Kaiser Permanente will pay a $1 million fine – the largest in California history against a full-service health plan – to settle a longstanding legal battle with regulators that began with a patient’s death, state officials announced Friday.
With one letter, Kaiser put to rest years of wrangling that at one point led the HMO to file contempt charges against Daniel Zingale, director of the state Department of Managed Health Care, for overstepping his authority.
“In the interest of our members and in order to dedicate our resources to our core mission of providing quality care and comprehensive coverage, we are pleased to have concluded this matter,” Kaiser Chief Executive Officer George Halvorson stated in the letter.
He also asserted that Kaiser had proved it did not violate state laws requiring reasonable access to patient care.
In May, an Oakland administrative law judge ruled that the state failed to prove a pattern of systematic problems with access to care at Kaiser hospitals. He reduced the penalty to $25,000.
But Zingale then exercised his authority to set aside that ruling and reissue a $1 million fine. He essentially left Kaiser with a choice between paying it or taking regulators back to court.
The company had previously indicated plans to keep fighting. But the letter – sent to regulators Thursday and made public Friday – ended the dispute.
Halvorson said Kaiser would work on ways to more quickly identify hard-to-diagnose conditions that caused the first death and two others found during an investigation.
Zingale said Kaiser now has systems in place that address the regulators’ main concerns about access to care.
Patient advocates hailed the fine as a victory.
“This is the beginning of a new era for Kaiser in fixing problems with access to care,” said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, “and for the state, this is a real affirmation of its power to collect fines.”
The Kaiser case was once expected to determine whether Zingale had the authority to police the quality of care received by California’s approximately 18 million HMO patients, but in September, Gov. Gray Davis signed a law granting state regulators that authority.
“As the court cases were going on, the Legislature passed a law that clarified my authority,” Zingale said. “Now, a fine of this magnitude will provide a strong incentive for HMOs to be more aggressive in protecting patients.”
The fine stems from the 1996 death of Margaret Utterback at a Kaiser facility in Hayward. Utterback, 74, died after emergency surgery to repair a ruptured abdominal aortic aneurism, a condition in which a section of the artery balloons and can fatally burst.
During an investigation into Utterback’s death, which relatives attributed to a series of treatment delays, state regulators discovered two Medicare patients who had died after arriving at Kaiser emergency rooms with the same condition.
At one point, the state had sought a $1.1 million fine against the HMO for all three deaths. After Kaiser argued in court that the Medicare members were covered by federal law, not by state regulations, Zingale reduced the penalty to $1 million and removed the additional patients from the case.
The Bee’s Lisa Rapaport can be reached at (916) 321-1005 or [email protected]