Prompted in part by a California Supreme Court hearing held in Los Angeles in April, state Insurance Commissioner Chuck Quackenbush is holding his own investigatory hearings on the use of binding arbitration to settle disputes over health care coverage.

According to Quackenbush, the hearings arise out of growing complaints from consumers that insurance and managed care companies include binding arbitration provisions in their contracts to keep enrollees from suing. Those suits are usually filed by consumers seeking medical coverage they feel is justified but which the HMO refuses to pay for.

"In some circumstances, consumers may be forced to deplete their savings or mortgage their homes to pay for treatment that may be essential to keep them alive while waiting for their cases to be settled," Quackenbush said. "Arbitration may even be delayed so long that it is too late to save the consumer's life by the time the dispute is decided."

The case for arbitration, in which both sides make their case before a professional third-party arbiter, is that it can be less costly and quicker than a trial hearing. But it leaves consumers little room for appeal if the arbiter finds against them.

Also, arbitration hearings are almost always held behind closed doors, and their findings are kept under wraps. So if a health care or insurance company is found to be in the wrong, the public is generally not made aware of it.

Quackenbush's hearings are timely in that the California Supreme Court heard arguments in April over Kaiser Permanente's use of binding arbitration as a way to settle disputes with disgruntled patients. Kaiser is the state's largest managed care company, with more than 5 million members.

The case, Engalla vs. Permanente Medical Group, pitted the managed care company against the family of Wilfredo Engalla. The family contends that Kaiser dragged its feet in agreeing on an arbiter to hear a dispute between Engalla and the company, in hopes that Engalla would die and his case would unravel.

Engalla was a San Francisco accountant who charged that Kaiser physicians failed over a period of five years to diagnose his lung cancer. He filed an arbitration claim in 1991, and his attorney asked Kaiser to fast-track the request so the case could be heard before Engalla died.

Engalla's family says Kaiser waited five months before acknowledging the case. Soon after the case was assigned to an arbiter, Engalla died. An initial finding against Kaiser was overturned by an appellate court, and a ruling by the Supreme Court is now pending.

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