BILL ANALYSIS
AB 171
Page 1
Date of Hearing: April 14, 2009
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 171 (Jones) - As Introduced: January 29, 2009
SUBJECT : DENTAL SERVICES: CREDIT
KEY ISSUE : IN ORDER TO PROVIDE INCREASED PROTECTION FOR
CONSUMERS FROM OVERWHELMING DEBT, SHOULD ADDITIONAL RULES BE
IMPLEMENTED GOVERNING THE ARRANGEMENT OF OPEN-END CREDIT FOR
DENTAL SERVICES?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This bill, identical to last year's SB 1633 that was summarily
vetoed by the Governor without regard to its merits, is
sponsored by the Western Center on Law and Poverty. This bill
establishes requirements governing the arrangement of open-end
credit for dental services and prohibits a dentist from charging
a third-party line of credit for services that have not been
rendered, or costs that have not been incurred, unless the
patient provides written consent. In addition, this bill
requires a dentist, prior to arranging for credit extended by a
third-party, to give the patient a written treatment plan
disclosing certain information, as specified. According to the
sponsor, this bill is necessary to set forth basic standards
regarding the use and arrangement of dental credit cards as well
as adequate protections for low-income, under-insured consumers
who have incurred significant debt from these credit cards
because they were inadequately informed about their proposed
treatment plan or were unaware of the terms and conditions of
the credit card financing. Supporters, including several legal
aid providers and AFSCME, all agree that this bill will protect
low-income consumers from being victimized by unfair or abusive
credit arrangements for dental services. There is no known
opposition.
SUMMARY : Establishes requirements governing the arrangement of
open-end credit for dental services and prohibits a dentist from
charging a third-party line of credit for services that have not
been rendered, or costs that have not been incurred, unless the
patient provides written consent. Specifically, this bill :
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1)Prohibits a dentist, or an employee or agent of a dentist,
from charging to an open-end third- party line of credit,
where the credit is arranged for or established in the dental
office, for services that have not been provided or costs that
have not been incurred, without the patient's written consent.
2)Defines "open-end credit" as credit extended by a creditor
under a plan in which the creditor reasonably contemplates
repeated transactions, the creditor may impose a finance
charge from time to time on an outstanding unpaid balance, and
the amount of credit that may be extended to the debtor during
the term of the plan (up to any limit set by the creditor) is
generally made available to the extent that any outstanding
balance is repaid.
3)Defines "dentist" to include, but not be limited to, a "dental
corporation."
4)Provides that "patient" shall include the patient's parent or
legal representative.
5)Requires a dentist to refund within 15 business days of a
patient's request any changes to the lender for services that
have not been provided or costs that have not been incurred
when made through third-party credit where the credit is
arranged for or established in the dental office.
6)Prohibits a dentist, or his or her employee or agent, from
arranging for or establishing third- party credit for a
patient unless the dentist, or his or her employee or agent,
provides a written notice containing specified disclosures
regarding credit for dental services to the patient and
obtains the patient's signature.
7)Requires a dentist to give a patient a written treatment plan
prior to arranging for, or establishing, credit extended by a
third-party and requires the treatment plan to include each
anticipated service to be provided and the estimated cost of
each service.
8)Requires the treatment plan to include the patient's estimated
share of cost for each service if the patient is covered by a
private or government dental benefit plan or dental insurance
and the dentist agrees to be paid directly by that plan.
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9)Requires the treatment plan to disclose that the treatment may
or may not be covered by a patient's private or government
dental benefit or dental insurance plan if the dentist does
not agree to be paid directly by that plan and to indicate
that the patient has the right to confirm his or her dental
benefit or insurance coverage before beginning treatment.
10)Prohibits a dentist, or his or her employee or agent, from
arranging for or establishing third- party credit for a
patient whose primary language is a non-English Medi-Cal
threshold language unless the written notice is provided in
that language.
11)Prohibits a dentist, or his or her employee or agent, from
arranging for or establishing third- party credit for a
patient who is under the influence of general anesthesia,
conscious sedation, or nitrous oxide.
12)Permits a patient who suffers any damage as a result of the
use or employment by any person of a method, act, or practice
that willfully violates this bill to seek relief under the
Consumer Legal Remedies Act (Act).
EXISTING LAW :
1)Prohibits, except as specified, a healing arts licensee,
including, among others, dentists from referring a person for
certain health care services if the licensee has a financial,
beneficial, proprietary, or ownership interest, as defined,
with the person or entity that receives the referral.
(Business and Professions Code Section 650 et seq.)
