Vicarious Liability: Relocating Responsibility for the Quality of Medical Care

Abstract

This article recommends statutory language to establish as a general rule that health plans are vicariously, and exclusively, liable for medical malpractice and other torts committed by health care providers whom they procure to treat their enrollees. Since this would be only the default rule, health plans would be allowed to shift liability risks downstream to subcontractors in a better position to bear responsibility for the quality of care -- who will in most cases also be responsible for the costs of the promised medical services. This new, more nuanced version of what has previously been called "enterprise liability" is predicated on the policy view that health plans should be presumptively accountable for the quality of care just as they are currently accountable for the cost of it. A major theme is that giving managers of care a new, stronger reason to be concerned about quality would go far toward aligning the interests of plans, providers, and patients, reducing severe tensions that have so far caused managed care to fall (far) short of expectations.

After characterizing the managed-care revolution as "half-baked," the article stresses the need for quality improvement throughout the entire health care industry and thus for more acceptance of corporate responsibility for clinical care. It then explains the proposal and advocates its adoption, specifically allaying concerns that vicarious liability would adversely affect the professionalism of physicians. The current law on vicarious liability is examined to show why legislation is needed even though courts are increasingly exposing health plans to various forms of liability. The article also briefly addresses predictable objections to relying on tort law as a source of incentives to improve the quality of care.