By JAMIE COURT, Jamie Court is executive director of the Santa Monica-based Foundation for Taxpayer and Consumer Rights. E-mail: Jamie@consumerwatchdog.org.  

California HMOs are slyly attacking the new patients' rights laws touted by Gov. Gray Davis as the toughest in the nation. The industry can't be allowed to undermine the two pillars of HMO patients' rights it has targeted: effective state regulation and legal accountability.

In the latest assault, Kaiser Permanente convinced an administrative law judge to rule that the state's HMO regulator could not intervene in most patients' quality of care problems.

The dangerous reasoning grew out of Kaiser's aggressive legal opposition to a $1.1-million fine levied against it after three patients with ruptured abdominal aortal aneurysms died after their access to treatment was blocked by Kaiser's unresponsive telephone call system or its over-capacity emergency rooms. Newly uncovered internal documents have proven the systemic nature of Kaiser's problems, although these were not introduced as evidence in the case. In a program Kaiser claims to have ended, the company's telephone clerks who handled patient calls were paid financial bonuses to limit doctor appointments, to not transfer calls to nurses and to hang up quickly. For its part, Kaiser has contended that its patients' quality of care is its doctors' problem, not the HMO's.

The state medical board, which regulates doctors, says it has no authority to address systemic quality of care and access to care problems at HMOs or in doctor-run medical groups; the board leaves those problems to the HMO regulator, the Department of Managed Health Care.

Kaiser now is seek­ing to turn this crack in the law--the lack of regulation of doctor-run medical groups--into a gaping loophole.

For the largest HMO in the nation to hide behind its doctors, who work only for Kaiser, is like an auto manufacturer claiming it is not re­spon­si­ble for the design of its exploding gas tanks because its workers built them.

Fortunately, the Department of Managed Health Care rejected the administrative law judge's decision, saying, "California's reforms are a beacon to the nation and we will not turn back the clock." Department Director Daniel Zingale also urged Kaiser to reconsider its "legal strategy of arguing that limitations on patient protection laws render this case unenforceable."

Now, Kaiser can decide whether to pursue its case in state Superior Court, where a similar ruling could undermine the authority of the agency created in 2000 specifically to enforce the California HMO reform package.

Kaiser and other HMOs supported much of this reform legis­la­tion to quell a public backlash at the time; now they must begin to live within those laws rather than continually try to obstruct them.

Ironically, Kaiser's litigiousness over the company's rights contrasts starkly with HMOs' evisceration of the legal rights extended to their patients in 1999. The mandatory binding arbitration agreements HMOs have forced their patients into as a condition of enrolling have become a means of disemboweling the HMOs' legal accountability to the individual.

Until the state's "right to sue" law, most patients could not recover damages when HMOs harmed them. Effective in 2001, the liability law gave all patients that right when their HMO interfered with the quality of their care but did not specify in what forum. Currently, there is no public record of any patient using the law. Forced arbitration has prevented cases from coming before judges, which keeps case law beneficial to patients from developing.

Without such precedents to determine the scope of HMOs' liability, the industry is evading accountability on yet another front.

Legislators must focus their attention on the efforts by HMOs to weaken the state's patients' bill of rights--even the sneak attacks.