Whodunit? Causal Responsibility of Utilization Review for Physicians' Decisions,Patients' Outcomes

For a more detailed look at the mechanisms of cost control, see Morreim E.H. , Balancing Act: The New Medical Ethics of Medicine's New Economics. Dordrecht: Kluwer Academic Publishers, 1991.

Wennberg J.E. Freeman J.L. and Culp W.J. , “Are Hospital Services Rationed in New Haven or Over-Utilized in Boston?” The Lancet 1987; 1: 1185–8; Wennberg J.E. , “The Paradox of Appropriate Care,” Journal of the American Medical Association 1987; 258: 2568–69; Burnum J.F. , “Medical Practice a la Mode,” The New England Journal of Medicine 1987; 317: 1220–22.

Banta H.D. and Thacker S.B. , “The Case for Reassessment of Health Care Technology,” Journal of the American Medical Association 1990; 264: 235–40; Woolf S.H. , “Practice Guidelines: A New Reality in Medicine,” Archives of Internal Medicine 1990; 150: 1811–18.

Wickline v. State of California, 228 Cal. Rptr. 661 (Cal. App. 2 Dist. 1986).

Wickline, at 663.

Wickline, at 671.

Wickline, at 671.

The court also noted that the decision to discharge Mrs. Wickline after only four extra days was not itself medically negligent, as expert witnesses agreed it was within the medical standard of care. Wickline, at 667.

Helvestine W.A. , “Legal Implications of Utilization Review,” IN: Gray B.H. and Field J.M. , eds. Controlling costs and changing patient care? The role of utilization management. Washington: National Academy Press, 1989, pp. 169–204, at 174.

If insurers could not retrospectively deny reimbursement, the public would suffer in the end. No insurer could sustain uncontrolled expenditures, and if they are forbidden to control them by denying payment, they would need to contain costs by limiting patients' choices of physicians. Ultimately public policy therefore favors upholding insurers' rights to refuse to cover certain medical services. Sarchett v. Blue Shield of California 729 P. 2d 267, 274 (Cal. 1987); Lockshin v. Blue Cross of Northeast Ohio, 434 N.E. 2d 754 (Ohio App. 1980); Varol v. Blue Cross and Blue Shield 708 F. Supp. 826 (E. Dist. Mich. 1989). But see Van Vactor v. Blue Cross Ass'n 365 N.E. 2d 638 (Ill. 1977).

Choate Alexander v. , 105 S. Ct. 712 (1985); Rush v. Parham, 625 F.2d 1150 (5th Cir. 1980); Harris v. McRae 448 U.S. 297 (N.Y. 1980); Maher v. Roe, 431 U.S. 464 (D.C. 1977).

Stern J.B. , “Bad Faith Suits: Are They Applicable to Health Maintenance Organizations?” West Virginia Law Review 1983; 85: 911–928; Abraham K.S. , “Judge-Made Law and Judge-Made Insurance: Honoring the Reasonable Expectations of the Insured,” Virginia Law Review 1981; 67:1151–1191, at p. 1168; McLaughlin v. Connecticut General Life Ins. Co. 565 F. Supp. 434 (Calif. 1983), at 440; Fletcher v. Western National Life Insurance Co., 89 Cal. Rptr 78 (Cal. App. 1970).

Morreim E.H. , “Stratified Scarcity: Redefining the Standard of Care,” Law, Medicine and Health Care 1989; 17: 356–367; see also Helvestine, supra note 9, at 192.

Furrow Johnson Jost and Schwartz , The Law of Health Care Organization and Finance, St. Paul: West, 1991, at 377; Hershey N. , “Fourth-Party Audit Organizations: Practical and Legal Considerations,” Law, Medicine and Health Care 1986; 14: 54–65, at 62; Varol v. Blue Cross and Blue Shield 708 F. Supp. 826 (E. Dist. Mich. 1989); Karaskiewicz v. Blue Cross and Blue Shield, 336 N.W.2d 757, 760 (Mich. App. 1983); Goodman v. Sullivan, 891 F.2d 449, 451 (2nd Cir. 1989); Rush v. Parham, 625 F.2d 1150, 1156 (5th Cir. 1980).

Wickline, at 671; see also Varol v. Blue Cross and Blue Shield 708 F. Supp. 826 (E. Dist. Mich. 1989).

Hershcy , supra note 14, at 62; Blum J.D. , “An Analysis of Legal Liability in Health Care Utilization Review and Case Management,” Houston Law Review 1989; 26:191–227, at 200.

Public hospitals are increasingly strained to care for burgeoning numbers of indigent patients who are no longer accepted at public hospitals. See Hadley J. Steinberg E.P. and Feder J. , “Comparison of Uninsured and Privately Insured Hospital Patients: Condition on Admission, Resource Use, and Outcome,” Journal of the American Medical Association 1991; 265: 374–379; Rindman A.B. Keane D. and Lurie N. “A Public Hospital Closes: Impact on Patients' Access to Health Care and Health Status,” Journal of the American Medical Association 1990; 264: 2899–2904.

Banta and Thacker , supra note 3.

Melnick S.D. and Lyter L.L. , “The Negative Impacts of Increased Concurrent Review of Psychiatric Inpatient Care,” Hospital and Community Psychiatry 1987; 38(3): 300–303; Woolf, supra note 3.

Feldstein P.J. Wickizer T.M. and Wheeler J.R.C. , “Private Cost Containment: The Effects of Utilization Review Programs on Health Care Use and Expenditures,” The New England Journal of Medicine 1988; 318: 1310–14.

Smith R.P. , “Insurance Carrier Liability as a Result of Pre-Admission Screening and Hospital Stay Guidelines,” Ohio Northern University Law Review 1985; 12: 189–212, at 200, 205; American Society of Internal Medicine, “America's Health Care System Strangling in Red Tape,” The Internist 1990; 31(8)(spec. supp.): 1–31, at 14.

Blum , supra note 16, at 199.

La. Stat. Ann. R.S. 22:657 D.

Throughout this discussion I am presuming that negligence suits against insurers are not in fact preempted by the Employee Retirement Income Security Act (ERISA) of 1982, which regulates employee pension and welfare-benefits plans. By preempting state laws on legal issues that involve employee benefits, ERISA generally limits beneficiaries of ERISA plans to federal remedies, which would allow recovery for the benefits that should have been awarded, plus some attorneys' fees. Federal remedies do not ordinarily allow punitive damages, lost wages, pain and suffering, and the like. The question whether ERISA truly precludes negligence suits from being brought under state laws has yet to be definitively resolved and, in any event, ERISA does not apply to privately purchased plans or to employer self-insurance plans. Thus, at least some suits can be brought against some insurers where their UR policies have allegedly caused adverse patient outcomes. See Hirshfeld E.B. , “Tort Considerations for Third Party Payors”, IN: Johnson K.B. Hirshfeld E.B. Ile M.L. Kelly J.T. Bierig J.R. Raskin R.D. and Fleisher L.D. , eds. Legal Implications of Practice Parameters. Chicago: American Medical Association, 1990: Pp. 55–90, at 70–72; Thomas M.C. , “Who'll Be Liable When a Patient is Injured?” Medical Economics 1991; 68(8): 57–62, at 57–58; Blum, supra note 16, at 200–215; Helvestine, supra note 9, at 187–88; DiPaola T.A. . Wrongful Denial of Health Insurance Benefits. 26 Trial 74–81 (1990); Fox D.M. and Schaffer D.C. , “Health Policy and ERISA: Interest Groups and Semiprcemption,” Journal of Health Politics, Policy and Law 1989; 14:239–260; Brown v. Blue Cross & Blue Shield of Alabama, 898 F. 2d 1556 (11th Cir. 1990).

Crane M. , “Do Third Parties Force Your Patients to Suffer?” Medical Economics for Surgeons 1991, 10(2): 23–26; Zane M. , “The Patient Could Have Died for All his HMO Cared”, Medical Economics for Surgeons 1991, 10(2): 60–62.

Berenson R. , “A Physician's Reflections,” Hastings Center Report 1989; 19(1): 12–15.

Keeton W.P. Dobbs D.B. Keeton R.E. and Owen D.G. , eds. Prosser and Keeton on the Law of Torts. 5th ed. St. Paul: West Pub. Co., 1984 (hereafter “Prosser”), at 263, 265. As an alternative to but-for language, courts and commentators have used the concept of a “substantial factor.” If one act or event was a substantial factor in bringing forth another event, then it can be called a cause-in-fact. Below, we will distinguish this notion of a factual cause from a legal, or “proximate,” cause.

