California Health Care Consumer Protection Act

Phoenix Business Group
Consumer Advocacy Services

HMO / Health Insurer Honesty & Accountability Act

TITLE & SUMMARY

Requires health care businesses to: be accountable for decisions they make or influence; clearly inform people about what they are buying and every reason why benefits are denied.

Prohibits: unfair, deceptive or dishonest acts; "gag rules"; unauthorized disclosure of medical records; rewarding doctors for denying, or punishing doctors for providing, covered benefits.

Further prohibits: denial of benefits by unqualified persons; unreasonable delay in payment to providers; reducing benefits without consumer's consent; mandatory binding arbitration; punishment of "whistle blowers."

Provides various remedies that are not dependent on government regulators.

Levies no new taxes.

HMO / Health Insurer Honesty & Accountability Act

Summary

· When an HMO or health insurer commits an unfair, deceptive, dishonest or fraudulent act it must be held accountable, just as any Consumer, Provider or any other person would be. - Chapter 2

· HMOs and health insurers cannot be allowed to control decisions directly or indirectly and then escape responsibility for the consequences of the decisions. - Chapter 3

· A Consumer's health care records and private information cannot be sold or disclosed by an HMO or health insurer to anyone without the consent of the person. - Chapter 4

· Health care providers cannot be "gagged" and prevented from telling people what treatment options are available or that an HMO or health insurer is breaking the law. - Chapter 5

· HMOs and health insurers must pay for covered services promptly. - Chapter 6

· Providers should not be punished for providing a covered health care service. - Chapter 7

· Providers should not be rewarded for denying a covered health care service. - Chapter 7

· When a business functions like an insurance company it must be held accountable like any other insurance company, no matter what it chooses to call itself. - Chapter 8

· Health insurance should not be a guessing game. You will be told what you are buying in plain, easily understood language. - Chapter 9(a)

· If you are not sure what a word means in the insurance contract, you should be able to look it up in a dictionary and find the answer. The HMO or health insurer cannot make up a special meaning, without telling you in advance, so it can deny a benefit. - Chapter 9(a)-(b)

· You will get what you were told you would get. An HMO or health insurer cannot change what you were promised after you signed the agreement without your consent and giving you a refund equal to the value of what it is taking away. - Chapter 9(c)

· HMO or health insurer clerks will no longer be able to make medical decisions. Denials of benefits will only be made by properly qualified persons and the HMO or health insurer for whom they work will be held accountable for the consequences of that denial. - Chapter 10

· You will be told every reason why any benefit is being denied, so you will have a fair chance to dispute it, if you think the HMO or health insurer is wrong. - Chapter 11

· If you disagree with your HMO's or health insurer's decision, you will have a fair chance to prevail. - Chapter 12

· You will not be forced to give up your rights by an HMO, health insurer or anyone. - Chapter 13

· Some HMOs and health insurers engage in the same unfair, deceptive, dishonest or fraudulent practices over and over again because their victims are compelled to keep silent about what was done to them as the price for getting paid what they were owed to begin with - or even much less. The next victim never knows that it has been done before. This practice harms us all and must cease. - Chapter 14

· No one should fear that by standing up for their rights or those of their friends, families, patients, co-workers or anyone else they will be harmed by an HMO, health insurer or anyone. - Chapter 15

· For these rights to be meaningful and effective, people must be able enforce them directly without relying entirely on the government. - Chapter 16

HMO / Health Insurer Honesty and Accountability Act

TEXT

Chapter 1. Purpose and Intent

Chapter 2. Unfair, Deceptive, Dishonest or Fraudulent Acts or Practices Are Prohibited

Chapter 3. HCBs Are Accountable for the Decisions They Make or Influence

Chapter 4. Your Privacy and Confidentiality Are Protected

Chapter 5. "GAG RULES" Are Prohibited

Chapter 6. Covered Services Will Be Paid For Promptly

Chapter 7. Providing A Covered Health Care Service Will Not Be Punished - Denying A Covered Health Care Service Will Not Be Rewarded

Chapter 8. Any Person Who Functions Like An Insurer Is Deemed To Be An Insurer

Chapter 9. You Will Be Told What You Are Buying and Get What You Were Told

Chapter 10. Denials of Benefits Will Only Be Made by Properly Qualified Persons

Chapter 11. You Will Be Told Every Reason Why Any Benefit Is Being Denied

Chapter 12. You Will Have A Fair Chance to Prevail in A Dispute with A HCB

Chapter 13. You Will Not Be Forced To Give Up Your Rights

Chapter 14. "COVER-UP / SILENCING CLAUSES" Are Prohibited

Chapter 15. "Whistle Blowers" Will Be Protected

Chapter 16. Enforcement

Chapter 17. Definitions

Chapter 18. Interpretation and Precedence

Chapter 19. Amendment

Chapter 20. Effective Date

Chapter 21. Legal Challenges

Chapter 22. Severability

The People of the State of California do enact as follows:

