Kaiser-DMHC Court Battles Will Determine Agency’s Oversight Authority
The Los Angeles Times today reports on the ongoing battle between the Department of Managed Health Care and Kaiser Permanente, the state's largest HMO, which have "squared off" in recent court proceedings that eventually will determine the extent of DMHC's authority to punish health plans for alleged harm to beneficiaries. Overall, the DMHC argues that Kaiser has failed to treat its beneficiaries in a timely manner, contributing to the deaths of three people, and has fined Kaiser $1.1 million. In the latest action, the state on Wednesday filed an affidavit in a Los Angeles federal court saying that Kaiser lacks sufficient medical personnel at its Woodland Hills facility. The staffing shortage there resulted in the death of 72-year-old Wolfgang Spunbarg, a Kaiser Medicare beneficiary, the state alleges. The state claims that Woodland Hills medical personnel "waited too long" to see Spunbarg because the emergency room was "overcrowded." Kaiser has filed suits in federal and state courts to overturn the fine. This week, Kaiser argued before an Oakland-based state administrative law judge that DMHC Director Daniel Zingale does not have the authority to fine Kaiser "based on the behavior of its doctors and hospitals" because they are regulated by state agencies other than the DMHC. Kaiser claims that an August federal court ruling prohibits Zingale from punishing the managed care company for cases involving Medicare beneficiaries (Ornstein, Los Angeles Times, 12/7). In August, a federal court ruled in a case filed by the California Association of Health Plans that the state could not impose some rules on health plans "as they relate" to Medicare beneficiaries (California Healthline, 11/29). Zingale has been ordered to appear before U.S. District Judge Ronald Lew on contempt of court charges stemming from the fine levied against Kaiser.
Jamie Court of the Foundation for Taxpayer and Consumer Rights said Kaiser's actions represent "a stare-down contest between the CEO of Kaiser and the state's HMO czar." Court added, "The stakes have escalated to whether or not Kaiser will be able to shirk all responsibility for deaths that occur in its facilities on a systemic basis." For his part, Zingale called the proceedings "extraordinary," adding that Kaiser was seeking to limit the ability of the DMHC to levy fines. Kaiser has "creative attorneys ... finding a new approach to try to block the state's action," he said. He added that all Kaiser beneficiaries are "at risk" unless the MCO improves its treatment response time. Kaiser spokesperson Jim Anderson said he believes the MCO will win its cases. "This is strictly about the rule of law. This is one of those times when we see the law differently than they do, and that's why we've gone to court to get those questions resolved," he added. He said that nearly all hospitals in the state, not just Kaiser facilities, face staffing shortages and overcrowding. He added, "This is a major public policy issue. We believe it deserves a thoughtful public policy response" (Los Angeles Times, 12/7).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.