. Ct. App. 1988) (finding trial court did not abuse discretion in excluding evidence of financial incentive because evidence "was only marginally relevant, and potentially very prejudicial").
363. See, e.g., Sweede v. CIGNA Healthplan, 1989 WL 12608 (Del. Super. Feb. 2, 1989).
364. 42 U.S.C. § 300e(c)(2)(D) (1994) (allowing qualifying HMOs to "make arrangements with physicians . . . to assume all or part of the financial risk on a prospective basis for the provision of basic health services by the physicians"); see also Pulvers v. Kaiser Found. Health Plan, 160 Cal. Rptr. 392, 394 (Cal. Ct. App. 1980) ("[T]he use of . . . 'incentive' plans is not only recommended by professional organizations . . . but . . . they are specifically required by section 300e of the Health Maintenance Organization Act of 1973.").
365. Shea v. Esensten, 622 N.W.2d 130, 136 (Minn. Ct. App. 2001).
366. See Kenneth S. Abraham & Paul C. Weiler, Enterprise Medical Liability and the Evolution of the American Health Care System, 108 Harv. L. Rev. 381 (1994); Kenneth S. Abraham et al., Enterprise Responsibility for Personal Injury: Further Reflections, 30 San Diego L. Rev. 333 (1993); William S. Brewbaker, III, Medical Malpractice and Managed Care Organizations: The Implied Warranty of Quality, 60 Law & Contemp. Probs. 117 (1997); Clark C. Havighurst, Vicarious Liability: Relocating Responsibility for the Quality of Medical Care, 26 Am. J.L. & Med. 7, 8 (2000); William M. Sage, Enterprise Liability and the Emerging Managed Health Care System, 60 Law & Contemp. Probs. 159 (1997) [hereinafter Sage, Emerging Managed Health]; William M. Sage et al., Enterprise Liability for Medical Malpractice and Health Care Quality Improvement, 20 Am. J.L. & Med. 1 (1994).
367. See Kenneth S. Abraham & Paul C. Weiler, Enterprise Medical Liability and the Evolution of the American Health Care System, 108 Harv. L. Rev. 381 (1994); Kenneth S. Abraham et al., Enterprise Responsibility for Personal Injury: Further Reflections, 30 San Diego L. Rev. 333 (1993); William S. Brewbaker, III, Medical Malpractice and Managed Care Organizations: The Implied Warranty of Quality, 60 Law & Contemp. Probs. 117 (1997); Clark C. Havighurst, Vicarious Liability: Relocating Responsibility for the Quality of Medical Care, 26 Am. J.L. & Med. 7, 8 (2000); William M. Sage, Enterprise Liability and the Emerging Managed Health Care System, 60 Law & Contemp. Probs. 159 (1997) [hereinafter Sage, Emerging Managed Health]; William M. Sage et al., Enterprise Liability for Medical Malpractice and Health Care Quality Improvement, 20 Am. J.L. & Med. 1 (1994).
368. See Kenneth S. Abraham & Paul C. Weiler, Enterprise Medical Liability and the Evolution of the American Health Care System, 108 Harv. L. Rev. 381 (1994); Kenneth S. Abraham et al., Enterprise Responsibility for Personal Injury: Further Reflections, 30 San Diego L. Rev. 333 (1993); William S. Brewbaker, III, Medical Malpractice and Managed Care Organizations: The Implied Warranty of Quality, 60 Law & Contemp. Probs. 117 (1997); Clark C. Havighurst, Vicarious Liability: Relocating Responsibility for the Quality of Medical Care, 26 Am. J.L. & Med. 7, 8 (2000); William M. Sage, Enterprise Liability and the Emerging Managed Health Care System, 60 Law & Contemp. Probs. 159 (1997) [hereinafter Sage, Emerging Managed Health]; William M. Sage et al., Enterprise Liability for Medical Malpractice and Health Care Quality Improvement, 20 Am. J.L. & Med. 1 (1994).
369. See Kenneth S. Abraham & Paul C. Weiler, Enterprise Medical Liability and the Evolution of the American Health Care System, 108 Harv. L. Rev. 381 (1994); Kenneth S. Abraham et al., Enterprise Responsibility for Personal Injury: Further Reflections, 30 San Diego L. Rev. 333 (1993); William S. Brewbaker, III, Medical Malpractice and Managed Care Organizations: The Implied Warranty of Quality, 60 Law & Contemp. Probs. 117 (1997); Clark C. Havighurst, Vicarious Liability: Relocating Responsibility for the Quality of Medical Care, 26 Am. J.L. & Med. 7, 8 (2000); William M. Sage, Enterprise Liability and the Emerging Managed Health Care System, 60 Law & Contemp. Probs. 159 (1997) [hereinafter Sage, Emerging Managed Health]; William M. Sage et al., Enterprise Liability for Medical Malpractice and Health Care Quality Improvement, 20 Am. J.L. & Med. 1 (1994).
