BILL NUMBER: AB 1751 AMENDED BILL TEXT AMENDED IN ASSEMBLY MAY 26, 2000 AMENDED IN ASSEMBLY MARCH 2, 2000 INTRODUCED BY Assembly Member Kuehl (Principal coauthor: Senator Escutia) (Coauthors: Assembly Members Aroner, Bock, Cardoza, Honda,House,Jackson, Keeley, Longville, and Romero) (Coauthors: Senators Burton, Hayden, Hughes, Solis, and Vasconcellos) JANUARY 12, 2000 An act to add Sections 1670.8 and 1670.9 to the Civil Code, to repeal Section 1363.1 of the Health and Safety Code, and to repeal Section 10123.19 of the Insurance Code, relating to health care. LEGISLATIVE COUNSEL'S DIGEST AB 1751, as amended, Kuehl. Health care and disability contracts: arbitration.Existing law, theThe Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans. Existing, and other provisions of existing lawprovidesprovide for the regulation of disability insurers. Existing law requires health care service plan contracts and disability insurance policies to disclose, as specified, provisions relating to binding arbitration. This bill would repeal the provisions of law requiring the disclosure of binding arbitration provisions in health care service plan contracts and disability insurance policies. This bill would prohibit a health care service plan, application, or contract issued or renewed on or after January 1, 2001, from requiring binding arbitration to resolve disputes under the contract. This bill would also prohibit an application, policy, or certificate of disability insurance, as specified, issued or renewed on or after January 1, 2001, from requiring binding arbitration to resolve disputes under the policy or certificate. Existing law requires specified disclosures to appear in a contract for medical services that contains a provision for arbitration of any dispute as to professional negligence of a health care provider. This bill would provide that the provisions of the bill shall not be construed to supersede this provision concerning the arbitration of any dispute as to the professional negligence of a health care provider or to affect in any way existing law contained in the Medical Injury Compensation Reform Act of 1975 (MICRA) . Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. This act shall be known and may be cited as the Patient' s Right to Trial Act. SEC. 2. The Legislature finds and declares all of the following: (a) Contracts for the provision of health care services often contain clauses requiring the use of predispute binding arbitration to settle disputes arising under the contract. (b) Mandatory, predispute binding arbitration clauses imposed by health plans and health insurers on patients as a condition for the provision of health coverage are inherently unfair, unconscionable, and against public policy. (c) It is the policy of the State of California to ensure that all patients have the full benefit of legal rights and remedies and that patients not be coercively deprived of those rights and remedies, including the right to resolve a health care dispute in court. (d) It is the further policy of the state to prohibit health plans and health insurers from requiring or requesting patients to waive the option of resolving a health care dispute in court. (e) Based on the fundamental nature of the relationships involved, a health care service plan and all other managed care and disability insurance entities regulated under the Health and Safety Code and the Insurance Code are engaged in the business of insurance in this state as that term is defined for purposes of the McCarran-Ferguson Act (15 U.S.C. Sec. 1011 and following). (f) The state's interest in regulating the business of insurance as provided in this act is to protect purchasers of managed care services and disability insurance, along with their beneficiaries, including employees, their dependents and families, and any other patients covered by health plans and disability insurers, from being deprived of their right to resolve disputes in court when insurance entities, including health plans and disability insurers, act wrongfully to the detriment and substantial harm of a patient. SEC. 3. Section 1670.8 is added to the Civil Code, to read: 1670.8. (a) Notwithstanding any other provision of law, a health care service plan application or contract may not contain a provision requiring enrollees or subscribers to submit to binding arbitration to resolve disputes which arise under the contract. (b) Any application or contract provision to the contrary shall be void and unenforceable. (c) Any waiver by a subscriber or enrollee of the provisions of this section shall be deemed involuntary and contrary to public policy, and shall be void and unenforceable. (d) A health care service plan that violates this section shall be subject to an administrative penalty in the amount of ten thousand dollars ($10,000) per violation. The administrative penalties provided for in this section are in addition to any other penalties or remedies provided by law. (e) Nothing in this section is intended to affect the ability of an enrollee or subscriber and a health care service plan to agree voluntarily to alternative dispute resolution procedures, including binding arbitration, after a dispute has arisen. However, a health plan may not require an enrollee or subscriber to agree postdispute to use binding arbitration or other alternative dispute resolution procedures as a condition for the continued receipt of benefits under the health plan contract. (f) Nothing in this section shall be construed to supersede Section 1295 of the Code of Civil Procedure as it relates to contracts with a health care provider for medical services , or in any way to affect existing law contained in the Medical Injury Compensation Reform Act of 1975 (known as MICRA) . (g) This section shall apply to health plan applications and contracts issued or renewed on or after January 1, 2001. SEC. 4. Section 1670.9 is added to theInsuranceCivil Code, to read: 1670.9. (a) Notwithstanding any other provision of law, an application, policy, or certificate for disability insurance that covers hospital, medical, or surgical expenses may not contain a provision requiring policyholders, insureds, or certificate holders to submit to binding arbitration to resolve disputes which arise under the policy or certificate. (b) Any application, policy, or certificate provision to the contrary shall be void and unenforceable. (c) Any waiver by a policyholder, insured, or certificate holder of the provisions of this section shall be deemed involuntary and contrary to public policy, and shall be void and unenforceable. (d) A disability insurer that violates this section shall be subject to an administrative penalty in the amount of ten thousand dollars ($10,000) per violation. The administrative penalties provided for in this section are in addition to any other penalties or remedies provided by law. (e) Nothing in this section is intended to prevent a policyholder, insured, or certificate holder and a disability insurer to agree voluntarily to alternative dispute resolution procedures, including binding arbitration, after a dispute has arisen. However, a disability insurer may not require a policyholder, insured, or certificate holder to agree postdispute to use binding arbitration or other alternative dispute resolution procedures as a condition for the continued receipt of benefits under the policy or contract. (f) Nothing in this section shall be construed to supersede Section 1295 of the Code of Civil Procedure as it relates to contracts with a health care provider for medical services , or in any way to affect existing law contained in the Medical Injury Compensation Reform Act of 1975 (known as MICRA) . (g) This section shall apply to disability insurance applications, policies, and certificates issued or renewed on or after January 1, 2001. SEC. 5. Section 1363.1 of the Health and Safety Code is repealed. SEC. 6. Section 10123.19 of the Insurance Code is repealed.