Establishing New Legal Doctrine in Managed Care: A Model of Judicial Response to Industrial Change

37 Pages Posted: 29 Nov 1999

See all articles by Peter D. Jacobson

Peter D. Jacobson

University of Michigan School of Public Health

Scott D. Pomfret

Ropes & Gray LLP - Boston

Abstract

Courts are struggling with how to develop legal doctrine in challenges to the new managed care environment. In this article, we examine how courts have responded in the past to new industries or radical transformations of existing industries. We analyze two historical antecedents, the emergence of railroads in the 19th century and mass production in the 20th century, to explore how courts might react to the current transformation of the health care industry.

In doing so, we offer a model of how courts confront issues of developing legal doctrine, especially regarding liability, associated with nascent or dramatically transformed industries. Our model of doctrinal change includes 5 steps. The first step is the emergence of a nascent or transformed industry. In the second step, courts attempt to apply old doctrine to the nascent industry, resulting in a doctrinal mismatch with the realities of the new industry. When faced with this dilemma, the third step is that courts tend, implicitly or explicitly, to establish new legal doctrine that favors the industry. Then, in the fourth step, a backlash against the industry sets in while courts reassess rules favoring the industry. The last step is the emergence of a new doctrinal method of holding the nascent industry more fully accountable for its operations.

After setting forth the model and its limitations, we discuss the implications for how courts have responded to the advent of managed care. Our historical analysis suggests that courts are reluctant to interfere with emerging market arrangements, such as managed care?s cost containment practices. Eventually, courts tend to find new ways to achieve greater accountability, largely arising from tort law concepts.

Suggested Citation

Jacobson, Peter D. and Pomfret, Scott D., Establishing New Legal Doctrine in Managed Care: A Model of Judicial Response to Industrial Change. Available at SSRN: https://ssrn.com/abstract=192954 or http://dx.doi.org/10.2139/ssrn.192954

Peter D. Jacobson (Contact Author)

University of Michigan School of Public Health ( email )

109 Observatory
Ann Arbor, MI 48109-2029
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HOME PAGE: http://www.sph.umich.edu/~pdj/

Scott D. Pomfret

Ropes & Gray LLP - Boston ( email )

One International Place
Boston, MA 02110
United States

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