State HMO Czar Quits Unexpectedly

Keith Bishop, who won a bruising confirmation fight in May to become Gov. Pete Wilson’s chief regulator of the state’s vast managed care industry, disclosed his surprise resignation Tuesday.

Bishop, the state commissioner of corporations, said he will step down from the $108,000-a-year post on Sept. 30 and return to private law practice in Orange County.

Word of his abrupt departure caught consumer advocates and industry executives off guard, particularly because he had won an extraordinarily hard-fought battle for Senate confirmation less than four months ago.

It also occurred as Wilson and the Legislature are struggling to create an updated regulatory system for the managed care industry that will balance the often competing demands of high-quality care and reduced costs.

Sean Walsh, the governor’s spokesman, said no successor would be appointed immediately. “We need to do some searches,” he said.

In an interview, Bishop, 40, who filed his letter of resignation with Wilson on Friday, said he decided to leave the post for “basically personal reasons.” In the letter, he cited the “financial obligations of rearing and educating three children.”

He conceded that he is interested in becoming a judge, but declined a direct answer on whether he has sought an appointment to the bench from Wilson. “At this point, I’m looking to rejoining private practice,” said Bishop, who lives in Mission Viejo.

During his confirmation hearings last spring, Bishop, who had served without confirmation for a year, was assailed by a variety of patients’ advocates for failing to act on consumer complaints against health maintenance organizations.

Included in the list were charges that the Department of Corporations had failed to enforce a regulation requiring HMOs to publicize a toll-free consumer hotline. More than 7,000 calls went unanswered, according to testimony at legislative hearings.

In the face of such opposition to Bishop, the Senate Rules Committee warned Wilson that Bishop’s appointment as chief HMO regulator would be rejected.

In a remarkable series of actions, Wilson subsequently added $6.5 million to the department’s $9-million budget for HMO enforcement and filled a vacant department ombudsman’s position. A few days later, Bishop won unanimous confirmation.

Bishop said Tuesday that he believes that he leaves the department “in real good shape.”

Even so, Myra Snyder, executive officer of the California Assn. of Health Plans, an HMO trade association that backed Bishop, voiced concern that his abrupt exit may impede efforts to develop new regulatory reforms for the mushrooming industry.

“The department definitely benefits from continuity and leadership. We were at the beginning stage of developing a working relationship with him,” Snyder said. She urged Wilson to appoint a successor quickly.

But Jamie Court of Los Angeles-based Consumers for Quality Care, one of Bishop’s toughest critics, asserted that even after Bishop was confirmed, his enforcement record on quality-of-care matters was “unremarkable.”

“The department is in shambles,” Court said. He claimed that while Bishop may have stepped up enforcement actions against HMOs for violating administrative procedures, he was not aggressive in pursuing quality-of-care offenders.

Another critic, Beth Capell of Health Access California, gave Bishop slightly higher marks. “We think he made some progress although the department is so inadequate” in providing consumer protections, she said. “We went from the sub-basement to basement.”