E M P L O Y E E B E N E F I T S , C O
M P E N S A T I O N
A N D P E N S I O N L A W
Vol. 2, No. 2: February 1, 2001
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Publisher: Legal Scholarship Network
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Urban Institute
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TOPIC OF THIS ISSUE:
Managed Care And Mandated Benefits
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T A B L E of C O N T E N T S
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WORKING PAPERS
"The Assault on Managed Care: Vicarious Liability, Class Actions
and the Patient's Bill of Rights"
RICHARD A. EPSTEIN
University of Chicago Law
School
ALAN O. SYKES
University of Chicago Law
School
NEW and FORTHCOMING ARTICLES
"From YUPPIES to GUPPIES: Unfunded Mandates and Benefit Plan
Regulation"
University of Georgia Law Review, Vol.
34, Pp. 195-289,
Fall 1999
DANA MUIR
University of Michigan
Department of Statistics
"Employer-Sponsored Health Insurance and Mandated Benefit Laws"
Milbank Quarterly, Vol. 77, No. 4, December
1999
GAIL A. JENSEN
Wayne State University
MICHAEL A. MORRISEY
University of Alabama
"Applying Fiduciary Duties in the Managed Care Context"
American Journal of Law & Medicine,
Vol. 26, Nos. 2 & 3,
Pp. 155-173, 2000
PETER D. JACOBSON
University of Michigan,
School of Public Health
MICHAEL T. CAHILL
Illinois Criminal Code Rewrite
& Reform Commission
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W O R K I N G P A P E R Abstracts
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"The Assault on Managed Care: Vicarious Liability, Class Actions
and the Patient's Bill of Rights"
BY: RICHARD A. EPSTEIN
University of Chicago Law School
ALAN O.
SYKES
University of Chicago Law School
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Paper ID: U Chicago Law & Economics, Olin Working Paper No.
112
Date: December 2000
Contact: RICHARD A. EPSTEIN
Email: Mailto:repstein@midway.uchicago.edu
Postal: University of Chicago Law School
1111 E.
60th St.
Chicago,
IL 60637 USA
Phone: 773-702-9563
Fax: 773-702-0730
Co-Auth: ALAN O. SYKES
Email: Mailto:alan_sykes@law.uchicago.edu
Postal: University of Chicago Law School
Frank
and Bernice J. Greenberg Professor of Law
1111 E.
60th St.
Chicago,
IL 60637 USA
Paper Requests:
Contact Marjorie Holme, Program Administrator and Discussion
Paper Coordinator, Olin Law and Economics Program, University
of
Chicago Law School, 1111 E. 60th Street, Chicago, IL 60637.
Phone:(773)702-0220. Fax:(773)702-0730.
Mailto:mholme@uchicago.edu
ABSTRACT:
The current level of public dissatisfaction has engendered a
long list of proposed reforms that seek to increase the overall
level of public regulation of Managed Care Organizations (MCOs),
by limiting the scope of preemption under ERISA, by expanding
doctrines of vicarious liability and implied agency, by adopting
a patient's bill of rights, and by exposing them to class
actions by disappointed plan participants. In response, this
paper argues that most of these reforms are ill-conceived, in
the sense that they do not hold any realistic possibility of
improving the performance of the health care system relative
to
the current set of tort and contract doctrines that are now in
place. Direct actions against MCOs for example are likely to
hamper their mission to contain costs. The usual conditions that
make vicarious liability sensible, for example, are not likely
to pertain here when physician groups have assets to meet
anticipated claims against them. And the use of class actions
runs the serious risk of introducing dubious claims for
liability based on some broadside allegations of fraud when
their proper function is restricted to allowing the amalgamation
of individual claims that would otherwise be too costly to
pursue on an individual basis. The real problem with MCOs is
that in conditions of scarcity, the public is unable to
reconcile its inconsistent demands for low premiums ex ante with
comprehensive and deep coverage ex post.
______________________________
N E W and F O R T H C O M I N G
Articles
_________________________________________________________________
"From YUPPIES to GUPPIES: Unfunded Mandates and Benefit Plan
Regulation"
University of Georgia Law Review, Vol.
34, Pp. 195-289,
Fall 1999
BY: DANA MUIR
University of Michigan
Department of Statistics
Contact: DANA MUIR
Email: Mailto:dmuir@umich.edu
Postal: University of Michigan
Department
of Statistics
701 Tappan
Street
Ann Arbor,
MI 48109 USA
ABSTRACT:
This article considers the debate and literature on unfunded
federal mandates in the context of federal health care and
pension regulation. The debate over mandated coverage,
especially in health care coverage, has more in common with the
unfunded mandates literature than just the use of the term
"mandate" -- a term now widely viewed as a pejorative.
