OAKLAND — Health maintenance organizations would be prevented from requiring incoming patients to sign away their rights to a jury trial if a new state bill introduced this month becomes law. The measure by Sheila Kuehl, D-Santa Monica, would stop the routine practice that HMOs currently use, asking members to sign a waiver committing themselves to binding arbitration should a dispute arise in the future.
“Basically, today if you’re a patient joining an HMO, you can be forced to give up your right to trial just as a condition of enrollment,” said Jamie Court, advocacy director for the Foundation for Taxpayer and Consumer Rights, which co-sponsored the legislation along with the California Nurses Association. “That is a very serious problem. Patients shouldn’t have to choose between their right to trial and health care.”
The bill was introduced into the Assembly two weeks ago and was announced at a press conference Wednesday in Oakland. The public face of the issue is worn by Aina Engalla Konold, whose father died of lung cancer during a long and drawn-out arbitration process with Kaiser Hayward.
“I am standing here today in support of legislation that would prevent what happened to my family from happening to others,” said Konold, holding a picture of her father, Wilfredo Engalla. “It’s a human being we’re talking about — not a statistic.”
But that very case prompted Kaiser to change its system, health plan officials said, making it an outdated example. Engalla filed a medical negligence claim against the Permanente Medical Group in January 1991 upon being diagnosed with inoperable lung cancer after several years of being told he had a cold, or chronic allergies. He died five months later. The next day, Kaiser sought to notify him that it had finally settled on an arbitrator to hear the claim. The Engalla family, sure that a jury trial would have provided a swifter resolution, successfully sued Kaiser for fraud, claiming the company intentionally stalled.
“Their strategy was to delay,” Konold said. “They were really just trying to make us give up.” At trial, all of the evidence would have been made public, including an award, if any. In this case, the family finally settled with Kaiser for an undisclosed amount.
California’s managed care industry responded curtly to the bill Wednesday.
“That’s really unfair because we already changed our arbitration system based on the Engalla case, which was unfortunate, we agree,” said Kathleen McKenna, public affairs director for Kaiser Permanente Sacramento.
Kaiser‘s revamp included reducing the average wait for an arbitrator from more than two years to 33 days, McKenna said, and turning the whole process over to an independent administrator.
“The system is tremendously improved,” she said. “What’s implied in all this is that arbitration is inherently unfair, and we disagree.”
Most of California’s major HMOs, except Blue Shield, require the preemptive arbitration agreements. They argue that the practice is cheaper and quicker than wading through the clogged court system, and that both patients and doctors benefit from the privacy that arbitration affords. Plus, unlike the trial system, arbitration decisions cannot be appealed.
“Yeah, you don’t get these lottery-size jury verdicts, but what you do get from the patient’s side is finality,” said Maureen O’Haran, spokeswoman for the California Association of Health Plans.
The new rule, Assembly Bill 1751, would shift the decision of whether to seek jury trial or arbitration until after a problem surfaces.
“That’s very unusual — there’s no precedent for that anywhere,” O’Haran said. “In every other industry, arbitration is part of the initial agreement that both parties sign.”