Harvey S. Frey #202595
Santa Monica, CA 90402
Attorney for Plaintiffs

The petitioner/plaintiffs (hereinafter "plaintiffs") are 1) enrollees of various California health care service plans (HMOs), who have filed complaints against their plans with the California Department of Managed Health Care (DMHC), and 2) the California Consumer Health Care Council, Inc., an organization of which the other plaintiffs are members and which has been working on their behalf, and for the benefit of all California health care consumers.

DMHC, by and through the individual respondent/defendants (hereinafter "defendants") has breached its statutory duty to each of the plaintiffs by failing and refusing to comply with plaintiffs’ requests and the requirements of the Knox-Keene Act (KKA) (Health & Safety Code (HSC)§ 1340 et seq) in at least three ways:

1) DMHC has failed to send to plaintiffs requested copies of materials submitted to DMHC by HMOs, or to require HMOs to supply such copies, as required by HSC § 1374.30(n) and as further described in heading IV below;

2) It has refused to provide the explanations required by HSC § 1368(b) upon closing plaintiffs’ cases, as further described in heading V below; and

3) It has refused plaintiffs’ requests to investigate, correct and penalize HMO violations, such as material misstatements to enrollees, DMHC, and Independent Medical Review (IMR) organizations, as further described in heading VI below.

This petition seeks an order from this court requiring DMHC to follow these legal requirements.

II. PETITIONER/PLAINTIFFS

California Consumer Health Care Council, Inc. (CCHCC) is a 501(c)(3) California non- profit public benefit corporation and membership organization, whose purpose is to improve the health care system. One of its primary goals is to ensure the faithful enforcement of all consumer protection laws. Acting to require DMHC to abide by and enforce the law, in the manner sought in this petition, is central to this goal. The other plaintiffs are members of CCHCC.

Information on other plaintiffs has been redacted

Plaintiffs’ individual medical histories are immaterial to the specific issues raised herein, and to avoid making them public record, we purposely omit them from the pleading. They will be made available to the court upon request if required for in camera review.

III. RESPONDENT/DEFENDANTS

The California Department of Managed Health Care (DMHC) is the Department established by §1341 of the California Health and Safety Code (HSC) to regulate health care service plans. Daniel Zingale is its Director, Barbara Reagan is the Director of its HMO Help Center, Andrew George is Senior Staff Counsel of the HMO Help Center, and Joan Cavanagh is its Director of Enforcement. Each of the individual defendants, is in some manner responsible for the errors and omissions listed herein, because of their organizational positions, and/or their personal involvement in one or more of plaintiffs’ cases.

IV. DMHC HAS FAILED TO REQUIRE HMOs TO PROVIDE COPIES OF SUBMITTED RECORDS TO COMPLAINANTS

HMOs are required by the KKA to create, maintain, and submit complete and accurate patient records and summaries to enrollees, DMHC and to the IMR Organization when IMR is ordered. DMHC, as the agency with the statutory duty to enforce the KKA, has the duty to require HMOs to comply.

The general rights of a patient to have access to his/her medical records are expressed in HSC §§ 123100-123149.5 .

Each of the plaintiffs has informed DMHC of unfair, deceptive, untrue or misleading statements and/or omissions of material fact (hereinafter "false statements") in records, reports and/or other submissions that they have obtained from the plans and/or from DMHC. These false statements, when uncorrected, skew the findings of DMHC and the IMR Organization (IMRO) against the complainant. They also lead to incorrect diagnoses and treatment when future medical providers, unwittingly or otherwise, rely upon the false statements. It is imperative that complainants are able to see these documents, to be able to: 1) identify any false statements; 2) make corrections before any additional harm is caused to the complainants by these false statements, and 3) permit DMHC to thoroughly investigate, correct and appropriately penalize the improper conduct.

Plaintiffs have requested that DMHC provide, or require the HMOs to provide, them with copies of materials submitted to DMHC and/or IMROs by the HMOs.

