New Rules Represent Important First Step Toward Better Disclosure

The Foundation for Taxpayer and Consumer Rights (FTCR) commended new rules issued by the California Department of Managed Health Care (DMHC) which force HMOs to disclose more information about their secret arbitration cases and to limit gag orders on claimants.

Zingale’s rules responded to a rulemaking petition filed by FTCR on February 13, 2001. The Department’s new regulations require that HMOs submit complete copies of all arbitration outcomes so that the DMHC can investigate complaints and determine patterns of abuse. Further, they permit claimants who have settled to discuss their cases with regulators without fear of violating confidentiality clauses. FTCR’s petition asked, more broadly, that all HMO arbitration files be made public to ensure that HMO quality of care violations are no longer hidden from public view. Zingale claimed he did not have the statutory authority to make such a change.

“So long as quality of care violations are hidden from the public in secret arbitration proceedings, patients will continue to suffer needlessly,” commented Emmy Rhine, a consumer advocate with FTCR. “The Department’s steps signify an important recognition that HMO mandatory arbitration procedures are suspect. Still, the new rules, while making more information available to the DMHC, do not give the public the information it needs be protected from quality of care violations.”

The Assembly Judiciary and Assembly Health committees have scheduled joint hearings on HMO arbitration procedures for the morning of March 12th. FTCR is the sponsor of SB 458 (Escutia) that makes HMO arbitrations voluntary under California’s new HMO liability law. It passed the California Senate last year but has yet to pass the Assembly.