Whistleblower’s lawsuit

Whistleblower’s lawsuit

A whistleblower who helped instigate regulatory and media investigations of Kaiser Permanente’s troubled Northern California kidney-transplant unit has filed a wrongful termination lawsuit, alleging that senior Kaiser medical-group officials ignored several warnings about mounting problems in the program. In early May, under pressure from federal and state authorities, Oakland-based Kaiser decided to shut the unit and transfer patients needing new kidneys to waiting lists at UCSF Medical Center and UC Davis Medical Center. The move came after examples of botched … paperwork, chaotic management practices and long delays for transplants reached the attention of regulators and the public.

According to the lawsuit filed by David Merlin, who was administrative head of the kidney unit for about two months in late 2005 and early this year, Kaiser’s kidney transplant program “was so poorly organized and unprofessionally managed that it failed to comply with state and federal requirements and was compromising patient care, leading to unnecessary suffering and possibly deaths.”

For many years prior to that, Kaiser had subcontracted kidney transplant work to the two University of California medical centers.

In the wrongful termination lawsuit, filed July 14, Merlin said he met with several senior San Francisco executives of the Permanente Medical Group (TPMG), the for-profit medical group that ran the transplant unit and contracts with Kaiser’s hospitals and health plan to provide clinical services in Northern California, in January and early February, raising concerns about the operation of the unit.

Merlin’s lawsuit said those executives — including Nancy Langholff, RN, assistant medical group administrator; Diane DeCorso, Langholff’s boss, and Dr. Nora Burgess, TPMG’s chief financial officer at the San Francisco hospital — ignored his attempts to bring severe ongoing problems in the unit to the organization’s attention, and declined to let him schedule a meeting with Bruce Blumberg, M.D., at the time the medical center’s physician-in-chief.

Instead, he was told to “shut up” about the problems, and to “let it go,” Merlin said.

Merlin, who had previously worked as an administrator at Brigham and Women’s Hospital, a Harvard University affiliate in Boston, as well as San Francisco’s Saint Francis Memorial Hospital and St. Luke’s Hospital, filed his wrongful termination suit in San Francisco Superior Court. It asks for at least $5 million in damages.

Shortly before the filing of the lawsuit, Kaiser spokesman Matthew Schiffgens described Merlin’s charges that senior officials ignored problems in the unit as “allegations,” adding, “if he has any concrete examples of the issues he’s raising, we’d be willing to address them.” As of July 17, “we have not been officially served with the complaint,” Schiffgens said, adding “we’re not to going to litigate or advance our litigation strategy in the media.”

More broadly, Schiffgens said, Kaiser continues to work with regulators to transfer patients to the UC medical centers, care for life-threatened renal patients in the San Francisco unit, and review the situation. “There is still a continuing internal review of the kidney transplant program,” Schiffgens said July 12, including “how the actual program operated (along with) administrative and communications issues.”

But a formal internal investigation, promised in the early days after the transplant unit’s woes hit the front pages, was discontinued after Kaiser decided — under pressure from regulators — to shutter the kidney unit, Schiffgens told the San Francisco Business Times. “That work has been put on hold,” he said, while Kaiser focuses on the specifics of running the unit and transferring patients to the non-Kaiser medical centers for transplants. “At some point in the future, we can revisit that.”
Regulators report

After being terminated by Kaiser in early February, Merlin took his case to the news media — including the Los Angeles Times and KPIX, CBS TV-Channel 5 in San Francisco. He also contacted a number of state and federal regulators, including the California Department of Managed Health Care, U.S. Department of Justice and the Medical Board of California, which licenses physicians, spending hours with top-level investigators and executives. Several DMHC officials and investigators talked to him by phone, for example, the agency confirmed. The result, starting in early May, was a flood of news accounts and regulatory moves that forced Kaiser to reconsider its plans.

The Centers for Medicare and Medicaid Services, for example, released a report on June 23 that appears to support a number of Merlin’s allegations about quality and management problems. That report alleged the unit was understaffed, its record keeping and training were inadequate or nonexistent, and that some patients weren’t matched up with donor kidneys, even when perfect matches were available. Patients received confusing information in many cases, and many complaints were ignored or lost.

Kaiser officials said in their June 22 CMS correction plan they didn’t agree with or acknowledge the accuracy of the federal agency’s long list of alleged operational and managerial deficiencies in the kidney unit, and declined to acknowledge any mistakes or take responsibility or liability for them.

A similar report from the Department of Managed Health Care is expected by month-end, and insiders at the agency say a significant monetary fine against Kaiser — possibly the largest ever levied by the state agency — will be part of DMHC’s response. That penalty could be significantly higher than the previous record fine of $1 million, according to an informed DMHC insider.