370. See Kenneth S. Abraham & Paul C. Weiler, Enterprise Medical Liability and the Evolution of the American Health Care System, 108 Harv. L. Rev. 381 (1994); Kenneth S. Abraham et al., Enterprise Responsibility for Personal Injury: Further Reflections, 30 San Diego L. Rev. 333 (1993); William S. Brewbaker, III, Medical Malpractice and Managed Care Organizations: The Implied Warranty of Quality, 60 Law & Contemp. Probs. 117 (1997); Clark C. Havighurst, Vicarious Liability: Relocating Responsibility for the Quality of Medical Care, 26 Am. J.L. & Med. 7, 8 (2000); William M. Sage, Enterprise Liability and the Emerging Managed Health Care System, 60 Law & Contemp. Probs. 159 (1997) [hereinafter Sage, Emerging Managed Health]; William M. Sage et al., Enterprise Liability for Medical Malpractice and Health Care Quality Improvement, 20 Am. J.L. & Med. 1 (1994).
371. See Kenneth S. Abraham & Paul C. Weiler, Enterprise Medical Liability and the Evolution of the American Health Care System, 108 Harv. L. Rev. 381 (1994); Kenneth S. Abraham et al., Enterprise Responsibility for Personal Injury: Further Reflections, 30 San Diego L. Rev. 333 (1993); William S. Brewbaker, III, Medical Malpractice and Managed Care Organizations: The Implied Warranty of Quality, 60 Law & Contemp. Probs. 117 (1997); Clark C. Havighurst, Vicarious Liability: Relocating Responsibility for the Quality of Medical Care, 26 Am. J.L. & Med. 7, 8 (2000); William M. Sage, Enterprise Liability and the Emerging Managed Health Care System, 60 Law & Contemp. Probs. 159 (1997) [hereinafter Sage, Emerging Managed Health]; William M. Sage et al., Enterprise Liability for Medical Malpractice and Health Care Quality Improvement, 20 Am. J.L. & Med. 1 (1994).
372. Havighurst, supra note 312, at 20.
373. Brewbaker, supra note 312, at 135; see also Petrovich v. Share Health Plan, Inc., 719 N.E.2d 756, 764 (Ill. 1999) ("HMO accountability is essential to counterbalance the HMO goal of cost-containment. To the extent that HMOs are profit-making entities, accountability is also needed to counterbalance the inherent drive to achieve a large and ever-increasing profit margin.").
374. Brewbaker, supra note 312, at 135.
375. See id.; Sage, Emerging Managed Health, supra note 312, at 167.
376. See Decker v. Saini, No. 88-361768NH, 1991 WL 277590, at *4 (Mich. Cir. Ct. Sept. 17, 1991).
377. See Donald M. Berwick et al., Curing Health Care: New Strategies for Quality Improvement 12 (1990) ("The doctor no longer really controls health care, . . . [c]ontrol is shifting, structure is shifting, the pattern of care is shifting . . . .").
378. We are speaking here only of common law liability, and not liability under state or federal statutes, which further complicates the liability picture. Texas's law became "the first . . . in the nation [to] allow[] individuals to sue health maintenance organizations" and others may soon follow. See Christine Lockhart, The Safest Care is to Deny Care: Implications of Corporate Health Insurance, Inc. v. Texas Department of Insurance on HMO Liability in Texas, 41 S. Tex. L. Rev. 621 (2000); see also Me. Rev. Stat. Ann. title 24-A, § 4313 (West 2000) (creating private right of action against health plans). MCOs may well soon be liable for delivering substandard care under federal law.
379. See Greg Miller, House OKs Patients' Rights Bill, L.A. Times, Aug. 3, 2001, at A1. The so-called patients' bill of rights movement is not necessarily
380. See 29 U.S.C. §§ 1001-1461 (1994).
381. § 1002(1)(A).
382. "Except as provided in subsection (b) of this section, the provisions of this subchapter . . . shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan . . . ." § 1144(a).
383. See, e.g., Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) (finding ERISA preempts New York human rights law).
