Laws vary from state to state, but in some states a health insurance carrier, health maintenance organization, or other managed care entity for a health care plan has the duty to exercise ordinary care when making health care treatment decisions and is liable for damages for harm to an insured or enrollee proximately caused by its failure to exercise such ordinary care.

This liability may be created by a specific state statute or by the state's common law (court opinions or case law) under a negligence theory for breach of the standard of care (reasonableness).

In New York, health insurance carriers, health maintenance organizations (HMOs), and other managed care entities are expected to adhere to a standard of ordinary care when making health care treatment decisions. While New York does not have a specific statute that explicitly imposes this duty, the standard is derived from common law principles of negligence. Under these principles, a managed care entity could be held liable for damages if it is found that the entity failed to exercise ordinary care, and this failure proximately caused harm to an insured or enrollee. The determination of liability would typically involve assessing whether the managed care entity's actions were reasonable under the circumstances and consistent with the standard of care expected in the industry. Cases involving such claims would be fact-specific and require a thorough analysis of the actions of the managed care entity in relation to the harm suffered by the patient.