HMO arbitration bill threated by moderate Dems

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Capital Journal

   Giving patients the right to sue their health maintenance organization was one of the most lauded health care reforms adopted last year — that is until Democrats declared before the governor’s signature on the bill was even dry that more legislation would be needed this year to give the HMO liability law some real teeth. But that important follow-up effort may not happen, it was learned last week, if a bloc of moderate Democrats keep it from leaving the Assembly.

The issue keeping California’s new HMO liability law at bay is arbitration. According to consumer advocates, lawmakers may have opened the way for patients to file lawsuits against their HMO for denied medical care, but most health maintenance organizations are shielded from last year’s SB 21 because of contracts signed by consumers when first joining a health plan. Those contracts frequently require any disputes over medical treatment to be handled by a third-party arbiter, which prevents patients from taking their grievances to civil court.

The solution to this obstacle, consumer groups say, is AB 1751 by Assm. Sheila Kuehl (D-Santa Monica), which would prevent HMOs from including mandatory arbitration clauses in patient contracts. The bill is co-sponsored by the Foundation for Taxpayer and Consumer Rights and Neighbor to Neighbor and backed by the Consumer Attorneys of Calif., Calif. Nurses Assn., the American Assn. of Retired Persons and others. It cleared its first hurdle late last month when Assembly Judiciary — which is dominated by liberal Democrats — approved the bill 9-4.

But opposition from HMOs, the Calif. Medical Assn. and the Calif. Chamber of Commerce has many moderate, business-friendly Democrats leery of the bill. According to sources within the caucus, as many as a dozen Democrats won’t support AB 1751 if it comes up for a floor vote.

Surprisingly, the group of Democrats opposing Kuehl’s bill does not include Assm. Dennis Cardoza (D-Ceres), the unofficial leader of the moderate Democratic caucus and newly appointed chair of Assembly Rules under Assm. Spkr. Bob Hertzberg (D- Sherman Oaks). Last year, Cardoza led many of the same moderate Democrats in opposing then-Assm. Spkr. Antonio Villaraigosa‘s (D- Los Angeles) high-profile effort to raise the cap on pain-and- suffering awards in medical malpractice cases. This time, though, Cardoza is on the opposite side of his moderate brethren, serving as co-author of AB 1751.

While recognizing that moderate Democrats hold Cardoza “in great respect,” Kuehl pointed out that legislative leaders, both official and unofficial, don’t have the same kind of clout they once did before term limits. Thus, with Cardoza’s influence mitigated, Kuehl intends to meet with each member of the caucus to try and alleviate their concerns with AB 1751.

“I intend to keep pushing the issue and see what we can come up with by June 10,” said Kuehl, referring to the deadline for bills to pass out of their house of origin.

Coincidentally, the same Democrats who opposed Villaraigosa’s malpractice legislation — known in the Capitol as MICRA after the Medical Insurance Compensation Reform Act of 1975 that capped punitive damage awards — also are balking at Kuehl’s bill because of its potential impact on MICRA cases. Today, malpractice cases are routinely handled through an arbiter, not the courts. Opponents of AB 1751 insist Kuehl’s plan could delay the processing of malpractice cases and drive up costs associated with them by throwing things into the hands of juries.

One HMO official argued that the real intent of Kuehl’s bill was not to assist consumers but help trial lawyers make more money from malpractice cases. “The only business left undone [from last year] were for special interests,” said Bobby Pena, vice president of communications for the Calif. Assn. of Health Plans (CAHP), which opposes AB 1751.

Kuehl insists her bill has been drafted so that it won’t affect MICRA cases and is willing to add further guarantees to maintain arbitration as the vehicle for malpractice cases in order to gain Democratic support. Support from Republicans is considered unlikely no matter how Kuehl amends the bill.

In addition to Kuehl’s plan, Sen. Richard Polanco (D-Los Angeles) also has an HMO arbitration bill. SB 1934 is said to be more industry friendly, according to one health expert in the Capitol. It does not ban arbitration clauses from patient contracts while seeking to guarantee the same opportunities through arbitration as in a jury trial.

Although it is supported by Kaiser Permanente and CAHP, SB 1934 has its own legislative hurdle to clear: Kuehl, chair of Assembly Judiciary. Kuehl has concerns with the Polanco bill and has been assured, according to one legislative source, that SB 1934 will be referred to her committee if it clears the Senate.

SB 1934 will get its first committee hearing in Senate Judiciary on April 25. Kuehl’s bill is currently on the Assembly floor awaiting action.

Consumer Watchdog
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