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Press Release
Oct 30, 2006 - 01:00 AM

CONTACT: Jerry Flanagan, (310) 392-0522 ext. 319

Consumer Advocates Call on HMO Regulator to Release Records In Wake of Allegations that the Schwarzenegger Administration Pre-approved Merger of Top Contributor

Santa Monica, CA -- In a Public Records Act request sent today, the Foundation for Taxpayer and Consumer Rights called on the Department of Managed Health Care (DMHC) to release records of all meetings and communications with Schwarzenegger Administration staff prior to a 2005 HMO merger following allegations by senior DMHC staff that the Administration decided to approve the merger before regulators assessed its impact on patients.

The merger of PacifiCare of California with UnitedHealth was approved without adequate patient protections. For example, as a result of the merger patients face a loss of competition in the health insurance market, diminished rights, reduced access to prescription drugs and the physician of their choice, and the giveaway of hundreds of millions of dollars in bonuses to top executives paid for by premium increases.

Schwarzenegger has received $105,800 in campaign contributions from PacifiCare, $78,500 of which was received before the merger was approved. FTCR urged the independent California State Auditor to investigate the Administration's approval of the merger, make public any inappropriate influence over regulators, and determine whether regulators should invalidate the terms of the merger. The State Auditor could require regulators to use their licensing authority to renegotiate the merger terms.

"Patients have a right to know why the Schwarzenegger Administration approved the merger without providing adequate patient protections," said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR).

To download a copy of the Public Records Act request sent today go to:

The allegations about the Schwarzenegger Administration's override of regulators was made last week by Kevin Donohue, Deputy Director of the Department of Managed Health Care, after being fired for holding stock in United Health while he led the department's review of the company's merger request. Donohue, who chaired public hearings on the merger, told the Los Angeles Times that he had not violated state laws barring public officials from participating in a policy decision in which they have a financial interest because the merger had been approved by higher ranking Schwarzenegger Administration officials prior to his involvement, and before his public hearings. State law requires the DMHC, not Administration officials outside of the department, to be the final arbiter of whether the terms of HMO mergers meet requirements for patient protection.

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The Foundation for Taxpayer and Consumer Rights (FTCR) is California's leading public interest advocacy organization. Visit us on the web at:

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