press release

CONSUMERS UNION
West Coast Regional Office
2002 CALIFORNIA LEGISLATIVE REVIEW

HEALTH CARE

BILLS PASSED / CU SUPPORTED

ENSURING ACCESS TO MEDICALLY NECESSARY MEDICATIONS

SB 842 clarifies the authority of the Department of Managed Health Care (DMHC) to ensure access to medically necessary medications for consumers whose health plans cover prescription drugs. Without this new law, consumers may be denied critical medications by their health plans because of recent court decisions that undermined the DMHC's authority.

ASSISTING RURAL RESIDENTS AFFECTED BY HMO WITHDRAWALS

There has been a 24 percent decline in HMO enrollment in California since 1997 and more than 35 percent of California's rural counties no longer have an HMO that provides services on a countywide basis. AB 1282 will require the Department of Managed Health Care (DMHC) to adopt regulations requiring HMOs to hold a public meeting when it intends to withdraw from a rural county. Under the new law, the HMO will be required to send a summary of the comments received at the public meeting to the DMHC.

ASSISTING CONSUMERS AFFECTED BY HMO BANKRUPTCIES

SB 398 requires an HMO to notify the Department of Managed Health Care when it intends to file for bankruptcy or make a material modification of its license. The new law also directs the DMHC to adopt regulations requiring HMOs to hold a public meeting at least 30 days before withdrawing from a county with fewer than 500,000 people. The law empowers the DMHC to require the HMO to provide a plan to assist in ensuring uninterrupted access to health care services for enrollees.

IMPROVING HMO RESPONSIVENESS TO ENROLLEES

AB 2179 will help ensure that consumers receive timely care from their HMOs. The new law requires the Department of Managed Health Care to establish standards for the time period for which an HMO must provide service to an enrollee. Services include requests to see doctors and specialists, requests for urgent care or admission to a hospital, and response times for telephone calls. The DMHC must also develop a plan for enforcing these standards and report to the public how well HMOs are abiding by the standards.
ALLOWING HMO GRIEVANCES TO BE FILED ONLINE
AB 2085 Corbett Signed into law CU supported

AB 2085 allows for online filing of appeals and grievances through the use of a secure online form on an HMOs web site. For consumers who have access to computers this can be a real convenience that will foster more efficient communication with their HMO.

ASSISTING MEDICALLY UNINSURABLE OBTAIN HEALTH COVERAGE

AB 1401 will improve access to health insurance in the individual market for many "medically uninsurable" Californians. An estimated 123,000 Californians lack health insurance because they are not covered by group health plans and have preexisting health conditions that make it extremely difficult and expensive to obtain coverage on their own. The new law will enable individuals who obtain coverage through the state's Major Risk Medical Insurance Program (MRMIP) to "graduate" to private individual coverage at 110 percent of the premium offered under the state program. The law will also set a higher annual limit of $200,000 for the policies offered to MRMIP graduates. Current MRMIP policies limit annual benefits to $75,000.

ADDRESSING DR. AND DENTIST SHORTAGES IN UNDERSERVED AREAS

AB 982 creates a loan repayment program for dental or medical students who agree to practice in underserved areas. According to the Office of Statewide Health Planning and Development, 37 percent of the state's regions have a shortage of primary care physicians. The cost of receiving medical and dental education prohibits many new physicians and dentists from working in underserved communities. A loan repayment program is critical to recruiting greater numbers of doctors and dentists to these medically needy areas.

STUDYING VULNERABLE CHILDRENS' HEALTH CARE NEEDS

SB 59 directs the Managed Risk Medical Insurance Board (MRMIB) to study ways to address the health insurance needs of vulnerable children, including immigrants, the homeless, and children facing health disparities. The federal government allows states to establish Public Health Initiatives through a waiver under the State Children's Health Insurance Program to promote better participation in the state's Healthy Families and Medi-Cal programs and receive federal matching dollars for doing so. The study by MRMIB will be the first step in reaching this important goal.

