Gov. Davis Seeks To Strike Provisions Of HMO Liability Law Before Ink Is Dry

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HMO-backed Bill To Change Law Before It Takes Effect

The Foundation for Taxpayer for Consumer Rights, sponsor of last year’s California HMO liability law SB 21 (Figueroa), today condemned a lobbying effort by Governor Davis to eviscerate important remedies in SB 21 before the law even takes effect on January 1, 2001.

AB 2039, inspired by Davis and to be heard Tuesday in Assembly Judiciary Committee, removes vital protections for patients who face significant financial harm and, under the current law, would have the right to go to court without going through the HMO’s internal review, then external review process.

“This makes the stick patients will have to wave at their HMOs on January 1st a lot shorter, giving HMOs another incentive to stonewall treatment requests for doctor-recommended care,” said Jamie Court, advocacy director for the Foundation for Taxpayer and Consumer Rights. “It’s a double-cross to significantly alter a patient protection law before it even takes effect. This is a troubling precedent that the Governor would show such disloyalty to a law he signed. Should we put people in imminent, serious physical harm’s way before they have the right to pay themselves for treatment and have a court sort it out? That is essentially what this bill does, forcing patients to choose between paying for treatment themselves when their HMO stonewalls and reserving their right to go to court by not paying in order to maintain a remedy. Patients should not have to wait until they are on their death bed before having access to a court.”

Arguments Against AB 2039 From FTCR Letter To Judiciary Committee

Removing significant financial harm as a condition of an HMO patient having the right to go to court instead of waiting for an independent review process, which first requires that an HMO complete their own internal review as a trigger, would impact all those patients with mental, emotion and physical problems who have not yet suffered significant and imminent significant harms enumerated under current law. It is difficult for a patient who faces harm, mental (for which there is no recovery under the current liability Act) or physical (that does not meet the imminent and significant threshold) to wait for an HMO to put their life in imminent jeopardy before paying for a treatment that could

help them.

In many cases as well, a patient paying for an outside diagnosis

could determine their treatment, which is often undiagnosed by the HMO.

There would not be a basis to take to external review until they know what they need, but going outside the network for diagnosis would preclude them from having a right to damages in court under AB 2039’s reasoning.

Under last year’s HMO liability law, a judge would decide if the patient

really faced significant financial harm and had an excuse to be in court. Under the amended bill, unless the imminent and significant physical harm thresholds were met, there would be no basis to go to court and a judge would have to throw the case out. This is more than a subtlety because it changes the burden (under current law) from the HMO having to prove there was no significant financial harm and it did follow procedure to (under proposed amended law) precluding a whole class of people from having a remedy and putting the burden on the individual not to put themselves in that class by not paying themselves for treatment.

Most significantly, the bill fails to require HMOs to live up to strict

internal and independent review time lines or face an immediate option for a patient to go to court. Without those guaranteed time lines, a patient could languish in both the internal and external reviews and be forced to pay for treatment themselves (thereby losing the right to sue under AB 2039) rather than waiting until they are in danger of dying or facing imminent seriousharm.

Requiring a judge to find that exhaustion would have been “futile”

before a patient goes to court again puts the burden on the patient rather than the HMO. It is a vague, ambiguous and impossible standard. Why should HMOs not have strict liability for not meeting statutory and industry deadlines that they promise to adhere to?

Texas had no such limits as those contemplated in AB 2039 and there have been only a handful of lawsuits under the Texas HMO liability law, which took effect in 1997. Texas doctors report HMOs are giving them more deference and yet health care premium increases in Texas have been far below the national average.

There is no evidence that patients will abuse SB 21’s protections. We urge you to withdraw this legislation because it gives HMOs yet another reason to stonewall.

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.

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