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Read Making a Killing

home / healthcare / in the media

San Francisco Examiner
May 10, 2000

by Robert Salladay

Demos fight Davis on HMOs;

Assembly committee rejects effort to deter patients from suing to recover medical costs
SACRAMENTO - Democrats in the Legislature have rejected an attempt by Gov. Davis to water down a cornerstone of the landmark HMO reforms he signed into law last year: the right for patients to sue their HMOs to recover medical costs.

Under the new law, HMO patients can skip a critical bureaucratic step and quickly sue their HMOs if they suffer "significant financial harm" because they were denied medical treatment. Only a few states have given HMO patients the right to sue to recover medical bills.

Some HMO patients have drained their bank accounts or sold their homes to pay for treatment after being denied coverage by an HMO. A significant portion of personal bankruptcies in the United States are the result of huge medical bills.

But only months after signing the new law, Davis started working to eliminate the "significant financial harm" requirement. The Democratic governor's proposed change would have allowed quick lawsuits against an HMO only when the patient's physical safety, not their pocketbook, is in danger.

Everyone else who wants to sue an HMO must undergo a state-supervised independent review of their case before going to court.

The Assembly Judiciary Committee rejected a measure Tuesday that would have amended the law to make it closer to what Davis wants. The landmark reforms stay - for now - the same as approved by the governor last year. The bill got only three "yes" votes.

"The Legislature said it was not going to amend a bill before the ink is dry," said Jaime Court, a lobbyist with the Foundation for Taxpayer and Consumer Rights, which is partly funded by trial lawyers. "This was the Legislature saying it was going to implement its own vision when it comes to HMO reforms."

A spokeswoman for Davis said he would continue to press the Legislature to change the law, despite Tuesday's setback.

Court and other consumer advocates said the governor's proposed changes "would have given patients a lot shorter stick in dealing with HMOs," effectively gutting the original measure Davis hailed as historic when he signed it in September.

"Simply put, the whole point of this right and the HMO liability laws passed last year is to provide the strongest possible incentive for

the HMOs to do the right thing the first time out," said Sara Nichols, director of the nonprofit Neighbor-to-Neighbor health care advocacy group. "This bill would cut back on that incentive and would place patients in an impossible position."

Maureen E. O'Haren, a lobbyist with the California Association of Health Plans, said sending these disputed cases to an independent review instead of directly to court didn't mean the HMO patient wouldn't be able to recover money from the HMO.

"We think people should pursue this process," O'Haren said. "It's available. It's speedy, and it gets them what they need as soon as possible."

Assembly Judiciary Committee Chairwoman Sheila Kuehl, D-Santa Monica, co-author of last year's bill, said she had told the governor she was adamant about keeping financial harm in the law, but agreed to carry the new bill, AB2039, this session to address Davis' concern that patients could "game" the system by paying out of pocket for medical care to avoid the independent review otherwise required.

She reminded her committee she would vote "yes" on her revised bill. AB2039 nevertheless failed, despite a large majority of Democrats on the panel.

"This is a very strange circumstance obviously," Kuehl said, "when my friends so vociferously oppose the bill."

But Kuehl said such situations were likely to arise more and more as the Legislature continued to wade into the complicated, politically risky world of HMO reform.

"We are trying to find a way to do pretty significant overhauling of some systems that in my opinion have needed it for quite a long time," Kuehl said. "Sometimes we just keep trying until we get it right."



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