MCOS MUST BEWARE OF VICARIOUS LIABILITY

To the editor: Regarding the Nov. 10 article, "Plans Rely on ERISA Shield," the managed care industry needs to be more concerned with recent court trends on ERISA pre-emption than David Manoogian's fear of legislation by "wily state rascals."

Unless devolutionists somehow reanimate the Articles of Confederation, state laws cannot override federal.

Managed care organizations are protected by the ERISA pre-emption when a utilization reviewer commits an error of judgment, when the MCO itself credentials a negligent provider, et cetera. The courts say that these steps are not subject to state law because they relate to the way in which plan benefits are administered. MCOs remain at risk, however, where a provider is negligent and the facts warrant a judicial finding that the MCO was vicariously liable because it held out to the claimant that the provider was its agent or employee.

Increasingly, plaintiffs' lawyers allege vicarious liability, and defendants' lawyers must show that providers acted for themselves, not as agents or employees of the managed care organization.

Nathaniel B. Taft

White Plains, N.Y.