Under Ostensible Agency as applied in McClellan v HMO Pennsylvania, when is an MCO liable for a provider's actions due to negligent credentialing?

Under Ostensible Agency as applied in McClellan v HMO Pennsylvania, when is an MCO liable for a provider's actions due to negligent credentialing?

• A. Only when the MCO directly supervises clinical care.
• B. When the MCO's credentialing creates the appearance of control over the provider.
• C. Only when the provider is employed by the MCO.
• D. Never, credentialing is separate from liability.

Answer: (B)

The concept being tested is ostensible (apparent) agency in the credentialing context. In this doctrine, a professional liability claim can be based on the MCO’s actions creating the impression that it controls the provider’s clinical practice, even if there is no formal employment or direct supervision. In McClellan v. HMO Pennsylvania, the court recognized that an MCO can be liable for negligent credentialing when its credentialing process gives patients and facilities the reasonable impression that the MCO is supervising or controlling the provider. If the MCO approves, maintains, or heavily influences a provider’s network status in a way that others rely on as evidence of the provider’s competence and ongoing oversight, the MCO can be held responsible for harm caused by inadequately credentialed practitioners. The key is that the appearance of control stems from the MCO’s credentialing actions, not from actual employment or direct clinical supervision. So the best answer is that liability arises when the MCO’s credentialing creates the appearance of control over the provider. This captures why negligent credentialing can be imputable to the MCO under ostensible agency—even without formal supervision or employment.

The concept being tested is ostensible (apparent) agency in the credentialing context. In this doctrine, a professional liability claim can be based on the MCO’s actions creating the impression that it controls the provider’s clinical practice, even if there is no formal employment or direct supervision.

In McClellan v. HMO Pennsylvania, the court recognized that an MCO can be liable for negligent credentialing when its credentialing process gives patients and facilities the reasonable impression that the MCO is supervising or controlling the provider. If the MCO approves, maintains, or heavily influences a provider’s network status in a way that others rely on as evidence of the provider’s competence and ongoing oversight, the MCO can be held responsible for harm caused by inadequately credentialed practitioners. The key is that the appearance of control stems from the MCO’s credentialing actions, not from actual employment or direct clinical supervision.

So the best answer is that liability arises when the MCO’s credentialing creates the appearance of control over the provider. This captures why negligent credentialing can be imputable to the MCO under ostensible agency—even without formal supervision or employment.