ACIC: Costly, Anti-Consumer Bill Passes Calif. Committee

The Senate Judiciary Committee has approved legislation that would shift Medi-Cal costs – and insurance rate hikes – to all forms of liability insurance, such as homeowners and automobile coverage, according to the Association of California Insurance Companies.
The ACIC-opposed bill, SB 399 by Sen. Martha Escutia (D-Whittier), was approved by the Senate Judiciary Committee on a 4-2 vote and will be considered next by the full Senate.

ACIC Executive Vice President Jeff Fuller, who testified in opposition to the bill in committee, explained that the measure would allow a county medical provider to file a lien against a defendant in a lawsuit when the litigation is brought by a Medi-Cal patient.

“The lien would allow the medical care provider to recover fees that are significantly higher than the Medi-Cal fee-for-service rate agreements,” said Fuller. “That added cost would be passed along to insurance consumers in the form of higher rates.”

In addition, the medical care provider could take a bigger share of the recovery, which would make less available under the insurance policy limits to pay the injured person for wage loss, out-of-pocket expenses or pain and suffering, Fuller noted.

“Under Current law, the cost of liability insurance coverage is partially based on anticipated loss costs incurred by the universe of injured parties – many of whom have no health coverage or may be covered by health insurance or Medi-Cal.

“In each instance, the injured party is entitled to recover only the amount actually charged under the particular health care program. Under SB 494, health care providers likely will assert that their costs of providing services to injured parties far exceed the Medi-Cal reimbursement they received for those services.

“The inescapable result will be that liability insurance coverages will experience substantial increases in loss costs that will inevitably translate into increased rates for all liability insurance purchases – auto, homeowners and commercial,” said Fuller.