WASHINGTON, Sep 21 (Reuters Health) -- Sources tell Reuters Health that California Governor Gray Davis is expected to sign a bill over the next 2 weeks that will usher in one of the nation's strongest HMO reform laws, allowing health plan members to sue their health maintenance organization (HMO).
Under the bill, HMO enrollees could sue their health plans when the plans fail to "exercise ordinary care" in arranging or denying care. The law, which Davis is expected to sign before October 10, would go into effect January 1, 2001. However, before suing a plan, a member must first take complaints through a new independent review system.
California Association of Health Plans Spokesman Cory Black says the bill, sponsored by California State Senator Liz Figueroa, is the only one in the nation that does not limit jury awards. Only Georgia and Texas have such HMO liability laws on the books, HMO industry officials said.
"It will definitely drive up healthcare costs and premiums," Black told Reuters Health. Drawing on a variety of source material, the association estimates that California health plan premiums could rise between 1.4% to 7% if the bill becomes law.
"(The bill) holds HMOs accountable when their misconduct harms patients," said Democratic Senator Figueroa in a press release. "It won't cost them a penny as long as they do the right thing."
Only patients suffering "substantial harm" can pursue a claim against a plan under the bill. Furthermore, the bill does not hold HMOs liable in cases attributable to medical negligence of a healthcare provider.
The HMO liability legislation is among a handful of managed care bills the governor is expected to sign, Gov. Davis' spokesman told Reuters Health. Other bills would force plans to approve second opinions, require that second opinions be obtained within 3 days in urgent cases, and reorganize state regulatory oversight for HMOs.
