Consumer Group Files False-Advertising Lawsuit Against Kaiser Permanente
Kaiser Permanente, the nation's largest not-for-profit HMO, "deceived members" through an advertising campaign stating that all medical decisions were "in the hands of doctors," according to a lawsuit filed by a consumer group, the San Francisco Chronicle reports. Filed by the Foundation for Taxpayer and Consumer Rights, the suit alleges that Kaiser Permanente falsely led members to believe that "all medical decisions were made by their doctors" and that the HMO was "unencumbered by 'bean counters' or insurance administrators." However, the consumer group alleges that Kaiser Permanente's use of guidelines to care and hospital length of stay, which were created specifically for the HMO by the consulting firm Milliman & Robertson Inc., "flies in the face" of Kaiser's advertising campaign. The suit also claims that Kaiser Permanente "encouraged [physicians'] cost-cutting behavior" through bonuses and other incentives, including withholding as much as 30% of a physician's salary "if cost targets were not met." Jamie Court, executive director of the consumer group, said, "Clearly, there is a cookbook for medicine at Kaiser that was concealed from the public." The group plans to introduce documents that demonstrate that the HMO "all along knew it was presenting an image it could not live up to," including internal e-mails that show Kaiser Permanente officials "had second thoughts" about the ad campaign's implications. In an e-mail to co-workers dated Sept. 2, 1998, Kaiser Permanente official Cecilia Runkle wrote, "The tag line may offer more than we are able to deliver, and I would appreciate hearing your thoughts on how the tag line was arrived at and how we intend to prevent the misconception that all care is in the hands of physicians." The Chronicle reports that the trial, scheduled to begin this fall, will be "significant" because Kaiser Permanente will "undergo scrutiny to determine how much weight, if any, business considerations play ... in the decisions of its medical staff."
Kaiser Permanente officials have denied the charges and said they will "vigorously contest" the allegations. Tom Debley, a Kaiser Permanente spokesperson, said the HMO does not keep a record of individual physicians to determine "how closely they follow the guidelines' recommendations." He said, "Does it (the guidelines) substitute for decision-making by the doctor or not? In our case, it's a tool that brings individual physicians information, but the decision-making is by them." In addition, Debley said that physicians' bonuses are not linked to cost-cutting goals, but instead to patient satisfaction and internal quality measures. "There are goals around managing the overall budgets or our medical centers ... but nothing that would put pressure on a physician to compromise care decisions." Wanda Jones, a New Century Healthcare Institute industry analyst, who supports Kaiser's position, said, "The taxpayer suit is one of these let's-go-get-'em type of suits ... on the part of extreme left-wing people. They don't understand business imperatives and don't think they should exist" (Colliver, San Francisco Chronicle, 1/7).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.