BILL ANALYSIS
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|Hearing Date:June 8, 2009 |Bill No:AB |
| |171 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: AB 171Author:Jones
As Amended:May 28, 2009 Fiscal: Yes
SUBJECT: Dental services: credit.
SUMMARY: Prohibits a person providing dental services, or an employee
or agent of that person, from charging treatment or costs to an
open-end credit, that is extended by a third party and that is
arranged for or established in a dental office, before the date upon
which the treatment is rendered or costs are incurred, without first
providing the patient a list of the treatment and services to be
rendered, the estimated costs of the treatment and services, and which
treatment and services are being charged in advance of rendering or
incurring of costs, and ensuring that the patient has received a
treatment plan, as required; requires a written notice to be signed by
a patient before any credit is extended or arranged.
Existing law:
1)Prohibits unfair methods of competition and unfair or deceptive acts
or practices in the sale or lease of goods or services. Allows
a consumer who suffers any damage as a result of unfair methods
of competition and unfair or deceptive acts or practices to
bring an action to recover damages, as specified.
2)Establishes the Medi-Cal program, administered by the Department of
Health Care Services, which provides comprehensive health
benefits to low-income children, their parents or caretaker
relatives, pregnant women, elderly, blind or disabled persons,
nursing home residents, and refugees who meet specified
eligibility criteria.
3)Establishes the Knox-Keene Health Care Service Plan Act of 1975 to
regulate and license health care service plans and specialized
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plans by the Department of Managed Health Care (DMHC).
4)Provides for the regulation of health insurers by the Department of
Insurance (DOI).
This bill:
1) Prohibits a person providing dental services, or an
employee or agent of a dentist, from charging treatment or costs
to an open-end credit, that is extended by a third party and
that is arranged for or established in a dental office before
the date upon which the treatment is rendered or costs are
incurred without first providing the patient a list of the
treatment and services to be rendered, the estimated costs of
the treatment and services, and which treatment and services are
being charged in advance of rendering or incurring of costs, and
ensuring that the patient has received a treatment plan, as
required.
2) Requires a dentist to, within 15 business days of a
patient's request, refund to the lender any payment received for
treatment that has not been rendered or costs that have not been
incurred made through a credit extended by a third part that is
arranged for or established in a dental office.
3) Prohibits a dentist, or an employee or agent of that
dentist, from arranging for or establishing credit extended by a
third party for a patient without first providing a written
notice on one page in at least 14-point type and obtain a
signature from the patient. Specifies the written notice that
must be provided.
4) Requires a dentist to give a patient a written treatment
plan prior to arranging for or establishing credit extended by a
third party. Requires the written treatment plan to include
each anticipated service to be provided, and the estimated cost
of each service. States that if a patient is covered by a
private or government dental benefit plan or dental insurance,
from which the dentist takes assignment of benefits, the
treatment plan must indicate the patient's private or
government-estimated share of cost for each service. States
that if the dentist does not take assignment of benefits from a
patient's dental benefit plan or insurance, the treatment plan
must indicate that the treatment may or may not be covered by a
patient's dental benefit or insurance plan, and that the patient
has the right to confirm dental benefit or insurance information
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from the patient's plan, insurer, or employer before beginning
treatment.
5) Prohibits a dentist, an employee or agent of that dentist,
from arranging for, or establishing credit extended by a third
party for a patient with whom the dentist, or an employee or
agent of that dentist, communicates primarily in language other
than English that is one of the Medi-Cal threshold languages,
unless the written notice information required in item #3) above
is also provided in that language.
6) Prohibits a dentist, or an employee or agent of that
dentist from arranging for or 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.
7) Allows 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 provisions of this bill to seek relief
under the Consumer Legal Remedies Act.
8) States that the rights, remedies and penalties established
by this bill are cumulative and does supersede the rights,
remedies or penalties established under other laws.
9) 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. Defines patient to include the patient's
parent or other legal representative.
10)Requires a staff-model dental health care service plan to
establish and comply with policies and procedures that ensure
that its dentists, employees and agents, and employees of agents
of its dentists comply with this bill.
11)Requires a staff-model dental health care service plan to
establish and comply with policies and procedures that ensure
that, within 15 business days of an enrollee's request, the plan
refunds to a lender any payment received for treatment that has
not been rendered or costs that have not been incurred made
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through a credit extended by a third party that is arranged for
or established in a dental office or by the staff-model dental
health care service plan.
12)Defines the following terms:
a) Staff-model dental health care service plan" means a
specialized health care service plan that contracts to
provide coverage for dental care services and retains
dentists as employees to care for its enrollees.
b) Enrollee includes, but is not limited to, an enrollee's
parent or other legal representative.
