ACIC: Californians Win Victory with SB 494 Veto

September 22, 2004

California consumers won a significant victory yesterday when Gov. Arnold Schwarzenegger vetoed SB 494, according to the Association of California Insurance Companies (ACIC).

ACIC President Sam Sorich said the bill, SB 494 by Sen. Martha Escutia, D-Whittier, represented unwise public policy and would have hurt insurance consumers by raising rates for auto, homeowners and business insurance policyholders.

The bill would have allowed a medical care provider to file a lien in a lawsuit when a Medi-Cal patient brought the lawsuit. The lien would have allowed the medical care provider to recover fees that would have reportedly been significantly higher than the Medi-Cal fee-for-service rate agreements.

“In other words, the bill would have forced consumers to subsidize the Medi-Cal program by imposing inflated insurance costs,” said Sorich.

Gov. Schwarzenegger emphasized this point in his veto message, saying “… perhaps most troubling is the fact that the inflated cost to the insurance system for these overcharges will be borne by consumers, increasing the likelihood of growing the number of uninsured in this state.”

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