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OAKLAND, Calif. (BestWire) – A consumer group’s 1999 lawsuit against Kaiser Permanente, which accuses the health system of false advertising, is set for trial this fall.

The Santa Monica, Calif.-based Foundation for Taxpayer and Consumer Rights claimed in its suit that Kaiser‘s $60-million-a-year, mass-market advertising campaign lured 500,000 new members with the false promise that only doctors, not insurance administrators, would make medical decisions.

The foundation will present documents at the trial, set for Nov. 4, to support its allegations of Kaiser‘s false-advertising practices. At the heart of the suit is Kaiser‘s ad campaign that carries the tagline “in the hands of doctors,” which the foundation alleges deceived members into thinking all medical decisions were made by Kaiser‘s doctors.

Kaiser Permanente has two entities: Kaiser Foundation Healthcare and Hospitals is the insurer and Permanente Medical Group is made up of doctors. Both sides have exclusive contracts to work only with each other.

Several attempts to reach Jamie Court, executive director of the foundation, were unsuccessful.

“This case should put every HMO around the nation on notice that they must do what they advertise and advertise what they do,” Court said in 1999. Kaiser‘s HMO is the nation’s largest not-for-profit HMO.

Kaiser Permanente officials have contended since 1999 the group’s lawsuit is “completely groundless and false.”

Kaiser spokesman Tom Debley told BestWire the foundation originally sought class-action status but was denied by the courts. However, the consumer group is appealing that decision.

In the meantime, the foundation’s documents will show that medical decisions were made by Kaiser Permanente officials and by guidelines provided by international actuarial and consulting firm Milliman & Robertson Inc., now known as Milliman USA, according to a San Francisco Chronicle report. Milliman is not a party to the suit.

Milliman’s guidelines, which were tailored for Kaiser Permanente, are tools required of health plans and HMOs by the Centers for Medicare & Medicaid Services, the federal agency that oversees Medicare, and the National Committee for Quality Assurance, according to Debley. “The guidelines assist us in assuring that members receive an appropriate level of care and do not substitute for decision-making by doctors,” he said. Health plans need to use such utilization-management guidelines, or they risk losing their NCQA accreditation or their ability to treat Medicare patients, said Debley.

“They are like any other tool, in terms of providing physicians with the best information available they can then use, combined with their training and experience, to make decisions,” said Debley.

The “M&R Care Guidelines” are evidence-based “best practices” physicians can refer to, as patients and their symptoms present themselves, said James S. Loughman, a spokesman for Milliman USA. Loughman said he wanted to “set the record straight” to clarify information recently reported in local newspapers. Since they were started, Milliman’s guidelines have been written to provide doctors with an up-to-date description of the best care possible, he said.

The guidelines aren’t a set of rules for practicing medicine, said Loughman, responding to prior characterizations of Milliman’s guidelines. “They anticipate and, in fact, unequivocally require the attending physician’s input in order to be either properly implemented at a health plan or applied to a patient’s course of treatment,” said Loughman.

At the trial, an issue to be debated is how closely Kaiser doctors were encouraged to follow Milliman’s guidelines.

The timing of the “in the hands of doctors” campaign also is under debate. Debley said that campaign ran for a time in 1998. “You will still see that tagline, but the campaign…is in 1998,” he said. The foundation contends, however, that the ads presenting doctors as in control of medical decisions without administrative oversight can be dated back to 1994 and continue today, according to the newspaper report.

The 1999 lawsuit, filed in San Francisco Superior Court, alleges that Kaiser established policies and practices that allow monetary and profitability concerns to interfere with the medical judgment of Kaiser doctors.

Debley said it’s publicly known the foundation is partly funded by trial lawyers.

Kaiser Foundation Health Plan Inc. is rated B+q (Very Good) by A.M. Best Co.

Consumer Watchdog
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