California Consumer Group Sues Kaiser Permanente Over Arbitration Process
The advocacy group California Consumers Health Care Council on Dec. 3 sued Kaiser Permanente in Superior Court in San Francisco, alleging the HMO's mandatory arbitration system is "unfair" and illegal, the Contra Costa Times reports. Under Kaiser's rules, beneficiaries are not permitted to sue the health plan for denials of care as allowed by state law; they may only present their complaints to a neutral arbitrator, who then decides if monetary compensation is warranted (Silber, Contra Costa Times, 12/19). Under California law, managed care patients have the right to an independent medical review in disputes with their health plans over treatment denials (California Heathline, 10/1). Patients who undergo an independent review and disagree with the results can file suit against their managed care plans in the event that a denial of treatment resulted in death, loss of body functions, chronic pain, disfigurement or financial loss (California Healthline, 1/2/01). The lawsuit alleges that Kaiser does not "adequately inform" members of the rules because the HMO prints the provisions "at the back of a lengthy booklet." The suit added that even when members know of the provisions, "they have no alternative but to accept the system." The suit also alleges that Kaiser forces members who choose arbitration to pay for half the cost and does not allow them to recoup the cost of attorneys' fees. "Arbitration is only proper when both parties to a dispute have an intent to arbitrate and have knowingly and voluntarily agreed to arbitrate the dispute," the lawsuit states. Michael Hawkins, an attorney representing Kaiser, said many of the claims in the lawsuit are "incorrect and outdated." Hawkins said that Kaiser, not members, pays the cost for arbitration cases with a single arbitrator. However, members are permitted to choose a three-member panel to arbitrate the case, in which one arbitrator each is chosen by the member and Kaiser. In those cases, the member is required to pay for the arbitrator they choose. Hawkins added that attorney fees are recovered on contingency, similar to medical malpractice cases tried in court (Contra Costa Times, 12/19).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.