On October 12, 2000, in a letter to CCHCC, David Link, Chief Counsel of DMHC’s Office of Patient Advocate, committed to a policy of releasing a patient's medical records to that patient upon request.

Nevertheless DMHC has not provided the documents requested by plaintiffs. In addition, in many cases, DMHC has not required the HMOs to provide this material to complainants either.

DMHC has a statutory duty to provide complainants with final case-closing summaries, to wit:

It is important for complainants that DMHC complies with this duty, since it: (a) encourages DMHC to draw legally relevant sub-conclusions supportive of its ultimate decision; (b) facilitates orderly analysis and minimizes the likelihood that the agency will prematurely leap from evidence to conclusions; and (c) enables a complainant or a reviewing court to trace DMHC's analysis, avoiding the necessity of unguided and resource-consuming explorations of the record to determine whether some combination of credible evidence and factual and legal conclusions supported the ultimate decision. Properly documented findings enable the parties to determine whether and on what basis they should seek review. They also serve a public relations function by helping to persuade the parties and the public that administrative decision-making is careful, reasoned, and equitable.

Each of the plaintiffs has asked DMHC for the summaries described above.
DMHC, has not complied, and has explicitly refused to comply with the statute, as expressed, for example, in a letter of August 2, 2001 from DMHC’s Joan Cavanagh.
In those cases where closing letters have been supplied by DMHC, they have been almost entirely conclusory, failing to satisfy the specificity requirements of HSC § 1368(b)(5), largely ignoring plaintiffs’ allegations and uncritically accepting HMOs blanket denials, and often consisting of no more than the bald statement ". . . no formal enforcement action will be taken at this time."
The adoption of this informal policy to ignore HSC § 1368(b) also constitutes improper regulation-making, contrary to the procedures of Government Code 11340 et seq.

VI. DMHC HAS FAILED TO INVESTIGATE HMO VIOLATIONS
AND TO APPLY MANDATORY PENALTIES

DMHC has a statutory duty to investigate and penalize violations of the KKA, to wit:

The submission of false statements by HMOs, as alleged in Paragraph IV above, are violations of the Knox-Keene Act of the sort mandating disciplinary action, to wit:

It is also a Felony for the HMO to make misleading statements or omissions in connection with a claim for payment or other benefit pursuant to an insurance policy:

Plaintiffs have presented explicit allegations of false statements by HMOs to DMHC, asking them to enforce these provisions of the KKA. DMHC has not done so, and has refused to do so, in clear derogation of its duty to protect health care consumers from just such illegal conduct. On March 2, 2001, CCHCC requested that DMHC issue a regulation requiring that documents relating to enrollee grievances submitted by HMOs be verified. DMHC refused to do so, by a letter of April 2, 2001.

VII. FIRST CAUSE OF ACTION

Declarative Relief under CCP §1060

The actual controversy here is clear. Plaintiffs say that DMHC must adhere to statutes requiring it to assure that complainants receive copies of adversarial filings, provide legally adequate summaries of closed complaints, thoroughly investigate alleged false statements and apply mandatory sanctions against HMOs that make false statements. DMHC has established a policy that it doesn’t have to do these things, and it has acted on that policy to deny plaintiffs the protections and benefits intended for them by the Legislature.

In addition, these improper policies have been implemented by DMHC without satisfying the rules for regulatory rule-making laid out in Government Code § 11340 et seq. This is precisely the sort of "overarching, quasi-legislative policy set by an administrative agency" which was held suitable for declaratory relief in Californians for Native Salmon & Steelhead Assn. v. Department of Forestry (1990) 221 Cal. App. 3d 1419. In the absence of such declaratory relief, every complainant who goes to DMHC for help in his/her dispute with his/her HMO, will be denied the benefits available under KKA and be compelled to sue DMHC or give up these benefits. These issues will have to be litigated over and over, resulting in a multiplicity of suits. As DMHC fails to adequately implement the non-judicial remedies provided by the Knox-Keene Act, complainants will be forced more often to resort to lawsuits against their HMOs, further adding to the burden on the courts. Judicial efficiency therefore also requires that this court declare once for all what DMHC’s legal responsibilities are with regard to these issues.

