HMO and Managed Care Law

IPA model HMO can be vicariously liable for a physician's medical malpractice - Hinterlong v. Baldwin, 720 N.E.2d 315 (Ill.App. 2 Dist. 1999)

Plaintiff brings this lawsuit as the executor of her mother's estate.  She claims that her mother died as the result of defendant's physician's negligence in diagnosing and treating her mother's heart disease.  Defendant is organized as an independent practice organization model managed care plan (MCO) which contracts with a physician group to provide medical services for the employees insured by the plan it administers.  Plaintiff initially filed in state court and defendant tried to remove the action to federal court, claiming exclusive jurisdiction because of ERISA preemption the state court action.  The federal court refused jurisdiction, finding that ERISA preemption was inapplicable in this case.  Despite this finding the federal court, the state district court judge dismissed plaintiff's claim as preempted by ERISA.  Plaintiff appealed and this case is the ruling in that appeal.

Before ruling on the underlying vicarious liability issue, the court reviewed the defendant's status as an ERISA worker benefit plan (EWBP).  Defendant argued that since it administered a EWBP for plaintiff's mother's employer, it was itself an EWBP.  The court discussed a growing controversy over whether an MCO that contracts with physicians to provide care is an EWBP at all, or just a service provider to the plan itself, which is run by the employer, even if administered by the MCO.  Since service providers have no ERISA immunity, this is an important issue that could potentially limit ERISA immunity to only pure insurance plans and not plans that act as brokers for medical services.  The court found that it did not have to rule on this issue to resolve the case and assumed, only for the purpose of this appeal, that defendant was an EWBP.  The court next conducts a through review of the cases dealing with vicarious liability claims under ERISA and finds that such claims do not interfere with the interests protected by ERISA preemption.  Relying on Lancaster v. Kaiser Foundation Health Plan of Mid-Atlantic States, Inc., 958 F.Supp. 1137, 1149-50 (E.D.Va.1997), the court holds that plaintiff's claims were not preempted by ERISA and remanded for a new trial.