$500,000 Fine Against HMO Upheld

In a case that drew national attention to controversial HMO policies, an administrative law judge Tuesday upheld a $500,000 civil fine against a California HMO accused of denying medical care to a young cancer patient. State regulators vowed to enforce the ruling.

The milestone case marks the only time in 20 years of regulating HMOs that the California Department of Corporations has levied a fine against a health plan for denial of medical services. About 13 million Californians are enrolled in health maintenance organizations.

The case centered on a 1993 decision by TakeCare, an HMO later acquired by Orange County-based FHP International, to have a urologist, not a pediatric cancer specialist, operate on 9-year-old Carley Christie of Woodside, who was battling a rare form of kidney cancer known as a Wilms’ tumor.

Harry Christie, Carley’s father, said Tuesday that he is delighted by the agency’s decision, which marks a big victory in his four-year struggle to penalize the HMO for actions that he argues put his daughter’s life in jeopardy.

Carley, now 13, survived her bout with cancer. Her parents decided to ignore the HMO’s rules and personally pay for surgery by a Stanford University pediatric surgeon and expert on Wilms’ tumors.

The case raised questions about whether HMOs were fully informing members about the limited choice of doctors they may have when they choose a medical group.

The Department of Corporations is not bound by the ruling of Administrative Law Judge Ruth S. Astle, which upheld regulators’ November 1994 decision to fine TakeCare. But the agency said it will enforce the ruling.

In an interview, Corporations Commissioner Keith P. Bishop insisted that FHP “should pay the fine today.”

FHP has argued that health plans shouldn’t be held liable for decisions made by doctors with whom they contract--in Carley’s case, by physicians at the prestigious Palo Alto Medical Foundation. FHP has also challenged the agency’s authority to levy the fine.

“Carley Christie received appropriate medical care from qualified medical professionals,” FHP said in a statement Tuesday. “That is why she is healthy today.”

Bishop, however, said he was “especially disturbed by FHP/TakeCare’s refusal to acknowledge its legal responsibilities to enrollees” as a state-licensed HMO.

A company spokeswoman said FHP is considering whether to appeal the fine in state court.

Frequent critics of state health officials commended their position on the Christie case. “I want to commend the commissioner because I did not expect him to uphold the administrative law judge’s decision in whole,” said state Sen. Herschel Rosenthal (D-Los Angeles).

But some also accused the Wilson administration of playing politics by announcing the decision one week before voters face two ballot proposals to tighten regulation of HMOs. By appearing to take a tough stand against an HMO, state officials could portray themselves as alert health-care watchdogs and contend the ballot proposals are unneeded.

Gov. Pete Wilson formally announced Tuesday that he is opposing Propositions 214 and 216, saying they would cost the state tens of thousands of jobs. HMOs and insurance firms also oppose them.

Wilson administration officials denied any political motivation behind the timing. Bishop said he received the administrative law judge’s proposed decision on Oct. 11 and deliberated carefully before choosing to uphold it.