2)Prohibits generally, under the Act, unfair methods of
competition and unfair or deceptive acts or practices in the
sale or lease of goods or services to consumers. The Act also
allows an injured consumer to bring an action for damages, as
specified. (Civil Code Section 1750 et seq.)
3)Governs generally Medi-Cal funding, benefits, reimbursement,
rights, and remedies. (Welfare and Institutions Code Section
14000 et seq.; 42 U.S.C. Section 1396a et seq.)
COMMENTS : This bill would increase consumer protections with
respect to the arrangement of open-end credit for dental
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services, and would prohibit a dentist from charging a
third-party line of credit for services that have not been
rendered, or costs that have not been incurred, unless the
patient provides written consent.
The author emphasizes the growing problem of dental debt as
consumers, particularly the elderly, the low-income, the
uninsured, and the under-insured, are using lines of credit to
finance their otherwise unaffordable dental procedures and
devices. For example, the American Dental Association (ADA)
indicates on its website that in addition to accepting cash,
checks and major credit cards, most dental practices today also
offer monthly payment plans through an outside health care
financing partner. While the ADA website advises that these
plans can only be used to cover a patient's health care needs,
it emphasizes that treatment can begin at once, usually with
little or no money down, and the patient can pay for the care
over time, in low monthly payments. The ADA website further
adds that some plans offer a revolving line of credit to serve
as a convenient financial resource that patients and their
families can use for ongoing dental needs. The ADA exclusively
endorses CareCredit, a medical credit card provider owned by GE
Money and used by approximately 60%-70% of dental offices.
A 2008 article in Consumer Reports Magazine indicates that other
medical credit card providers include CapitalOne Healthcare
Finance, Chase HealthAdvance, and Citi Health Card.
Additionally, the article notes that the interest rates for
these cards range from 24% to 28% and credit limits are as high
as $40,000. ("Overdose of Debt," Consumer Reports, July 2008.)
These facts highlight the risks of crushing dental debt that
face low-income consumers who may rely on these lines of credit.
The sponsor of this bill, Western Center on Law and Poverty
(WCLP), reports that health care providers are increasingly
offering to facilitate their patients' ability to obtain loans
to pay for medical services through these types of dental credit
plans. According to WCLP, this bill responds to numerous
complaints it has received from consumers, primarily elderly,
low-income, and limited English-speaking patients, who have
fallen victim to credit cards for dental care without adequate
protections. In these cases, the consumers received dental
services with out-of-pocket costs ranging from a few hundred to
thousands of dollars. Typically, these patients thought they
were signing payment plans with their providers, only to realize
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when they started receiving credit card statements that they had
signed credit applications. In addition, some consumers were
charged for future services they did not receive, and other
limited-English proficient consumers were given applications in
English that they did not understand.
The sponsor also notes that this bill is not intended to
prohibit dentists from helping to arrange credit cards or loans
for their patients, but aims to protect low-income consumers
from being victimized by such arrangements. Finally, WCLP
points out that this bill is especially important in light of
the current economic climate where low-income consumers are
facing foreclosures, check cashing abuses, and other forms of
predatory lending.
The California Dental Association, with nearly 24,000 members
representing 70% of practicing dentists in the state, also
supports this bill, stating:
AB 171 reflects the dental profession's commitment
to maintaining trusting relationships between
dentists and their patients, including ensuring that
patients understand the treatment they receive and
how the treatment costs will be covered. The
provisions of AB 171 reflect standard ethical
business practices that protect consumers and uphold
a positive dentist-patient relationship.
Many legal assistance providers in California support this bill,
including Neighborhood Legal Services of Los Angeles County,
California Rural Legal Assistance, and the Health Rights
Hotline. Each organization has written to relate its experience
assisting clients who unfortunately have fallen victim to unfair
or downright abusive lending practices involving dental credit
cards that resulted in significant medical debt for these
low-income persons. Supporters widely agree that this bill will
protect low-income consumers from being victimized by unfair or
abusive credit arrangements for dental services.
Prior Legislation : SB 1633 (Kuehl): AB 171 (Jones) as
introduced is identical to the version of last year's SB 1633
that was summarily vetoed by the Governor, without regard to its
merit. Prior to being vetoed, SB 1633 passed off the Senate
floor with only three dissenting votes and passed off the
Assembly floor by unanimous vote.
AB 171
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REGISTERED SUPPORT / OPPOSITION :
Support
Western Center on Law and Poverty (sponsor)
American Federation of State, County and Municipal Employees
(AFSCME)
California Dental Association
California Immigrant Policy Center
California Rural Legal Assistance, Inc.
Health Access California
Health Rights Hotline
Neighborhood Legal Services of Los Angeles County
Opposition
None on file
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334