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Read Making a Killing

home / healthcare / in the media

Los Angeles Times
Nov 16, 2002

by Charles Ornstein, Times Staff Writer

Kaiser Will Pay $1-Million Fine for Death;

The state's biggest HMO gives in to regulators who said thefirm failed to deliver timely care to a woman who died of an aneurysm.
Kaiser Permanente, the state's largest HMO, has agreed to pay a $1-million fine for what California regulators called fatal lapses in the treatment of a patient, officials announced Friday.

Kaiser had vigorously fought the penalty in state and federal proceedings, but decided it was time to move on.

The fine, initially imposed in May 2000, is the state's largest against a full-service health maintenance organization, said Daniel Zingale, director of the California Department of Managed Health Care.

The state alleged that Kaiser failed to deliver urgently needed care to 74-year-old Margaret Utterback, who died in 1996 of an abdominal aortic aneurysm. The state also claimed that Kaiser had "systemic" problems treating patients in a timely manner.

Zingale said the fine sends a message to all HMOs that violating patient rights laws carries consequences. "This means that the debts to society are being paid, and I think that creates a safer environment for patients," Zingale said.

Previously, Kaiser claimed that Zingale's agency had no right to oversee the quality of medical care that its 6.3 million patients in California receive. This week, Kaiser officials conceded that the state has the authority to discipline the HMO, but denied that their medical-care system was flawed.

Spokesman Jim Anderson said the HMO giant gave up its protests in the case to "put this all behind us."

"There are many, many more areas where we agree with the [HMO regulators], and that's what we're trying to emphasize by doing this," Anderson said. "The point of this is to move forward and not to dwell on what went on in the past."

Some of Kaiser's critics praised the HMO for paying the fine and possibly turning a corner. They said Kaiser's new chief executive officer, George Halvorson, has taken a more conciliatory approach with state regulators since taking the job this year.

"I hope it's not just a face lift but a heart transplant," said Jamie Court, director of the Foundation for Taxpayer and Consumer Rights, which has sued Kaiser in the past. "The recalcitrance that has marked Kaiser's problems with the public is certainly fading."

Court also pointed to Kaiser's decision in September to donate $1 million to Duke University so a 3-year-old Northern California child can get an experimental stem-cell transplant in an effort to save him from a deadly disease. Kaiser had previously denied coverage for the procedure.

Since May, Kaiser has been working to develop clinical guidelines to help doctors recognize the type of aneurysm that killed Utterback, who lived in San Leandro. That work is ongoing, Anderson said.

According to state documents, Utterback's problems with Kaiser began Jan. 26, 1996, when she woke up with a pain in her side and was unable to get a doctor's appointment. After repeated calls to Kaiser, she finally got a 4:15 p.m. slot, but showed up at the doctor's office two hours early in tears.

Though she asked to be seen early three times and "squirmed in her chair and held onto her side" in view of the reception desk, she was not seen by her doctor until 4:30, the documents state.

Almost immediately, the doctor diagnosed an aortic aneurysm and paramedics were called, but an hour passed before Utterback reached a hospital. Her aneurysm burst within minutes of her arrival. She was rushed to surgery, but the hospital staff was never able to stabilize her and she died a day and a half later.

Later, her family began to complain about her treatment. And in May 2000, the state Department of Corporations, which previously regulated HMOs, imposed a $1 million fine on Kaiser. Zingale's agency, which took over the case later that year, increased the fine to $1.1 million in February 2001, citing the deaths of two other Kaiser members from undiagnosed aneurysms.

The HMO's lawyers attempted to have Zingale found in contempt of court by U.S. District Judge Ronald S.W. Lew because they claimed the regulator improperly cited the deaths of two Medicare enrollees in justifying its fine. The judge refused that request in December 2001.

Kaiser also appealed to a state administrative law judge in Oakland. In May the judge struck down the fine, saying Zingale had overstepped his authority and was not entitled to regulate the quality of medical care that patients receive.

Zingale overruled the judge's decision -- which is his right under state law -- saying it would have gutted the state's patient-protection laws. The regulator did, however, drop the two other patients from the case and lowered the fine to the original $1 million.

Utterback's daughter, Terry Preston, led a crusade for four years to hold Kaiser responsible. She never sued the HMO, preferring instead for the state to send a message to all health plans with a tough fine. She will not receive any of that money.

"This is really just about saving lives," Preston said Friday. "Now maybe they'll start considering people first before they start cutting back."


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