Assembly Committee to Discuss Legislation to Allow HMO Patients to Bypass Mandatory Arbitration in Some Cases
The Assembly Health Committee today will consider a Senate-passed bill (SB 458) that would allow patients to bypass mandatory arbitration and file lawsuits against health plans when an HMO "interferes with doctor-recommended treatment and substantial harm results," the Sacramento Bee reports. Most health plans currently require patients to participate in binding arbitration to resolve disputes as a condition of their coverage. Consumer advocates say that HMOs are more familiar with the arbitration process, which places patients at a disadvantage compared to lawsuits. But HMO officials say arbitration effectively resolves disputes and contend that consumer advocates only oppose the arbitration system because it makes it difficult for trial lawyers to win "large jury awards." California Association of Health Plans President Walter Zelman said, "Arbitration has proven to be a faster, less-expensive approach to resolving disputes to the benefit of consumers." Although Gov. Gray Davis (D) has not taken a position on the bill, Daniel Zingale, director of the Department of Managed Health Care, said that he has "concerns" about the current system, pointing out that HMOs may gain an advantage by being "repeat customers" in arbitration proceedings. He added that because arbitration often leads to confidential settlements, it is difficult for state investigators to collect data on the industry (Rojas, Sacramento Bee, 6/18).
The bill "deserves thoughtful debate" by the committee today because the theory that the current arbitration system is "faster, cheaper and fairer than going to court" may no longer be true, according to a San Jose Mercury News editorial. The editorial cites March testimony from law professor J. Clark Kelso, who said that arbitration can be as "costly and as lengthy as court proceedings" but provides "fewer safeguards" for patients. He added that it is "unfair" to require patients to agree to mandatory arbitration as a condition of enrollment in a health plan and that patients cannot appeal arbitration decisions even if "legal or factual errors" are committed. The Mercury News concludes, "Few decisions are more important than those in the health care arena. It may be time to allow HMO patients to have the choice of arbitration or court, under the narrow set of conditions allowed in SB 458" (San Jose Mercury News, 6/16).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.