Consumer Advocates Call on HMO Regulator to Release Records of HMO Merger;

Charges that Schwarzenegger Administration Pre-approved Merger of Top Campaign Contributor Must be Delved

Santa Monica, CA — In a Public Records Act request sent today, the Foundation for Taxpayer and Consumer Rights called on the Department of Managed Health Care (DMHC) to release records of all meetings and communications with Schwarzenegger Adminstration staff prior to the 2005 HMO merger of Pacificare of California and UnitedHealth.  The request follows allegations by a former top administrator at the state’s Department of Managed Health Care that the Administration decided to approve the merger before regulators assessed its impact on patients, bypassing state law on the role of the DMHC.  

The merger of PacifiCare of California with UnitedHealth was approved without assessing the loss of competition in the health insurance market, and its reduction of patient access to prescription drugs and the physicians of their choice. Hundreds of millions of patients’ premium dollars were paid out in bonuses to top executives. 

Schwarzenegger has received $105,800 in campaign contributions from PacifiCare, $78,500 of which was received before the merger was approved. FTCR urged the independent California State Auditor to investigate the Administration’s approval of the merger, make public any inappropriate influence over regulators, and determine whether regulators should invalidate the terms of the merger.

“Patients have a right to know if, and why, the Schwarzenegger Administration could have pre-approved the merger without providing adequate patient protections,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR).  “The state’s role in health care regulation is to protect Californians, not grease a multimillion-dollar benefit for a large contributor.”

To download a copy of the Public Records Act request sent today go to: http://www.ConsumerWatchdog.org/resources/PRA.DMHCmtghistAdm.pdf.

The allegations about the Schwarzenegger Administration’s ovveride of regulators was made last week by Kevin Donohue, former Deputy Director of the Department of Managed Health Care, after he was fired for holding stock in United Health while he led the department’s review of the company’s merger request.  Donohue, who chaired public hearings on the merger, told the Los Angeles Times that he had not violated state laws barring public officials from participating in a policy decision in which they have a financial interest because the merger had been approved by higher ranking Schwarzenegger Administration officials prior to his involvement, and before his public hearings.  State law requires the DMHC, not Administration officials outside of the department, to be the final arbiter of whether the terms of HMO mergers meet requirements for patient protection.

“Only an independent investigation and the public release of relevant documents can get to the truth of this charge,” Flanagan said. “If the governor’s office resists the release of the documents, the public’s only logical conclusion must be that the charges are true, and the political power of corporate health care trumps the quality of health care for Californians.”

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The Foundation for Taxpayer and Consumer Rights (FTCR) is California’s leading public interest advocacy organization.  Visit us on the web at:  http://www.ConsumerWatchdog.org.