Hart H.L.A. and Honorée T. Causation in the Law. 2nd ed. Oxford: Clarendon Press, 1985, at 142 ff.

Hart and Honorée, supra note 28, at 2.

Hart and Honorée, supra note 28, at 157.

Hart and Honorée, supra note 28, at 187–192.

Blum J. , “Economic Credentialing: A New Twist in Hospital Physician Appraisal Processes,” Journal of Legal Medicine 1991, 12: 427–475; Slomski A.J. , “Hospitals Wield a Heavy Club Against High-Cost Doctors,” Medical Economics 1991; 68(191:57–69.

The action is not voluntary because the person “is in a predicament which limits his area of choice by rendering one alternative less eligible.” Hart and Honorée, supra note 28, at 157.

Hart and Honorée, supra note 28, at 157.

Hillman A.L. , “Financial Incentives for Physicians in HMOs: Is There a Conflict of Interest?” The New England Journal of Medicine 1987; 317: 1743–48; Hillman A.L. Pauly M.V. and Kerstein J.J. , “How Do Financial Incentives Affect Physicians' Clinical Decisions and the Financial Performance of Health Maintenance Organizations?” The New England Journal of Medicine 1989; 321: 86–92; Levinson D.F. , “Toward Full Disclosure of Referral Restrictions and Financial Inventives by Prepaid Health Plans,” The New England Journal of Medicine 1987; 317: 1729–1731.

Egdahl R.H. and Taft C.H. , “Financial Incentives to Physicians,” The New England Journal of Medicine 1986; 315: 59–61.

Hart and Honorée, supra note 28, at 53–54, 125.

Wilson v. Blue Cross of Southern Cal., 271 Cal. Rptr. 876, 883 (Cal. App. 2 Dist. 1990).

Zalta E. , “Utilization Review Works—Most of the Time,” Medical Economics 1991; 68(13): 23–27; Institute of Medicine, “Controlling Costs and Changing Patient Care? The Role of Utilization Management,” IN: Gray B.H. and Field M.J. , eds. Washington: National Academy Press, 1989, at 77.

Hammonds v. Aetna Casualty & Surety Company, 243 F. Supp. 793, 803 (Ohio 1965).

See, e.g., Teale v. American Mfrs. Mut. Ins. Co., 687 S.W. 2d 218 (Mo. App. 1984).

In Wilson v. Blue Cross, for example, The plaintiff alleged that Western Medical, an independent utilization reviewer, induced his insurer to break its contract with the patient; Wilson, at 881. We will examine the Wilson case in detail, below.

As noted by one commentator, “the issue in tort law is not, whether the original tortfeasor had the principle or sole responsibility for the ‘victim's welfare,’ but only what was the scope of the foreseeable risk created by the original tortious act. Therefore, this economic pressure on the treating physician is sufficient proximate cause to give rise to liability on the part of the insurers.” Smith, supra note 21, at 203.

Wickline, at 671.

Wilson v. Blue Cross of Southern Cal. 271 Cal. Rptr. 876 (Cal. App. 2 Dist. 1990).

Further, the court offers somewhat confusing bases on which to distinguish the Wilson from the Wickline case. In Wickline, the court said, the state's UR process was not pursuant to a private contract, but rather was the product of the legislation creating Medi-Cal. Ordinarily parties are to be responsible for the injuries they cause, but this usual standard of tort can be suspended by the state for good reasons of public policy. By statute, Medi-Cal was permitted to use UR as a basis on which to deny benefits, so long as care comports with the “usual standards of medical practice in the community” (at 879–80). Therefore, the court concluded, Medi-Cal was not governed by traditional tort standard. Unfortunately, the court's discussion is a bit perplexing here, because in medical malpractice litigation, the tort standard of care just is the “usual standards of medical practice in the community.” In this sense, we might say that the state did not exempt itself from tort standards, but wrote them into its own UR provisions. Therefore, it is unclear in just what sense the Wilson court believes that Medi-Cal utilization review is somehow exempt from the usual tort standards.

Wilson, at 883.

Brennan T.A. , “Causal Chains and Statistical Links: The Role of Scientific Uncertainty in Hazardous-Substance Litigation,” Cornell Law Review 1988; 73: 469–533, at 478.

