Union Sues To Prevent Kaiser From Selling Plans Through Exchange

On Wednesday, the National Union of Healthcare Workers filed a lawsuit to keep Kaiser Permanente from participating in the state health insurance exchange, theSacramento Business Journal reports.

The lawsuit comes after Kaiser in June was fined $4 million by the state Department of Managed Health Care for failing to correct violations of mental health regulations (Robertson, Sacramento Business Journal, 9/5).

Background on Exchange

The exchange -- called Covered California -- is expected to open for registration in October, and an estimated five million people are expected to purchase plans through the exchange in 2014 (California Healthline, 9/4).

Exchange officials have selected Kaiser to offer individual and small business policies (Sacramento Business Journal, 9/5).

Background on Violations

In March, DMHC issued a report finding that Kaiser mismanaged its mental health care services.

The report was released as part of a routine mental and physical health services survey conducted every three years.

The report found that Kaiser had:

• Made patients wait excessively long periods between appointments; and
• Offered patients inaccurate information that could have dissuaded them from seeking long-term individual therapy.

According to the report, Kaiser provided information sheets stating that individual counseling services "will not be a Kaiser-covered benefit and will not be paid for by Kaiser." DMHC said that such statements "are in error because the [p]lan is required to provide coverage for serious mental illnesses under the same terms and conditions as medical conditions."

The $4 million fine was the second-largest in DMHC history (California Healthline, 6/26).

Details of Lawsuit

The lawsuit -- filed in Sacramento County Superior Court by NUHW and five other plaintiffs -- seeks:

• A ruling that the exchange violated its duty to select health plans in good standing;
• A court order that would require the exchange to uphold such a responsibility; and
• Payment of fees and court costs (Sacramento Business Times, 9/5).

In a statement, Horace Beach -- a plaintiff in the case and a psychologist who has worked for Kaiser -- said, "Before Kaiser is allowed to enroll thousands more patients through the exchange, it should first demonstrate that it can take care of patients who already rely on Kaiser for their health care."

Kaiser's Response

In a statement responding to the lawsuit, John Nelson -- a Kaiser spokesperson -- called the charges "patently untrue," adding that Kaiser is "in good standing and fully licensed by the state" (Rauber, "Bay Area BizTalk," San Francisco Business Times, 9/5).

Nelson noted that the union currently is in a prolonged contract negotiation with Kaiser. He also said that the problems identified by DMHC have been improved (Sacramento Business Times, 9/5)

Source: California Health line, September 6, 2013. (Link)