BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 1256
Author: Mitchell (D), et al.
Amended: 6/25/14
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 8-0, 4/7/14
AYES: Lieu, Wyland, Berryhill, Block, Corbett, Galgiani, Hill,
Padilla
NO VOTE RECORDED: Hernandez, Vacancy
SENATE JUDICIARY COMMITTEE : 6-0, 4/22/14
AYES: Jackson, Anderson, Corbett, Lara, Leno, Vidak
NO VOTE RECORDED: Monning
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 36-0, 5/15/14 (Consent)
AYES: Anderson, Beall, Berryhill, Block, Cannella, Corbett,
Correa, De Le�n, DeSaulnier, Evans, Fuller, Gaines, Galgiani,
Hancock, Hernandez, Hill, Hueso, Huff, Jackson, Knight, Lara,
Leno, Lieu, Liu, Mitchell, Monning, Morrell, Nielsen, Padilla,
Pavley, Roth, Steinberg, Torres, Vidak, Wolk, Wyland
NO VOTE RECORDED: Calderon, Walters, Wright, Yee
ASSEMBLY FLOOR : 77-0, 8/7/14 (Consent) - See last page for vote
SUBJECT : Medical services: credit
SOURCE : Consumer Federation of California
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DIGEST : This bill 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.
Assembly Amendments make technical changes; and add a co-author.
ANALYSIS :
Existing law:
1. 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 ensuring the patient's receipt of the treatment
plan.
2. 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.
3. 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-point type font and to get a signature from the
patient in order to arrange for or establish credit extended
by a third party.
4. 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.
5. 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
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of general anesthesia, conscious sedation or nitrous oxide.
6. Provides that a patient who suffers damages as a result of a
person willfully violating these provisions may seek civil
relief, under the Consumer Legal Remedies Act (CLRA).
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 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
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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 CLRA, 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 following terms:
A. "Licensee" as an individual, firm partnership,
association, corporation, limited liability company or
cooperative association.
B. "Licensee's office" as an office of a licensee in
solo practice or an office in which services or goods
are provided by the licensee or by employees in that
office, or by independent contractors in that office.
C. "Open-end credit" as credit extended by a creditor
under a plan in which the creditor reasonably
contemplates repeated transactions.
11.Allows the creditor to impose a finance charge from time to
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time on an outstanding unpaid balance, up to any limit set by
the creditor.
12.Specifies that a "patient" includes, but is not limited to,
the patient's parent or legal representative.
13.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.
Background
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 front,
but the cards can get unwitting patients into debt at a
time when they may not be fully focused on financial
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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 requires 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.
CLRA . Existing law, under the CLRA authorizes 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:
Actual damages, but in no case shall the total award of
damages in a class action be less than $1,000;
An order enjoining the methods, acts, or practices;
Restitution of property;
Punitive damages; or
Any other relief that the court deems proper.
The provisions of this bill may be enforced through the CLRA,
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, restitution, punitive damages, and any other
relief the court deems proper.
Comments
According to the author's office, this bill extends the current
protections that patients receive in a dental office to other
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areas of the medical field. The author's office believes that
medical credit cards, extended through third party lenders, but
solicited by medical providers, pose a significant risk to
consumers who may not fully understand the arrangements that are
being made for them by their provider or provider's office. The
interest rates for these credit cards can range between 24-28%
and may include significant penalty fees charged retroactively
on the entire cost of the procedure. 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/7/14)
Consumer Federation of California (source)
Board of Chiropractic Examiners
California Immigrant Policy Center
ARGUMENTS IN SUPPORT : The bill's sponsor, 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? 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. ?Patients,
primarily elderly, low-income or limited English-speaking, who
are offered a credit card when they are most vulnerable? 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."
ASSEMBLY FLOOR : 77-0, 8/7/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Ch�vez, Chesbro, Conway, Cooley, Dababneh,
Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Frazier, Beth
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Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Mansoor, Medina, Melendez, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, John A. P�rez, V.
Manuel P�rez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,
Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron,
Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Bonilla, Fox, Vacancy
MW:d 8/8/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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