San Gabriel Valley Tribune

SACRAMENTO — Legislation aimed at strengthening patients’ rights has been dealt a damning blow after members of a key Assembly committee rejected a proposal seeking to protect those insured by HMOs.

Introduced by state Sen. Martha Escutia, D-Whittier, Senate Bill 458 would have allowed patients to forgo mandatory arbitration in certain disputes with health maintenance organizations, including those cases in which patients suffer significant damage as a result of the plan’s refusal to provide treatment ordered by one of its physicians.

“I love Kaiser; I love my Kaiser doctors … but, I come to you as a
consumer realizing that more often than not the arbitration system is not a fair system,” Escutia told members of the Assembly Health Committee, which on Tuesday rejected her bill that would have allowed patients harmed by HMOs to choose between court proceedings and binding arbitration as forums to seek legal remedy.

While California’s Right to Sue law, signed in 1999, was then hailed as one of the toughest patients’ rights protections in the nation, advocates said Tuesday insurers are skirting the law by forcing HMO enrollees to submit to binding arbitration as a condition of coverage, essentially forcing patients to relinquish many of their rights should a legal dispute arise.

“HMOs are forcing patients to sign away their right to go to court when they enroll in a health plan; they are literally forced to give up their Seventh Amendment to get health coverage,” said Jamie Court, executive director of the Santa Monica-based Foundation for Taxpayer and Consumer Rights.

Meanwhile, industry spokespeople argued that arbitration is a
cost-effective, fair means of resolving otherwise costly disputes.
Arbitration, they said, often leaves patients with larger settlements,
awarded more quickly than those attained through traditional courtroom litigation.

Sharon Lybeck Hartmann, an independent arbitrator who contracts with Kaiser Permanente, said “attacks on arbitration are made on the basis of fragmented anecdotes.

“In the majority of cases, arbitration has been a speedy way to resolve disputes with their health provider,” she said, pointing out that in a recent survey of arbitration participants, most were overwhelmingly satisfied with the process.

Warren Goold told lawmakers that so far he is not impressed with the arbitration system. Since filing suit against Health Net last year Goold has yet to have a hearing scheduled, he said.

It took two years and filing a lawsuit before Health Net treated his
degenerative disk condition that resulted from an automobile crash. He alleges that Health Net ignored his doctors’ recommendations for early surgery to treat his condition.

“I did not realize when I enrolled in my health plan that I had given up my constitutional right to a jury trial in the fine print,” said Goold, a 44-year-old Kern County resident.

“I have been asked to pay extraordinary costs, $11,000, just to file a case in arbitration because of the extreme damage,” Goold said. “A person in my situation who collects long-term disability from my employer is in no position to pay that cost.”

Court of the Foundation for Taxpayer and Consumer Rights said arbitration often favors HMOs, which contract with neutral arbitrators, which are generally retired judges or highly experienced attorneys.

“HMOs fear the sunlight and sunshine of a courtroom,” he said. “They do not fear the windowless rooms of arbitration,” explaining that decisions handed down by arbitrators are not open for appeal or judicial review.

Decrying the committee’s decision to reject Escutia’s bill, Court said a quick look at campaign finance disclosures reveals the reasons for some lawmakers’ opposition to the proposal, including that of Assemblyman Ed Chavez, D-La Puente, who has received a total of $42,250 in cash contributions from insurers.

“This is really about HMO industry money versus patients’ rights,” Court said. “Assemblyman Chavez has become a general in the HMO’s war against patients.”

Chavez scoffed at Court’s remarks in several fiery exchanges in which Chavez ultimately banned the veteran lobbyist from contacting his office in the future.

“I will not be threatened into voting for a bill that is opposed by
organizations in my district,” Chavez said, pointing to letters from the San Gabriel Valley Economic Partnership and the Los Angeles Federation of Labor asking him to oppose the legislation.

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Chris Rizo can be reached at (916) 449-9006.