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Dec 10, 2001

Kaiser Fails In Bid To Harass HMO Czar & Derail $1.1 Million Fine Against It

Federal court Judge Ronald Lew ruled today that California Department of Managed Health Care (DMHC) Director Daniel Zingale was not in contempt of court for using evidence of a MedicarePlusChoice's patients' death in holding Kaiser accountable for a $1.1 million fine. Ruling against Kaiser, the state's largest HMO, Lew found that Zingale's regulatory power was broad enough to use such evidence.

Kaiser attorney Steven Madison, however, made clear he would continue to press his case against Zingale by seeking sanctions against DMHC lawyers and asking for the judge's acknowledgement that Kaiser could return at the end of the administrative hearing against Kaiser, being prosecuted in Oakland, to seek a contempt charge again.

"The ruling is an important vindication of the power of the HMO regulator to pursue fines using all vital evidence," said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, which has been monitoring the case. "Without the power to freely prosecute, there is no power to police. Kaiser has made clear it will continue to harass regulators rather than take responsibility for the death of patients in its systems. On one hand, Kaiser's litigiousness is an acknowledgement that California's HMO regulation has teeth. Similar industry pressure stopped the Food and Drug Administration from banning cancer causing red dyes in food for twenty years and auto makers also managed to stall implementation of air bags for twenty years after the requirement that they be installed. However, Kaiser deals with the life and death of patients. Its recalcitrance in this case showing systemic deficiencies in its system portends much danger for millions of Kaiser patients. When HMOs fail to acknowledge their mistakes, avoidable tragedies continue to occur. Tougher laws are needed in Sacramento to make Kaiser and other HMOs pay a price for stonewalling. The lessons of this case are that Kaiser will do anything to save face rather than save patients. The legislature must create laws to deal with such lawlessness and make even clearer Kaiser's responsibility to patients."

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