Patient Advocacy and Termination from Managed Care Organizations. Do State Laws Protecting Health Care Professional Advocacy Make Any Difference?

• Publication year: 2021

82 Nebraska L. Rev. 508. Patient Advocacy and Termination From Managed Care Organizations. Do State Laws Protecting Health Care Professional Advocacy Make Any Difference?

508

Linda C. Fentiman*

Patient Advocacy and Termination From Managed Care Organizations. Do State Laws Protecting Health Care Professional Advocacy Make Any Difference?

TABLE OF CONTENTS

I. Introduction ....................................................... 510
II. A Road Map ........................................................ 512
III. What is Advocacy ................................................. 513
A. Fiduciary Duty ................................................ 513
B. Health Care Professionals' Viewpoint .......................... 515
C. Common Law Views on Health Care Professionals'
Duty to Advocate .............................................. 516
D. Advocacy - A Problem of Definitions ........................... 519
E. How Common Is Health Care Professional
Deselection ................................................... 522
F. National Health Care Professional Data Banks .................. 525
IV. Statutory and Common Law Protections for Health
Care Professionals Who Advocate for Their Patients ................ 527
A. Legislative Action ............................................. 527
1. Explicit Protection of Advocacy ............................. 527

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2. Implicit Protection of Advocacy ............................. 532
a. By Statutes .............................................. 532
i. Prohibition of Retaliation Based on
Rendering Mandated Services ......................... 532
ii. Statutes Prohibiting "Gag Clauses" .................. 534
iii. Statutes Establishing Procedural Due
Process for Health Care Professionals ............... 535
iv. Statutes Prohibiting Financial Incentives
to Control Costs .................................... 540
b. Other Statutory Protections for Advocacy ................. 541
B. Common Law Protection for Advocacy ............................. 542
1. Fiduciary Duty to Advocate .................................. 542
2. Implied Covenant of Good Faith and Fair
Dealing ..................................................... 544
3. Common Law Right to Fair Procedure .......................... 546
4. Additional Common Law Theories .............................. 547
V. Barriers to Enforcement of Advocacy Protection Laws ................ 550
A. Federalism ...................................................... 550
1. ERISA Preemption ............................................. 550
2. Medicare Managed Care Preemption ............................. 562
3. Procedural Enforcement Obstacles ............................. 564
a. Does the Statute Create a Private Cause of
Action? ................................................... 564
B. Burdens of Production and Persuasion ............................ 567
C. Discovery ....................................................... 570
1. Practical Burdens of Litigation .............................. 572
VI. How Effective Are Advocacy Protection Laws - Is More
Needed? ........................................................... 573

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"Charlie, you were my bruddah. You shoulda looked out for me a little bit. I coulda had class, I coulda been a contendah. . ."

Marlon Brando, playing Terry Malloy in ON THE WATERFRONT (Columbia 1954).(fn1)

I. INTRODUCTION

This article examines the impact of state laws designed to protect the role of health care professionals as advocates for their patients on American health care delivery during the last decade. During the 1990's managed care spread rapidly, largely replacing the fee for service health care system,(fn2) and changing both the practice and the perception of providing health care services in America. As horror stories circulated of risk-sharing arrangements that lead to denial of medically necessary care,(fn3) Draconian utilization review,(fn4) "gagging" of physicians in their communications with patients,(fn5) and as many patients began to have more impersonal and transient relationships with their doctors, there was an inevitable backlash against managed care's goals of cost containment and the more active and effective manage

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ment of patient care.(fn6) As part of this backlash, many states enacted statutes to protect health care professionals (HCPs) who advocated on behalf of their patients, declaring that HCPs could not be terminated from a managed care organization (MCO) or otherwise penalized because of their advocacy.(fn7)