On the theoretical level, the article considers whether the
unfunded mandates literature can explain the dichotomy between
the widespread use of plan content regulation and the consistent
defeat of plan sponsorship legislation. On the political level,
it asks whether requiring increased attention to the incremental
costs associated with proposed regulation would increase the
stability, cohesiveness, and long-range policy objectives of
the
regulation of health care and pension plans. The article argues
that, though such analysis might appear to offer some
superficial advantages, it actually would pose a significant
threat to the normative quality of legislation. The article then
identifies three categories of important policy criteria that
should govern legislative debate on these issues and shows that
the narrow consideration of incremental costs may divert
attention from those criteria.
______________________________
"Employer-Sponsored Health Insurance and Mandated Benefit Laws"
Milbank Quarterly, Vol. 77, No. 4, December
1999
BY: GAIL A. JENSEN
Wayne State University
MICHAEL
A. MORRISEY
University of Alabama
Contact: GAIL A. JENSEN
Email: Mailto:g.jensen@wayne.edu
Postal: Wayne State University
Institute
of Gerontology
87 E.
Ferry Street
Detroit,
MI 48202 USA
Co-Auth: MICHAEL A. MORRISEY
Email: Mailto:morrisey@uab.edu
Postal: University of Alabama
Tuscaloosa,
AL 35487 USA
ABSTRACT:
Although states have regulated the types of coverage that could
be sold by private insurers for half a century, the world of
health care insurance has changed dramatically in the past two
decades. Partly in response to concerns about the potentially
adverse effects of managed care policies, the number of state
and federal mandates covering small employers and managed care
plans has increased dramatically in recent years. For example,
there are currently more than 1,000 state coverage mandates.
In
the lead article of this issue, "Employer-Sponsored Health
Insurance and Mandated Benefit Laws," Gail A. Jensen and Michael
A. Morrisey describe the nature of both state and federal laws,
provide possible explanations for the emergence of these laws,
and assess their influence on private insurance markets and
individuals. Mandates are attractive to consumers who are
concerned about access to care, and to legislators who want to
protect the interests of their constituents. However, Jensen
and
Morrisey conclude that workers and their dependents may pay
indirectly for such mandates and that the costs fall
disproportionately on employees of small firms.
______________________________
"Applying Fiduciary Duties in the Managed Care Context"
American Journal of Law & Medicine,
Vol. 26, Nos. 2 & 3,
Pp. 155-173, 2000
BY: PETER D. JACOBSON
University of Michigan, School of Public Health
MICHAEL
T. CAHILL
Illinois Criminal Code Rewrite & Reform Commission
Contact: PETER D. JACOBSON
Email: Mailto:pdj@umich.edu
Postal: University of Michigan, School of Public Health
109 Observatory
Ann Arbor,
MI 48109-2029 USA
Phone: 734-936-0928
Fax: 734-764-4338
Co-Auth: MICHAEL T. CAHILL
Email: Mailto:mtcahill@hotmail.com
Postal: Illinois Criminal Code Rewrite & Reform Commission
188 West
Randolph
Suite
407
Chicago,
IL 60601 USA
ABSTRACT:
In this Article we describe a process, based on fiduciary duty
principles, for resolving potential conflicts of interest
arising in managed care and for addressing the mutual antagonism
between physicians and attorneys. One current topic of legal
debate is whether courts should analyze managed care issues
under the rubric of tort or contract law. Although both tort
and
contract are, to some extent, necessary components of a legal
regime in managed care, they are not sufficient either
individually or in tandem to resolve the types of conflicts and
disputes presented in managed care.
As an alternative, we propose a regime rooted in the concept
of fiduciary duty. Fiduciary relationships are particularly
important in medical care where the parties are unable to
foresee the conditions under which one act produces better
results than another, and where the parties lack adequate
information to assess the quality of care.
The underlying justification for using the fiduciary duty
model is that a patient's trust in his or her physician is the
foundation of a morally acceptable health care system. Patients
expect and trust that physicians have control over the resources
needed for their care. Many aspects of this relationship of
trust-including methods of balancing social and economic
concerns and the aspects of a physician's relationship to the
managed care plan that must be disclosed to patients-are
subjects of intense dispute. The basic need for trust, though,
is incontrovertible. Absent trust, managed care cannot survive.
A fiduciary model offers a framework that preserves patient
trust while recognizing that changes in the marketplace,
including economic incentives to limit the use of health care
resources, are unavoidable, at least in the short-term. We
conclude with a discussion of law and medicine at the
Millennium, focusing on why the fiduciary approach can help
resolve the tensions unsettling health care delivery.