The Impact of State Managed Care Liability Statutes

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Since the mid-1990s ten states have enacted statutes that have created tort liability for patient harm caused by managed care organizations, and similar liability has been considered in Congress. This study is the first attempt to evaluate the impact of these state statutes on liability exposure and litigation activity. These statutes have resulted in little or no litigation and are not seen as creating any fundamentally new type of liability exposure. This muted effect is not attributable primarily to ERISA preemption but, rather, to the costs and complexities of suing a health plan, which deter lawyers from including this additional defendant in medical malpractice cases. The main drivers of increased liability concerns are the large class-action lawsuits that are pending under federal law and the few state cases with massive punitive-damage verdicts prior to these statutes. This suggests that a federal liability statute is not likely to greatly increase liability exposure unless it allows such suits.

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