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NEWS RELEASE
Mar 13, 2002


CONTACT: Emmy Rhine - 310-392-0522 x320

Hearing Reveals Ills in HMO Mandatory Arbitration

More than three hundred nurses turned out for a California Assembly Health and Judiciary Committee hearing yesterday about forced HMO arbitration to support Senate Bill 458 (Escutia), which requires that arbitration be voluntary under California's HMO Accountability law. The following are some of the revelations from the hearing that show the need for the legislation, which is sponsored by the Foundation for Taxpayer and Consumer Rights (FTCR).

Mandatory arbitration negatively impacts the public court system, according to Professor J. Clark Kelso of McGeorge School of Law. In addition to causing "brain drain" in which the most able judges retire early lured by the more "lucrative" arbitration setting, Kelso likewise remarked that mandatory arbitration "leaves the court system with an unbalanced view of the world. You don't get to see a whole range of business and complex disputes. You may be removing from the courts entire subject matter areas so that the cases just don't arise, and that means the courts will not have the opportunity to develop the law in that particular area."

The Office of Independent Administrator (OIA) for Kaiser's forced arbitration system lacks an internal grievance system, confessed OIA "independent" administrator, Sharon Lybeck Hartmann. Claimants have no place to turn with complaints of bias, fraud, and malfeasance in the OIA system. One Kaiser OIA claimant, Hiram Ash, testified that his complaints of serious impropriety at the OIA were rejected first by the OIA and later by the State Bar, the latter because they only review problems originating in public courts. The OIA was created in response to a 1997 California Supreme Court decision that condemned Kaiser's arbitration system, ruling that "Kaiser has established a self-administered arbitration system in which delay for its own benefit and convenience was an inherent part."

Secrecy in HMO arbitration constitutes a serious public health threat, according to the California Nurses Association (CNA). CNA RN, VP Deborah Burger testified that although the number of arbitrations and their award amounts are publicly accessible, all medical facts are hidden resulting in an inability by nurses, regulators, and the public to monitor and address HMO quality of care violations and systemic patterns of malfeasance. The nurses were quickly shut down by the Committee Chair following their chants in unison of: "What do Kaiser patients want? Choice! What is Kaiser most afraid of? Truth! Why should Kaiser patients have the right to trial? Justice!"

Survey of claimant attorneys reveals significant distaste with "unfair" Kaiser OIA system, according to The Foundation for Taxpayer and Consumer Rights (FTCR). Of the 23 Kaiser arbitration cases charted through Jury Verdict Research between April of 1999 and October of 2001, 17 OIA claimant attorneys responded this way to FTCR's survey.
When asked whether or not they perceive the OIA Arbitration System as fair 88% responded negatively.
94% reported that the lists of approved Neutral Arbitrators supplied by the OIA contain primarily inexperienced and/or unknown individuals.
82% stated that they always or generally choose to not use the neutral arbitrators on the OIA panel. Rationales included the unfamiliarity and inexperience of the arbitrators, and an overall distrust of "neutrals" for whom "Kaiser is footing the bill."
88% indicated that awards granted to claimants in the OIA system are less than in the jury system.
100% reported that the "repeat player" problem continues to impact the decisions made by OIA arbitrators who feel pressure to please Kaiser in order to be agreed upon to arbitrate future cases. Comments included: "There is always a tendency to split the difference and give claimants less than they are due." The arbitrators "compromise and don't give injured victims the compensation they need and deserve." "Claimants can never receive the full amount that they are due."

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