NCPA - National Center for Policy Analysis

Employers Fear Liability Under Patients' Rights Bill

June 26, 2001

The patients'-rights legislation being debated in the Senate is supposed to contain language that would protect employers from increased legal liability. But businesses say those safeguards don't go far enough.

A provision of the bill would let a patient sue a health plan when it makes a decision that harms a patient's health. But businesses say they are also being put in jeopardy.

  • The bill would allow patients to sue their employers if those employers directly participate in a health plan's decision that harms or kills a patient -- "direct participation" being defined as making the medical decision in question or exercising control in making that decision.
  • Opponents of the bill say that standard is vague and would let patients bring frivolous lawsuits against businesses -- even if the companies aren't involved in making medical decisions.
  • Businesses that administer their own plans -- mostly large companies that operate in more than one state -- would be open to lawsuits since they decide what procedures should and shouldn't be covered.
  • Employers that pay health-insurance costs themselves but hire a third party to administer the benefits -- typically large, multistate companies -- could be opened to increased liability.

Opponents say the increased cost and hassle of broader liability will prompt employers -- particularly small businesses -- to stop offering health coverage.

Source: Sarah Lueck, "Patients' Rights Legislation Raises Concerns Among Employers About Legal Liability," Wall Street Journal, June 26, 2001.

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