California Overhauls HMO Oversight, Calls on Congress to Follow Suit

Published on

Associated Press

A wide-ranging new package of health care laws that grants Californians the right to sue HMOs for damages has raised hopes among consumer advocates and Democratic officials that the federal government will follow suit.

“Now that the state that pioneered HMOs is pioneering HMO liability reform, there’s very little objection Congress can have,” said Jamie Court, spokesman for the Foundation for Taxpayer and Consumer Rights, which sponsored the HMO-liability bill.

“This is a populist uprising that’s going to spread east just like managed care spread east,” Court said.

Gov. Gray Davis signed 21 bills into law Monday that will transform the way Californians deal with their health plans by forcing HMOs to pay for contraceptives, certain treatments and second opinions, and require them to make decisions on care quickly. Most significantly, it will allow them to sue in certain cases.

Only Texas and Georgia have laws that let managed-care patients sue if the plans fail to exercise “ordinary” care in treatment, said Marla Rothouse, a health policy specialist with the National Conference of State Legislatures in Washington, D.C.

“With California enacting (the liability law), I would expect other states to reconsider it next year, depending on what the federal government does,” Rothouse said.

California’s contentious debate on health care – particularly on whether to allow patients to sue HMOs – mirrored deliberations in many other states and in Congress now.

President Clinton has been pressing for a “patients’ bill of rights.” He proposes to allow patients to seek damages from health care companies that botch treatment.

Davis, who resisted some health-care legislation earlier this year and insisted he would only sign a “common-sense” package of reforms, said the new laws positioned California as a national leader on health care.

“I would ask Congress to take note of what we are doing here today,” Davis said. “There is no reason Congress cannot pass a patients’ bill of rights before the session ends this year.”

House Speaker Dennis Hastert said earlier this month he will bring patient-protection legislation to the House floor in early October, promising votes on at least two bills that give patients new rights to sue their HMOs.

California’s liability law will let consumers sue if they are substantially harmed by a health insurer’s decision to delay, deny or alter necessary treatment. Before filing a lawsuit, cases in which patients don’t face possible imminent harm must go through a review process with independent panels of doctors.

The law, which takes effect Jan. 1, 2001, defines substantial harm as loss of life, loss or significant impairment of limb or bodily functions, significant disfigurement, severe or chronic pain or significant financial loss.

“The point of this bill is to give consumers and doctors the leverage, the stick, that hopefully they won’t have to swing, but it’s in the closet, for when they want to club that HMO and say ‘Give us care,”‘ Court said.

Patients whose HMOs require a legal arbitration process might still be forced into it after the independent review, raising concerns among Court and some lawmakers. The new law is silent on the issue.

“We’ll have to make sure they don’t use arbitration to get around external review and liability,” said Sen. Liz Figueroa, D-Fremont, who wrote the right-to-sue bill.

The new laws will also require managed-care plans and other health insurers to provide a second opinion when a patient requests it and cover contraceptives, cancer screening and treatment of diabetes and mental illness.

California law will require HMOs to make decisions about physicians’ referrals for surgery or specialized care within five days in most cases, and let only medical professionals make those initial decisions.

To enforce the new laws, Davis approved a new state agency to regulate health care plans, taking the job from the Department of Corporations.

“These bills taken together will ultimately put medical decision-making back where it belongs: in the hands of doctors and patients,” Davis said at a signing ceremony before more than 100 doctors, consumer advocates, health insurers, lawmakers and others at a medical clinic in the North Hollywood section of Los Angeles.

Patients affected by the changes include an estimated 15 million Californians covered by employer-purchased managed-care plans.

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.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases