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Kaiser's "Independent" Arbitration System Administrator Lobbies For Kaiser

Placebo legislation by the state's largest HMO, Kaiser Permanente, designed to head off more ambitious HMO arbitration reform, was defeated by the California Senate Judiciary Committee Tuesday evening.

The bill, SB 1934 (Polanco), simply restates current case law, which mandates that patients in court or arbitration can recover the same damages, but without fixing a lopsided arbitration process where the rights of due process in binding arbitration are not compatible with those in court and greatly disadvantage patients. Patients in forced arbitration cannot appeal errors of law, do not have the same discovery and evidentiary rights, and there is no public scrutiny or public record. Existing law can already be enforced to guarantee access to punitive damages for injured patients, which is what SB 1934 purports to do.

"The debate can now focus on fixing the Kangeroo Court of forced HMO binding arbitration by giving all patients the right to choose between trial and arbitration after a dispute occurs," said Jamie Court, advocacy director of the Foundation for Taxpayer and Consumer Rights, sponsor of AB 1751 (Kuehl). The bill makes HMO arbitration voluntary. "Addressing the fundamental lack of power patients have in the forced arbitration system and how the process is dramatically different from the American court system is the only way to guarantee patients equitable remedies. As long as patients are forced to choose between the right to trial and the right to health care, there will be no incentive to HMOs to make their arbitration systems fairer."

Kaiser's new "independent" arbitration administrator, Sharon Hartman, testified as part of the Kaiser presentation in favor of the bill.

"The independent administrator's presence as a lobbyist for Kaiser legislation raises real questions about her independence," said Court. "A truly independent administrator would not be part of a Kaiser lobbying and public relations ploy to stop real reform. If Kaiser's reformed system really works, patients will choose it over the court system if they are given the chance."

A lack of due process rights for patients caused a commission of the American Medical Association, American Arbitration Association and American Bar Association to conclude in 1998 that patients should only enter into arbitration voluntarily, after a dispute occurs, not as a condition of having health coverage at an HMO. AB 1751, which implements that reform, awaits action on the Assembly Floor.