The plaintiffs in this case are members of the class for whose benefit the Knox-Keene Act was passed, and they have verified this petition. DMHC is the agency created by that act for the express purpose of carrying out its mandates. By 1) accepting false, misleading, and/or materially incomplete statements from HMOs, as a basis for its determinations in complaints filed by health care consumers; 2) failing to provide complainants with copies of the materials supplied by each plan, upon which DMHC and/or the IMRO relies in making its determinations; 3) failing to give full, reasoned explanations for their refusal to help complainants; and 4) refusing to fully and faithfully enforce the laws enacted to protect consumers from the wrongful conduct noted herein, DMHC flouts the rule of law and deprives complainants of the ability to obtain needed medical benefits, subjecting them to pain, ill health, and shortened life expectancy, as well as significant financial loss. There is no remedy at law for this denial of their rights by a state agency. The derelictions outlined in sections IV, V, and VI above are of the clear, present, ministerial, non-discretionary duties required of DMHC by law.

If this court should find any of DMHC’s actions invested with discretion, plaintiffs allege that, in failing to obey the clear instructions of the law, DMHC acted arbitrarily, capriciously, fraudulently, and without due regard for plaintiffs’ clear, present, and beneficial rights and that the actions prejudiced them. ( Huntington Park Redevelopment Agency v. Duncan (1983) 142 Cal.App.3d 17, 25.) "While mandamus will not lie to compel governmental officials to exercise their discretionary powers in a particular manner, it will lie to compel them to exercise them in some manner." (Los Angeles County Employees Assn., Local 660 v. County of Los Angeles (1973) 33 Cal.App.3d 1, 8;

IX. THIRD CAUSE OF ACTION

Injunctive Relief

DMHC’s failure and refusal to implement the above-mentioned portions of the Knox-Keene Act has deprived and continues to deprive plaintiffs of the protections and benefits the legislature intended for those in their situation. A suit at law for damages is incapable of remedying their injury. If a writ of mandate is not approved by this court, the only remedy available is an injunction directing DMHC to remedy the derelictions noted in sections IV, V, and VI above.

WHEREFORE Plaintiffs pray for judgment as follows:

1. On the First Cause of Action, that this court declare that DMHC is required to

a) provide, and/or require HMOs to provide, all complainants with copies of material submitted by HMOs to DMHC or to an IMRO within a time frame permitting correction before any decision is made by DMHC or an IMRO;

b) provide all complainants with the summary as required by HSC § 1368(b) within thirty days after closing a case or any portion of a case;

c) thoroughly investigate HMO violations reported by complainants, order violations to be corrected and apply the penalties required by the Health & Safety Code where violations are found.

2. On the Second Cause of Action, that a peremptory writ of mandate issue under seal of this court, commanding that DMHC fully and faithfully perform their mandatory duties, to wit, to enforce HSC §§ 1374.30(n)(1)(B), 1374.30(n)(3), 1374.34(b), 1386(b)(3,6,7,8,9, and 12), 1387(a), 1390, 1391.5(a), 1392, 1394.1, and to comply with HSC §§ 1346(a), 1368(b)(5,6, and 8), 1368.04(a), 1374.34(d), and 1386(a).

3. On the Third Cause of Action, that this court enjoin DMHC to fully and faithfully perform their mandatory duties as detailed in the previous paragraph.

4. Appoint CCHCC or another appropriate individual or entity, as a Special Master to monitor DMHC’s compliance with the Court’s injunction and report its findings to the Court at an interval set by the court for a reasonable period of time as set by the court..

5. Costs of suit, and reasonable attorney fees pursuant to Code of Civil Procedure §1021.5 or as otherwise allowable by law, and

6. Further relief the court deems proper.