Health agency rejects ruling

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The managed-care chief says no to a judge’s slashing of a fine against Kaiser.

The Sacramento Bee

A legal battle over patient rights that began six years ago with a death at a Kaiser hospital took a new turn Thursday when state regulators rejected a court ruling they say undercuts their ability to guarantee California’s 18 million HMO members timely access to quality care.

Daniel Zingale, director of the California Department of Managed Health Care, rejected an administrative law judge’s decision to reduce a fine against Kaiser to $25,000 from $1.1 million in a case regulators said stemmed from “systematic problems that resulted in a death.”

Margaret Utterback, 74, died in 1996 at a Kaiser facility in Hayward after surgery to repair an abdominal aortic aneurysm, a condition in which a section of the artery balloons and can fatally rupture, court records show.

After investigating the death, regulators hit Kaiser with the largest fine ever assessed against a California HMO, which Kaiser then challenged in court.

In a decision released Thursday, Oakland Judge Michael C. Cohn said of Kaiser, “It is clear that the system in place reasonably provides enrollees with ready access to services.”

But Zingale disagreed and said it was within his authority to reject the ruling, which he said could ultimately undermine his ability to prevent delays and denials of patient care.

“The one death in this case was absolutely an indicator of systematic problems and saying otherwise is like saying the health of the canary has nothing to do with conditions in the coal mine,” Zingale said.

To be sure, court records show it took hours for Utterback to get an appointment and see her doctor the day she called Kaiser with “severe abdominal pain.”

But just as surely, Utterback died of a rare, difficult-to-diagnose
condition that can rapidly become life-threatening or even fatal, experts said.

Kaiser and Zingale agree the Department of Managed Health Care can police HMOs for failures under their control, such as delays in scheduling appointments or authorizing procedures.

It gets murkier in cases where hospitals or doctors delay or deny care because regulating health-care providers falls to other agencies, such as medical boards and the California Department of Health Services.

“It’s been cited in this ruling that there are other organizations that have been given regulatory authority to oversee medical care delivery in the state of California — and they did not find any problems in care at Kaiser,” said Dr. Robert Pearl, chief operating officer of Kaiser‘s Permanente Medical Group.

Still, industry experts say the perennial problem with regulating Kaiser is distinguishing its HMO from the doctors it hires and the hospitals it operates.

Patient advocates fear the ruling in the Kaiser case could weaken the Department of Managed Health Care‘s ability to regulate HMOs.

“The Legislature intended for Zingale to regulate access to care and quality of care, and this is a case of the state’s largest HMO succeeding in an attempt to bend the law,” said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights.

Other HMOs have paid fines without protest.

Pacificare paid $25,000 for its failure to refer a patient to a throat
surgeon, and Aetna paid $5,000 for denying a patient necessary end-of-life care, Zingale said.

In the unresolved Kaiser case, Zingale said he will appoint a staff member in his department to review the facts and take a new regulatory action, which could reinstate, raise, or reduce the $1.1 million fine. Kaiser can then accept the department proposal or sue Zingale in Superior Court.

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