HMO / Health Insurer Honesty & Accountability Act

Health and Safety Code is amended. Division 2.4 (commencing with Section 1796) is added as follows:

Chapter 1. Purpose and Intent

Section 1796.01 The People of California find and declare that:

(a) A majority of Consumers, both businesses and individuals, receive their health care benefits through a Health Care Business ("HCB");

(b) A majority of health care providers ("Providers ") work for or are influenced by HCBs;

(d) HCBs must be honest in their dealings and be held accountable for their actions;

(e) Existing law does not provide adequate protection for any of us;

(f) The purpose of this Act is to provide that protection and hold HCBs accountable for their actions.

Chapter 2. Unfair, Deceptive, Dishonest or Fraudulent Acts or Practices Are Prohibited

Section 1796.02. (a) Unfair, deceptive, dishonest or fraudulent acts or practices by HCBs are prohibited. (b) Any intentional or grossly negligent violation of this Chapter is also subject to the same remedies and penalties authorized in Insurance Code Article 1 (commencing with Section 1871) of Chapter 12 of Part 2 of Division 1 for other acts of fraud related to insurance.

Chapter 3. HCBs Are Accountable for the Decisions They Make or Influence

Section 1796.03. Health and Safety Code Section 1344.5 is added to read: Notwithstanding Health and Safety Code Section 1371.25: (a) HCBs have the duty to exercise ordinary care when making or influencing decisions relating to the provision of health care services; (b) HCBs shall be liable both for all damages to any Consumer, Provider or the general public caused by its failure to exercise such ordinary care, and / or by the failure of any its employees, representatives, agents, ostensible agents, or any person over whom it has control or influence, to exercise such ordinary care; (c) Notwithstanding any provision of any other law, including but not limited to Code of Civil Procedure, Sections 340.5, 364, 667.7 or 1295, Civil Code, Sections 3333.1 or 3333.3, or Business and Professional Code, Section 6146, nothing in this Act or any existing law shall cause a HCB to be defined as a Provider; (d) Nothing in this Act creates any obligation on the part of a HCB to provide any health care service that is not covered under the HCB Contract; and (e) Nothing in this Chapter shall create any financial liability on the part of an employer or group purchasing organization that purchases coverage from a HCB for health care services on behalf of its members or employees.

Chapter 4. Your Privacy and Confidentiality Are Protected

Section 1796.04. (a) The health care records and related information of each person, in whatever form it is obtained or maintained, are private and confidential. (b) Every person shall have access to his/her own health care records and related information during regular business hours. (c) No HCB shall disclose, give, loan, share, convey, sell, trade, license, rent or lease any person's health care records and related information, or any part thereof, to any other person without the express prior written authorization of the person. (d) These provisions supplement all other statutes, regulations and decisions in common law that relate to or protect the confidentiality of health care records and related information.

Chapter 5. "GAG RULES" Are Prohibited

Section 1796.05. Any arrangement of any kind between a HCB and a Provider that limits a Provider's ability to advocate on behalf of Consumers or fully disclose to any Consumer, other Provider, regulator or the general public all health care service options which might be available or any act or omission of a HCB which may be a violation of any law or regulation is prohibited.

Chapter 6. Covered Services Will Be Paid For Promptly

Section 1796.06. Unless otherwise agreed to in the HCB Contract, payment to a Provider for any covered health care service shall be made no later than thirty (30) days after the receipt of the billing and all reasonably required documentation.

Chapter 7. Providing A Covered Health Care Service Will Not Be Punished - Denying A Covered Health Care Service Will Not Be Rewarded

Section 1796.07. Any arrangement of any kind between a HCB and a Provider, which penalizes a Provider when a covered health care service is provided or rewards a Provider when a covered health care service is denied, is prohibited.

Chapter 8. Any Person Who Functions Like An Insurer Is Deemed To Be An Insurer

Section 1796.08. Any person who performs any of the substantial administrative functions of a health insurer or who, for compensation, assumes any of another person's financial risk for the cost of any health care service is an insurer, in the business of insurance, and subject to all statutes and regulations governing insurers and the business of insurance, which statutes and regulations shall be directly enforceable through the Courts by any person.

