Consumer Group Seeks End To Mandatory HMO Arbitration

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Associated Press

SANTA MONICA, Calif. (AP) — A consumer group Thursday urged lawmakers to bar health maintenance organizations from forcing patients to seek arbitration in disputes.

The Foundation for Taxpayer and Consumer Rights, citing a state report, said 30 of the 50 HMOs operating in California require patients to accept binding arbitration as a condition of membership.

“This report shows the HMO’s private justice system is tilted against the patient,” said Jamie Court, the group’s executive director. “Other states with HMO liability laws, such as Texas, Washington and Georgia, do not permit HMOs to force patients into secret arbitration proceedings where private lawyers, rather than judges, preside.”

HMO arbitration cases in California typically cost $4,500, with the HMO usually splitting the cost with the patient, according to the report issued Thursday by the California Research Bureau, a government study arm.

“This report should convince the Legislature that patients should not have to waive their right to trial simply to join an HMO,” Court said.

A bill to ban the practice and allow patients to take HMO disputes to court was sent to the Assembly by its Judiciary Committee last March but stalled in the Legislature.

An HMO trade group defended binding arbitration as a far cheaper and quicker method of settling disputes than taking them to court.

“The state government’s using it, industry’s using it, the federal government’s using it,” said Bobby Pena, spokesman for the Sacramento-based California Association of Health Plans. “We think it’s fair. There’s value in arbitration.”

Because HMOs are required by state law to have multiple grievance procedures, Pena also estimated that less than 5 percent of patient disputes wind up in arbitration.

The state report said 171 arbitration’s were reported to the Department of Managed Health Care in 1999 but estimated about 300 cases are decided annually. The report said it “seems likely” that many HMOs are not meeting reporting requirements, although it did not supply any proof.


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