Officials Broaden Kaiser Probe

Times Staff Writers

In announcing a record fine Thursday against Kaiser Permanente, California HMO regulators also said they have broadened their investigation to determine whether the giant insurer’s entire Northern California operation routinely ignores or mishandles patient complaints.

The fine, first reported in The Times on Thursday, requires Kaiser to pay $2 million to the California Department of Managed Health Care for the failings of its kidney transplant program in San Francisco, which endangered hundreds of patients during and after its start-up in 2004.

In a series of stories last May, The Times detailed how Kaiser had imperiled patients by inexplicably delaying or denying surgeries and losing track of hundreds of patients altogether.

Shortly after those reports, Kaiser announced it would close the program and transfer more than 2,000 patients awaiting kidneys to centers at other hospitals.

As part of a consent decree unveiled Thursday, the HMO agreed to donate an additional $3 million to support Donate Life California, a nonprofit organ and tissue donor registry program that seeks to increase donations.


Cindy Ehnes, director of the managed-care agency, said during a news conference in Sacramento that the penalty reflects the severity of Kaiser’s lapses.

“Not only will it acknowledge Kaiser’s serious failures to adequately administer and operate its transplant center but also directly benefit the patients who so desperately need help,” she said. “This funding will save lives.”

A top Kaiser official apologized to the health plan’s members Thursday and said the HMO has learned from the debacle.

“This experience really has caused our organization to reflect on how we can continue to improve moving forward,” said Mary Ann Thode, president of the Kaiser Foundation Health Plan and Hospitals in Northern California.

She said the penalty would not be passed along to members in the form of higher premiums.

Though some patients and their relatives applauded the fine as “justice” for Kaiser’s fumbling of their care, others said it amounted to a light slap to the nation’s largest HMO.

Stuart Talley, a Sacramento attorney representing about 50 Kaiser transplant patients and relatives of some who died awaiting kidneys at Kaiser, called the fine “a joke.”

The $5-million fine and donation “is clearly a slap on the wrist” given Kaiser’s expansive resources and “the fact that patients may have actually died as a result of the alleged conduct,” he said.

Ehnes said her agency launched a wider inquiry into the HMO’s quality oversight program earlier this month after allegations that top Kaiser officials “had not somehow heard the concerns of patients, of treating physicians and of others that there were things awry” in the transplant program.

“If they weren’t hearing these complaints about something this large, is there anything else that they may have been missing because of the way that they are monitoring their grievances?” Ehnes asked.

The expanding probe will look at the plan’s handling of the complaints of patients and its own staff, as well as its system for assessing doctor quality, Ehnes said, and could result in additional fines for the HMO.

The managed-care agency on Thursday also released results of its own investigation into Kaiser’s troubled kidney program.

The report documented how ill-prepared and understaffed the enterprise was from its inception, affirming findings by The Times and federal regulators.

In Kaiser’s program, twice as many patients died on the waiting list last year as received kidneys, The Times found. The statewide pattern was the reverse: Twice as many patients received kidneys as died.

Hundreds of patients were stuck in limbo for months -- with little hope of receiving new kidneys -- because Kaiser failed to properly process paperwork transferring them from outside programs into its own.

The state’s report found that Kaiser opened its program with no idea how many of its Northern California patients were awaiting transplants. When state inspectors asked Kaiser staff at what point they became aware of the large number of patients the program would be treating, the report said, they were told, “Once they started coming.”

When asked Thursday if Kaiser planned to terminate any employees, Thode said she preferred to focus on the safe transfer of patients to kidney programs at UC San Francisco and UC Davis.

The transplant program’s medical director, Dr. Sharon Inokuchi, who has been faulted by regulators for her actions, was stripped of her administrative responsibilities, but she continues to see patients.

“I just don’t think that placing blame is the answer,” Thode said, adding that Inokuchi is a well-qualified clinician who has the “best knowledge of the patients” in the program.

Ehnes said she suggested that Kaiser contribute cash to promote organ donation because of the scarcity of organs available for transplantation. In the San Francisco region, for instance, patients can wait five to six years for a new kidney.

“We felt, and I think Kaiser agreed, that the ability to have something good come out of this for the public, and maybe for those patients who are still on that waiting list, was essential,” Ehnes said.

The organ registry nonprofit, which this year has a budget of about $140,000, learned of the impending donation from Kaiser Thursday morning, only 15 minutes before it was announced at the news conference, said Brenda Owen, a Donate Life spokeswoman.

“We want to definitely use this money in a way that helps California and helps the registry so that more people will sign up and more organs will be available,” she said, noting that California has the highest percentage of people waiting for organs in the country.

Ehnes said she cannot imagine a circumstance in which Kaiser would reopen its transplant center in the near future, but she said it might be possible at some point.

Right now, she said, “the baggage is too heavy.”

To read previous articles about the Kaiser transplant program, go to Weber can be reached at, and Ornstein at charles.ornstein@



Key problems

The California Department of Managed Health Care identified five major deficiencies in Kaiser Permanente’s Northern California kidney transplant program. Specifically, the HMO failed to:

Adequately oversee administration of the program

* Ensure that the transfer of 1,500 patients to Kaiser’s program from other, more established centers was accomplished without compromising care

* Ensure that patients had timely access to specialists in the program

* Monitor the program’s grievance system and ensure that it responded to patient complaints

* Provide consistent and timely referrals for necessary kidney transplant services

Source: California Department of Managed Health Care

Los Angeles Times