Managed Process, Due Care: Structures of Accountability in Health Care

Abstract

Almost unnoticed, a new kind of adjudication system has appeared in American law. In forty-one states and the District of Columbia, special entities have been established to resolve contract and tort claims. State law created and mandates each system; these are not arbitrations agreed to by contract between the parties. Despite their public nature, however, these systems are not offered or operated by courts; the public function of adjudication is entirely outsourced to private actors. The decision-makers are neither elected nor appointed, nor are they public sector employees; they work in private companies. Most do not write opinions, and they neither establish nor follow precedent. These new entities are the external review systems set up to resolve disputes between patients and managed care organizations (MCOs), which arise when such organizations deny coverage for medical treatment, services, or equipment that the patient, generally upon the recommendation of a physician, believes to be medically necessary. When pre-authorization for care is required, the coverage decision about whether to pay also becomes in effect a treatment decision that determines whether the care will ever be rendered. The payor's decision merges with and trumps what used to be solely the treating physician's decision. It is this massive shift in the ramifications of these disputes that has caused lawmakers to pay much greater attention to the processes for resolving them. This Article examines how legal, political, and economic change produced a new adjudicatory mechanism for resolving disputes between patients and MCOs. It is in essence a case study of the multiple determinants of procedure in a particular field-health law-at a time of rapid change in the underlying industry. We will see how these changes, plus a broader cultural shift toward less acceptance of professional omniscience, are reshaping our core concepts of medical decision-making in an increasingly corporate environment. Through close analysis of this example, we can also learn a significant amount about newly-emerging models of procedural justice.