BILL ANALYSIS �
SB 1256
Page 1
Date of Hearing: June 24, 2014
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Susan A. Bonilla, Chair
SB 1256 (Mitchell) - As Amended: June 11, 2014
SENATE VOTE : 36-0
SUBJECT : Medical services: credit.
SUMMARY : Extends existing consumer protections regarding lines
of credit for dental services to all types of medical or healing
arts services by requiring a licensee to provide a patient with
a treatment plan, a disclosure form, and information about
third-party payment coverage, and also establishes language and
competency requirements. Specifically, this bill :
1)Prohibits a licensee from charging treatment or costs to an
open-end credit or loan, that is extended by a third party and
that is arranged for, or established in, that licensee's
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 the treatment plan, as specified.
2)Requires a licensee, 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, that licensee's office for treatment that has
not been rendered or costs that have not been incurred.
3)Prohibits a 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 written
notice, as specified, on one page in at least 14-point type,
and obtaining a signature from the patient.
4)Requires a licensee to provide a patient with a written
treatment plan prior to arranging for or establishing credit
extended by a third party. The treatment plan shall include
each anticipated service to be provided and the estimated cost
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of each service.
5)States that if a patient is covered by a private or government
medical benefit plan or medical insurance from which the
licensee takes assignment of benefits, the treatment plan
shall indicate the patient's private or government-estimated
share of cost for each service. If the licensee does not take
assignment of benefits from a patient's medical benefit plan
or insurance, the treatment plan shall indicate that the
treatment may or may not be covered by a patient's medical
benefit or insurance plan, and that the patient has the right
to confirm medical benefit or insurance information from the
patient's plan, insurer, or employer before beginning
treatment.
6)Prohibits a licensee, or an employee or agent of that
licensee, from arranging for or establishing credit extended
by a third party for a patient with whom the licensee, or an
employee or agent of that licensee, communicates primarily in
a language other than English that is one of the Medi-Cal
threshold languages, unless the written notice information is
also provided in that language.
7)Prohibits a licensee, or an employee or agent of that
licensee, 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.
8)Authorizes a patient who suffers any damage as a result of
anything prohibited by this bill to seek relief through the
methods authorized under the Consumer Legal Remedies Act, as
specified.
9)States that the rights, remedies, and penalties established by
this bill are cumulative, and shall not supersede the rights,
remedies, or penalties established under other laws.
10)Defines the terms "licensee," "licensee's office," and
"patient".
11)Defines the term "open-end credit" means 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
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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.
12)States that no reimbursement is required by this bill because
the only costs that may be incurred by a local agency or
school district will be incurred because this bill creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, or changes the
definition of a crime.
EXISTING LAW :
1)Specifies that 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 is generally made available to the extent that any
outstanding balance is repaid. (Civil Code (CIV) Section
1812.405)
2)Authorizes, under the Consumer Legal Remedies Act, any
consumer who suffers any damage as a result of the use or
employment by any person of a method, act, or practice
declared to be unlawful, as specified, to bring an action
against that person to recover or obtain any of the following:
a) Actual damages, but in no case shall the total award of
damages in a class action be less than one thousand dollars
($1,000);
b) An order enjoining the methods, acts, or practices;
c) Restitution of property;
d) Punitive damages; or,
e) Any other relief that the court deems proper. (CIV
1780)
3)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
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ensuring the patient's receipt of the treatment plan.
(Business and Professions Code (BPC) Section 654.3(a))
4)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. (BPC
654.3(b))
5)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 type font and to get a signature from the patient in
order to arrange for or establish credit extended by a third
party. (BPC 654.3(c))
6)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. (BPC 654.3 (e))
7)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. (BPC
654.3 (f))
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of this bill . This bill extends existing consumer
protections regarding lines of credit for dental services to
all types of licensed healing arts services. SB 1256 also
requires a licensee to provide a patient with a treatment
plan, a disclosure form, information about third-party payment
coverage, and establishes language and competency
requirements. This bill will help consumers make better
informed financial decisions. This bill is enforceable by a
private right of action and is sponsored by the Consumer
Federation of California.
2)Author's statement . According to the author's office,
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"Patients, primarily elderly, low-income or limited
English-speaking, who thought they had signed a payment plan
with their provider, later come to realize they have signed up
for credit cards or loans they cannot afford. 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.
"SB 1256 simply extends the current protections that patients
receive in a dental office to other areas of the medical
field."
3)Medical credit cards . According to a December 10, 2013
article in the New York Times, medical credit cards are often
much more costly to patients than they realize, and have
attracted the attention of the Consumer Financial Protection
Bureau (Bureau):
Richard Cordray, the Bureau's director, said the
agency had received hundreds of complaints about the
[medical credit] card and found that many patients who
were offered it thought they were signing up for an
interest-free payment plan. But, in fact, they were
applying for a deferred-interest credit card that had
a no-interest promotional period of up to two years.