384. Pegram v. Herdrich, 530 U.S. 211, 228 (2000).
385. See Thomas R. McLean & Edward P. Richards, Managed Care Liability for Breach of Fiduciary Duty After Pegram v. Herdrich: The End of ERISA Preemption for State Law Liability for Medical Care Decision Making, 53 Fla. L. Rev. 1 (2001).
386. Corporations generally prefer arbitration over the court system, since arbitration involves "reduced litigation costs and a perceived immunity from sympathy-induced punitive damages awards." Chittenden, supra note 307, at 494. Federal regulations, and most state MCO statutes require MCOs to maintain administrative dispute resolution procedures. See 42 C.F.R. § 417.124(g) (2000). Even though arbitration is a creature of contract, and no party is required to submit to arbitration, the Supreme Court has held that questions regarding a party's intent to arbitrate a dispute are to be resolved in favor of arbitration. See AT&T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 648 (1986); Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983). State efforts to protect consumers from odious arbitration clauses have been struck down under the Supremacy Clause as violative of the Federal Arbitration Act. See Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681 (1996).
387. See, e.g., Ala. Code § 27-21 A-23(d) (1975) ("No person participating in the arrangements of a health maintenance organization other than the actual provider of health care . . . shall be liable for negligence, misfeasance, nonfeasance or malpractice in connection with the furnishing of such services and supplies."); N.J. Stat. § 26:2J-25 (1996) (exempting anyone "participating in the arrangements of a health maintenance organization" other than the actual providers from liability for "negligence, misfeasance, nonfeasance or malpractice").
388. See Propst v. Health Maint. Plan, Inc., 582 N.E.2d 1142 (Ohio Ct. App. 1990); Williams v. Good Health Plus, Inc., 743 S.W.2d 373 (Tex. Ct. App. 1987). But see Sloan v. Metropolitan Health Council, 516 N.E.2d 1104, 1109 (Ind. Ct. App. 1987).
389. There are a host of articles discussing the various theories of liability for MCOs. See, e.g., Bearden & Maedgen, supra note 225; Chittenden, supra note 307; Domenick C. DiCicco, Jr., HMO Liability for the Medical Negligence of Member Physicians, 43 Vill. L. Rev. 499 (1998); Malone & Thaler, supra note 247; William E. Milks, Liability of Health Maintenance Organizations (HMOs) for Negligence of Member Physicians, 51 A.L.R. 5th 271 (2000); Lisa Panah, Common Law Tort Liability of Health Maintenance Organizations, 29 J. Health & Hosp. L. 146 (1996); David L. Trueman, Managed Care Liability Today: Laws, Cases, Theories, and Current Issues, 33 J. Health L. 191 (2000).
390. There are a host of articles discussing the various theories of liability for MCOs. See, e.g., Bearden & Maedgen, supra note 225; Chittenden, supra note 307; Domenick C. DiCicco, Jr., HMO Liability for the Medical Negligence of Member Physicians, 43 Vill. L. Rev. 499 (1998); Malone & Thaler, supra note 247; William E. Milks, Liability of Health Maintenance Organizations (HMOs) for Negligence of Member Physicians, 51 A.L.R. 5th 271 (2000); Lisa Panah, Common Law Tort Liability of Health Maintenance Organizations, 29 J. Health & Hosp. L. 146 (1996); David L. Trueman, Managed Care Liability Today: Laws, Cases, Theories, and Current Issues, 33 J. Health L. 191 (2000).
391. There are a host of articles discussing the various theories of liability for MCOs. See, e.g., Bearden & Maedgen, supra note 225; Chittenden, supra note 307; Domenick C. DiCicco, Jr., HMO Liability for the Medical Negligence of Member Physicians, 43 Vill. L. Rev. 499 (1998); Malone & Thaler, supra note 247; William E. Milks, Liability of Health Maintenance Organizations (HMOs) for Negligence of Member Physicians, 51 A.L.R. 5th 271 (2000); Lisa Panah, Common Law Tort Liability of Health Maintenance Organizations, 29 J. Health & Hosp. L. 146 (1996); David L. Trueman, Managed Care Liability Today: Laws, Cases, Theories, and Current Issues, 33 J. Health L. 191 (2000).
