Managed care liability and the capitated provider.

Abstract

While there have been no reported cases as yet on the subject of ERISA preemption of claims arising from utilization review decisions by providers, it will unquestionably be a significant issue facing providers that participate in capitated arrangements. If preemption is determined not to be available, providers will be exposed to risks from which health plans are currently shielded. Providers conducting utilization review should be following this issue as it develops, but should also be obtaining insurance for this risk to the extent it is available (e.g., it will not be available for punitive damages). Providers should also consider negotiating provisions in their contracts with health plans to the effect that any utilization review conducted by the provider is on behalf of the health plan and that the provider's utilization review activities will be covered under the health plan's liability insurance.