An order to ease state rules raises consumers’ fears

Published on

The San Diego Union-Tribune

Consumer advocates are concerned that an executive order Gov. Arnold Schwarzenegger signed in November could compromise several consumer protections, including protections for managed-care patients.

Shortly after taking office, Schwarzenegger signed an order that aimed to ease “over-regulation” in hopes of making the state more business-friendly and attracting jobs.

However, consumer advocates say the potential lifting of some rules could make the state less consumer-friendly. “It’s basically taking away the force of the law,” said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

Schwarzenegger’s order requested state agencies to submit reports of all regulations adopted, amended or repealed since the start of former Gov. Gray Davis‘ term.

The idea, according to the Schwarzenegger administration, was for agencies to identify and possibly modify regulations, depending on how well they work within the state’s current economic climate.

The order included temporarily freezing proposed regulations and identifying “underground” regulations, agency rules, policies or procedures not written into law.

But some of the rules that could come up for review are making consumer advocates nervous.

In particular, consumer groups are looking at a few rules identified by the Department of Managed Health Care as not having been adopted as regulations. The department regulates the state’s HMOs.

In a report complying with the executive order, the department identified a number of rules that could come up for review, including several mentioned in department communications issued during the previous administration.

In a March 2002 letter, for example, the department informed licensees of its position that an HMO must cover emergency contraception when dispensed by a contracting pharmacist.

“Now, the state can’t make the HMO do it,” Court said.

Until the Office of Administrative law makes a determination on such rules, agencies can apply them on “an opinion-only basis, which will not carry the force of law,” the executive order reads.

Debra Cornez, senior counsel for the Office of Administrative Law, said the office has received about 50 agency reports.

However, “it’s not fair to say that because something is listed in these reports that it doesn’t have the force of law,” she said. “Just because an agency has identified it in these reports doesn’t mean it is an underground regulation.”

The Office of Administrative Law will determine whether the rules identified are truly “underground” regulations that meet the definition of a regulation under government code. If so, they would have to go through a formal process to become legally enforceable unless they are determined to be exempt.

This process could take three months to a year and would include a public comment period. The office has not been given a set timeline for issuing its legal opinions, Cornez said.

A spokesman for the governor said he did not know how much this process might cost state agencies in administrative expenses.

Daniel Zingale, who headed the Department of Managed Health Care until early 2003, said he had not read his former department’s report but said he was concerned about how any rollback of managed-care regulations might affect patient rights.

“California has the strongest patients rights in the country, and those are enforced through regulations,” he said. “The freezing of HMO regulations is troubling to HMO consumers.”
Leslie Berestein: (619) 293-1542; [email protected]

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