392. There are a host of articles discussing the various theories of liability for MCOs. See, e.g., Bearden & Maedgen, supra note 225; Chittenden, supra note 307; Domenick C. DiCicco, Jr., HMO Liability for the Medical Negligence of Member Physicians, 43 Vill. L. Rev. 499 (1998); Malone & Thaler, supra note 247; William E. Milks, Liability of Health Maintenance Organizations (HMOs) for Negligence of Member Physicians, 51 A.L.R. 5th 271 (2000); Lisa Panah, Common Law Tort Liability of Health Maintenance Organizations, 29 J. Health & Hosp. L. 146 (1996); David L. Trueman, Managed Care Liability Today: Laws, Cases, Theories, and Current Issues, 33 J. Health L. 191 (2000).
393. There are a host of articles discussing the various theories of liability for MCOs. See, e.g., Bearden & Maedgen, supra note 225; Chittenden, supra note 307; Domenick C. DiCicco, Jr., HMO Liability for the Medical Negligence of Member Physicians, 43 Vill. L. Rev. 499 (1998); Malone & Thaler, supra note 247; William E. Milks, Liability of Health Maintenance Organizations (HMOs) for Negligence of Member Physicians, 51 A.L.R. 5th 271 (2000); Lisa Panah, Common Law Tort Liability of Health Maintenance Organizations, 29 J. Health & Hosp. L. 146 (1996); David L. Trueman, Managed Care Liability Today: Laws, Cases, Theories, and Current Issues, 33 J. Health L. 191 (2000).
394. There are a host of articles discussing the various theories of liability for MCOs. See, e.g., Bearden & Maedgen, supra note 225; Chittenden, supra note 307; Domenick C. DiCicco, Jr., HMO Liability for the Medical Negligence of Member Physicians, 43 Vill. L. Rev. 499 (1998); Malone & Thaler, supra note 247; William E. Milks, Liability of Health Maintenance Organizations (HMOs) for Negligence of Member Physicians, 51 A.L.R. 5th 271 (2000); Lisa Panah, Common Law Tort Liability of Health Maintenance Organizations, 29 J. Health & Hosp. L. 146 (1996); David L. Trueman, Managed Care Liability Today: Laws, Cases, Theories, and Current Issues, 33 J. Health L. 191 (2000).
395. There are a host of articles discussing the various theories of liability for MCOs. See, e.g., Bearden & Maedgen, supra note 225; Chittenden, supra note 307; Domenick C. DiCicco, Jr., HMO Liability for the Medical Negligence of Member Physicians, 43 Vill. L. Rev. 499 (1998); Malone & Thaler, supra note 247; William E. Milks, Liability of Health Maintenance Organizations (HMOs) for Negligence of Member Physicians, 51 A.L.R. 5th 271 (2000); Lisa Panah, Common Law Tort Liability of Health Maintenance Organizations, 29 J. Health & Hosp. L. 146 (1996); David L. Trueman, Managed Care Liability Today: Laws, Cases, Theories, and Current Issues, 33 J. Health L. 191 (2000).
396. See DiCicco, supra note 329, at 506.
397. See supra note 225 (discussing various forms of HMOs).
398. See Prosser, supra note 292, at 499-500.
399. Id. at 501 (listing the many factors to be taken into account in determining the existence and degree of control).
400. See Chittenden, supra note 307, at 455 ("The staff model HMO, which employs its physicians on a salaried basis and often provides its own medical facilities, fulfills most of the 'master-servant' relationship requirements.").
401. 516 N.E.2d 1104 (Ind. Ct. App. 1987).
402. Id. at 1105.
403. Id. at 1106.
404. Id. at 1109. The defendant HMO argued that it could not possibly have controlled the physician, because the physician was exercising his independent professional judgment. The court found: [N]o logical basis for denying liability . . . on the ground that the professional must exercise a professional judgment that the principal may not properly control. . . . [T]he touchstone of the principal's liability for the tortious acts of his agent is merely whether they are done within the course and scope of the employment. Id.
405. Gugino v. Harvard Cmty. Health Plan, 403 N.E.2d 1166, 1168 (Mass. 1980).
406. Id.
407. Id.
408. Schleier v. Kaiser Found. Health Plan, 876 F.2d 174, 178 (D.C. Cir. 1989).
409. Id. at 177.
410. But see Dunn v. Praiss, 606 A.2d 862, 868 (N.J. Super. Ct. 1992) (finding group model HMO liable under respondeat superior theory because "the overall control exercised by the HMO over . . . physician[] clearly caused [the physician] to be . . . actually . . . the agent of the HMO"), rev'd on other grounds, 656 A.2d 413 (N.J. 1995).
