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HMO and Managed Care Law

MCO plan members cannot force MCOs to disclose physician incentive schemes - Ehlmann v. Kaiser Foundation Health Plan of Texas, 198 F.3d 552 (5th Cir. 2000)

Plaintiffs in this case are members of Kaiser Foundation Health Plan of Texas.  They seek to force Kaiser to provide plan members with detailed information about the physician incentive schemes that defendant allegedly uses to manipulate physician decisionmaking to better serve defendant's interests.  They base their claim on ERISA's incorporation of common law fiduciary duties and on specific ERISA statutory disclosure requirements.  Their claim is a logical extension of Shea v. Esensten, 107 F.3d 625 (8th Cir. 1997), cert. denied, 118 S.Ct. 297 (1997) in which the 8th Circuit ruled that a health plan violated its duty to disclose material information when it withheld that the patient's physician was penalized for making referrals to specialists.

The district court dismissed and plaintiff appealed.  The Circuit court first distinguished Shea as depending on the special facts of the case, i.e., that there was a specific reason that the physician incentive plan mattered to plaintiff in Shea - he asked to be referred to cardiologist because classic symptoms and family history of cardiac disease, but was denied the referral because of the incentive scheme.  The court does not reject this duty to disclose when a specific patient's requests make the information material, but it declined to make this a general duty.  The court also disagreed with plaintiffs' reading of ERISA, focusing on the specific disclosure sections of ERISA rather than the general fiduciary duty sections.  The court held that since ERISA provided a list of specific disclosures that plans had to make, this list was exhaustive and precluded a duty to make unlisted disclosures to the plan subscribers in general.  Based on this reading, the court affirmed the dismissal of plaintiffs' action and found that ERISA qualified MCOs do not have a general duty to inform plan members of their physician incentive schemes.  Interestingly, the court was silent on whether the fiduciary duty implicit in the physician patient relationship would require the physicians to inform the patient of the incentive schemes, independent of any duty by the plan.

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