FISCAL EFFECT: According to the Assembly Appropriations Committee, no
direct fiscal impact to the California Department of Consumer Affairs
(DCA) to continue oversight of professionals under the jurisdiction of
the California Dental Board.
COMMENTS:
1.Purpose. According to the Western Center on Law and Poverty
(Sponsor), healthcare providers are increasingly offering to
facilitate their patients' ability to obtain loans to pay for
medical services. The Sponsor states that its office received
numerous complaints from low-income consumers who have fallen
victim to credit cards for dental care without appropriate
protections. The Sponsor points out that this bill does not
intend to prohibit dentists from arranging credit cards or loans
for their patients but aims to protect low-income consumers from
unfair practices in the marketing of dental credit cards and
loans. The Sponsor indicates this bill is important especially
in the current environment where low-income consumers are facing
foreclosures, check cashing abuses, and other forms of predatory
lending.
2.Background. Background information provided by the Sponsor,
including newspaper articles, indicates that the practice of
hospitals, medical, and dental offices arranging credit for
their patients started proliferating with the growth of the
uninsured and underinsured population. Typically, the practice
involves a patient who has a medical or dental condition that is
not covered by a health or dental plan or policy, and the
medical or dental provider or its employee or agent arranges a
credit or loan for the patient to assist in paying for the
services. According to a November 2007 Business Week article
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entitled " Fresh Pain for the Uninsured ," financial institutions
such as General Electric, U.S. Bancorp, Capital One, and
Citigroup are examples of medical creditors. General Electric
owns Care Credit, and according to Care Credit's website, it has
6 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. The article points out
that many patients across the country do not realize their
medical debts are being shifted to credit card companies by
their providers.
The Sponsor and the Neighborhood Legal Services of Los Angeles
County indicate that they had received several complaints,
mostly from the elderly and/or Medicare or Medi-Cal eligibles,
who had received dental services with out-of-pocket expenses
from a few hundred to thousands of dollars. Typically, these
patients thought that they had a payment plan with their
providers and were not made aware that they had been signed-up
with a credit card company that charges interest rates. In
addition, some consumers were charged for future services they
did not receive, and other limited-English proficient consumers
were given applications in English which they did not
understand.
3.Prior Legislation. SB 1633 (Kuehl, 2008) is similar to the
provisions of this bill and would have prohibited a person
providing dental services, or an employee or agent of that
person, from charging to a line of credit or other extension of
credit, or accept payment from loan funds for services that the
patient, client, or customer has not yet received. Governor
Schwarzenegger summarily vetoed SB 1633 because of the budget
crisis.
4.Arguments in Support. In support of this bill, the California
Dental Association (CDA) states that this measure reflects the
dental professions 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. CDA asserts that the
provisions of this bill reflect standard ethical business
practices that protect consumers and uphold a positive
dentist-patient relationship. The Neighborhood Legal Services
of Los Angeles County and Consumers Union state that basic
standards for how credit card loans are arranged are needed to
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protect low-income consumers. Consumers Union points out that
some consumers have had charges put on their credit cards for
care they never received and others did not know they were
signing a credit card. Neighborhood Legal Services of Los
Angeles County points out that its offices have seen an increase
in the number of individuals who have contacted their office
because of dental credit card debt, even though many of them are
Medi-Cal or Medicare enrollees.
5.Neutral. The Department of Managed Health Care (DMHC) has taken
a neutral position on this bill. DMHC states that in 2007 and
2008, it has found that the use of dental credit cards has
caused significant financial issues, with at least one
staff-model dental health plan placing health plan enrollees at
significant financial risk but current law does not clearly
provide authority or guidance to the DMHC with regards to dental
credit cards. DMHC indicates that this bill will ensure that
appropriate disclosure and refund provisions related to third
party credit apply to staff model dental health plans and thus
empowers the DMHC to enforce important consumer protections.
NOTE : Double-referral to Senate Judiciary Committee (second).
SUPPORT AND OPPOSITION:
Support:
Western Center on Law and Poverty (sponsor)
American Federation of State, County, and Municipal Employees
Asian Pacific American Legal Center of Southern California
California Dental Association
California Immigrant Policy Center
California Primary Care Association
California Rural Legal Assistance
Congress of California Seniors
Consumers Union
Having Our Say
Health Access California
Health Rights Hotline
Neighborhood Legal Services of Los Angeles County
Neutral:
California Department of Managed Health Care
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Opposition:
None on file as of June 2, 2009
Consultant:Rosielyn Pulmano