Med Provider Lien Bill Irks California Insurers

By Matt Brady

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

The alarm was sounded during a teleconference presented by representatives of the Association of California Insurance Companies in Sacramento.

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

For insurers, according to Mr. Jeff Fuller, executive vice president and chief counsel of the ACIC, the measure would effectively require companies to add in the extra amount of the healthcare providers lien into its loss costs, resulting in higher premiums. Additionally, he noted that the measure would increase the contingency fees for plaintiffs' attorneys, which are set as a percentage of the settlement or award, and decrease the amount going 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 tort system.

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

ACIC noted that other measures in the Legislature, which have generally been passed, were aimed at resolving some of the issues that arose after the wildfires that hit Southern California last year.

Measures already awaiting Gov. Arnold Schwarzenegger's signature would increase and clarify the disclosures insurers are required to make about their policies.

They would also make permanent a mediation program designed to resolve claims disputes after a disaster, specifically those disputes involving "under-insured" policyholders whose claims were not enough to cover their rebuilding costs.

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

One homeowner-related bill that has not been passed, although Mr. Sorich said it was expected to receive the green light this week, is a measure that would require companies to offer renewal of a homeowners policy during the rebuilding for at least one policy term, and to work with the policyholder to ensure that their premiums are relative to their risk.

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

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

While much of the work in recent months by the legislature has dealt with the homeowners issues, ACIC noted that lawmakers have continued working on workers' compensation issues, specifically rate regulation.

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

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

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Med Provider Lien Bill Irks California Insurers

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