Gov. signs bill against snooping in patient records

SACRAMENTO —  Hospitals and other health facilities will face harsh new penalties if their employees snoop in the medical records of patients, under legislation signed Tuesday by Gov. Arnold Schwarzenegger after privacy was breached on celebrities’ files -- including his wife’s -- at UCLA Medical Center.

Schwarzenegger approved two bills creating a state office to police patient privacy and to allow the state to issue fines as high as $250,000 for multiple violations.

The governor rejected most other major healthcare legislation aimed at protecting average Californians who face significant medical bills or inadequate insurance. In his veto messages, Schwarzenegger vented at the Legislature for rejecting his $14.9-billion plan to overhaul the state’s healthcare system in January and castigated lawmakers’ incremental proposals as inferior.

The medical privacy measures Schwarzenegger signed were prompted by The Times’ reports that more than 100 employees at UCLA Medical Center had peeked at the confidential files of famous people, including actress Farrah Fawcett, pop star Britney Spears and California First Lady Maria Shriver.

“Repeated violations of patient confidentiality are potentially harmful to Californians, which is why financial penalties are needed to ensure employees and facilities do not breach confidential medical information,” Schwarzenegger said in a statement.

Assemblyman Dave Jones (D-Sacramento), the author of one of the bills, AB 211, emphasized that they protect all patients, not just famous ones.

“Your private medical information shouldn’t be flapping in the breeze like an open hospital gown,” he said.

The other measure, SB 541, was written by Sen. Elaine Alquist (D-Santa Clara).

In addition to the higher fines for privacy violations, the measures raise maximum penalties for serious medical mistakes to $125,000 when their occurrence indicates that other patients may also be in danger.

Schwarzenegger vetoed the Legislature’s primary solution to insurers’ practice of retroactively canceling the policies of sick people by claiming they failed to disclose health problems when they applied for coverage. The bill would have required insurers to prove that consumers intentionally misled them and to get state approval before canceling those policies.

Schwarzenegger wrote, “This bill was written by the attorneys that stand to benefit from its provisions” and failed to incorporate his ideas to protect consumers.

Assemblyman Hector De La Torre (D-South Gate), the author of the measure, AB 1945, was dismayed.

“We went from the year of healthcare reform to the year of status quo,” De La Torre said.

Schwarzenegger signed a narrower bill mandating that when insurers cancel someone’s coverage, they allow other members of the family to keep theirs. That measure, AB 2569, was by Assemblyman Kevin De Leon (D-Los Angeles).

He vetoed most measures that would have required insurers to add new coverage, including maternity services, orthodontic procedures to repair cleft palates, hearing aids, mental health treatment and durable medical equipment.

Schwarzenegger even vetoed a measure that had been part of his own initial healthcare proposal. That measure, SB 1440 by Sen. Sheila Kuehl (D-Santa Monica), would have blocked insurers from keeping more than 15% of premiums for administrative costs and profits.

The governor said that without the other provisions of his plan -- including a requirement that all Californians hold health insurance -- the measure was “exactly what I did not want to see this year -- a one-sided, piecemeal approach to healthcare reform.”

Schwarzenegger rejected the Legislature’s primary solution to “balance billing,” a practice in which doctors and hospitals charge patients for care that their insurers refuse to cover. The bill also would have set a rate for insurers to pay emergency room doctors with whom they did not have contracts and would have created a system for resolving disputes.

However, he signed a measure outlawing medical providers from seeking such payments from the state.

As he did two years ago, the governor vetoed Kuehl’s SB 840, which would have begun the process of creating a public health insurer to replace the private insurance industry.

He signed measures preventing insurers from refusing to pay the medical bills of customers injured while drunk or drugged and requiring insurers to pay for HIV screening regardless of the diagnosis.

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jordan.rau@latimes.com

patrick.mcgreevy@ latimes.com