Kaiser Permanente to Pay $1 Million Fine for HMO Patient Death

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American Health Line

Kaiser Permanente, California’s largest HMO, last week agreed to pay a $1 million fine for alleged “fatal lapses” in the treatment of a patient, the Los Angeles Times reports. The California Department of Managed Health Care imposed the $1 million fine, the largest the department has issued against an HMO, in May 2000. Kaiser had “vigorously fought” the fine but decided to end objections to “move on,” the Times reports (Ornstein, Los Angeles Times, 11/16).

DMHC imposed the fine as a result of the 1996 death of Margaret Utterback, who died from a stomach aneurysm in Kaiser‘s Hayward hospital after she made a number of efforts to visit her physician about back and abdominal pain on the day of her death. An administrative law judge agreed with Kaiser‘s argument that the department “overstepped its authority” with the fine, based on a 1975 law that “allows HMO regulators to oversee health plan finances but not the quality of medical care that patients receive.” The judge said that Kaiser should receive a $25,000 fine for violations of the grievance process for HMO members established by the state (American Health Line, 12/12/01). However, DMHC Director Daniel Zingale overruled the court decision, a move allowed under state law. He said that the decision would have “gutted” the state’s patients’ rights laws (Los Angeles Times, 11/16).

Kaiser had planned to continue opposition to the fine, but in a letter sent to state officials Thursday, the HMO agreed to pay the fine (Rapaport, Sacramento Bee, 11/16). The move will allow Kaiser to avoid additional “legal jousting with the state,” the San Francisco Chronicle reports (Russell, San Francisco Chronicle, 11/16). In the letter, Kaiser CEO George Halvorson said Kaiser proved in court that the HMO did not violate state laws that require “reasonable access to patient care” but added that Kaiser would work to develop “ways to more quickly identify hard-to-diagnose conditions,” such as the condition that led to Utterback’s death (Sacramento Bee, 11/16).

“There are many, many more areas where we agree with the (HMO regulators), and that’s what we’re trying to emphasize by doing this,” Kaiser spokesperson Jim Anderson said (Los Angeles Times, 11/16).


The Chronicle reports that consumer advocacy groups “heaped praise” on Halvorson for Kaiser‘s decision to end the dispute over the fine. In addition, they said that the decision “reaffirms” the authority of the state over HMOs on issues related to patient access to care. Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, said that the decision marks a “big win” for consumers. “It established the DMHC as a cop on the beat, with the power to swing a club,” he said (San Francisco Chronicle, 11/16). “This is the best news for HMO patients in the last couple years. For HMOs, it’s a warning sign,” Court added (Thompson, AP/San Diego Union Tribune, 11/16)

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