Now that we are several years into this counterattack on managed care, it is appropriate to consider whether these state advocacy protection laws have made any difference, either for health care professionals or for the patients on whose behalf they are advocating.(fn8) A broad range of possibilities is apparent. One could view advocacy protection laws as a cheap and meretricious political fix, adopted by politicians anxious to demonstrate their concern to the electorate without really doing anything about systemic problems with managed care. One could decide that these laws are largely irrelevant, since changes in the healthcare marketplace and the enormous wave of public opinion against managed care have already caused managed care organizations to eliminate their most offensive cost-containment strategies.(fn9) Or one could conceive of these laws as scripts for modern "morality plays," providing updated versions of frontier dramas in the tradition of the shoot-out at the OK Corral.(fn10) Pursuing the metaphor further,

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one could envision these statutes functioning as "the equalizer," altering the power balance between MCOs, HCPs, and their patients, to ensure that HCPs will effectively protest denials of medically necessary and appropriate care, and thus fulfill their fiduciary obligation to act on the patient's behalf, without giving in to economic pressures to comply with MCO rules. In this scenario, advocacy protection laws would both vindicate the rights of individual HCPs who have been terminated and serve as a powerful deterrent to inappropriate MCO cost containment strategies, by encouraging HCPs to be forceful advocates for necessary patient care, knowing that their conduct will be protected.

II. A ROAD MAP

This article will explore the history, implementation, and impact of state advocacy protection statutes. The article is in four major parts. The first Part provides an introduction to the concept of advocacy, both as it was understood at common law, and as it is presently interpreted by HCPs and MCOs. The article will also examine the phenomenon of HCPs' "deselection," that is, the termination or nonrenewal of their contracts with MCOs. In this context, the article will highlight the distinction between anecdote and data and emphasize the paucity of hard evidence to support either side's version of the truth about these HCP-MCO interactions.

The second part will survey the legislative and common law landscape surrounding HCP advocacy. The article will look first at state statutes that explicitly protect HCP advocacy on behalf of patients, and then consider the large group of statutes that provide supplemental support for such advocacy. These include laws that implicitly protect such advocacy, by providing other "Managed Care Bill of Rights" protections for patients, providing procedural due process protections for HCPs who are deselected from an MCO, or otherwise attempting to rein in cost containment efforts by MCOs. The article will also consider other federal and state statutes that could be used by HCPs as part of their arsenal in suits against MCOs. Finally, the article will address common law protections for HCP advocacy, examining the cases that have been brought by HCPs to challenge their deselection by an MCO, as well as additional common law theories that might be used creatively on behalf of deselected HCPs.

The third part will review the implementation of state advocacy protection statutes. Federal preemption is an important potential hurdle to litigants, as both ERISA(fn11) and the Medicare program(fn12) have arguably carved out a significant regulatory domain free from state

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incursion. In addition, there are state law interpretation problems for an HCP litigant, as well as burden of proof and discovery issues that may make it difficult for deselected HCPs to prevail against MCOs that no longer want their services.

The fourth part will consider whether state advocacy protection laws make any difference for HCPs or their patients. This paper will evaluate the efficacy of these laws, and conclude that they have a limited in terrorem effect, making it somewhat harder for MCOs to terminate HCPs who advocate for their patients. After concluding that current legal rules are inadequate to ensure that health care professionals will vigorously advocate for their patients, I suggest alternative means to encourage and support patient advocacy, which will improve the resolution of disputes among managed care organizations, health care professionals, and patients, and will enhance the quality of health care delivery.

III. WHAT IS ADVOCACY?

A. Fiduciary Duty

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Defining the concept of advocacy is critical to exploring the relationship between health care professionals and their patients. An advocacy definition is also needed to understand the dynamic underpinnings of the struggle between HCPs and MCOs over who should determine the care a particular patient needs and will receive. Organized American medicine has long believed that no outsider should interfere with the physician's relationship to the patient.(fn13) In part this reflects ancient notions of a physician's special, fiduciary obligations to the patient,(fn14) which Hans Jonas has described as a "sa

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cred trust."(fn15) In part, the...