Plaintiffs' lawyers have turned from suing individual doctors to suing a variety of health care insurers. The resulting class action lawsuits do not overtly challenge the legitimacy or wisdom of managed care as a means of delivering health services, but many analysts believe that the success of the suits would severely constrain the ability of health care providers to offer managed care.

A March 10 forum at AEI sponsored by Amgen, Inc., set out to discuss the likely effects of the legal challenges on health care insurers and patients. Three law experts, Clark C. Havighurst, Daniel E. Troy, and William M. Sage, presented their views to lead the discussion.

Troy, a partner at the Washington, D.C., law firm of Wiley, Rein & Fielding and an AEI associate scholar, began by providing some background on the issue. Plaintiffs in the lawsuits argue that insurance companies have sacrificed quality of care to maximize profits. For instance, companies may deny claims they deem unnecessary or second-guess prescription requests, even if in their initial contracts they had promised to provide "all medically necessary care." The lawsuits do not aim to remedy individual complaints; as class action cases, they seek to address the broader issue of how managed care companies operate in relation to physicians and patients.

Havighurst, the William Neal Reynolds Professor at Duke University School of Law and an AEI adjunct scholar, argued that the managed care providers, not the plaintiffs, should win the suits, although he did criticize the contracts of the insurers. The insurers do not sacrifice quality in bad faith. When these contracts were first presented to the public years ago, the populace understood that there would be second-guessing on marginally necessary care. Nevertheless, Havighurst insisted that, in the future, health care companies ought to provide detailed contracts and that the courts should vigilantly enforce them.

Sage, an associate professor of law at Columbia University, agreed that the plaintiffs' underlying complaints were without merit. He then highlighted the opposed relationship between managed care companies and physicians. Whereas the companies focus on profits and cutting costs, physicians strive for quality and often become lawyer-like advocates for the patients. Sage believes that we should shift liability to the health care enterprise so that companies will balance their pursuit of profits with a concern for quality.

Finally, the three panelists commented on the future effects of the class action lawsuits on managed care companies. Sage predicted that the suits would not affect the health care industry as much as tobacco lawsuits affected the tobacco industry, but that the suits might stimulate discussion about the manner in which managed care companies operate. He also asserted that the future of health care will depend greatly upon the economy.

Havighurst said that a health care crisis could be building because the companies rest upon a shaky legal foundation. The lawsuits will call attention to those flaws and thus highlight the importance of detailed contracts between provider and patient.

Troy stated that he had no faith in the courts to resolve this problem and that he feared the health care situation would only become worse. He predicted that public policy would vacillate between promoting expensive, high-quality care, which will keep poorer people from obtaining health care, and inexpensive, low-quality care that is uniformly available.