HMOs, Insurers Lose Major Battle over Reforms
Sacramento — Consumers, patients and voters scored significant victories with the passage of a series of bills sponsored or supported by the Foundation for Taxpayer and Consumer Rights (FTCR) in the California Senate Tuesday and Wednesday. Three bills (SB 21, SB 171 and SB1237) raised the ire of the HMO and insurance industry, but passed the Senate floor in spite of the industry’s efforts.
Senate Passes Bill to End Low-balling by Insurance Companies
Late Wednesday the Senate passed, by a vote of 21-16, consumer protection legislation — SB 1237 (Escutia) — that allows injured accident victims the right to sue the at-fault driver’s insurance company if the company unfairly denies, delays or undervalues an accident claim.
“This bill brings much needed accountability to the insurance industry,” said Doug Heller, consumer advocate with FTCR. “For ten years insurers have made extraordinary profits by unfairly low-balling innocent accident victims’ medical bills, wage losses and other accident related expenses.”
SB 1237 allows accident victims, who have won a judgment against the at-fault driver, to take the driver’s insurer to court if the insurer denies, delays or underpays the claim. The bill changes a 1988 California Supreme Court decision which held that innocent accident victims could not sue the insurance company of an at-fault driver, even if the insurer unfairly withheld or undervalued a legitimate claim.
“If we don’t pay our insurance premiums on time and in full, insurers will cancel our policy. Insurance companies should be held to a similar standard. SB 1237 sets that standard,” said Heller.
Senate Agrees to Landmark HMO Accountability Law
SB 21 (Figueroa) allows all patients the right to sue their HMO for damages over a denial omedically necessary treatment or coverage. While public employees can sue their HMO and receive damages, fourteen million Californians with health coverage through private industry do not have their HMO for damages until SB 21 is enacted.
“This bill is the strongest medicine for HMO abuses yet,” said Jamie Court, director of FTCR’s Consumers for Quality Care, the sponsor of SB 21. “All working Californians should have the same right to sue their HMOs as their public officials now have. Without the threat of damages, patients will continue to have no leverage against billion dollar HMOs that pursue profit at the expense of patient care.”
Lifeline Auto Insurance Bill Creates First-in-Nation Low-Cost Policy for the Poor
The Senate passed, Tuesday, SB 171 (Escutia) sponsored by FTCR, which creates a low-cost auto insurance policy for California’s poor. SB 171 requires automobile insurance companies to sell a low-cost policy ($300/year for drivers with no violation points, $400/year for drivers with one violation point) to good drivers in California who have an income at or below 150% of the federal poverty line. Actuaries estimate that, if one million ‘ of approximately three to four million ‘ presently uninsured motorists become insured through Lifeline, this will result in an aggregate savings to already insured motorists of $175 million dollars in reduced “uninsured motorist” premiums.
“In parts of the state, low-income Californians must pay $1800 for basic liability insurance,” said Doug Heller. “A poor person who must buy insurance cannot afford that. At no cost to the state and with a savings to other insured drivers, SB 171 provides low-income drivers with an opportunity to comply with the state’s mandatory insurance law.”
Senators Pass Truth in Initiative Advertising Bill
SB 1220 (Schiff), which required a 2/3 vote and passed by a margin of 28-10, requires statewide ballot measure advertisements to clearly disclose ‘ as part of the advertisement ‘ the top contributors to the campaign. The bill is the second initiative reform bill authored by Senator Schiff and sponsored by the Oaks Project to pass out of the Senate. SB 1219 (Schiff), which passed last week, requires petitions for ballot measures to disclose whether the signature gatherer is a paid or volunteer circulator.
“Voters should know who is paying for the initiative advertisements that blanket the airwaves during campaign season,” said Bill Gallagher director of FTCR’s Oaks Project, the volunteer-based organization that encouraged thousands of Californians to call or write their Senator in support of the bill. “Californians are frustrated by advertisements that only tell us that the ad is paid for by a committee called ‘Californians for a Better Tomorrow.’ With real disclosure, voters can make an informed decision.”
Each of these bills now move to the Assembly.