What’s the Fairest Battlefield in the Fight for Better Health Care?

This week, the California Supreme Court reaffirmed that people in private arbitrations do not have the same rights as people who go to court.

The war between patients and their HMOs could become a lot less contrarian if state legislation mandating the right to a public trial, rather than private dispute resolution by HMOs, passes the California Assembly, where it awaits action. Among the five states with HMO liability laws, California is the only one where patients do not have such a public right to trial.

Any patient who has fought an HMO over an unpaid doctor’s bill or denial of a prescription drug has felt the frustration sparked by contradictions straight out of Cold War-era politics.

The HMO “Cold War” with patients over small bills is waged in the chilly tones of unreturned phone calls, lost or misplaced paperwork and clerks with insufficient authority. When the issue becomes a legal battle over a $100,000 procedure that could save a life, the fine print of HMO contracts ensures another cool reception for the patient in the office of an HMO-financed lawyer, where there is no jury or judge. The private lawyer decides matters of life and death and receives repeat business from the HMO if goodwill is maintained.

The HMOs’ private judiciary, known as “binding arbitration,” embodies the worst elements of American hypercapitalism and Soviet-style justice. To have access to the “market” of health care coverage, a patient must give up his right to a court trial. Patients cannot appeal errors of law to a judge. None of the evidence and testimony presented is public record, and the media are not welcome to observe proceedings. Delays are common, as is abusive behavior by HMO defense lawyers, because there is no judge to ensure fairness.

To the market-oriented HMOs, this system represents “choice.” Yes, consumers can avoid mandatory binding arbitration by joining an HMO that doesn’t require it--if they can find one. The only true choice for the typical patient is between health care and due process--”choice” only in Stalin’s lexicon.

The best legal and medical minds concur. In 1998 a commission of the American Medical Assn., the American Arbitration Assn. and the American Bar Assn. unanimously agreed that binding arbitration only be entered into voluntarily by patients after a dispute arises. AB 1751, sponsored by Assemblywoman Sheila Kuehl (D-Santa Monica), would guarantee this standard, but it is the target of an intensive lobbying and public misinformation campaign by the HMO industry.

Last year, Gov. Gray Davis signed legislation giving all HMO patients who suffer or are in danger of suffering significant harm the right to seek legal relief and damages from HMOs. However, the forum for such disputes will be the office of a private lawyer paid by the HMO, unless AB 1751 becomes law.

Lung cancer patient Wilfredo Engalla relied on this forum, making the claim that his cancer had been misdiagnosed as colds and allergies. Wanting resolution, Engalla tried to make the process as quick as possible. His HMO, Kaiser, stalled until after his death, five months after his initial request for a hearing. Engalla’s daughter, Aina Engalla Konnold, explains, “The amount of damages we might have been awarded was significantly reduced once Dad passed away [because the dead recover no money for pain and suffering]. It explained with chilling clarity the reasons behind Kaiser’s stall tactics.”

The family alleged fraud, the only appealable issue. The data produced in the case revealed that while the HMO promised that an arbitrator would be appointed in 60 days, in the typical Kaiser case, it took approximately two years. The California Supreme Court ruled that “there is evidence that Kaiser established a self-administered arbitration system in which delay for its own benefit and convenience was an inherent part, despite express and implied contractual representations to the contrary.”

While Kaiser claims to have fixed its system, the case offers a rare window into how forced arbitration systems can be abusive because patients have little power.

California patients should not have to choose between health care and the right to trial. Legislators debating Kuehl’s bill should recognize this is a matter of pragmatism and principle.