Med Provider Lien Bill Irks California Insurers

By Matt Brady

NU Online News Service, Aug. 18, 5:50p.m. EDT?A California insurers' trade group todayvoiced concerns that a bill in their state legislature concerningmedical provider liens could severely impact their operations

The alarm was sounded during a teleconference presented byrepresentatives of the Association of California InsuranceCompanies in Sacramento.

Under the measure, SB 494, medical providers can claim that thereimbursement provided to them under the state's Medic-Cal programfor injured indigents was inadequate and file a lien for additionalcosts in any lawsuit filed by the patient or settlement thatpatient receives.

For insurers, according to Mr. Jeff Fuller, executive vicepresident and chief counsel of the ACIC, the measure wouldeffectively require companies to add in the extra amount of thehealthcare providers lien into its loss costs, resulting in higherpremiums. Additionally, he noted that the measure would increasethe contingency fees for plaintiffs' attorneys, which are set as apercentage of the settlement or award, and decrease the amountgoing to the injured party.

"It doesn't do consumers any good at all," Mr. Fuller said,adding that it would be "disastrous" in terms of expanding the tortsystem.

ACIC President Sam Sorich also criticized the bill. "The bottomline," he said, "is that the property and casualty industry will beunderwriting the Medi-Cal system."

ACIC noted that other measures in the Legislature, which havegenerally been passed, were aimed at resolving some of the issuesthat arose after the wildfires that hit Southern California lastyear.

Measures already awaiting Gov. Arnold Schwarzenegger's signaturewould increase and clarify the disclosures insurers are required tomake about their policies.

They would also make permanent a mediation program designed toresolve claims disputes after a disaster, specifically thosedisputes involving "under-insured" policyholders whose claims werenot enough to cover their rebuilding costs.

Another bill passed by the legislature would extend the timeperiod for rebuilding a home from six to twelve months, with anallowance of six months extensions if there is "good cause".Additionally, the measure would set an extended, twenty-four monthrebuilding period for homes after a disaster.

One homeowner-related bill that has not been passed, althoughMr. Sorich said it was expected to receive the green light thisweek, is a measure that would require companies to offer renewal ofa homeowners policy during the rebuilding for at least one policyterm, and to work with the policyholder to ensure that theirpremiums are relative to their risk.

Mr. Sorich said he was unaware of any companies that werenon-renewing after the wildfires, and that the ACIC supported thebill.

"I think the bill is well drafted and well intentioned," hesaid. "I think it's good public policy."

While much of the work in recent months by the legislature hasdealt with the homeowners issues, ACIC noted that lawmakers havecontinued working on workers' compensation issues, specificallyrate regulation.

Mr. Sorich said that now is, "the wrong time to impose a strictform of rate regulation," and pointed out that the market isgetting more competitive.

However, although there has been some speculation in Sacramentothat some rate regulation language might be included in an omnibusbill, Mr. Sorich said that no bill appeared forthcoming, and thatthe rate regulation bills would likely end up going nowhere.