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Kaiser to Pay Record $2-Million Fine for Kidney Program

By Charles Ornstein and Tracy Weber, Times Staff Writers
August 10, 2006

Kaiser Permanente has agreed to pay a $2-million fine after state HMO regulators found that its Northern California kidney transplant program imperiled hundreds of patients, in some cases delaying critical surgeries or losing track of patients altogether, four people familiar with the deal said.

The penalty, expected to be announced today in Sacramento, would be the largest ever levied by the California Department of Managed Health Care. The previous record, $1 million, was collected from Kaiser in 2002 after lapses in care caused the death of a Northern California woman.

The fine is part of a consent decree that stipulates a series of corrective actions Kaiser must take, the sources said on condition of anonymity. For instance, it forces the HMO to contribute about $3 million — in addition to the fine — for outreach programs to encourage organ donation. It also requires Kaiser to change some of its practices with monitoring from state regulators.

Additional details of the agreement — a rare and stinging rebuke by the HMO agency — were not available Wednesday night. The size of the fine is intended to demonstrate the depth of the problems, some sources said.

Kaiser, the nation's largest health maintenance organization, announced the closure of its San Francisco kidney transplant program in May after reports in The Times described how patients were endangered when Kaiser forced them in 2004 to transfer to its fledgling program from established transplant centers at outside hospitals.

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 handle paperwork transferring them to its new program. And 25 Kaiser patients who had been treated at UC San Francisco were denied the chance to receive nearly perfectly matched kidneys because Kaiser directed the university to reject the organs during the transition between programs.

All the while, the patients have had to undergo prolonged dialysis, which removes impurities from the blood but can lead to fatal complications and reduce prospects for a successful transplant.

Now, as Kaiser closes its program, more than 2,000 patients on its waiting list are being moved to UC San Francisco and UC Davis — in many cases the same hospitals that had been treating them before Kaiser started its program. That process is not expected to be complete until year's end because regulators say they want to be sure patients are protected in the transition.

The state managed-care agency would not comment on the agreement, but has called a news conference for 11 a.m. today to make a "major announcement." A Kaiser spokesman said the HMO would not comment until afterward.

Bonnie Jacobson, a social worker who resigned from the transplant program last month, applauded the fine.

"In my experience in talking to the patients, it's caused a lot of anxiety, a lot of worry, a lot of anger, a lot of frustration," she said. "I don't really feel that the really high-up people in the administration at Kaiser got this…. If any of them had to go for even one dialysis treatment, they would have a whole new understanding of what it means to these patients to get a kidney transplant."

Karen Sorensen, whose 74-year-old mother experienced delays in the Kaiser program, said she, too, is pleased that Kaiser will have to pay for its actions.

"That's the only way that corporations and big companies ever understand anything," she said Wednesday. "They'll probably just increase their rates to get their money back and we'll pay for it in the long run."

Sorensen's mother, Corra Mayo, had been waiting for a transplant since 1999 at UC San Francisco when Kaiser forced her into its program. Even though Mayo was near the top of the waiting list at UC San Francisco in early 2004, her care stalled at Kaiser, Sorensen said.

On Friday, after transferring back to UC San Francisco, Mayo received a new kidney. Her daughter said she is doing very well but remains hospitalized because she is overloaded with fluids.

"This just proves to us that Kaiser was more or less selecting the people that would be easier for them so that their ratings would be high," she added, referring to Kaiser's post-transplant survival statistics.

For Ella Haynes, whose husband, Ronald, died in March 2005 awaiting a kidney at Kaiser, news of the fine provided "a little bit of justice."

Ella Haynes learned from The Times in May that Ronald never had a chance. The 2 1/2 years he spent on the waiting list at UC Davis had never been transferred to Kaiser, effectively shutting him out of a transplant.

"Sometimes you have to have money to slap them on the hands," she said. "It's just sad. The whole thing has been sad from the very beginning … to have it messed it up so badly."

Kaiser's program has already been roundly criticized. In a stinging report made public in June, federal regulators concluded that practically every aspect of the Kaiser kidney program was flawed and threatened to cut off Medicare funding for treating all end-stage renal disease at the HMO's San Francisco hospital. But the U.S. Centers for Medicare and Medicaid Services late last month accepted Kaiser's plan for fixing its problems, even though the program is closing.

In Southern California and elsewhere, Kaiser does not have an in-house transplant program and continues to send patients to outside hospitals for the procedures.

The troubles at Kaiser's program followed other high-profile failings at transplant centers in California.

St. Vincent Medical Center in Los Angeles and UCI Medical Center in Orange closed their liver transplant centers last year amid scandal. Separately, the liver transplant program at USC University Hospital has among the lowest one-year patient survival rates in the nation.

But the collapse of Kaiser's program affected far more patients. It also undercut Kaiser's contention that bringing transplants in-house would provide patients with coordinated care among physicians, labs, pharmacies and hospitals.

"I wish that there was a support group for all of the people who went through Kaiser and experienced difficulty," Sorensen said.


To read previous articles about the Kaiser transplant program, go to . Charles Ornstein can be reached at; Tracy Weber at