Chapter 9. You Will Be Told What You Are Buying and Get What You Were Told

Section 1796.09. (a) Consumers and Providers have the right to receive accurate, easily understood information about any HCB Contract that they may choose to sign. Therefore, the words used in a HCB Contract shall be understood: (1) as they are defined in commonly available dictionaries, unless a special meaning, given to a word or phrase by a HCB or a Court, has been clearly explained, in writing, to the Consumer or Provider prior to signing the HCB Contract; and (2) as reasonable Consumers or Providers would understand them based on what they were told by any representative of the HCB and the contents of the HCB Contract; and (3) the words shall not be understood based on any belief or intent of a HCB of which the Consumer or Provider was not informed, in writing, prior to signing a HCB Contract. (b) Any limitation on the benefits that is not clearly disclosed to the Consumer or Provider, prior to the signing of a HCB Contract, shall be unenforceable. (c) No benefit shall be limited or eliminated during the term of a HCB Contract without the prior written consent of each affected Consumer or Provider and a prompt refund by the HCB reflecting the fair market value of the limited or eliminated benefit.

Chapter 10. Denials of Benefits Will Only Be Made by Properly Qualified Persons

Section 1796.10. No HCB shall refuse to authorize any health care service that is covered under the HCB Contract and that is recommended by a Consumer's appropriately licensed Provider, unless it is denied by an appropriately licensed Provider, with the education, training, and relevant expertise that is appropriate for evaluating the specific clinical issues involved in the denial and for whose decisions the HCB is liable. Each person making such a decision shall also be liable for all reasonably foreseeable consequences of that decision.

Chapter 11. You Will Be Told Every Reason Why Any Benefit Is Being Denied

Section 1796.11. (a) When any benefit is denied or limited, the HCB shall provide the claimant with a detailed written statement of all the reasons for that denial or limitation within ten (10) days of the request for the benefit or completion of any test(s) or examination(s) reasonably required to make the determination that the benefit should be provided, limited or denied. (b) In an emergency, where a person's health is in jeopardy, the HCB's determination must be expedited to prevent any harm that might be caused by a delay. (c) All reasons for the denial or limitation of a benefit, which a HCB knew of or should have known of, which are not specifically stated in the initial letter from the HCB denying or limiting such benefit, are waived and the HCB is estopped from asserting.

Chapter 12. You Will Have A Fair Chance to Prevail in A Dispute with A HCB

Section 1796.12. (a) Each HCB shall establish an Internal Review Procedure that ensures Consumers and Providers that an appeal of a decision by a HCB to deny or limit any benefit shall be completed within fourteen (14) days of a request that is made on or after the date on which the detailed written statement of all the reasons for the denial or limitation of any benefit was required to have been sent to the Consumer or Provider. (b) Notwithstanding any other provision of law, any provision in any agreement requiring binding arbitration of any dispute between a HCB and any Consumer or Provider is prohibited. (c) Voluntary binding arbitration may be offered by a HCB only at the time a dispute arises, provided that the offer is in writing and contains the following language placed in a prominent and conspicuous location: "Both parties to this contract, by voluntarily agreeing to this binding arbitration, are giving up their constitutional right to have this dispute decided in a court of law before a jury. It is prohibited by law for any HCB to require you to agree to submit disputes to binding arbitration."

Chapter 13. You Will Not Be Forced To Give Up Your Rights

Section 1796.13. Any provision in any agreement or HCB Contract that contradicts or limits any of the rights or remedies granted by this Act and / or any waiver by any person of any provision of this Act is contrary to public policy and shall be unenforceable and void.

Chapter 14. "COVER-UP / SILENCING CLAUSES" Are Prohibited

Section 1796.14. Any provision in any settlement agreement or HCB Contract requiring a Consumer or Provider to keep silent about anything relating to a grievance or dispute with a HCB is prohibited.

Chapter 15. "Whistle Blowers" Will Be Protected

Section 1796.15. No person who disputes a decision made by a HCB or takes any other action authorized by this Act or related statutes or regulations shall be penalized, disciplined or harmed in any way, either directly or indirectly, by any person.

Chapter 16. Enforcement

Section 1796.16. (a) Any license issued pursuant to the Knox-Keene Act or the Insurance Code shall be suspended for any violation of this Act, until such time as the violation has ceased and all fines, penalties, damages, restitutions and / or disgorgements have actually been made or paid by the violator, and the violator has been enjoined from or has consented, in a form enforceable in any Court of competent jurisdiction, to refrain from engaging in such act or practice in the future. (b) Every person is granted the right, for themselves and / or on behalf of the general public, to: (1) enforce the provisions of this Act and all related statutes and regulations, in any Court of competent jurisdiction; (2) obtain payment from any person for all damages caused by that person, based on any violation of any such provision; (3) compel restitution by any person, including disgorgement of all gains obtained as a result of any violation; (4) obtain injunctive relief to prevent or compel any action necessary to assure adherence to the provisions of this Act and all related statutes and regulations by any person; and (5) obtain any other relief which the Court deems proper. (c) Punitive damages shall be awarded in instances where: (1) only one [1] violation has occurred, but it is proven by a preponderance of the evidence that the action or motivation of the person involved fraud, oppression or malice; or (2) the same or similar violation, by the same person, has occurred on at least three [3] other occasions and the violations are not proven by that person, by a preponderance of the evidence, to have been solely the result of mistake, inadvertence or excusable neglect. (d) No HCB shall pass on the cost of any punitive damages it is ordered to pay to any other person. (e) All damages available under this or any other applicable law or regulation, as well as compensation for expert witness fees and the reasonable value of any time spent or expense incurred by any person as a plaintiff in bringing the action, including, but not limited to, witness fees, shall be awarded to a person or member of a class who prevails in an action based upon any violation of this Act. (f) No HCB shall indemnify any person for any sums awarded through any settlement or judgment because of, or any costs associated with the defense of, any proven violation of this Act. (g) The rights and remedies granted by this Act are cumulative and are in addition to any other procedures or remedies for any violation or conduct provided for in any other law or regulation and are in addition to any civil penalties or disciplinary actions sought by any regulatory agency pursuant to any other law or regulation.

