San Francisco Chronicle
Record $3 million fine for Kaiser
David R. Baker, Chronicle Staff Writer
Friday, July 27, 2007
Kaiser Permanente must pay a record $3 million fine after state investigators
found that the health maintenance organization, the country's largest, did not
adequately track patient complaints about treatment.
The penalty, announced Thursday, marks the second time in a year that Oakland's
Kaiser has faced a multimillion-dollar fine from the state.
Kaiser was fined $2 million last year for its mismanagement of a new San
Francisco kidney-transplant unit. Delays in transferring medical records and
information about the amount of time patients had spent on transplant waiting
lists slowed the process of getting new kidneys. The unit has since been shut
But state regulators working on the case decided to probe further into Kaiser's
handling of patient complaints. They found inconsistent and sometimes
deficient procedures at the nine Kaiser medical centers they examined in
California. The medical centers did not consistently ensure that problems with
the quality of their care were identified and corrected.
"We did not find that there were problems uniformly across the board -
what we found was there was significant variation overall," said Cindy Ehnes,
director of the California Department of Managed Health Care. "The risk to a
patient was that if they had a problem, it might not be resolved."
The fine is the largest yet levied by the Managed Health Care Department. But
Kaiser may not have to pay all of it.
Ehnes' department has given Kaiser a list of steps needed to correct the
problems it found, steps that will cost an estimated $10 million to $13 million
to implement. If Kaiser completes those steps by the time the department
conducts a follow-up survey late next year, the HMO won't have to pay $1
million of the fine.
"We thought it was important to provide the appropriate incentive over the next
year," Ehnes said.
The steps include establishing a uniform system for having physicians
review complaints at the medical centers and report them to the health plan's
headquarters. Kaiser also must create a process that allows the organization's
management to keep tabs on changes in clinical practices at all 29 of its
medical centers in California.
A Kaiser spokesman said the health plan took no issue with the department's
report and is already working on some of the changes.
"We feel it's been a very thorough, thoughtful and fair assessment," said
spokesman Matthew Schiffgens.
The department reviewed case files and interviewed staff at four Kaiser medical
centers in Southern California and five in Northern California, including San
Francisco, San Rafael and South San Francisco.
E-mail David R. Baker at
This article appeared on page D - 1 of the San Francisco Chronicle
HMO Faces $3M Fine for Lax Oversight
Thursday, July 26, 2007
(07-26) 06:41 PDT Oakland, Calif. (AP) --
Health care provider Kaiser Permanente faces a $3 million fine for what state
regulators say were haphazard investigations into patient complaints and
physician performance. It was the second rebuke in a year for the nation's
Last summer, the state fined Kaiser $2 million over mismanagement of a kidney
The director of the California Department of Managed Health Care, Cindy Ehnes,
said her agency reviewed nine Kaiser hospitals and found inconsistencies in
how questionable cases were handled. She said in Thursday's Los Angeles Times
that the fine could be reduced to $2 million if Kaiser makes necessary
"A patient has to be sure that if they have a problem ... the health plan has
their ears open to hear those complaints and their arms available to tackle any
of the problems that have arisen," Ehnes told the paper.
"Those ears in particular seemed to be sometimes deaf," she said.
Bernard Tyson, Kaiser's executive vice president of health plan and operations,
said the hospital was taking steps to fix the oversight issues noted in the
"The survey identified the areas in which there were shortcomings, and we have
corrected those shortcomings or are well on the way to correcting those
shortcomings," Tyson said.
Oakland-based Kaiser was penalized last August by the agency for
breakdowns in oversight of its kidney transplant center in San Francisco. The
state ordered Kaiser to pay a $2 million fine and give $3 million to an organ
donor program. Officials said botched paperwork and administrative errors
delayed some patients' procedures and risked lives.
The latest inquiry grew out of the state's investigation of the transplant
Inspectors examined 246 files involving complaints, quality-of-care
concerns and other issues from five Northern California hospitals and four in
Southern California. The probe did not focus on whether individual patients
had been harmed.
The 51-page report found the HMO "lacked the ability to verify consistent
handling of complaints throughout its medical centers or to determine whether
serious or chronic problems were being addressed."
In one case, a peer review panel examining pediatric care determined that a
doctor provided an "unacceptable standard of care," but it appeared no one
alerted the hospital's top doctors to the finding so they could act.
Regulators also found several instances in which doctors investigated cases in
which the treatment they provided was called into question.
Among several steps to overhaul its oversight system, Kaiser has agreed to
draft a uniform set of standards for peer review, audit physician peer review
programs to ensure they are accurately evaluating potential quality issues and
reconfigure the computer system to better track quality reviews.
The nine Kaiser hospitals examined in the report were in Baldwin Park,
Fresno, Fontana, west Los Angeles, south Sacramento, South San Francisco, San
Francisco, San Rafael and Woodland Hills. The state did not identify which
hospitals had the weakest systems.
Kaiser operates 29 medical centers in the state, with more than 6 million