Tort Liability of Third Party Payors: Wilson v. Blue Cross of Southern California

Abstract

INTRODUCTION|Traditionally, a patient's financial circumstances could not factor into a physician's determination of the patient's course of treatment. However, this standard developed years ago when patients paid physicians directly on a fee-for-service basis. Today, physicians are primarily reimbursed through third party payors insurance companies, Medicare, and Medicaid programs.|Under the present system, third party payors make independent decisions regarding what treatment they believe is medically necessary to provide for their plan members under the plan members' particular plan. When a third party payor determines that any further treatment of a patient is unnecessary, the payor informs the hospital or physician that it will finance no further treatment for the patient. If at that time the physician stops medically necessary treatment, the legal result is clear: the physician will be held liable for any harm that the patient suffers because of this termination of treatment. What is not so clear are the legal consequences the third party payor may face when it determines any additional treatment of a patient is medically unnecessary, and therefore decides to stop funding any further treatment. If the payor's decision is arbitrary or unreasonable, the question arises as to whether the payor may be held responsible...