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to the limits of the plan; if not, the patient's financial coverage may be reduced or denied altogether. Many physicians criticize the intrusion of UR programs, while most payers claim they reduce health care costs.

Under traditional indemnity plans, UR occurs retrospectively. That is, claims for payment are reviewed after the treatment is rendered. Recently, prospective and concurrent review programs have become more prevalent. A prospective review program requires the physician to obtain prior certification from the payer before providing treatment. In concurrent review, the payer monitors a patient's treatment (usually the length of a hospital stay) and specifies the last clay for which payment is authorized.

Because these programs can directly affect the medical care of the patient, they increase the potential for harm and, consequently, the potential for liability arising out of the UR program. Prospective and concurrent UR decisions also pose dilemmas for the treating physicians and hospitals. If a treatment plan is disapproved, is the physician free to abandon the plan? To what extent is the physician or hospital obligated to provide the treatment despite the risk of nonpayment? How vigorously must the physician pursue any appeal rights to contest the UR decision?

The patient is also left in a quandary. The patient faces conflicting judgments by two medical professionals: the treating physician and the UR consultant. Should the patient rely on the treating physician's opinion, go forward with treatment and accept the resultant benefit penalties, or should he limit treatment to that which the payer will cover? Who is ultimately responsible for such decisions, and where should liability fall if the decision results in injury to the patient?

There are two leading court decisions regarding liability for UR decisions, Sarchett v. Blue Shield of California 43 Cal. 3d 1, 233 Cal. Rptr. 76, 729 P. 2d 267, (1987), and Wickline v. California 192 Cal. App. 3d 1630, 239 Cal. Rptr. 810 (1986). Sarchett, a retrospective review case, upheld the fundamental right of an insurer to challenge the treating physician's determination of medical necessity. Wickline, a case involving concurrent review, addressed the reviewer's potential liability to the patient for harm resulting from prospective or concurrent review decisions.

The Sarchett Decision

The most important aspect of the California Supreme Court's decision in Sarchett v. Blue Shield of California, supra, was that it affirmed an insurer's right to disagree with the treating physician's determination of medical necessity. The decision also made it clear that if coverage is denied, the insurer must inform the insured of any contractual rights to reconsideration or independent review, such as by arbitration.

The plaintiff, John Sarchett, was hospitalized for 3 days by his family