First of Better Business Bills Receives Support
Sacramento — A bill allowing patients a choice of court or arbitration under California’s new right-to-sue law passed the California State Senate today. The bill would end mandatory arbitration agreements forced upon patients who wish to recover against HMO’s for corporate negligence.
“SB 458 gives HMO patients the choice of going to court or binding arbitration under California’s new right-to-sue law.” said California State Senator Martha Escutia, author of the bill which was sponsored by the Foundation for Taxpayer and Consumer Rights. “California’s HMO’s force more than 80% of their enrollees into binding arbitration as a condition of health coverage.”
This bill is among the 13 “Better Business Bills” for which all California legislators will be graded by the following organizations: The California Labor Federation, California Nurses Association, California Public Interest Research Group, Congress of California Seniors, Consumer Action, Consumer Attorneys of California, Consumer Action, California Applicants’ Attorney Association, Consumer Federation of California, Consumers For Auto Reliability and Safety, Gray Panthers, Sierra Club and the Foundation for Taxpayer and Consumer Rights. Legislators who voted in favor of SB 458 and will receive positive marks for support of “Better Business Bills” are Alarcon, Alpert, Bowen, Burton, Chesbro, Dunn, Escutia, Figueroa, Karnette, Kuehl, Murray, O’Connell, Ortiz, Peace, Perata, Romero, Sher, Soto, Torlakson, Vasconcellos and Vincent
“Patents should not be forced to choose between having health care and having the right to trial, and this bill clarifies that they can have both.” said Jamie Court, executive director at the Foundation for Taxpayer and Consumer Rights.
“Senator Escutia launches the first of the better business bills in winning passage of this legislation.” said Sara Nichols, Legislative Advocate with the California Nurses Association. “Patient care will be better because of this bill.”
SB 458 (Escutia) clarifies that under California’s new HMO right-to-sue statute, enacted in 1999 and effective January 1, 2001, a patient will not be forced to give up their right to trial as a condition of health coverage.
The bill is narrowly tailored to address only causes of action under Section 3428 of the Civil Code, not all disputes with HMOs. Causes of action for bad faith, unfair business practices, medical negligence and other issues could still be subject to mandatory binding arbitration agreements. However, when the HMO violates its duty of ordinary care (under Section 3428) to arrange for services and significant harm occurs the patient would have the right to choose between a court and binding arbitration. The statute is intended to make the HMO responsible for injury caused when it makes health care and/or treatment decisions in the guise of “cost management.”
California is alone among other HMO right-to-sue states in allowing patients to be forced into binding arbitration in order to receive health care coverage. The state constitutions and case law in Texas, Washington, Maine, and Georgia preclude binding arbitration at HMOs in those states.
Californians should not have less protection than citizens in these other right-to-sue states. In Texas, where the right to sue law has be in effect since 1997, there have been only six lawsuits under the HMO liability statute. The Texas Medical Association reports, however, that the right to sue in court has had a deterrent effect, with HMOs more readily approving necessary medical care.
A joint 1998 panel of the American Arbitration Association, American Medical Association and American Bar Association found the patients should only be asked to enter into arbitration agreements voluntarily after a dispute occurs. This legislation enacts that recommendation specifically for California’s HMO liability law.
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