California attorney general to oversee Kaiser Permanente's medical arbitration system under new law

California Governor Gavin Newsom signed Assembly Bill 1770, placing Kaiser Permanente's private medical arbitration system under state attorney general oversight. The law, known as Lindalee's Law, follows years of complaints that Kaiser's self-run system, which covers one-quarter of Californians, is biased in favor of the health plan. Stephen Martinez championed the bill after spending $350,000 on two failed arbitrations following his wife's death from cancer. Kaiser maintains its system is fair and efficient.

Passage of Assembly Bill 1770

• ▪Assembly Bill 1770, also known as Lindalee's Law, was authored by California Assemblyman Robert Garcia.
• ▪To implement Assembly Bill 1770, California plans to hire up to four deputy attorneys general, one legal analyst, and three legal secretaries.
• ▪California Governor Gavin Newsom signed Assembly Bill 1770 on September 27, 2026, placing Kaiser Permanente's medical arbitration system under the oversight of the California Attorney General.
• ▪Under Assembly Bill 1770, the California Attorney General will determine actions to ensure private arbitrations required by health plans are handled fairly and comply with state law.

Kaiser's internal arbitration system

• ▪Unlike most companies that use large external arbitration firms, Kaiser Permanente created and operates its own internal medical arbitration system.
• ▪Under Kaiser Permanente's arbitration system, once a neutral arbitrator is selected, either party can disqualify that arbitrator without cause and with no limit on the number of disqualifications.
• ▪Kaiser Permanente requires all members, representing approximately one-quarter of California's population, to agree to use its private arbitration system to settle medical disputes.

Criticisms of Kaiser's arbitration system

• ▪Critics allege that Kaiser Permanente's greater knowledge of past rulings and unlimited veto power over arbitrators give the health plan an unfair advantage in selecting favorable judges.
• ▪An annual report by the independent administrator of Kaiser Permanente's system stated that patients, families, and lawyers commonly complained that the private medical arbitration system and its neutral arbitrators favored the health plan.
• ▪Critics and patients argue that hourly fees paid to Kaiser Permanente's arbitrators, who are mostly retired judges, create a financial incentive to rule in Kaiser's favor to secure future cases.

Stephen Martinez's arbitration cases

• ▪During a legislative hearing, Stephen Martinez testified that a Kaiser Permanente physician assistant dismissed a lump in Lindalee Iverson's breast, which was later diagnosed as metastatic cancer.
• ▪In Stephen Martinez's arbitration cases, a neutral arbitrator ruled in favor of Kaiser Permanente's expert, despite testimony from two Kaiser breast surgeons that the physician assistant failed to follow guidelines.
• ▪Retired aerospace engineer Stephen Martinez advocated for Assembly Bill 1770 after spending $350,000 on two unsuccessful Kaiser Permanente arbitration cases regarding his late wife, Lindalee Iverson.

Kaiser Permanente's response and defense

• ▪Kaiser Permanente has historically defended its mandatory arbitration system, asserting that the private process is fair for both patients and the nonprofit health plan.
• ▪Kaiser Permanente stated on September 28, 2026, that it looks forward to resolving claims through an independently administered system that provides a fair and efficient process for members.

Debatable claims

• ▪Kaiser Permanente's internal medical arbitration system is inherently biased against patients
• ▪Healthcare providers should be banned from requiring mandatory arbitration for medical disputes
• ▪California's oversight of Kaiser's medical arbitration system is necessary to protect patients