In the event of a pandemic Asian bird flu affecting a large number of members in a specific health plan, there could be an increased exposure to the Managed Care Errors and Omissions (MCO E&O) of a plan. This could be as a result of the increase in the exposures of its enrollees looking to receive the flu shot, according to Thomas McGraw, managed care liability expert and principal of ARC New England.

“For example, if there is a flu epidemic and all 200,000 enrollees of a plan want to receive a flu shot, the plan may be unable to handle the flow of requests. If a patient becomes sick and dies, the estate could sue the health plan for lack of adequate care or lack of access to available care. Additionally, the plan may have other management liability exposures for failing to provide enough health care providers to adequately render care, or provide access to quality and timely care as well as a whole range of other issues that could arise during a crisis situation,” he added.

Further, Mr. McGraw adds “Unfortunately the aftermath of Hurricane Katrina has and will continue to teach us valuable lessons such as - can our health plans operate with limited employees due to bird flu absenteeism, lack of fresh water, inability to get vaccines to the damaged areas/infected or quarantined areas? One of the key concerns is our ability to plan for such a disaster and from Katrina we learned that not only do we need to be better prepared, we need to have multiple contingency plans. We are in a period of time in history that unfortunately requires us to be prepared for catastrophes such as the bird flu pandemic where we may not have had a previous parallel event but we may be “graded” if you will by history on how well we thought out the unthinkable –such as a pandemic Asian bird flu event.”

The forum for possible liability is even wider for directors and officers of a managed care organization. The cornerstone of the responsibilities of Directors and Officers requires them to act with the care that a reasonably prudent person in a similar position would use under the same circumstances. Mismanagement and failure to perform due diligence on a contingency plan for such a catastrophic event may prove negligence by the plan for inadequate foresight.

In an effort to protect themselves, health plans should consider purchasing a broad managed care errors and omissions policy. These policies ensure that all the many facets of administration are covered. They provide entity coverage, punitive damages where allowable by law, and vicarious liability (liability which an insured is liable for by someone who is providing services on behalf of) clearly defined. Additionally, a health plan’s Directors & Officers (D&O) policy should be inclusive of entity coverage, broad coverage for management liability, and comprehensive employment practices liability with retaliation coverage at the very least. Mistakes will be made during the normal course of business and remediation will be sought by those harmed or affected.

The aforementioned insurance products should be used as an effective risk management tool. There are many A.M. Best rated or better carriers offering policies at reasonable premium cost.