Kaiser HMO, New State Regulator Square Off

Published on

Firm is trying to overturn the young agency’s $1.1-million fine for alleged fatal lapses in care.

Los Angeles Times

Kaiser Permanente, the state’s largest HMO, and the fledgling California Department of Managed Health Care are butting heads in a case that tests regulators’ ability to penalize health plans for alleged lapses in patient care.

In short, the state claims that Kaiser has not assessed and treated ill patients in a timely manner, which it says contributed to the deaths of three people. Kaiser denies problems with its facilities and is seeking, in both state and federal proceedings, to overturn a $1.1-million fine.   

The state, in its latest salvo, has accused Kaiser of a “systemic” failure to provide adequate health care at its Woodland Hills hospital. Regulators say the problems resulted in the death of Wolfgang Spunbarg, a 72-year-old Kaiser Medicare enrollee, in April 2000. In an affidavit filed Wednesday with a federal court in Los Angeles, state officials say Kaiser doesn’t have enough medical personnel in Woodland Hills–or at other facilities–to ensure prompt services for patients.

A state administrative law judge in Oakland began hearing evidence this week in one attempt to overturn the fine. In that hearing, Kaiser has argued that chief HMO regulator Daniel Zingale lacks the authority to impose fines on the HMO based on the behavior of its doctors and hospitals, which are regulated by other state agencies.

Separately, Zingale has been ordered to appear before U.S. District Judge Ronald Lew in Los Angeles on Monday because Kaiser says he violated federal law by citing the Medicare enrollee’s death in justifying the fine. Kaiser claims that an August federal court ruling prohibits Zingale from penalizing Kaiser for actions involving Medicare patients. Lew has told Zingale to explain why he should not be held in contempt of court.

Spunbarg’s death was not the original basis for the fine but was cited as an example of systemwide problems when the fine was increased by $100,000 in February.

Spunbarg died on April 26, 2000, of an abdominal aortic aneurysm within two hours of arriving at Kaiser‘s Woodland Hills hospital. The state claims that medical personnel waited too long to see him because the emergency room was overcrowded. Kaiser says the patient was seen within 10 minutes of registering.

One consumer advocate, who has long attacked Kaiser, said the HMO’s recent legal actions are an attempt to intimidate Zingale.

‘The Stakes Have Escalated’

“This is basically a stare-down contest between the CEO of Kaiser and the state’s HMO czar,” said Jamie Court of the Foundation for Taxpayer and Consumer Rights in Santa Monica. “The stakes have escalated to whether or not Kaiser will be able to shirk all responsibility for deaths that occur in its facilities on a systemic basis.”

Zingale called the proceedings “extraordinary.” He said Kaiser was seeking to limit the state’s ability to assess fines on health plans.

“They have creative attorneys in finding a new approach to try to block the state’s action,” he said. “But I don’t think it’s a valid one.”

In federal court filings, the state portrays Kaiser as a company that has problems responding to emergencies. Officials primarily rely on depositions from two employees to criticize the Woodland Hills facility.

In the documents, a receptionist acknowledged assessing patients’ medical needs when they registered in the emergency room, although she said she has no formal medical training except a CPR certificate.

In addition, an emergency room doctor has testified that since 1986, the facility often finds all beds filled, forcing it to close to ambulances for an average of 50 hours per week.

Zingale says Kaiser needs to do more to protect its 5 million patients in California. “Every one of those Kaiser enrollees is at risk until we improve their ability to respond to an emergency situation involving a patient,” he said.

Kaiser denies that allegation. Officials say nearly all hospitals are dealing with overcrowding, which causes them to close their emergency rooms to ambulances regularly. But when patients arrive on their own, they are always treated, spokesman Jim Anderson said.

“This is a major public policy issue affecting all of the hospitals in Los Angeles County,” he said. “We believe that it deserves a thoughtful public policy response.”

Anderson said he believes the HMO will prevail in both legal challenges.

“This is strictly about the rule of law,” he said. “This is one of those times when we see the law differently than they do, and that’s why we’ve gone to court to get those questions resolved.”

The quality of care provided by Kaiser has been under increased scrutiny in recent months. Last month, Zingale fined Kaiser $500,000 for failing to send a young man with muscular dystrophy to a specialist. Timothy Joseph Waters, a 19-year-old Stockton resident, died six days after his mother’s last, frantic request for a referral to a specialist.

“This case involves multiple, egregious errors by Kaiser in its care and treatment of the enrollee,” the department said at the time. Kaiser subsequently failed to implement a corrective plan to avoid the errors that led to Waters’ death, Zingale said.

Anderson said Kaiser will appeal the fine.

To save money and control demand, Kaiser in the late 1990s deliberately inconvenienced patients who sought care in Northern California, according to internal documents. The documents consist largely of minutes from private meetings and doctors’ e-mails.

A Kaiser physician group official described how “we chose not to provide our patients with what they desired,” according to minutes of a private meeting last spring.

Three Deaths Are Cited

At a meeting last summer, the official told his physician group’s board of directors that the business approach had left patients and doctors dissatisfied–and wasn’t saving money. He said it was time to change.

The fine at the center of the current controversy dates back to the 1996 death of Margaret Utterback, 74, of San Leandro, who suffered a fatal aneurysm. Utterback made numerous efforts to see her doctor on Jan. 26, 1996, the day the aneurysm ruptured. In May 2000, the state Department of Corporations, which previously regulated HMOs, found that Kaiser‘s lapses contributed to her death.

Zingale’s agency increased the fine in February 2001, citing the deaths of Spunbarg and a 62-year-old man in a Walnut Creek facility.

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