Hart and Honorée, supra note 28, at 13, 32 ff.; Brennan, supra note 48, at 485.

Prosser, supra note 27, at 264, 268.

Prosser, supra note 27, at 267. Similarly, Keeton points out that: “Factual causation refers to the requirement that the act and the injury be related. Legal causation refers to the requirement that the act and the injury be reasonably related.” See W.P. Keeton, “Causation,” 28 So. Texas Law Review 1986; 28: 231–240, at 232. See also: King J.H. Jr. , “Causation, Valuation, and Chance in Personal Injury Torts Involving Preexisting Conditions and Future Consequences,” The Yale Law Journal 1981; 90:1353–1397, at 1353–55.

See Brennan, supra note 48, at 491. We should at least note that there are some legal scholars who deemphasize the role of fault in tort litigation. For the so-called “economic analysts”, the purpose of tort law is to maximise wealth and minimize social costs. Legal “blameworthiness”, with its underlying tone of moral blameworthiness, plays little or no role on this view. Rather, we look for which risks are worth avoiding, and which party can most easily and cheaply avoid them. Under such an approach, one's notion of causality is also modified from more traditional concepts. See, e.g., Wright R.W. , “Actual Causation vs. Probabilistic Linkage: The Bane of Economic Analysis,” Journal of Legal Studies 1985; 14: 435–56.

Keeton, supra note 51, at 232. The most notable exception to the requirement of fault is strict liability, which operates independently of fault. A corporation can be liable for a defective product, no matter how careful or blameless its conduct. Vicarious liability similarly operates with little requirement of fault, although when, for example, an employee has behaved carelessly, we might find some fault in the way that the employer selected or supervised him. In the main, however, tort litigation is based on the notion that the costs of injuries should be levied on those who did wrong.

In Commonwealth v. Hall, 78 N.E.2d 644 (Mass. 1948), a mother placed her illegitimate daughter in the attic to die of starvation and dehydration. According to the Massachusetts Supreme Court, “‘if death is the direct consequence of the malicious omission of the performance of a duty (as of a mother to nourish her infant child) this is a case of murder. If the omission was not malicious and arose from negligence only, it is a case of manslaughter’ … By the law of this Commonwealth the defendant was under a duty to provide for the support and maintenance of her child notwithstanding its illegitimacy” (at 647). The court further circumscribed causal responsibility on the basis of who had the greatest duty. “The primary duty is on the mother, and she is relieved of that duty only to the extent that aid can be obtained from the father” (at 648) Ultimately, the mother was found guilty of second degree murder, while the father was not even tried. Thus, only the one who antecedently had the duty was the cause of the death. See also Lewis v. State of Georgia, 72 Ga. 164 (1883); People v. McDonald, 1 N.Y.S. 703 (1888). See also Justice Scalia's discussion of this point in Cruzan v Director, Missouri Dept. of Health, 110 S.C. 2841 (1990), at 2861.

Madison v. Brantley, 395 S.E.2d 190 (S.C. App. 1990).

Madison v. Brantley, 395 S.E.2d 190 (S.C. App. 1990).

See Barrow v. State, 188 P. 351 (Okla. App. 1920); People v. Phillips, 414 P.2d 353 (Cal. 1966).

It would not be his duty to provide antibiotics if the patient had requested that he use no life-prolonging treatments. Further, one can argue that the physician has no legal or moral duty to provide treatments that are futile. See Brett A.S. and McCullough L.B. , “When Patients Request Specific Interventions,” The New England Journal of Medicine 1986; 315: 1347–1351; Meisel A. , “Legal Myths About Terminating Life Support,” Archines of Internal Medicine 1991; 151: 1497–1502.

In these two cases we might, morally, be inclined to suppose that those who knew of the patient's or child's plight could and should have helped, and that therefore they were at least partly the cause of his death. And yet, if we were to ascribe causality in this way, we could only do so by adopting the view of causality offered here. We would be arguing that because these other people also had a (moral) duty, they therefore also bear causal responsibility. It is because we do not wish to hold such a moral obligation as a binding legal duty that we would not then take the further step of holding the neighbors or other physicians legally the cause of the death.

Prosser, supra note 27, at 264.

