Big HMO Money Kills Bill Giving HMO Patients Right To Choose Trial

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Consumer Group Will Now Turn To Ballot Initiative Campaign

SACRAMENTO- Legislation allowing patients the right to choose between HMO binding arbitration and a jury trial died on the Assembly Floor after an aggressive HMO industry-wide lobbying campaign against the measure. AB 1751 (Kuehl) never came to a vote because it was apparent that the HMO industry had derailed the legislation by swaying business-friendly Democrats from voting for it.

“It is tragic that the wishes of HMO industry lobbyists and executives have outweighed the urgent needs of injured HMO patients who have been denied justice in the companies’ private justice system,” said Jamie Court, advocacy director for the Foundation for Taxpayer and Consumer Rights, the sponsors of the bill. “This was cash register politics at its worst. Reports that the Governor himself lobbied against the bill on the industry’s behalf are extraordinarily troubling.”

Court continued, “Without this legislation, patients will still have to choose between the right to health care and the right to trial since every commercial HMO uses binding arbitration as a condition of coverage. Now we will have to use a ballot initiative to restore to patients their 7th Amendment right to trial. It is painfully clear that only the voters will settle this issue.”

AB 1751 guaranteed that HMO arbitration be voluntarily entered into only after a dispute arises.

In 1998, a joint commission of the American Bar Association, American Medical Association, and American Arbitration Association concluded, “In disputes involving patients, binding forms of dispute resolution should be used only where parties agree to do so after a dispute arises.” AB 1751 required just this.

Through research and interviews with patients, FTCR has found that forced arbitration can be lengthy, costly, unfair, and conceals quality of care violations from public scrutiny.

o Arbitrators often depend on repeat business from HMO corporations

and are more likely to rule in their favor.

o Patients complain of abuse and delays by attorneys who are not subject to discipline by judges.

o Arbitrators generally charge $100-$400 per hour, compared to $350 per

day generally for court costs.

o None of the abuses or documents uncovered in the process can be made public.

o There is no media scrutiny, publicly accountable judge, or jury of one’s


o There is judicial review only in cases of outright fraud, not judicial


Under state HMO liability legislation, passed in 1999 and to take effect in 2001, patients will be able to recover damages from an HMO that interferes with the quality of their care. But an HMO enrollment contract can still force patients into a private arbitration system controlled by private lawyers, rather than by a judge or jury.

To raise public awareness of AB 1751, FTCR faxed daily an “HMO Arbitration Abuse Report” highlighting a new patients’ testimony of HMO arbitration injustice.


Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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