Interest accrued during the promotion at an annual
rate of 26.99 percent - much higher than a typical
bank credit card, he said. If the balance wasn't paid
by the end of the promotional period, the patient
became liable for the interest, resulting in "a very
expensive loan," he said.
Other similar credit cards are available, but
CareCredit [a division of GE Capital Retail Bank] is
one of the largest in the industry, the bureau said.
It is offered by about 175,000 doctors, dentists,
vision care and veterinary offices across the country.
There are about four million active CareCredit
cardholders.
Providers like the cards because they get paid up
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front, but the cards can get unwitting patients into
debt at a time when they may not be fully focused on
financial details. "They're not on guard financially,"
he said. "Their focus is on getting better."
Many patients did not receive copies of the credit
agreement, he said, but relied on oral explanations
from office staff members who often received little
training.
This bill would require licensees who offer such cards or
loans from third party providers to provide written
information to patients on the nature of the payment
providers, repayment, and billing.
4)Disclosure statement . The bill requires the following
disclosure to be provided to the patient on one page, in at
least 14-point font:
Credit for Medical Services
The attached application and information is for a
credit card/line of credit or loan to help you finance
your medical treatment. You should know that:
You are applying for a ____ credit card/line of credit
or a ____ loan for $____.
You do not have to apply for the credit card/line of
credit or loan. You may pay your medical provider for
treatment in another manner.
This credit card/line of credit or loan is not a
payment plan with the provider's office; it is credit
with [name of company issuing the credit card/line of
credit or loan]. Your medical provider does not work
for this company.
Before applying for this credit card/line of credit or
loan, you have the right to a written treatment plan
from your medical provider that includes the
anticipated treatment to be provided and the estimated
costs of each service.
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If you are approved for a credit card/line of credit,
your medical provider can only charge treatment and
laboratory costs to that credit card/line of credit
when you get the treatment or the medical provider
incurs costs unless your medical provider has first
given you a list of treatments that you are paying for
in advance and the cost for each treatment or service.
You have the right to receive a credit to your credit
card/line of credit or loan account refunded for any
costs charged to the credit card/line of credit or
loan for treatment that has not been rendered or costs
that your medical provider has not incurred. Your
medical provider must refund the amount of the charges
to the lender within 15 business days of your request,
after which the lender will credit your account.
Please read carefully the terms and conditions of this
credit card/line of credit or loan, including any
promotional offers.
You may be required to pay interest rates on the
amount charged to the credit card/line of credit or
the amount of the loan. If you miss a payment or do
not pay on time, you may have to pay a penalty on the
entire cost of your procedure and/or a higher interest
rate.
You may use this credit card/line of credit for
payments toward subsequent medical services.
If you do not pay the money that you owe the company
that provides you with a credit card/line of credit or
loan, your missed payments can appear on your credit
report and could hurt your credit rating. You could
also be sued.
[Patient's Signature]
5)Remedies . The provisions of this bill may be enforced through
the Consumer Legal Remedies Act, which declares, in part, that
a consumer that suffers damage as a result of unlawful
business practices may bring a suit to recover actual damages,
an order for the offender to stop the unlawful act,
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restitution, punitive damages, and any other relief the court
deems proper.
6)Author's amendments . The author would like to change
references from "medical provider" to "health care provider"
in the disclosure statement to better characterize the breadth
of licensees affected by this bill.
The author would also like to add Asm. Skinner as a co-author.
7)Arguments in support . The 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, including some
vision, hearing and cosmetic care. 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 even paid
up-front for treatments they have not yet received. The
interest rate on these cards, if promotional, may start out at
0% with a credit limit of up to $40,000. However, after a
late payment, or at the end of the promotional period,
interest rates can climb to between 24% and 28% with
additional penalties and retroactive fees on the entire cost
of the care received."
"While medical credit cards closely resemble other credit
cards, there is one very important difference: medical credit
cards are solicited and offered to the consumer by their
medical provider, not by banks or creditors. In most
instances, a patient who has built a relationship with their
medical provider may consider them an advisor when it comes to
their medical care. Patients, primarily elderly, low-income
or limited English-speaking, who are offered a credit card
when they are most vulnerable - such as when they are in pain
or when a provider has recommended a treatment they cannot
afford - 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."
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8)Previous legislation . AB 171 (Jones) Chapter 418, Statutes of
2009, established requirements governing the arrangement of
credit cards and loans for dental services and prohibits a
dentist, or an employee or agent of a dentist, from charging
to a third party line of credit for services that have not
been rendered, or costs that have not been incurred, unless
the patient receives a list of treatment and services to be
rendered, including the estimated costs, and a written
treatment plan, as specified.
REGISTERED SUPPORT / OPPOSITION :
Support
The Consumer Federation of California (sponsor)
The California Immigrant Policy Center
Board of Chiropractic Examiners
Opposition
None on file
Analysis Prepared by : Sarah Huchel / B.,P. & C.P. / (916)
319-3301