Since the Los Angeles Times and CBS TV broke the story in early May, a number of top Kaiser officials connected to the kidney program have left their positions. Michael Alexander, CEO of Kaiser’s San Francisco Medical Center, which houses the unit, announced plans to retire last month. Dr. Bruce Blumberg, the hospital’s physician-in-chief during the two years problems in the kidney unit festered, left that position in recent weeks to move into the San Francisco medical center’s genetics unit, a shift that sources say was not related to the kidney unit’s woes and had been planned for some time. And Dr. Sharon Inokuchi, who at various times had been the kidney unit’s medical director and administrative head, was relieved of administrative duties “several months ago,” according to Kaiser, and is now working as a practicing nephrologist, or kidney specialist, in the unit, which is in the process of being shut down.

So far, however, no senior executives in the Permanente Medical Group, which ran the unit, have left or been reprimanded. And except for the first days after the issue came to light, TPMG executives have repeatedly deflected questions on the medical group’s role, leaving Mary Ann Thode, president of Kaiser’s Northern California hospital and health-plan units, to bear the brunt of public scrutiny.

A number of critics, including Merlin and former Kaiser, California Medical Association and Deloitte Consulting senior researcher Ruth Given, contend that TPMG’s role was central to the kidney unit.

The medical group, unlike the rest of Kaiser, is a for-profit enterprise that splits profits among its physician partners. Critics say that gives an incentive for the group to bring services in-house for financial reasons, sometimes to the detriment of enrollees. In addition, critics say, Kaiser’s emphasis on “population health” — meaning providing cost-effective care for the greatest number of enrollees — carries within it some risk that the interests of individual patients could be compromised in an attempt to stretch health-care dollars across a broad spectrum of care.

That appears to have been one of the factors leading Kaiser executives to take steps that put some individual patients at risk, with the goal of ultimately benefiting the greater good, Given said. This “may at least partially explain TPMG’s unwillingness to respond to (patient and family) complaints in a timely manner — or apparently at all — if the media had not gotten involved.”

As Kaiser has done for a number of weeks, Schiffgens declined to make other Kaiser officials available, including Robert Pearl, M.D., chief executive officer of the 6,000-doctor medical group, or other senior TPMG officials. “I have been the spokesman for the program,” Schiffgens said, “and I don’t see that changing going forward.”

A rollout gone wrong?

Merlin said he’s convinced that the kidney unit’s highly publicized woes are indicative of much deeper management and structural flaws within the giant HMO, which has more than 8.5 million enrollees nationwide, more than three-quarters of them in California.

He said Kaiser planned to use the San Francisco unit as the template for a series of kidney and other transplant centers nationwide that would save the organization huge amounts of money by not sending them to non-Kaiser hospitals for their transplants.

“I have every reason to believe they’re going to resurrect this (model),” Merlin said. “They want to build a strong template to roll out in the other eight states. … They said it would save Kaiser hundreds of millions of dollars” to handle organ transplants in-house.

Kaiser’s Schiffgens said he is “not aware” of such a broader strategy. The San Francisco-based Northern California kidney transplant unit is “the only (transplant program) that was ever brought in-house,” he said.

Other sources, including some within Kaiser, say Kaiser’s corporate culture and the influence of its powerful medical group, contributed to a reluctance to address these issues directly and publicly.

Considering that Kaiser’s own “Principles of Permanente Medicine” guidelines hold the system’s physicians responsible for directing all clinical decisions and designing and operating care delivery within the organization, said Given, a former Kaiser research specialist, “it is particularly puzzling to me that there has been no official public statement from TPMG about (its) role in this entire fiasco.”

Critics say the powerful influence of Kaiser’s doctors within the organization is little known to the public or to regulators, and that financial incentives sometimes result in clinical decisions that can put some patients in jeopardy. A senior Kaiser source blamed the situation on internal power struggles and cultural change within what the source called “a doctor’s culture.”

The physicians “manage to stay out of things,” the Kaiser source said, “but the doctors are key. They’re the ones that really control the huge part of the money.”

Chris Rauber

Whistleblower settles lawsuit over abrupt firing

David Merlin, the former administrative director of Kaiser Permanente’s troubled Northern California kidney transplant unit, has settled his wrongful termination lawsuit against Kaiser following a Dec. 18 arbitration hearing.

Merlin lost his job in February 2006 after eight weeks, following his questioning the safety, management and oversight of the unit by Kaiser and its Permanente Medical Group. The suit, filed in mid-July in San Francisco Superior Court and seeking at least $5 million in damages, said the transplant program “was so poorly organized and unprofessionally managed that it failed to comply with state and federal requirements and was compromising patient care, leading to unnecessary suffering and possibly deaths.”

Merlin also brought his concerns to the federal Centers for Medicare and Medicaid Services, the California Department of Managed Health Care (DMHC) and other regulators, and to the news media, resulting in a series of huge fines, scathing regulatory reports and media scrutiny of the transplant center’s woes.

Matthew Schiffgens, Kaiser’s spokesman on the transplant issue, confirmed that the Oakland-based health-care giant had settled the case, without providing any further details.

San Francisco Business Times.


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