December 20, 2001

Governor Gray Davis

State Capital

Sacramento, CA 95814

VIA FACSIMILE

RE: Kaiser Campaign Cash Should Not Be Perceived To Have Bought State Bonds

Dear Governor Davis,

This week your administration granted $204 million in tax-exempt, state bonds for Kaiser Permanente to construct an outpatient surgery center. This gift to Kaiser follows $75,000 in campaign contributions to you from Physicians for the Group Practice of Medicine, which is controlled by Kaiser‘s physicians. The committee’s $25,000 contribution to you in August 2001 represented 35% of its $69,500 in expenditures for the period. The committee’s $50,000 gift in December 2000 was about 30% of its total giving in that cycle.

Kaiser does not need a welfare check, particularly as it battles your Administration’s right to regulate HMOs in the courts. Modern Healthcare magazine reported on November 5th that Kaiser had a “10% rise in third-quarter net income, helped by a growth in members by 100,000 to 8.2 million people. The nation’s largest not-for-profit health plan earned $198 million in the three months ended Sept. 30, up from $180 million in the year-ago period. Revenue rose 11% to $4.9 billion.”

Most disturbing is the financial support you have received from Kaiser which, while well-concealed, creates a troubling financial conflict of interest. The public should not perceive that cash from Kaiser to your campaign chest bought a taxpayer financed facility. To avoid the appearance of impropriety,

I call upon you to either withdraw the taxpayer aid to Kaiser or return the contributions immediately.

Sincerely,

Jamie Court

Cc: California Attorney General Bill Lockyer