We also might consider other policy matters, such as the proximity between the act and the consequence, the foreseeability of the harm, public policies for preventing harm, the costs of imposing a duty, and the like. See Wickline, at 670.

Prosser, supra note 27, at 263–64, 273.

Prosser, supra note 27, at 273. This view is echoed in Judge Andrews' dissent in Palsgraf v. Long Island R. Co. (162 N.E. 99 (N.Y. 1928)). Any event has many causes, and each is essential in that without each, the events that followed would not have been the same. Proximate causation, however, takes us beyond these natural consequences of an event. “What we do mean by the word ‘proximate’ is that, because of convenience, of public policy, of a rough sense of justice, the law arbitrarily declines to trace a series of events beyond a certain point. This is not logic. It is practical politics” (at 103).

Commonwealth v. Hall, at 648.

Epstein R.A. , “Market and Regulatory Approaches to Medical Malpractice: The Virginia Obstetrical No-Fault Statute,” Virginia Law Review 1988; 74:1451–1474.

Smith , supra note 21, at 199–200.

Prosser, supra note 27, at 312.

Hart and Honorée, supra note 28, at 29, 41.

Hart and Honorée, supra note 28, at 37–38.

Hart and Honorée, supra note 28, at 38.

Morreim E.H. , “Economic Disclosure and Economic Advocacy: New Duties in the Medical Standard of Care,” The Journal of Legal Medicine 1991; 12: 275–329.

Wickline, at 671.

Wickline; see also Smith v. Yohe, 194 A.2d 167 (Pa. 1963); Wilkinson v. Vesey, 295 A.2d 676 (R.I. 1972); Hicks v. United States, 368 F.2d 616 (1966); Peterson v. Hunt, 84 P.2d 999 (Wash. 1938); Price v. Neyland, 320 F.2d 674 (D.C. 1963); Kingston v. McGrath, 232 F.2d 495 (Idaho 1956).

Becker v. Janinski, 15 N.Y.S. 675 (N.Y.C. 1891); Ricks v. Budge, 64 P.2d 208 (Utah 1937); A.J. Lairson, “Reexamining the Physician's Duty of Care in Response to Medicare's Prospective Payment System,” Washington Law Review 1987; 62: 791–812, at 794–805.

Morreim , Stratified Scarcity, supra note 13. See also E.H. Morreim, Balancing Act, supra note 1; Morreim E.H. , “Cost Containment and the Standard of Medical Care,” California Law Review 1987; 75: 1719–63.

Morreim E.H. , “Gaming the System: Dodging the Rules, Ruling the Dodgers,” Archives of Internal Medicine. 1991; 151:443–447.

Morreim , Stratified Scarcity, supra note 13; Morreim E.H. , Balancing Act, supra note 1; Morreim E.H. , “Rationing and the Law,” IN: Rationing America's Care (Brookings Institution, forthcoming, 1991).

La. Stat. Ann. R.S. 22:657 D.

Hughes v. Blue Cross of Northern Calif., 245 Cal. Rptr. 273 (Cal. App. 1988).

Hughes, at 279.

Some studies specifically look the ways in which UR operations assemble their substantive review criteria. One such investigation compared the criteria that are used by various Peer Review Organizations (PROs), established by Congress to assess the quality and appropriateness of medical care funded by Medicare. For the three procedures studied—carotid endarterectomy, cataract removal, and cardiac pacemaker implants—the investigators determined that PROs differed widely from each other, and from guidelines promulgated by medical subspecialty groups. See S.E. Kellie and J.T. Kelly, “Medicare Peer Review Organization Preprocedure Review Criteria: An Analysis of Criteria for Three Procedures,” Journal of the American Medical Association 1991; 265:1265–1270.

Wickline, at 671.

Field M.J. and Gray B.H. , “Should We Regulate “Utilization Management?” Health Affairs 1989; 8:103–112, at 106; L. Page, AMA, “Insurers Agree on Guidelines for Hospital Admission Utilization Review,” American Medical News 7/21/89, pp. 3, 34, 35; “Here's the Text of Agreement on Hospital Utilization Review,” American Medical News 7/21/89, p. 34.