Chapter 17. Definitions

Section 1796.17. The following definitions shall apply to this Act:

(a) "Act" means the HMO / Health Insurer Honesty & Accountability Act and / or any of its provisions.

(b) "Advertisement" means any written, printed, telephonic, electronic or verbal communication of any kind published or disseminated by any means in connection with the offer or sale of any HCB Contract.

(c) "Consumer" means any person who contracts or pays for any other person to receive, or any person who is entitled to receive or receives, a health care service or benefit offered or paid for by a HCB.

(d) "Health Care Business" ("HCB") means any: "health care service plan" as defined in Knox-Keene Act Section 1345 (f)); "health care facility" as defined herein; health insurer or hospital service plan as defined in the Insurance Code or other statute that issues or administers individual or group insurance policies that provide payment or reimbursement for any health care service; other insurer that pays for or may become liable to pay for any health care service; other person who, in substance, acts in a similar capacity to any of the above or administers any claim for any health care service, regardless of business form or whether organized or operating as a profit or nonprofit, tax-exempt or non-exempt enterprise.

(e) "Health Care Business Contract" ("HCB Contract") means the contract, other documentation and / or advertisement that describes any of the details of any such agreement offered by a HCB to any person.

(f) "Health Care Facility" means any facility of any kind at which any health care service is provided, regardless of business form or whether organized or operating as a profit or nonprofit, tax-exempt or non-exempt enterprise, and including facilities owned, operated, or controlled by governmental entities, hospital districts, or other public entities.

(g) "Health Care Services" means health care services of any kind, included but not limited to diagnostic tests or procedures, medical or surgical treatments, nursing, chiropractic, physical therapy, speech pathology, audiology, professional mental health, dental, hospital, or optometric care, any other service related to the preservation or maintenance of the physical, emotional or mental health of a Consumer, or any other health care service as defined in Health and Safety Code Section 1345 (b).

(h) "Person" means any person, individual, Consumer, firm, business, institution, administrator, association, organization, partnership, HCB, Provider, business trust, foundation, worker, labor organization, corporation, public agency, regulator or political subdivision of the state.

(i) "Provider" means any person that delivers or furnishes any health care service.

Chapter 18. Interpretation and Precedence

Section 1796.18. This Act shall be liberally construed and applied to promote its underlying purposes, which are to protect every Consumer, Provider and the general public against unfair, deceptive, dishonest or fraudulent business acts or practices and to provide efficient and economical procedures to secure such protection. It is the will of the People of California that the provisions of this Act shall take precedence over any statute, regulation or decision in Common Law which may conflict with or limit the most expansive interpretation of these provisions for the protection of every Consumer, Provider and the general public.

Chapter 19. Amendment

Section 1796.19. No provision of this Act may be amended by the Legislature except to further the purpose of that provision by a statute passed in each house by roll call vote entered in the journal, two-thirds of the membership concurring, or by a statute that becomes effective only when approved by the electorate. No amendment by the Legislature shall be deemed to further the purposes of this Act unless it furthers the purpose of the specific provision of this Act that is being amended.

Chapter 20. Effective Date

Section 1796.20. The provisions of this Act shall become effective upon passage of the Act and shall apply to all acts or practices performed or contracts entered into from that date forward.

Chapter 21. Legal Challenges

Section 1796.21. It is the will of the People of California that any legal challenge to the validity of any provision of this Act shall be acted upon by the Courts on an expedited basis and any fees or costs incurred by the taxpayers in connection with the defense of the Act shall be promptly repaid to the taxpayers by any person challenging the Act.

Chapter 22. Severability

Section 1796.22. If any provision of this Act or the application thereof to any person or circumstance is held invalid, that invalidity shall not affect any other provision or application of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable. It is the will of the People of California that any invalid section, subdivision, paragraph, sentence, clause, phrase or word shall be severed from the remainder of the Act to preserve its remaining provisions.

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