At this year's annual meeting of the American Medical Association, the House of Delegates voted to redefine what constitutes the practice of medicine. Although it does not have a direct or immediate impact on practicing physicians, the new AMA policy states that coverage decisions made by managed care medical directors will be considered medical practice. In addition, the act of providing expert testimony at trial will fall within the new AMA definition.


    Although these new definitions have been voted on and passed by the American Medical Association, they will not be enforceable unless they are adopted by state licensing boards or the AMA develops a new disciplinary process.


    Various states are independently taking action to expand the definition of the practice of medicine to include testimony and some managed care coverage decisions. In fact, the Arizona Supreme Court recently upheld a decision that holds an HMO medical director accountable to the state licensing board for a decision to deny coverage.


    In that case, Murray v. Blue Cross Blue Shield of Arizona, a patient enrolled in a Blue Cross HMO had her doctor request pre-certification for a laparoscopic cholecystectomy in December 1992. The medical director at Blue Cross, who was trained as a gastroenterologist, determined that the procedure was not medically necessary and denied coverage for the procedure. He based this determination on the ultrasound taken of the patient's gallbladder, which showed no evidence of stones. Given the patient's history of complaints, the director attributed her symptoms to irritable colon syndrome. The patient's own doctor disagreed, arguing that the patient's complaints of severe abdominal pain and her recent weight loss were indications for surgery.


    Even though Blue Cross denied coverage, the patient elected to go ahead with the surgery as her doctor advised. The post-operative pathology reports showed evidence of both cholecystitis and cholelithiasis.


    The patient's physician filed a complaint with the Arizona Board of Medical Examiners, claiming the HMO medical director's refusal to authorize coverage for the procedure constituted medical incompetence. After the licensing board investigated the matter, it issued the medical director an advisory letter of concern for his medical decision, saying it could have caused harm to the patient who needed surgery.


    Blue Cross and the medical director then sued the board in state court, claiming it had no authority to issue the advisory letter because the physician was not practicing medicine when he issued coverage decisions. However, the trial court upheld the board's jurisdiction.


    Blue Cross appealed, arguing that the trial court's decision interfered with the HMO's authority to limit health care costs, and would result in disgruntled patients filing numerous complaints with the state licensing board. In addition, Blue Cross claimed that pre-certification decisions are regulated solely by the state department of insurance. The licensing board countered that it had the right to review a decision made by a licensed physician on the issue of medical necessity, which would impact a patient's health.


    The Arizona Appeals Court held that the Board indeed had the authority to discipline the medical director. He was not just a provider of insurance, but an employee who made medical decisions for his employer. On further appeal to the Supreme Court of Arizona, this ruling was upheld.


    If the definition of medical practice is expanded to include coverage decisions by a managed care medical director, will the consequences of bad decisions go beyond discipline by licensing boards to involve malpractice suits? In the near term, maybe not. Physicians making these kinds of coverage decisions for managed care plans ordinarily have been protected from state law-based malpractice suits by ERISA, a federal law. ERISA usually preempts malpractice claims against the individuals who make benefits coverage decisions. However there has been much debate in Congress about changing the ERISA law to allow managed care organizations to be sued for malpractice when coverage decisions harm patients. So far new federal legislation has not been successful.


    The recent AMA rule extending that organization's definition of medical practice to expert testimony in court would require a new peer review process to have any direct effect. A benefit of the new definition would be to prevent experts from rendering opinions that are clearly outside the bounds of acceptable medical decision making.


    Those who oppose the AMA rule believe it would enable the court to police doctors, and may interfere with the ability of parties in litigation to find expert witnesses. Health professionals may be reluctant to put their credentials and licenses at risk. Just such an action against a psychologist testifying in child custody suits was brought by a licensing board in Washington state. In Deatherage v. State Examining Board of Psychology, the Supreme Court of Washington last year ruled that the psychologist was subject to disciplinary actions related to his courtroom testimony, as provided in state statute.


    Implementing an expanding definition of medical practice is complicated and may affect medical malpractice cases in ways that are not contemplated today. However, it is clear that society is increasingly concerned about the effect of professional medical opinions rendered far from the physician's office or hospital bed.

    Expansion of What Constitutes Medical Practice

    by Attorney Frank E. Reardon

    October 1998

    Healthcare Law, Litigation & Public Policy   Medical Licensure & Discipline ♦ Employment Board of Registration

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