Torts, Expertise, and Authority: Liability of Physicians and Managed Care Organizations
AbstractWe examine optimal individual and entity-level liability for negligence when expected accident costs depend on both the agent's level of expertise and the principal's level of authority. We consider these issues in the context of physician and managed care organization (MCO) liability for medical malpractice. Under current law, physicians generally are considered independent contractors and hence MCOs are not liable for negligent acts by physicians. We find that the practice of reviewing the medical decisions of physicians affects their incentives to take care, which in turn implies that it is efficient for MCOs to be held liable for the torts committed by their physicians.
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Bibliographic InfoPaper provided by New York University, Leonard N. Stern School of Business, Department of Economics in its series Working Papers with number 04-26.
Date of creation: 2004
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Postal: New York University, Leonard N. Stern School of Business, Department of Economics, 44 West 4th Street, New York, NY 10012-1126
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Web page: http://w4.stern.nyu.edu/economics/
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- Jennifer Arlen & W. Bentley MacLeod, 2005. "Torts, Expertise, and Authority: Liability of Physicians and Managed Care Organizations," RAND Journal of Economics, The RAND Corporation, vol. 36(3), pages 494-519, Autumn.
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