American Journal of Law & Medicine

FOREWORD.

It is my distinct honor and privilege to provide this Foreword to the American Journal of Law & Medicine Symposium Issue 2000, The Changing Face of Law and Medicine in the New Millennium. Indeed, healthcare law at the dawn of the new millennium is at the epicenter of the most critical underlying challenges to the ever-evolving, complex, United States healthcare system. For over 200 years, our healthcare system has been, in effect, a mixed public and private system, essentially built on a private chassis with a great deal of public funding, regulating and prodding. It also has been a profoundly federalist system, generating fifty-one health regulatory schemes.

The Articles in the Symposium offer a broad-based and thought-provoking look by some of the best contemporary thinkers in health law at the issues confronting the healthcare system as it enters the new millennium. Each article offers a perspective, to varying and lesser degrees, on where we are today and where we may be heading. My comments in this Foreword focus on several of the key issues in health law in the year 2000 that, I think, underlie many of the themes presented in the Symposium Articles. It is my hope that these brief comments will provide a useful context by which to introduce the Symposium.

I. MANAGED CARE

As we head into the new millennium, managed care is clearly at a crossroads. The optimism with which the challenge to control cost increases in healthcare was thrust upon the private sector in general, and health maintenance organizations (HMOs) in particular, in the early 1990s after the failure of the Clinton health plan was replaced by a severe pendulum swing to the other extreme of vilifying these same organizations,(1) notwithstanding the fact that they appear to have done what they were asked, at least for most of the decade.(2)

The current debate over HMO liability illustrates the old adage about throwing out the baby with the bath water. If the liability provisions of the House version of the managed care reform bill,(3) sponsored by representatives Charles Norwood (R. Ga.) and John D. Dingell (D. Mich.) are enacted, we would risk making cost-efficiency illegal in the name of patient protection.

Federally instituted Professional Review Organizations (PROs), which have operated since 1972 in the area of utilization management of healthcare services provided to Medicare beneficiaries, continue to do their work unchallenged. Their objective is to assure quality and cost-efficiency, and they continue a long history in the law of protecting peer reviewers from liability so that they can do their important and challenging work effectively.

Yet that same behavior by managed care companies is being questioned at a very fundamental level today on a variety of fronts. Indeed, Employee Retirement Income Security Act (ERISA) preemption was intended to give self-insured employers and their agents some of the same kinds of protection we give PROs. But one only has to look at the opinion of the U.S. Court of Appeals for the seventh Circuit in Herdrich v. Pegram,(4) to see where open season on managed care could lead. In effect, the Court of Appeals says that it is a breach of fiduciary duty under ERISA to implement cost-containment mechanisms.(5) Similarly, the theories espoused in the recent widely publicized class actions against HMOs also challenge fundamental managed care processes, without any link to alleged negative outcomes.

Therefore, it would be imprudent in this environment, to amend ERISA, as the Norwood-Dingell bill does, to allow unlimited damage actions under state tort law against HMOs, based on their medical management activities--with no constructive guidance on how to maintain and enhance appropriate cost-containment mechanisms and no restraint on the dismantling of current cost-efficient practices. …

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