411. See Restatement (Second) of Torts § 429 (1965). Section 429 states: One who employs an independent contractor to perform services for another which are accepted in the reasonable belief that the services are being rendered by the employer or by his servants, is subject to liability for physical harm caused by the negligence of the contractor in supplying such services, to the same extent as though the employer were supplying them himself or by his servants. Id. Section 267 of the Second Restatement of Agency states: One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such. Restatement (Second) of Agency § 267 (1958).
412. Capan v. Divine Providence Hosp., 430 A.2d 647, 649 (Pa. Super. Ct. 1981).
413. Boyd v. Albert Einstein Med. Ctr., 547 A.2d 1229, 1235 (Pa. Super. Ct. 1988).
414. Id. at 1229.
415. Id. at 1235.
416. Id.; see also Decker v. Saini, No. 88-361768NH, 1991 WL 277590, at *4 (Mich. Cir. Ct. Sept. 17, 1991) (holding HMO liable under ostensible agency theory for negligence of contract physician); McClellan v. HMO of Pa., 604 A.2d 1053, 1056-57 (Pa. Super. Ct. 1992) (finding plaintiff stated valid cause of action for ostensible agency liability). But see Chase v. Indep. Practice Ass'n, 583 N.E.2d 251, 255 (Mass. App. Ct. 1991) (finding there was no ostensible agency because there was no showing of detrimental reliance).
417. Petrovich v. Share Health Plan, 719 N.E.2d 756, 760, 775 (1999).
418. See Harrell v. Total Health Care, Inc., 781 S.W.2d 58, 60 (Mo. 1989) (finding HMO owed duty to subscribers to investigate competence of physicians and to exclude those who present foreseeable risk of harm).
419. The leading case in this area is Wickline v. State, 239 Cal. Rptr. 810 (Ct. App. 1986). See supra text accompanying notes 298-300. Though the court did not find the insurance company liable for a denial of treatment decision, in dicta the court wrote: The patient who requires treatment and who is harmed when care which should have been provided is not provided should recover for the injuries suffered from all those responsible for the deprivation of such care, including, when appropriate, health care payors. Third party payors of health care services can be held legally accountable when medically inappropriate decisions result from defects in the design or implementation of cost containment mechanisms as, for example, when appeals made on a patient's behalf for medical or hospital care are arbitrarily ignored or unreasonably disregarded or overridden. Wickline, 239 Cal. Rptr. at 819.
420. Johnson v. Humana Health Plans, Inc. (Cir. Ct., Jefferson Co., Ky. Oct. 20, 1998), reported in Nat'l L.J., Nov. 30, 1998, at B6 (awarding $13 million to patient for bad faith refusal to pay for recommended hysterectomy).
421. See Williams v. HealthAmerica, 535 N.E.2d 717, 721 (Ohio Ct. App. 1987) (bad faith failure to inform plaintiff of grievance procedures); Morris v. Health Net, 988 P.2d 940, 941 (Utah 1999) (bad faith failure to reimburse plaintiff for emergency treatment); McEvoy v. Group Health Cooperative, 570 N.W.2d 397, 407 (Wis. 1997) (bad faith denial of out-of-network services for anorexia).
422. McClellan v. HMO of Pa., 604 A.2d 1053, 1055 (Pa. Super. Ct. 1992) (allowing suit to proceed alleging HMO promotional materials misrepresented quality of care, screening of physicians, and freedom of access to specialty care).
423. Drolet v. Healthsource, Inc., 968 F. Supp. 757, 758, 761 (D.N.H. 1997) (finding adequate plaintiff's characterization of the physician-patient relationship as "hopelessly compromised by various undisclosed financial incentives . . . provide[d] to . . . physicians in an effort to reduce expenditures on specialty care services."); see also Roger N. Braden & Jennifer L. Lawrence, Medical Malpractice: Understanding the Evolution - Rebuking the Revolution, 25 N. Ky. L. Rev. 675, 691 (1998) (discussing DeMeurers v. Health Net, Civ. No. 239338 (Cal. Super. Ct., Riverside Co., Oct. 16, 1993), where an arbitration panel awarded over $1 million for an HMO's intentional interference with patient-physician relationship).
424. See Walsh, supra note 257, at 231-32 (discussing Fox v. Health Net, Civ. No. 219692 (Cal. Super. Ct., Riverside Co., Dec. 28, 1993)).
