43 HMOs Fined for Ignoring Consumer Law

State regulators on Tuesday slapped more than 40 health plans with fines totaling $515,000, saying they were ignoring a state law intended to help consumers redress problems with their HMOs.

California Corporations Commissioner Keith P. Bishop said the health plans had failed to notify their members of their right to register complaints with the state by calling a toll-free 800 number. The complaint hotline, established by legislation, became law in January 1996.

HMOs applauded the hotline at the time of the bill’s passage, saying they welcomed the additional scrutiny. However, the list of 43 violators released by the state includes some of the industry’s best-known names, including Aetna, Cigna, FHP, Kaiser Permanente, Pacificare and WellPoint.

The large number of plans found to be snubbing the state law is “disturbing and unacceptable,” Bishop said. He said other health plans have not responded to the agency’s requests for information and may be subject to future disciplinary actions.

The state’s action is a big embarrassment to HMOs, which have been striving to repair their image amid a barrage of negative publicity over industry practices.

“The health plans . . . have minimized consumer problems by calling them anecdotal or horror stories,” said Jeanne Finberg, health policy analyst with Consumers Union in San Francisco. “But they do seem to be hiding the ball here.”

Alan Tomiyama, a spokesman for the California Assn. of HMOs, said the trade group supports the consumer hotline.

“If these allegations have merit, our position is that health plans need to comply with these requirements,” he said.

Cynthia Coulter, a spokeswoman for WellPoint Health Networks, said the Woodland Hills-based company was surprised to learn Tuesday that it was not in compliance with the law and was facing a $40,000 fine.

“We were never notified previously, and the state’s notice doesn’t give any specifics” about the nature of the violation that led to the fine, she said.

Bishop said the actions were taken after a “lengthy investigation” prompted by complaints about HMOs that were not complying with the law.

One of those who complained was state Sen. Herschel Rosenthal (D-Los Angeles), author of the legislation that established the consumer hotline. Rosenthal’s office wrote the Department of Corporations in November about a PacifiCare member who had not been properly notified about her right to appeal HMO decisions to the state agency.

Rosenthal’s bill was an attempt to address the problem that many HMO members were unaware they have the right to appeal denials of medical services to the state. Moreover, the vast majority of HMO members were unaware that the little-known Department of Corporations is charged with regulating HMOs.

Last year, the Corporations agency used the complaint data collected through its 800 number to release a public report on HMO complaints. Bishop said in an interview that the fact that so many HMOs are not complying with the new law raises questions about the accuracy of statistics in that report and an upcoming report on 1996 complaints.

The hotline number is (800) 400-0815.