The problems seen in healthcare today are best understood as having arisen as unintended consequences of competing legislative solutions conceived in the early 1970s, whose implications are only now being fully understood. This paper will begin by examining the shift from indemnification health insurance to managed care organizations (MCOs). The new federal regulatory regimes regarding healthcare created two "regulatory vacuums\" in the context of an industry-wide shift in the economic market of healthcare finance. The first vacuum created was that between the requirements of Emergency Medical Treatment and Labor Act (EMTALA) and the obligation of MCOs. A common response by states to this gap has been to institute a "prudent layperson"(PLP) standard. This paper will examine the consensus that has emerged behind the prudent layperson standard, whether the standard is intended to represent our old fiend, the objective "reasonable person" standard, and the economic implications and consequences of the prudent layperson standard. Unfortunately, the second vacuum created, that between Employment Retirement Income Security Act (ERISA) preemption and substantive ERISA provisions, today threatens any state law seeking to regulate MCOs. Accordingly, this paper will also analyze ERISA preemption jurisprudence to date, to determine the likelihood of federal preemption of state prudent layperson laws. Analysis will demonstrate that no state effort can be clearly secure from federal preemption in today\'s confused legal environment. Thus, I will conclude by forecasting that only uniform, nationally mandated benefits or an amendment to ERISA permitting state health care standards or causes of action can correct the problems of MCO accountability regarding emergency medical care and federal preemption.
University of New Mexico School of Law
Vaile, Pilar. "The Prudent Layperson Standard: Bridging the Gap Between EMTALA and MCO Review of Emergency Utilization." (2000). https://digitalrepository.unm.edu/law_studentscholarship/16