Maryland and Arkansas, for example, mandate that UR agencies be certified. Certification requires that the UR agency submit information concerning its procedures, staffing level and qualifications, appeal mechanisms, and the like. Maryland also requires that UR firms stay open 24 hours a day, in order to respond to requests for authorization. Minnesota requires that preauthorization decisions be rendered within ten business days. The Louisiana statute provides that review should be conducted “in accordance with nationally accepted medical criteria,” and requires that UR be timely, preferably within two days. See Md. Code Ann. § 19–1301 et seq.; Minn. Stat. Ann. § 72 A 20 (4a); La. Stat. Ann. R.S. 22:657D; Helvestine, supra note 9, at 186–87; Winslow R. , “Effort to Curb Health Costs is Hitting Snags,” Wall Street Journal 8/8/91, B-1, B-4.

Helvestine, supra note 9, at 177.

Brown v. Blue Cross & Blue Shield of Alabama 898 F. 2d 1556 (11th Cir. 1990), at 1562.

Brown , at 1565.

Brown , at 1566–67.

Morreim , “Economic Disclosure and Economic Advocacy,” supra note 71; Morreim, Stratified Scarcity, supra note 13; Morreim, “Rationing and the Law, supra note 77.

Chew v. Meyer, 527 A.2d 828 (Md. App. 1987).

Chew v. Meyer, 527 A.2d 828 (Md. App. 1987), at 832.

“Even if the risks inherent in the treatment are minimal, the financial pressure on the patient to forego treatment makes it particularly important for the physician to explain carefully the medical risks of foregoing the treatment.” Helvestine, supra note 9, at 192.

Hershey, supra note 14, at 61.

Hershey, supra note 14, at 63.

Hirshfeld, supra note 24, at 78.

For further discussion of the “last clear chance” doctrine, see Restatement (Second) of Torts, § 479–480; Davies v. Mann, 152 Eng. Rep. 588 (1841); Cartwright v. Harris, 400 N.E.2d 1192 (Ind. App. 1980).

Hershey, supra note 14, at 60.

The physician is, of course, obligated to inform the patient carefully regarding the consequences of refusing a recommended intervention. See Truman v. Thomas, 611 P.2d 902 (Cal. 1980). Where patients have been properly informed, courts regard their refusals to follow medical advice as reason to hold them causally and legally responsible for any problems of their own making. See Sorina v. Armstrong, 554 N.E.2d 943 (Ohio App. 1988).

Grumet G.W. , “Health Care Rationing Through Inconvenience: The Third Party's Secret Weapon,” The New England Journal of Medicine 1989; 321:607–611, at 608–9.

American Society of Internal Medicine, supra note 21, at 8–10.

Helvestine, supra note 9, at 191.

Blum, supra note 16, citing Wickline, at 199.

For examples of UR “hassles”, see American Society of Internal Medicine, supra note 21; Crane, supra note 25; G.A. Moore, “How I Fight the Preauthorization Racket,” Medical Economics 1990; 67: 54–56; Zane, supra note 25; Zalta, supra note 39.

Novack D.H. Detering B.J. and Arnold R. , “Physicians' Attitudes Toward Using Deception to Resolve Difficult Ethical Problems,” Journal of the American Medical Association 1989; 261: 2980–2985; Morreim, Gaming the System, supra note 76.

Institute of Medicine, supra note 39, at 77; Zalta, supra note 39.

Morreim, Gaming the System, supra note 76.

In the Wickline case, for example, the physicians were not asking for further hospitalization, they were asking for more money. If they had kept Mrs. Wickline in the hospital for another four days, she probably would not have received an enormous hospital bill. Or if she had, quite likely she would not have had to pay it. She was, after all, medically indigent, as certified by her eligibility for Medicaid insurance. Hospitals are often reluctant to spend time and money pursuing collections that are known from the start to be poor prospects. Much more likely, the hospital would simply have incurred yet another sum of uncompensated care. That consequence is not insignificant, of course, because hospitals must shepherd their resources very carefully. Still, while it would be foolish to ignore the serious problem of hospitals' rising rates of uncompensated care, nevertheless in individual cases one can often devise a way for the patient to receive what he or she needs.

Imperiale T.F. Sicgal A.P. Crede W.B. and Kamens E.A. , “Preadmission Screening of Medicare Patients: The Clinical Impact of Reimbursement Disapproval,” Journal of the American Medical Association 1988; 259: 3418–3421.

For further discussion of the limits of advocacy, see Morreim, Balancing Act, supra note 1, Chapter VI.