BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1256|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: SB 1256
Author: Mitchell (D)
Amended: 4/29/14
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 8-0, 4/7/14
AYES: Lieu, Wyland, Berryhill, Block, Corbett, Galgiani, Hill,
Padilla
NO VOTE RECORDED: Hernandez, Vacancy
SENATE JUDICIARY COMMITTEE : 6-0, 4/22/14
AYES: Jackson, Anderson, Corbett, Lara, Leno, Vidak
NO VOTE RECORDED: Monning
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Medical services: credit
SOURCE : Consumer Federation of California
DIGEST : This bill prohibits all healing arts licensees or an
employee or agent of that licensee from (1) arranging for or
establishing credit extended by a third party without first
providing a written notice and treatment plan to a patient and
prohibits that arrangement or establishment of credit with
regard to a patient who has been administered or is under the
influence of general anesthesia, conscious sedation, or nitrous
oxide; and (2) charging for treatment not yet rendered or costs
not yet incurred to an open-end credit extended by a third party
without providing the patient with information regarding the
CONTINUED
SB 1256
Page
2
treatment and services. Also, requires all healing arts
licensees to refund any payment received for treatment that has
not been incurred within 15 business days upon the patient's
request.
ANALYSIS :
Existing law:
1. Prohibits a dentist or employee or agent of a dentist from
charging treatment not yet rendered, or costs not yet
incurred, to an open-end credit extended by a third party
without first providing the patient with specified
information regarding the treatments and services to be
rendered and ensuring the patient's receipt of the treatment
plan.
2. Requires a dentist, within 15 business days of a patient's
request, to refund to the lender any payment received through
credit extended by a third party that is arranged for or
established in a dental office, for treatment that has not
been rendered or costs that have not been incurred.
3. Requires a dentist or an employee or agent of a dentist to
provide the patient with a written notice on one page in at
least 14-point type font and to get a signature from the
patient in order to arrange for or establish credit extended
by a third party.
4. Prohibits a dentist or employee or agent of a dentist from
arranging for or establishing credit extended by a third
party for a patient with whom the dentist or employee or
agent of the dentist communicates with in a language other
than English unless the written notice information is also
provided in that language.
5. Prohibits a dentist, employee or agent of that dentist from
establishing credit that is extended by a third party for a
patient who has been administered or is under the influence
of general anesthesia, conscious sedation or nitrous oxide.
6. Provides that a patient who suffers damages as a result of a
person willfully violating these provisions may seek civil
CONTINUED
SB 1256
Page
3
relief.
This bill:
1. Prohibits a healing arts licensee, or an employee or agent of
that licensee, from arranging for or establishing credit
extended by a third party for a patient without first
providing a written notice and a written treatment plan.
2. Prohibits the arrangement or establishment of credit with
regard to a patient who has been administered or is under the
influence of general anesthesia, conscious sedation, or
nitrous oxide.
3. Prohibits a healing arts licensee, or employee or agent of a
licensee, from charging for treatment not yet rendered or
costs not yet incurred to an open-end credit extended by a
third party that is arranged for, or established in, that
licensee's office without first providing the patient with
specified information regarding the treatment and services to
be rendered and ensuring the patient's receipt of the
treatment plan.
4. Prohibits a healing arts licensee or employee or agent of a
healing arts licensee from arranging for or establishing
credit extended by a third party for a patient with whom the
licensee or employee or agent of the licensee communicates
with in a language other than English unless the written
notice information is also provided in that language.
5. Requires a healing arts licensee to refund to the lender any
payment received for treatment that has not been rendered, or
costs that have not been incurred within 15 business days
upon the patient's request.
6. Provides that a person who willfully violates the provisions
of this bill is subject to civil liability.
7. Defines the following terms:
A. "Licensee" as an individual, firm partnership,
association, corporation, limited liability company or
cooperative association.
CONTINUED
SB 1256
Page
4
B. "Licensee's office" as an office of a licensee in
solo practice or an office in which services or goods
are provided by the licensee or by employees in that
office, or by independent contractors in that office.
C. "Open-end credit" as credit extended by a creditor
under a plan in which the creditor reasonably
contemplates repeated transactions.
8. Allows the creditor to impose a finance charge from time to
time on an outstanding unpaid balance, up to any limit set by
the creditor.
9. Specifies that a "patient" includes, but is not limited to,
the patient's parent or legal representative.
Background
Medical credit card popularity . Medical credit cards have
increased in popularity over the past decade. U.S. financial
institutions have partnered with health care providers to offer
medical credit cards to people without health insurance or those
who require services not covered by their insurance including
dental care, vision, hearing aids, cosmetic procedures and
veterinary care. According to Craig Conway, a research
professor with the University of Houston Law Center in Texas,
U.S. citizens spend about $294 billion annually on out-of-pocket
medical expenses, a quarter of which they charge to standard
credit cards. However, an estimated 79 million people have
trouble paying those expenses and, as a result, health care
providers struggle to collect money owed to them (University of
Houston Law Center, Health Law Perspective, November 2009). The
American Medical Association and the American Dental Association
have no formal policy on medical credit cards, but some
practitioners refuse to use them, saying they threaten to
exploit the traditional relationship between provider and
patient.
Medical credit card companies . Consumer Reports indicates that
health care credit card providers such as Capital One Healthcare
Finance, Chase Health Advance and Citi Health Card charge
interest rates ranging from 24-28% with credit limits as high as
$40,000 ("Overdose of Debt," Consumer Reports, July 2008).
Financial institutions such as General Electric, U.S. Bancorp
CONTINUED
SB 1256
Page
5
and Citigroup are also medical creditors. According to a
November 2007 Business Week article entitled, "Fresh Pain for
the Uninsured," General Electric owns Care Credit, and according
to Care Credit's Web site, it has six million customers and is
marketed to dentists, plastic surgeons and some hospitals. U.S.
Bank, a U.S. Bancorp unit, finances about $2 million in patient
debt per month through a medical-benefit firm, charging most
customers annual interest of 13.5% and as much as 24% on late
bills.
Comments
According to the author's office, this bill extends the current
protections that patients receive in a dental office to other
areas of the medical field. The author's office believes that
medical credit cards, extended through third party lenders, but
solicited by medical providers, pose a significant risk to
consumers who may not fully understand the arrangements that are
being made for them by their provider or provider's office. The
interest rates for these credit cards can range between 24-28%
and may include significant penalty fees charged retroactively
on the entire cost of the procedure. The significant risks
created by deferred interest credit cards in connection to
medical services make it essential that consumers fully
understand the arrangements they make with their medical
providers.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 5/13/14)
Consumer Federation of California (source)
California Immigrant Policy Center
ARGUMENTS IN SUPPORT : The bill's sponsor, Consumer Federation
of California, writes, "Medical credit cards provide a financing
option that helps patients pay for treatments or procedures that
are not otherwise covered by their medical insurance? However,
in some instances, patients who thought they were signing up for
a payment plan directly with their provider later discover that
they have signed credit applications and may have event paid
up-front for treatments they have not yet received. ?Patients,
primarily elderly, low-income or limited English-speaking, who
CONTINUED
SB 1256
Page
6
are offered a credit card when they are most vulnerable? may not
understand that the financing option they have been recommended
is actually a credit card or loan extended through a third
party. SB 1256 is not intended to prohibit medical providers
from helping to arrange credit cards or loans for their patients
but aims to set forth basic standards governing these credit
card arrangements and provide basic consumer protections."
MW:d 5/13/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED