In attempts to reduce the cost of mental health treatment, health insurers are turning to mechanisms for intensive oversight that fall under the rubric of managed care. These approaches have implications for the potential liability of clinicians and managed care entities. Clinicians may be confronted with legal duties to appeal adverse decisions, to disclose the impact of managed care on patients' treatment, and in some circumstances, to continue treatment after payment has been denied. Managed care entities are being held to duties to conduct review in a reasonable fashion, and may also have a duty to disclose the limitations managed care may place on patients' access to treatment, and to select appropriate providers of care. The law in this area is in an early stage of development and is likely to be refined.