425. See supra Part II.B.
426. See supra notes 232-40 and accompanying text.
427. In re Am. Med. Ass'n, 94 F.T.C. 701, 917 (1979).
428. Id. at 954.
429. See supra notes 159-60 and accompanying text.
430. Annotated Model Rules of Prof'l Conduct R. 5.4(c) (1999); cf. Tully v. Edgar, 676 N.E.2d 1361, 1365 (Ill. App. 1997) (ruling that because of the "general duty applied to all attorneys to work for the best interests of their client, without regard to who may ultimately be paying their fees," special attorneys general "must exercise independent judgment in protecting the interests of their state employee clients, without interference from, or with regard to the views of, the [a]ttorney [g]eneral").
431. R. 1.8(f)(2); see also Model Code of Prof'l Responsibility DR 5-107(B) (as amended and in effect as of 1983), reprinted in ABA, Compendium of Professional Responsibility Rules and Standards (2001) ("A lawyer shall not permit a person who recommends, employs or pays him to render legal services for another to direct or regulate his professional judgment in rendering such legal services.").
432. Rule 1.2(c) provides that "[a] lawyer may limit the objectives of the representation if the client consents after consultation." R. 1.2(c). Paragraph 4 in the official comments to Rule 1.2 explains that "[t]he objectives or scope of services provided by a lawyer may be limited by agreement with the client or by the terms under which the lawyer's services are made available to the client. . . . The terms upon which representation is undertaken may exclude specific objectives or means." R. 1.2 cmt. 4.
433. R. 1.7(b) (emphasis added).
434. See Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 15.2, at 627 (5th ed. 2000); see, e.g., Owen v. Wangerin, 985 F.2d 312 (7th Cir. 1993) (lawyer representing plaintiff owed a debt to defendant); Kroblin Refrigerated Xpress, Inc. v. Pitterich, 805 F.2d 96 (3d Cir. 1986) (financial interest in corporation to be acquired by client); Cummings v. Sea Lion Corp., 924 P.2d 1011 (Alaska 1996) (undisclosed financial interest with other party to transaction); Gonzalez v. Gordon, 233 A.D.2d 191 (N.Y. App. Div. 1996) (undisclosed personal guaranty of loans of party involved in transaction).
435. See Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 15.2, at 627 (5th ed. 2000); see, e.g., Owen v. Wangerin, 985 F.2d 312 (7th Cir. 1993) (lawyer representing plaintiff owed a debt to defendant); Kroblin Refrigerated Xpress, Inc. v. Pitterich, 805 F.2d 96 (3d Cir. 1986) (financial interest in corporation to be acquired by client); Cummings v. Sea Lion Corp., 924 P.2d 1011 (Alaska 1996) (undisclosed financial interest with other party to transaction); Gonzalez v. Gordon, 233 A.D.2d 191 (N.Y. App. Div. 1996) (undisclosed personal guaranty of loans of party involved in transaction).
436. R. 1.6(a).
437. Under Model Rule 5.3, lawyers are responsible for reasonable efforts to ensure that non-lawyer assistants maintain client confidences to which they are privy and otherwise conduct themselves in a manner "compatible with the professional obligations of the lawyer." R. 5.3(b).
438. Model Rule 1.10(a) provides that "[w]hile lawyers are associated in a firm, none of them shall knowingly represent a client when any of them practicing alone would be prohibited from doing so by Rules 1.7, 1.8(c), 1.9 or 2.2." R. 1.10(a).
439. The "Scope" preamble to the Model Rules states that "[t]hey are not designed to be a basis for civil liability." Annotated Model Rules of Prof'l Conduct pmbl., at xvii (1999). They are, however, routinely relied on to establish a standard of care in cases asserting claims against lawyers for breach of their professional duties. See Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of Lawyering § 1.1:201, at 10-13 (Supp. 1997); see, e.g., Fishman v. Brooks, 487 N.E.2d 1377 (Mass. 1986).
