City News Service

A federal judge today ruled that the California Department of Managed Health Care is acting within the law and can levy a $1.1. million fine against Kaiser Permanente — the state’s largest HMO.

The state alleged that Kaiser has not assessed and treated ill patients in a timely manner, which contributed to the deaths of three people.

The department also 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.

U.S. District Judge Ronald S.W. Lew found that Kaiser could not hold Daniel Zingale, chief HMO regulator for the state, in contempt of court because he is abiding by an order the judge issued in August.

The order states that benefits for Medicare patients are determined by federal law and not the more generous California Patients’ Bill of Rights, which Gov. Gray Davis signed into law two years ago.

Kaiser claimed that the ruling prohibits Zingale from penalizing Kaiser for actions involving Medicare patients and argued Zingale violated federal law by citing Spunbarg’s death in justifying the fine.

“I don’t think it’s surprising,” said Steven Madison, a lawyer for Kaiser, after the hearing.

Kaiser, which denies problems at its hospitals, also is seeking to overturn the fine in state administrative law court in Oakland, where a judge has begun hearing evidence last week.

There Kaiser contends that 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.

The trial is expected to go through the end of January, Madison said.

“We have enormous respect for the director and the Department” of Managed Health Care, Madison said. But “in these cases have a disagreement.”

Curtis Leavitt, a lawyer for the regulators, said outside court that “we didn’t violate the order. We are abiding state law and state regulations.”

Zingale, who attended the hearing, said afterwards: “I’m personally relieved, but I’m especially relieved what this means to all patients, not just Medicare patients.”

If the judge had found him in contempt of court, Zingale said that could have meant that the fine was invalid and potentially could have halted the trial in Oakland.

Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, said the ruling is “a vindication for the state.”

At a press conference before the hearing, Court said “this is about the right of this regulator to watch every HMO.”

Court said the Kaiser Woodland Hills emergency room is closed two days out of the week and is inadequately staffed.

“This is a real outrage,” Court said. “Kaiser needs to fix its problems.”

Jill Furillo, a registered nurse and governmental relations director for the California Nurses Association, said Kaiser replaced about 2,000 nurses with unlicensed assisted personnel.

“We are really upset with Kaiser,” Furillo said. “We have predicted that this kind of practice would ultimately lead to … patient deaths.”

Terry Preston, the daughter of Margaret Utterback, who died of a ruptured abdominal aortic aneurysm in January 1996 because Kaiser allegedly failed to promptly see her, said the “Kaiser system killed my mother.”

Her mother suffered a “long, painful death” at Kaiser‘s hospital in Hayward, Preston said.

Margaret Utterback, who first contacted the hospital in the morning, spoke to clerks instead of nurses or doctors, and sat in the waiting room for two hours before seeing a doctor in the late afternoon, Preston said.

“This case affects every case in the country,” Preston told reporters. “It’s about image, it’s about power, and it’s about market share.”

Utterback’s death was the original basis for the Department of Managed Health Care to levy a $1 million fine against Kaiser in June 2000 — six months after the department was created, Zingale said.

Spunbarg’s death and a third death were cited as examples 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.