A key source of liability for a managed care organization (MCO), that arises
from an MCO's negligence in selecting (or retaining) a healthcare provider
who is deficient in delivering healthcare services, and such deficiency
produces an injury. MCOs owe a duty to their subscribers to investigate the
competence of their healthcare providers and to exclude those who pose a
foreseeable risk of harm. Coverage for this exposure is afforded by a managed
care liability insurance policy. Such claims have also been made against
employers in which employees allege that the employer negligently selected an
MCO or health insurer under an employee benefit plan.