PROHIBITING UNFAIR PAYMENTS FOR MATERNITY HEALTH SERVICES

SB 1411 prohibits health care service plans in the individual market from imposing co-payments or deductibles for maternity health services that exceed the most common amount paid on other covered medical conditions. This practice is currently prohibited for most group insurance policies, but was still permitted in the individual insurance market until this bill was enacted into law.

ENCOURAGING COMPETITION AMONG EYE CARE PROVIDERS

AB 2020 will require that optometrists and ophthalmologists give consumers their contact lens prescription following an exam so that they have the option of purchasing these products from another vendor. Prior to passage of this bill, eye care providers were required to provide copies of these prescriptions for eyeglasses but not contact lenses. Eye care professionals who do not release prescriptions hold consumers captive to purchasing from their businesses, sometimes charging higher prices for products available more inexpensively through other vendors. The new law will encourage competition among eye care providers by giving consumers greater choice.

IMPROVING PUBLIC DISCLOSURE OF MALPRACTICE SETTLEMENTS

SB 1950 would improve public disclosure of physician malpractice settlements by the Medical Board of California. Currently, California consumers have more information about how best to choose an automobile than for selecting the right physician. Malpractice settlements are an important piece of information that consumers should be able to consider when choosing a doctor. Consumers will have access to this information through a quarterly publication called a "Medical Discipline Report" produced by the Medical Board of California.

BILLS PASSED / CU OPPOSED

AUTHORIZING HEALTH PLANS TO MARKET STATE INSURANCE PLANS

SB 283 authorizes approved commercial health plans to provide Healthy Families Program and Medi-Cal application assistance directly through California schools. Consumers Union opposed the measure because of concerns that it would subject potentially eligible families to inappropriate pressure and steering by plan employees. Our experience with schools that are actively working to enroll children indicates that health plans' main objective seems to be enrolling families into their respective plans rather than fully considering what is in the best interest of consumers. SB 283 would foster this kind of self-interested recruiting.

BILLS DEFEATED / CU SUPPORTED

ENSURING HEALTH CARE ACCESS FOR DIVERSE COMMUNITIES

AB 2739 would have ensured that the diverse beneficiaries of the Healthy Families and Medi-Cal Managed Care programs are provided linguistically accessible and culturally appropriate medical care. Approximately half of all beneficiaries of these two programs speak a primary language other than English. Currently, the language and cultural competency requirements simply appeared in the contracts negotiated by the state with health plans. By codifying these requirements into law, this bill would have helped ensure that they could not be arbitrarily weakened by the health plans.

CREDIT & FINANCE

BILLS PASSED / CU SUPPORTED

DISCLOSING POTENTIAL CONFLICTS OF INTEREST IN ARBITRATION

AB 2656 will provide greater accountability for arbitration provider organizations by requiring them to plainly disclose to the public information such as the number of arbitrations handled for a particular business and the outcome of those arbitrations. Public disclosure of arbitration results is particularly important because of the risk that a business which is a "repeat player" in arbitration might receive more favorable treatment in the arbitration than an individual consumer who may only have one arbitration with an arbitration provider.

CURBING POTENTIAL CONFLICTS OF INTEREST IN ARBITRATION

AB 2574 makes it unlawful for an arbitration provider to administer a consumer arbitration if the provider has a financial interest in one of the parties, or if one of
attorneys or parties has a financial interest in the arbitration provider.

PROTECTING CONSUMERS FROM ARBITRATION ABUSES

AB 3030 requires arbitration providers to give back administrative fees paid by consumers if the arbitrator violates certain protections mandated by other reform proposals.

MAKING ARBITRATION MORE AFFORDABLE FOR CONSUMERS

AB 2915 would prevent a requirement that a consumer who loses an arbitration has to pay the other side's arbitrator's fees. Elimination of the "loser pays" rule in consumer cases would mitigate one of the ways in which arbitration can be more costly for consumers than the court system. AB 2915 also will address another aspect of the high cost of arbitration by requiring that each arbitration provider organization waive fees for lower income consumers who submit a sworn statement of qualifying household income.

SAFEGUARDING CONSUMERS FROM JUDICIAL CONFLICTS

AB 2504 addresses judicial ethics in the court system when judges are discussing future arbitration employment. It prevents judges who are discussing employment as arbitrators from ruling on the enforceability of arbitration agreements, and from ruling in cases involving the arbitration provider with whom the judge had employment discussions.

PROTECTING CONSUMERS FROM PAYDAY LOAN ABUSES

SB 898 requires payday lenders to abide by annual auditing and reporting requirements that currently apply to other small lenders, and enacts other rules for an industry that is virtually unregulated in California. The new law closes a loophole that allowed payday lenders to partner with federally chartered banks and ignore state consumer protections. It stops the practice of some payday lenders who charge a $10 administrative fee to each customer and requires lenders to inform consumers of their rights and obligations in the payday loan transaction. And it requires the Department of Corporations to prepare a study of industry practices based on data collected by payday lenders in the state and offer recommendations for further reform.


STRENGTHENING THE CALIFORNIA BOARD OF ACCOUNTANCY

AB 270 changes the traditional accounting industry domination of the California Board of Accountancy by requiring a public majority on the Board. It also changes the standard for disciplining an accountant so that the Board can take enforcement action more easily against an individual who has engaged in repeated negligent acts. Finally, it requires accountants to report to the Board certain events that might trigger an investigation into a particular account or accounting firm. For example, under the new law, an accountant would have to tell the Board when a company has restated its earnings.

IMPROVING AUDIT DOCUMENTATION REQUIREMENTS

AB 2873 requires that audit documentation must be maintained and be sufficiently complete so that a competent outsider can see the procedures, evidence, and conclusions of the auditor. The new federal accounting reform bill addresses part of this issue. It imposes criminal penalties if documents are destroyed before five years, and it requires that the new federal accounting oversight board adopt regulations requiring that accounting firms prepare and maintain such records for at least seven years. The new California law makes the anti-shredding requirement go into effect immediately, creates a presumption that the work was not done if documentation is not maintained, extends the seven-year period in certain circumstances, and requires that the individual accountants that performed the work be identified.

CLOSING THE ACCOUNTING INDUSTRY REVOLVING DOOR

AB 2970 helps to close the accounting industry revolving door by requiring a one-year cooling off period before an accountant with audit responsibility can accept employment as a financial officer of a company he or she has audited. The new federal law addresses the flip side of this coin by banning accounting firms from providing audit services if certain high level persons responsible for accounting and fiscal controls were employed by the auditing firm and participated in the audit during the year before the audit is initiated.

INCREASING PUBLIC ACCESS TO AUDIT REPORTS

AB 55 requires publicly traded corporations to file an annual statement disclosing the name of its auditor, providing the most recent audit report, and information about compensation paid to directors and officers, including information about any stock options available only to them and not other employees of the corporation. Such ready access to reports and the possibility of increased scrutiny by the public should create a new incentive to make audit reports as complete and accurate as possible.

PROTECTING CONSUMERS FROM PHONE CARD RIP-OFFS

AB 2244 will augment the existing disclosure requirements for the use of prepaid phone cards. In addition to information now required about surcharges and fees on prepaid phone cards, the bill will require prepaid phone card companies to give consumers additional important information in advertising, the card or packaging, and at the point of sale, including periodic fees, maintenance fees, access fees, and international call surcharges. These disclosures should help to prevent surprising fees which detract from the value of the prepaid phone services purchased. AB 2244 also will require that prepaid phone services improve the customer service lines by having sufficient capacity to accommodate a reasonably anticipated number of calls, and by providing consumers a means to obtain information about the remaining balance in the prepaid telephone services account.

PROTECTING GIFT CERTIFICATE HOLDERS DURING BANKRUPTCIES

AB 2473 protects consumers who hold gift certificates for companies that have declared bankruptcy. When a company enters bankruptcy, it generally needs court approval to pay any pre-bankruptcy claims. The amount at stake for individual consumers who hold gift certificates is too small to make it worthwhile for consumers to pursue this remedy in bankruptcy court. AB 2473 defines the value reflected by the gift certificate as value which is not the property of the issuer of the gift certificate. As a practical matter, this should allow the consumer to use the gift certificate at stores or online when the company is remaining open for business during a bankruptcy.

REQUIRING FOUR HOUR UTILITY SERVICE WINDOW DISCLOSURE

SB 500 requires utility companies to inform consumers of their statutory right to have utility service appointments occur within a four hour window. California retailers with 25 or more employees are already required to offer consumers a four hour window for a service or delivery appointment. However, before this law was enacted, utilities were required to give consumers the same convenience only if it was requested.

LIMITING FEES FOR CREDIT COUNSELING

Throughout the 1990s, the debt industry boomed and over the course of the past ten years competition grew between traditional Credit Counseling Services who are affiliated with the National Foundation for Credit Counseling and smaller, more business-like nonprofit credit counselors. The increased demand for credit counseling made it imperative to enact strong consumer protections for debtors. AB 2293 creates a uniform fee for all nonprofit credit counselors. Under the new law consumers may be charged for a debt management plan at 6.5 percent of the money dispensed monthly or $20, whichever is less. In addition, all consumers will receive an itemized record disclosing how much they have paid to their creditors and how much has been paid to the credit counselor.

PROMOTING LOW-COST AUTO INSURANCE

SB 1427 strengthens California's Low-Cost Automobile Insurance Pilot Program, which is being offered in San Francisco and Los Angeles to good drivers where the household income is 150 percent or less of the federal poverty line. The program provides basic auto insurance coverage that satisfies California's' financial responsibility laws, which require drivers to carry minimum amounts of third-party liability. Unfortunately, relatively few drivers have signed up for the program because the policies are priced too high and the publicity effort to promote them has been ineffective. The new law reduces the initial price for the policies, extends the pilot program until January 2007, creates incentives for agents to sell the policies, and expands the number of uninsured drivers who are eligible for the program.

ASSISTING IDENTITY THEFT VICTIMS

SB 1239 requires consumer credit reporting agencies to provide a victim of identity theft the right to block fraudulent information and to receive a free copy of his or her credit report once a month for up to 12 months. This will make it easier for identity theft victims to monitor their credit reports to limit any further damage to their credit record.

PROTECTING CONSUMERS FROM CREDIT CARD THEFT

SB 1617 requires credit card issuers to establish an activation process for consumers to follow before a credit card can be used. Before the law was enacted, card issuers were able to send live cards to consumers from different retailers as long as it was considered a substitute for the credit account the consumer originally established. Unfortunately, consumers don't always know when a substitute card is being sent, making it easy for a card to be stolen from the mailbox. The new law will help to protect consumers from this kind of fraud.

PROTECTING HOMEOWNERS IN COMMON INTEREST DEVELOPMENTS

AB 2289 creates protections for homeowners who are members of homeowners' associations from losing their homes to foreclosure when such associations use the non-judicial foreclosure process to collect small amount of unpaid association dues or fees. The bill requires homeowners' associations to give 30 days notice to owners before recording a lien against a property for late payments and is expected to impact one-quarter of all homeowners in California.

BILLS DEFEATED / CU SUPPORTED

PROTECTING CONSUMERS' FINANCIAL PRIVACY

SB 773 would have allowed consumers to stop the financial institutions they do business with from sharing personal information with affiliates by opting out. Most financial institutions would have been required to get prior approval from consumers (opt-in) to share or sell financial information with unaffiliated third parties. The bill would have required financial institutions to provide consumers with better notice of their privacy rights and established fines for businesses that violated the law.

GIVING CONSUMERS GREATER CHOICE IN ARBITRATION

AB 3029 further addresses the "repeat player" issue by allowing the parties to choose a different arbitration provider than the one which the business pre-selected in the form contract. The bill also requires arbitration providers to disclose other business relationships, such as consulting, that they have with companies that are parties to an arbitration.

HOLDING CORPORATIONS ACCOUNTABLE FOR FINANCIAL FRAUD

SB 783 would have held corporations and their managers accountable for knowing about and failing to report accounting and financial fraud with their companies. The bill also would have required employers to inform employees of their whistleblower protections under current law. And it created a confidential whistleblower hotline for employees, located at the office of the California Attorney General.

IMPROVED DISCLOSURE OF MONEY TRANSMISSION POLICIES

SB 426 requires international money transmitters to provide consumers with a refund of the fees and amount transmitted if the consumer changes their mind about a transaction within a specified period of time. It also requires money transmitters to post important information regarding the transaction in a variety of languages, including the exchange rate for the most used transmission services offered by the licensee.

BILLS DEFEATED / CU OPPOSED

PROVIDING LIMITED PRIVACY PROTECTION FOR CONSUMERS

AB 1775 was an alternative financial privacy protection measure supported by Governor Gray Davis that was opposed by consumer groups. The bill offered only weak improvements over existing federal law and was plagued by numerous loopholes that would have allowed financial institutions to easily circumvent it. AB 1775 failed to offer meaningful financial privacy protection because it permitted unrestricted sharing of personal information among companies with very loose affiliations; failed to require financial institutions to use a standardized form to provide consumers with adequate notice regarding their privacy rights; and provided a weak and confusing framework for enforcing the provisions of the proposed law.

REQUIRING NEWLY INSURED MOTORISTS TO PAY HIGHER PREMIUMS

SB 689 would have permited a discount to motorists who have remained insured for a period of time. Consumer groups opposed the discount because it would have required other motorists, namely those who don't have a long history of insurance coverage, to pay more to fund the discount for other drivers. As a result, consumers who want to comply with the law and become insured drivers will be faced with higher insurance rates to fund a small discount to other consumers.

OTHER ISSUES

BILLS PASSED / CU SUPPORTED

CURBING GREENHOUSE GAS EMISSIONS

AB 1493 empowers the California Air Resources Board to set auto emissions standards by January 1, 2005 for cars and light trucks sold in the state and manufactured in or after 2009. California produces seven percent of the world's carbon dioxide emissions, a major contributor to global warming.

REGULATING THE SALE OF DANGEROUS EPHEDRINE SUPPLEMENTS

Serious concerns are mounting about the health risks associated with weight loss and energy boosting sports supplements that contain ephedra, an herbal supplement that acts like an amphetamine. Ephedra has been linked to more than 100 deaths and serious injuries in the U.S. SB 1884 bans the sale and distribution of ephedrine products to minors; requires warning labels on such products; and requires manufacturers to post on product labels the toll-free number for the Food and Drug Administration's MedWatch reporting hotline to enable consumers to report adverse effects.

REQUIRING PROMINENT WARNING LABELS ON HERBAL SUPPLEMENTS

Herbal supplement companies are free to market and sell their products without any proof that they are effective and there is no pre-market safety evaluation for these products by the Food and Drug Administration. Consumers Union has serious concerns about some commonly used sports supplements like those containing ephedrine, creatine, and androstenedione. SB 1948 would help protect consumers by ensuring that warning labels on such supplements are clearly worded and conspicuously placed to enable users to make more informed choices.

BILLS DEFEATED / CU SUPPORTED

LABELING TRANS FAT CONTENT ON PROCESSED FOODS

SB 1610 would have required manufacturers of processed food sold in California to disclose the amount of trans fat contained in it products. Trans fat is a processed fat found in crackers, cookies and fast food. A National Academy of Sciences study found a direct link between trans fat and heart disease and increases in LDL cholesterol, which can block arteries. SB 1610 was approved by the Senate but was defeated in the Assembly Agriculture Committee on following intense opposition by food manufacturers. Shortly after the defeat of the measure, the U.S. Food and Drug Administration announced that it will require food manufacturers to include information on trans fat content on the nutrition labels of processed foods.

View Files Sorted By Office: Consumers Union OPI, New York - Washington DC Office
West Coast Regional Office - Southwest Regional Office - Consumer Policy Institute

  
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