Proposed Legislation Seeks To Eliminate Confidentiality Clauses in Some Lawsuits
Assembly members on Tuesday are scheduled to discuss a bill (AB 446) that would prevent state health care providers and other licensed professionals from using clauses in legal settlements to prevent plaintiffs from reporting the action to state regulators, the Los Angeles Times reports.
The measure would permit confidential settlements in which plaintiffs agree not to disclose the details of the lawsuit's resolution, including the amount of the settlement. However, under the bill, California's 2.3 million business professionals would be disciplined if they insert a gag stipulation to persuade plaintiffs from reporting their complaints to regulators.
Lawmakers, consumer advocates and regulators, who are urging a ban on the gag clauses, say the stipulations are "legally dubious" and have caused "troublesome gaps" in California's consumer-protection efforts, the Times reports.
Gov. Arnold Schwarzenegger (R) last year vetoed similar legislation, saying that eliminating gag clauses would "not further the goal of making California more business-friendly." In his veto message, he added that "even after the resolution of a civil suit, this bill could still require a licensee to [undergo] a second adjudication before a regulatory body."
The attorney general's office last year told legislators it believed that a ban on confidentiality clauses could not be enforced. However, supporters say plaintiffs endure "intense" pressure to consent to the clauses, the Times reports.
Mitchell Karlan, president of the California State Medical Board, through a spokesperson said that "[g]ag clauses in malpractice settlements present unnecessary roadblocks which impede the medical board's investigators from their sworn duty to protect the public."
Julianne D'Angelo Fellmeth, the state-appointed independent monitor for the Medical Board of California, said "The whole practice is just unconscionable, and it deprives executive branch agencies of the information they need to do their job," adding, "I don't understand how the governor didn't see that the first time around" (Rau, Los Angeles Times, 4/19).