Applying Fiduciary Duties in the Managed Care Context

Posted: 16 Dec 2000

See all articles by Peter D. Jacobson

Peter D. Jacobson

University of Michigan School of Public Health

Michael T. Cahill

Brooklyn Law School


In this Article we describe a process, based on fiduciary duty principles, for resolving potential conflicts of interest arising in managed care and for addressing the mutual antagonism between physicians and attorneys. One current topic of legal debate is whether courts should analyze managed care issues under the rubric of tort or contract law. Although both tort and contract are, to some extent, necessary components of a legal regime in managed care, they are not sufficient either individually or in tandem to resolve the types of conflicts and disputes presented in managed care.

As an alternative, we propose a regime rooted in the concept of fiduciary duty. Fiduciary relationships are particularly important in medical care where the parties are unable to foresee the conditions under which one act produces better results than another, and where the parties lack adequate information to assess the quality of care.

The underlying justification for using the fiduciary duty model is that a patient's trust in his or her physician is the foundation of a morally acceptable health care system. Patients expect and trust that physicians have control over the resources needed for their care. Many aspects of this relationship of trust-including methods of balancing social and economic concerns and the aspects of a physician's relationship to the managed care plan that must be disclosed to patients-are subjects of intense dispute. The basic need for trust, though, is incontrovertible. Absent trust, managed care cannot survive.

A fiduciary model offers a framework that preserves patient trust while recognizing that changes in the marketplace, including economic incentives to limit the use of health care resources, are unavoidable, at least in the short-term. We conclude with a discussion of law and medicine at the Millennium, focusing on why the fiduciary approach can help resolve the tensions unsettling health care delivery.

Suggested Citation

Jacobson, Peter D. and Cahill, Michael T., Applying Fiduciary Duties in the Managed Care Context. American Journal of Law & Medicine, Vol. 26, Nos. 2 & 3, pp. 155-173, 2000, Available at SSRN:

Peter D. Jacobson (Contact Author)

University of Michigan School of Public Health ( email )

109 Observatory
Ann Arbor, MI 48109-2029
United States
734-936-0928 (Phone)
734-764-4338 (Fax)


Michael T. Cahill

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States
718-780-7901 (Phone)
718-780-0376 (Fax)


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