BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 171
Assemblymember Jones
As Amended May 28, 2009
Hearing Date: June 16, 2009
Business and Professions Code; Health and Safety Code
ADM:jd
SUBJECT
Dental Services: Credit
DESCRIPTION
This bill would prohibit dentists from arranging credit (through
credit cards, loans, or other lines of credit) for dental
services not yet received unless the consumer/patient is first
given a specified written notice, treatment plan, and estimated
costs of treatment plan and services. This bill would require
the written notice to be provided in a patient's primary
language for those patients whose primary language is not
English. This bill would prohibit dentists from arranging
credit for patients under the influence of anesthesia. This
bill would require dentists to provide a refund to a credit
lender within 15 business days of a patient's request for any
payment received for services that have not been provided or
costs that have not been incurred.
This bill would provide for remedies under the Consumer Legal
Remedies Act for violations of its provisions.
BACKGROUND
Dental debt is a growing problem 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. According to the
American Dental Association, most dental practices today accept
cash, checks, and major credit cards, and offer monthly payment
plans through CareCredit, an outside medical credit card
provider used by approximately 60-70 percent of dental offices.
(more)
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Consumer Reports indicates that other health care credit card
providers include Capital One Healthcare Finance, Chase
HealthAdvance, and Citi Health Card. Interest rates for these
cards range from 24 to 28 percent with credit limits as high as
$40,000. (See Overdose of Debt, Consumer Reports, July 2008.)
Additionally, news reports over the last couple of years have
exposed this growing medical cycle of debt problem for
consumers. (See, e.g., Fresh Pain for the Uninsured, Business
Week, November 21, 2007.)
This bill is intended to better protect consumers from medical
cycle of debt problems related to dental services. This bill
was approved by the Senate Business, Professions, and Economic
Development Committee on June 8, 2009.
CHANGES TO EXISTING LAW
1. Existing law 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.
(Bus. & Prof. Code Sec. 650 et seq.)
Existing law , the Consumer Legal Remedies Act (CLRA),
generally prohibits unfair methods of competition and unfair
or deceptive acts or practices in the sale or lease of goods
or services to consumers. The CLRA also allows an injured
consumer to bring an action for damages, as specified. (Civ.
Code Sec. 1750 et seq.)
This bill would prohibit 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 costs, and ensuring that the patient has received
the treatment plan as required by the bill's provisions.
This bill would require a dentist, within 15 days of a
patient's request, to refund to a 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
party that is arranged for or established in a dental office.
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This bill would provide that a dentist may not arrange for or
establish credit extended by a third party for a patient
without first providing the patient a specified written
notice, which must be signed by the patient.
This bill would require a dentist to give a patient a written
treatment plan prior to arranging for or establishing credit
extended by a third party. The treatment plan would be
required to include each anticipated service to be provided
and the estimated cost of each service. 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 would be required to indicate the
patient's private or government-estimated share of the cost
for each service. If the dentist does not take assignment of
benefits from a patient's dental plan or insurance, the
treatment plan would be required to 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 information from the patient's
plan, insurer, or employer before beginning treatment.
This bill would prohibit a dentist from arranging for or
establishing credit extended by a third party for a patient
with whom the dentist communicates primarily in a language
other than English that is one of the Medi-Cal threshold
languages, unless the written notice information required by
the bill is also provided in that language.
This bill would prohibit a 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.
This bill would provide that a patient who suffers any damage
as a result of the use or employment by any person of a
method, act, or practice that violates the bill's provisions
may seek relief under the CRLA. (Civ. Code Sec. 1750 et seq.)
This bill would provide that the rights, remedies, and
penalties established by the bill's provisions would be
cumulative, and would not supersede the rights, remedies, or
penalties established under other laws.
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This bill would define "open-end credit" to mean 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 the 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.
2.Existing law , the Knox-Keene Health Care Service Plan of 1975,
provides for the licensure and regulation of health care
service plans by the Department of Managed Health Care and
makes a willful violation of the act a crime. (Health & Saf.
Code Sec. 1340 et seq.)
This bill would require 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 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.
This bill would define "staff-model dental health care service
plan" to mean a specialized health care service plan that
contracts to provide coverage for dental care services and
that retains dentists as employees to care for its enrollees.