440. See supra text accompanying notes 332-43.
441. See supra text accompanying notes 344-51.
442. The process has been described as follows: Under the terms of a typical liability policy, the insurer agrees in return for payment of premiums to provide the insured: 1) indemnity up to policy limits against liability incurred for covered conduct and 2) defense against claims of such liability. Policies typically but not always give the company the right to choose defense counsel and to control the defense. A run-of-the-mill case - one in which the alleged liability is clearly covered within the policy limit and the insured's interest in the defense is solely economic - will proceed without conflict. The insurance company is, in effect, the true party in interest. Only the insurance company's money is at stake in the litigation, and the insured is content to have the insurance company conduct the defense as it sees fit. Not uncommonly, however, the interests of the insurer and the insured diverge for one or more reasons, including: 1) the complaint alleges some conduct that is covered and some that is not covered; 2) the plaintiff seeks damages beyond the amount covered by the policy; or 3) the insured has non-economic reasons for avoiding any apparent admission of negligence or wrongdoing. . . . Choices in the conduct of the defense may, therefore, benefit one at the expense of the other. George C. Harris et al., Navigating the Insurance Triangle, ch. 3. at TM-1, in Litigation Ethics: Course Materials for Continuing Legal Education (John Q. Barrett & Bruce A. Green eds., 2000). Particularly if the insurer is obligated to provide a defense to the insured without regard to the cost of that defense, the insurer will be interested in controlling the costs of defense whereas the insured will prefer that the defense lawyer do everything possible on her behalf.
443. See Mallen & Smith, supra note 368, § 29.3, at 215 ("The attorney's relationship with the insurer usually is ongoing, supported by a financial interest in future assignments and, like other long-term relationships, sometimes strengthened by real friendship.").
444. See Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 28.5, at 498 (4th ed. 1996) ("There has been a noticeable increase by insurers in the use of salaried counsel to defend their insureds.").
445. Courts in nine of eleven states that have faced this issue have found it permissible for insurers to defend insureds with in-house counsel. See, e.g., Cincinnati Ins. Co. v. Wills, 717 N.E.2d 151, 155 (Ind. 1999) ("[A]ttorneys who are employees of insurance companies do not necessarily trigger an impermissible conflict . . . when they appear as counsel to defend claims against the companies' policyholders."); see also Petition of Youngblood, 895 S.W.2d 322 (Tenn. 1995) (finding it is not a per se ethical violation for in-house insurance company counsel to represent policyholders).
446. We tolerate a similar ethical tension for the same reason in allowing advocacy groups to represent individual clients pro bono. As Professor Wolfram has explained, in discussing NAACP v. Button, 371 U.S. 415 (1963): The strong ideological interest of an advocacy organization can plainly create a risk that the organization's lawyer will not represent sponsored clients with totally free and independent professional judgment. Nonetheless, if that risk is not incurred, no representation . . . would result. The Court apparently deems the latter less acceptable than the former. Wolfram, supra note 64, at 447.
447. Most, but not all, courts regard the insurance triangle as a circumstance of dual representation, with defense counsel owing attorney-client loyalties to the insurer as well as the insured. See Mallen & Smith, supra note 368, § 29.3; Douglas R. Richmond, Lost in the Eternal Triangle of Insurance Defense Ethics, 9 Geo. J. Legal Ethics, 475, 482 n.26 (1996).
448. Most, but not all, courts regard the insurance triangle as a circumstance of dual representation, with defense counsel owing attorney-client loyalties to the insurer as well as the insured. See Mallen & Smith, supra note 368, § 29.3; Douglas R. Richmond, Lost in the Eternal Triangle of Insurance Defense Ethics, 9 Geo. J. Legal Ethics, 475, 482 n.26 (1996).
449. See, e.g., Am. Cas. Co. v. O'Flaherty, 57 Cal. App. 4th 1070, 1076 (1997) (holding that insurer has a right as client to sue defense counsel for malpractice but only where there is no conflict between insurer and insured because "the attorney's primary loyalty must be to the insured it was retained to defend"); Siebert Oxidermo, Inc. v. Shields, 446 N.E.2d 332, 341 (Ind. 1983); Mallen & Smith, supra note 368, § 29.3, at 217 n.14 (discussing cases that held a lawyer's paramount duty is to the insured when interests between insured and insurer diverge).
