Vanderbilt Law Review

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This article is intended as a practical aid to the lawyer who is confronted with the legal problems involved in the organization and operation of a group health plan.' It covers the statutes and decisions of the states affecting the corporate structure, the problems involved in membership service contracts and their comparison with insurance policies, and the unique requirements of physicians' contracts.

Group health plans here discussed are those in which the member-patients sponsor and control the nonprofit corporation on a democratic or cooperative basis, or at least have an effective voice in its management. The corporation usually owns the clinic building and its equipment and through its lay board of directors manages this facility, as well as operating funds derived from periodic prepayments of the members which are used to maintain the facility and to pay for medical services rendered to the members. The physicians, specialists and technicians rendering the services are engaged as independent contractors and are compensated on a mutually agreeable basis which produces a known cost in advance, so that, with other overhead costs, the budget can be met with members' prepayments.