assessment, and cost containment. Depending on the particular course taken, however, health care reform might greatly reduce the volume and variability of demands made on practitioners.


When employers adopt programs to review the necessity and appropriateness of medical services provided to specific patients or to direct employees to specific health care providers, they may expose themselves to claims that their programs have caused medical harm to individuals (APPWP, 1991; Holoweiko, 1992; Kent, 1992a). To date, the claims of medical harm or negligence that have been raised against insurers, utilization management organizations, HMOs, and similar arrangements have not yet directly involved employers, but as the degree of direct employer involvement in managing health benefits increases so does the potential for litigation.

Although case law is limited, it seems reasonably clear that a utilization review firm, an HMO, or even an employer—depending on applicability and interpretation of the Employee Retirement Income Security Act of 1974 (ERISA)—could be "held legally accountable when medically inappropriate decisions result from defects in the design or implementation of cost containment mechanisms" (Wickline v. California, 228 Cal. Rptr. 661 [1986], p. 670). For a particular party involved in a utilization management program to be held liable for medical harm to a patient, legal experts say that four questions must be answered positively (Miller, 1991). Does the party have a duty of care to patients? Has that duty been breached? Was there injury? Was the breach of duty a proximate cause of the injury? Litigation has, to date, raised more questions than answers about how the second and fourth questions will be evaluated and answered (Gosfield, 1991; Miller, 1991; IOM, 1992a).

An employer that purchases utilization management services from an insurer or independent vendor would seem to be less directly linked to individual medical care decisions than one that engages in such activities directly. Conversely, an employer that directly evaluates and contracts with health care providers for services to employees may be viewed as more proximately involved than one that contracts with an HMO. In any case, the more directly involved employers become in influencing patient care and choice of provider, the more they risk liability if they fail to exercise "good management, good judgment, good faith, and good documentation" (IOM, 1989).

ERISA, however, is a major barrier to legal claims of corporate negligence even if the criteria for negligence described above are met (Costich, 1990-1991; Holoweiko, 1992; Moses, 1992; and Appendix B to this report).

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