450. ABA Formal Op. 01-421 (Feb. 16, 2001), LEXIS, ABA Formal Ethics Opinions.
451. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
452. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
453. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
454. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
455. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
456. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
457. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
458. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
459. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
460. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
461. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
462. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
463. See Ala. Ethics Op. RO-98-02 (1998), reprinted in Nat'l Rep. on Legal Ethics (2001); Colorado Formal Ethics Op. 107 (1999), available at http://www.cobar.org/ comms/ethics/fo/fo_107.htm; Fla. Bar Staff Ethics Op. 20591 (1997), reprinted in Trial Advoc. Q., Winter 1998, at 7; Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics; Iowa Ethics Op. 99-1 (1999), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Ky. Bar Ass'n. E-331 (1988); Mass. Op. No. 00-4 (2000), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - MA Opinions; Mo. Bar Informal Op. 980124 (1998), available at http://www.mobar.net/opinions/; Ohio Op. 2000-3 (2000), available at 2000 WL 1005223; R.I. Supreme Court Ethics Advisory Panel Op. No. 99-18 (1999), available at LEXIS, National Reporter on Legal Ethics and Prof. Responsibility - RI Opinions; Tenn. Formal Ethics Op. 2000-F-145, available at 2000 WL 1687507; Tex. Ethics Op. 533 (2000), available at 2000 WL 987291; Vt. Op. No. 98-7 (1998), reprinted in [2000 Transfer Binder] Nat'l Rep. on Legal Ethics; Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723; Wash. Formal Op. 195 (1999), reprinted in Nat'l Rep. on Legal Ethics (2001).
464. Ind. Ethics Op. No. 3 of 1998, reprinted in [1998 Transfer Binder] Nat'l Rep. on Legal Ethics.
465. Id.
466. For example, see Virginia Leo 1723, which states: [T]he attorney/client relationship must remain free from undue influence from third parties, such as the insurance carrier . . . it is ethically impermissible for an attorney to agree to an insurance carrier's restrictions on the attorney's representation of the insured absent full disclosure and consent of the client at the outset of the representation and absent a determination that the client's rights will not be materially impaired by the restrictions. Va. Leo 1723 (1998), available at Westlaw, VA LE Op. No. 1723.
467. 2 P.3d 806 (Mont. 2000). The case was vigorously defended by several major insurance companies and provoked numerous briefs by amici. See id. at 807.
468. See also Dynamic Concepts, Inc. v. Truck Ins. Exch., 71 Cal. Rptr. 2d 882 (Cal. Ct. App. 1998). The court in Dynamic Concepts stated: Under no circumstances can [insurers' outside counsel guidelines] be permitted to impede the attorney's own professional judgment about how best to competently represent the insureds. If the attorney's representation is to be limited in any way that unreasonably interferes with the defense, it is the insured, not the insurer, who should make that decision. Id. at 889 n.9; see also State Farm Mut. Auto. Ins. Co. v. Traver, 980 S.W.2d 625, 634 (Tex. 1998) (Gonzalez, J., concurring in part and dissenting in part) ("I am concerned that defense lawyers may be reluctant to resist cost-cutting measures that detrimentally affect the quality of the insured's defense. There is a real risk that these efforts at cost containment compromise a lawyer's autonomy and independent judgment on the best means for defending an insured.").
469. Rules of Prof'l Conduct, 2 P.3d at 815, 817.
470. See supra notes 296-97 and accompanying text.
471. See, e.g., Delmonte v. State Farm Fire & Cas. Co., 90 Haw. 39, 54 (1999) (holding that insurance defense counsel who followed insurer directives could be liable for malpractice for breach of duty of independent judgment).
472. See, e.g., Boyd Bros. Transp. Co. v. Fireman's Fund Ins. Co., 729 F.2d 1407, 1410-11 (11th Cir. 1984) (observing that vicarious liability is the majority rule); Smoot v. State Farm Mut. Auto. Ins. Co., 299 F.2d 525, 530 (5th Cir. 1962) ("Those whom the Insurer selects to execute its promises, whether attorneys, physicians, no less than company-employed adjusters, are its agents for whom it has the customary legal liability."); Pacific Employers Ins. Co. v. P.B. Hoidale Co., 789 F. Supp. 1117 (D. Kan. 1992); Continental Ins. Co. v. Bayless & Roberts, Inc., 608 P.2d 281 (Alaska 1980); Stumpf v. Continental Cas. Co., 794 P.2d 1228, 1232 (Or. Ct. App. 1990) ("[W]e apply what appears to be the rule in the majority of jurisdictions: An insurer may be vicariously liable for the actions of its agents, including counsel that it hires to defend its insured."). But see Merritt v. Reserve Ins. Co., 110 Cal. Rptr. 511, 527 (Cal. Ct. App. 1973) ("[R]emedy for this negligence is found in an action against counsel for malpractice and not in a suit against counsel's employer to impose vicarious liability."); State Farm Mut. Auto Ins. Co. v. Traver, 980 S.W.2d 625, 629 (Tex. 1998) (holding that insurer may not be vicariously liable for malpractice of independent attorney whom it chooses to defend insured).
473. See generally Stephen S. Ashley, Bad Faith Actions: Liability and Damages (2d ed. 1997).