April 8, 2014
Health care patients would no longer be subject to exorbitant third-party credit charges arranged without their full knowledge and informed consent under a Consumer Federation of California-sponsored bill that passed a unanimous state Senate committee vote on Monday, April 7, 2014.
CFC Executive Director Richard Holober testified in favor of Senate Bill 1256 (Mitchell) before the Senate Committee on Business, Professions and Economic Development. He illustrated the need for the legislation with the experience of a chronic pain sufferer living in Shingle Springs who responded to a 2009 Sacramento Bee advertisement for four free chiropractic treatments, part of a 14-treatment plan.
The total cost of the treatment plan was $3,877, and it was not covered by the patient’s health insurance. The chiropractor arranged for the patient to obtain credit from ChaseHealthAdvance, a division of Chase Bank. Unknown to the patient, under the arrangement between the chiropractor and Chase, the lending institution immediately paid the chiropractor the entire amount—three weeks before the first treatment even began.
After receiving the four free treatments at the Folsom chiropractic office, the patient had not received any pain relief and told the chiropractor he wished to discontinue the procedures. The chiropractor persuaded him to continue the treatments, stating that the cumulative effects would eventually help him. The patient agreed.
When the treatments still failed to provide any relief, the patient withheld a monthly payment of $217, while he exercised his right to dispute his obligation. In response, Chase promptly terminated the deferred interest and subjected the entire loan amount to interest at an annual rate of 25.5 percent.
The patient explained to the creditor that he was disputing the obligation to pay because the treatments had been a sham. But Chase continued to insist on full payment—both of the cost of the full 14-treatment regimen and of $1,266 in interest that became due when he missed a monthly payment, because according to Chase, the chiropractor would not refund the bank the $3,877 principal that it had paid upfront. Ultimately, the patient paid over $5,000 for treatments which were completely worthless.
SB 1256 would curb this type of unfair financial arrangement between health care providers and financial institutions. The bill prohibits the payment from a bank or financial instutution to a healing arts practitioner for procedures that have not yet been provided. SB 1256 contains other patient protections:
- It requires a health care practitioner to refund to a lender any payment for services that have not been rendered within 15 days of a patient’s request.
- It restricts the establishment of credit with a patient who is anaesthethesized or sedated.
- It requires a written notice and treatment plan from the medical care provider before the credit can be established.
(CFC has been informed that Chase is no longer offering medical credit of this nature through California health care providers.)
Watch for updates on this and other bills at www.consumercal.org.