COMMENT
1. Stated need for the bill
The sponsor, the Western Center on Law and Poverty (WCLP),
writes:
AB 171 is sponsored by the Western Center on Law and Poverty
in response to numerous complaints that its office has
received from elderly, low-income, and limited
English-speaking consumers who have fallen victim to credit
cards for dental care without adequate [consumer] protections.
In these cases, patients believed they were signing payment
plans for their dental costs with their providers only to
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discover after they began receiving credit card statements
that they had signed credit applications. Some patients were
charged for future services that were never provided and other
non-English proficient patients were given applications they
did not understand.
AB 171 is not intended to prohibit dentists from helping to
arrange credit cards or loans for their patients, but aims to
set forth basic standards governing these arrangements while
providing necessary consumer protections.
2. Examples of the problems the bill seeks to address
Sponsor WCLP writes that "medical debt has long been a problem
facing health consumers and sadly a new avenue to medical debt
has emerged." The following are examples of why the bill is
needed:
"Robert" is a 70-year-old man with Medicare and Medi-Cal who
lives in Los Angeles. At a routine dental appointment his
dentist told him that he needed additional dental work that
would not be covered by Medi-Cal. Robert told the dentist
that he could not afford to pay for the work, and the dentist
offered him a credit card application. Robert refused, saying
he could not assume any debt on his fixed Social Security
income. However, he did sign what he thought was a treatment
plan. The treatment plan turned out to be an application for
a dental credit card, and the full cost of the treatment was
charged to the card that day. Robert never received any of
the treatment outlined on the treatment plan and was surprised
to receive a statement from the credit card company for $900
of dental care. He could not get this credit cancelled either
through the dentist's office or the credit card company until
he got help from an advocate with the Health Consumer Center
of Los Angeles.
"Bill," a 75-year-old man in Orange County, went in for a
cleaning which would have cost $5 under his dental coverage.
The dentist started on other work which the client did not
understand or agree to and signed-up Bill for a credit card on
which $10,820 was charged. Bill did not know he was getting a
credit card; rather he believed he was agreeing to a payment
plan with the dentist's office.
The author and WCLP assert that these examples, which border on,
if not are, examples of fraud and/or elder abuse, underscore the
need for the bill. And, if as appears to be the case, these
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types of practices are increasing and proliferating where
particularly the elderly, the low-income, the uninsured, and the
under-insured are being taken advantage of, this bill is needed
to address those practices in ways that better protect consumers
from a medical cycle of debt.
3. This bill is double-referred to the Senate Committee on
Business, Professions, and Economic Development; Department of
Managed Health Care (DMHC) has indicated a neutral position;
California Dental Association (CDA) is in support now
This bill is double-referred to the Senate Business,
Professions, and Economic Development Committee. That
committee's analysis indicates that the DMHC has taken a neutral
position on the bill. That analysis writes that the "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. [The] 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."
Additionally, the CDA, which was opposed at one point to a prior
version of this bill (SB 1633, Kuehl) is now in support of AB
171. The CDA writes:
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.
Support : American Federation of State, County, and Municipal
Employees (AFSCME), AFL-CIO; Asian Pacific American Legal
Center; California Dental Association; California Immigrant
Policy Center; California Primary Care Association; California
Rural Legal Assistance, Health Consumer Center of Imperial
Valley; Congress of California Seniors; Consumers Union; Having
Our Say Coalition; Health Access California; Health Rights
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Hotline; Neighborhood Legal Services of Los Angeles County
Opposition : None Known
HISTORY
Source : Western Center on Law and Poverty
Related Pending Legislation : None Known
Prior Legislation : SB 1633 (Kuehl, 2008) was identical in many
respects to AB 171. SB 1633 did not contain what is now Section
2 of AB 171 regarding the Knox-Keene Health Care Service Plan
Act of 1975 and staff-model dental health care service plans.
SB 1633 was vetoed on grounds other than the substance of the
bill. The governor's veto message referred to the 2008-2009
State Budget and that SB 1633 did not meet the governor's
priority related to the budget.
Prior Vote :
Assembly Business and Professions Committee (Ayes 11, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
Assembly Appropriations Committee (Ayes 16, Noes 0)
Assembly Floor (Ayes 78, Noes 0)
Senate Business, Professions and Economic Development Committee
(Ayes 7, Noes 0)
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