The Private HMO Justice System for Injured California Patients
Is It Fair?

Published on

Should California patients be forced to give up their right to go to court just to sign up for HMO coverage?

Should they be forced to have their health care disputes decided in secret proceedings, controlled by private lawyers and retired judges who depend on repeat business from the HMOs, where cases are screened far from the open forum of public opinion?

Today, California patients can be forced into mandatory, binding arbitration as a condition of joining an HMO or managed care health plan prior to any dispute arising.

Courts, the place where the average person who is wronged can take on the rich and powerful corporation, have increasingly been replaced with a private judiciary, presided over by private lawyers, not judges and juries.

Forced arbitration can be lengthy, costly and unfair. It also conceals quality of care violations from public scrutiny.

  • Arbitrators often depend on repeat business from HMO corporations and are more likely to rule in their favor.
  • Patients complain of abuse by attorneys that are not subject to discipline by judges.
  • Arbitrators generally charge $100-$400 per hour, compared to $350 per day for court costs.
  • None of the abuses or documents uncovered in the arbitration process can be made public.
  • There is no jury of one’s peers, publicly accountable judge or media scrutiny.
  • There is judicial review only in cases of outright fraud, not judicial error.1

Is Pre-Dispute, Binding Arbitration Unfair?

In 1998, a joint commission of the American Bar Association, the American Medical Association and the American Arbitration Association concluded, “In disputes involving patients, binding forms of dispute resolution should be used only where parties agree to do so after a dispute arises.”

Nation’s largest HMO sets up arbitration system to delay.

In 1997, the California Supreme Court, ruling in the case of lung cancer patient Wilfredo Engalla, found, “There is evidence that Kaiser established a self-administered arbitration system in which delay for its own benefit and convenience was an inherent part, despite express and implied contractual representations to the contrary.”2

Other HMOs in California have comparable arbitration systems and many of their patients have reported similar abuses to the Foundation for Taxpayer and Consumer Rights (FTCR). Assembly Bill 1751 (Kuehl), sponsored by FTCR, would end Pre-Dispute, Binding Arbitration for California patients.

What you can do:

1. Find your California state legislator:

State Senator

State Assemblymember

2. Write Gov. Davis and your state legislator asking for their support of AB 1751 (Kuehl).

Letters should be addressed to:

Governor Gray Davis

State Capitol

Sacramento, CA


The Honorable _________

California State Senate

P.O. Box 942848

Sacramento, CA


The Honorable _________

California State Assembly

P.O. Box 942849

Sacramento, CA


Ask Gov. Davis and your state legislator to pass AB 1751 (Kuehl) during the 2000 legislative session.

1. “Thus even though an error of law appears on the face of an arbitration award and causes substantial injustice it is not subject to judicial review.” Moncharsh v. Blase, California Supreme Court, No. S-02099-7.

2. Nida Engalla et al. v. The Permanente Medical Group, Inc.,
California Supreme Court, No. S-O4881-1, 1997.

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.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases