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Read Making a Killing

home / healthcare / in the media

The San Francisco Chronicle
Nov 16, 2002

by Sabin Russell, Chronicle Medical Writer

Kaiser to pay $1 million fine over death; HMO had disagreed with state on its authority on access to care

Ending an acrimonious battle with state regulators, Kaiser Permanente agreed to pay a record $1 million fine Friday to settle a case surrounding the death of a 74-year-old San Leandro woman whose treatment was allegedly delayed at its Hayward hospital.

Consumer groups hailed the decision and heaped praise on Kaiser's new chief executive, George Halvorson, for ending the protracted dispute. The settlement, they said, reaffirms the authority of the state Department of Managed Care over HMOs on matters involving access to care.

"This sends a signal to all HMOs that there are consequences for failing to obey the state's patient's rights law," said Daniel Zingale, director of the 2-year-old department.

During the most heated part of the legal tussle, Kaiser asked a federal judge in December to issue a contempt of court citation against Zingale -- who faced possible jail time -- for exceeding his authority by bringing evidence from other Kaiser Medicare patients into the case. The judge ruled in favor of Zingale.

"We feel we'd like to put this behind us and move forward to devote our attention to working with the department in establishing standards for access to health care," said Kaiser spokesman Terry Lightfoot.

In a letter to Zingale, Halvorson stressed the giant health plan's willingness to work as "a constructive and active" participant in developing new regulations assuring access to care. Halvorson, a former Minnesota HMO executive, took over the helm of Kaiser in May.

The case was brought in 1996 on behalf of retired social worker Margaret Utterback, who died at the Kaiser facility of a ruptured aortic aneurysm after what family members called unconscionable delays in getting access to care for abdominal pain.

"I watched my mother die. It took her 36 hours to die," said Terry Preston, who filed the original case with the Department of Corporations, which regulated HMOs until 2000. Preston, who believes her mother's death could have been averted if Kaiser's system had been set up to recognize the gravity of the symptoms of an about-to-burst aneurysm, said the fight had always been about principle.

"I am surprised, stunned and quite happy right now," she said.

Kaiser continues to maintain that it did not break the law in its care for Utterback, although it conceded it violated rules in its handling of the grievances filed after her death. Those problems were corrected, it said, in 1996.

In paying the fine, however, Kaiser averted another round of legal jousting with the state. Zingale acknowledged that his department was preparing to file an appeal of a May ruling by an administrative law judge that Kaiser had provided appropriate medical care. The judged had rolled back to only $25,000 a proposed sanction of $1.1 million.

The judge also sided with Kaiser's view that the newly established state agency was authorized only to regulate the finances of health plans, not the medical practices of their doctors.

Following that decision, lawmakers passed a bill, signed by Gov. Gray Davis, that clarified the state's authority to regulate HMOs on "quality of care issues."

Jamie Court of the Foundation for Taxpayer and Consumer Rights, a Santa Monica group that has championed the case, called the settlement "a big win" for consumers, the state and Kaiser members. "It establishes the Department of Managed Health Care as a cop on the beat, with the power to swing a club."

A relentless foe of HMO practices, Court nevertheless lauded Kaiser's new chief for settling the case. "I'm hoping it is a sign of good things to come, that this is not just a face-lift but a change of heart."

In prepared remarks, the governor praised the settlement. "I am pleased that justice has been done," Davis said.
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E-mail Sabin Russell at srussell@sfchronicle.com.

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