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EGGLESTON, SIEGEL & LeWITTER
JAMES E. EGGLESTON #98772
1330 Broadway, Suite 1700
Oakland, CA 94612
(510) 834-7111 (fax)
Attorneys for Plaintiff
California Nurses Association
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF CONTRA COSTA
on behalf of its members and the Kaiser Permanente Health Plan members,
KAISER FOUNDATION HEALTH PLAN, KAISER FOUNDATION HOSPITALS,THE PERMANENTE MEDICAL GROUP, INC., THE PERMANENTE COMPANY, and THE PERMANENTE FEDERATION, dba KAISER PERMANENTE MEDICAL CARE PROGRAM; THE CALIFORNIA DEPARTMENT OF CORPORATIONS; BRIAN A. THOMPSON, in his official capacity as Acting Commissioner; THE CALIFORNIA DEPARTMENT OF HEALTH SERVICES; and SANDRA SMOLEY, in her official capacity as Director; and DOES 1-20, inclusive,
PETITION FOR PEREMPTORY WRIT OF MANDATE AND COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
[C.C.P. § 1085; Bus. And Prof. Code § 17203]
I. PRELIMINARY STATEMENT
1. This action seeks
to remedy a health care crisis occurring throughout Northern California
including Contra Costa County created in large part by an unlawful, commercially
motivated scheme of Kaiser Permanente Medical Care Program to substantially
reduce acute care and emergency health services, and tacitly sanctioned
by deliberate inaction and omission of the California Department of Corporations
("DOC") and California Department of Health Services ("DHS").
created and exists and operates for various
purposes, including to establish and promote standards of nursing practice
and patient care, to initiate and support quality health care and protect
nursing practice in the state of California, and to represent Registered
Nurses in relations with their employers concerning terms and conditions
of employment and standards of professional practice and patient care.
CNA has long been recognized as a leader in California in developing the
professional role of Registered Nurses in meeting new and changing needs
of patient care, and in assisting the legislature, licensing boards and
health regulatory agencies in responding to new developments in health
care. CNA has assumed an active and very public role in the current debate
in health care reform and ongoing controversies over the danger to the
public health and risks to patients arising from the growing commercialization
of health care and hospital industry restructuring and resulting erosion
of patient care standards, elimination of health care services, and increasing
restrictions on access to adequate and necessary health care services.
CNA represents 7.500 registered nurses employed by Kaiser in Northern California.
The vast majority of these members and their families are enrolled in Kaiser
health plans and receive health care services from Kaiser.
California public benefit corporation,
licensed under the Knox-Keene Act as a health care plan. KFHP serves as
a non-profit front organization and cover for the commercial, for-profit
operations of the Kaiser Permanente Medical Care Program. KFHP has 2.8
million health plan enrollees/members in Northern California. Defendant
KFHP does business in the County of Contra Costa, California.
public benefit corporation, licensed
by the Department of Health Services to operate health care facilities,
including acute care hospitals. Defendant KFH, together with KFHP serves
as a non-profit front organization and cover for the commercial, for-profit
Kaiser Permanente Medical Care Program. Defendant KFH does business in
the County of Contra Costa, California.
physician-owned corporation which provides
medical services to Kaiser Health Plan members and serves as a vehicle
for the secret, undisclosed extraction and distribution of profit from
the consolidated operations of the commercial, for profit enterprise known
as the Kaiser Permanente Medical Care Program. Defendant TPMG does business
in the County of Contra Costa, California.
corporation of TPF that was created in
1996 and exists and operates for the purpose, inter alia, of assisting
in the secret, undisclosed extraction and distribution of profits from
the consolidated operations of the commercial, for profit enterprise known
as Kaiser Permanente Medical Care Program. Defendant PermCo does business
in the County of Contra Costa, California.
commercial name and affiliated business
form under which defendants KFHP, KFH, TPMG, TPF, and PermCo operate together
with several affiliated non-profit, tax exempt entities and for profit
entities and ventures as a single commercial enterprise. This single, integrated
Kaiser operation is a for profit enterprise which generates billions of
dollars in annual revenues (more than $20 billion in 1996) through its
consolidated operations. Kaiser conceals its substantial profits from public
disclosure using its tax exempt front organizations including KFHP and
KFH as a cover, and secretly extracts and distributes hidden profits through
its various integrated, for profit operations. KPMCP does business in the
County of Contra Costa, California.
Plan" within the meaning of § 1345(f)
of the Health and Safety Code under the license of defendant KFHP issued
by the Department of Corporations in accordance with § 1349 of the
Health and Safety Code. These individual defendant entities are all "affiliates"
and operate "under common control" within the meaning of applicable regulations
of the Department of Corporations. 10 C.C.R. § 1300.45(c) and (b).
This single, fully integrated Kaiser health care conglomerate does business
as a licensed health care service plan under the name of Kaiser Permanente
Medical Care Program.
operation consists of a complex web of
common directors, officers, and shareholders of affiliated non-profit and
for profit corporations which together constitute the "governing body"
of Kaiser acute care hospital operations within the meaning of regulations
of the Department of Health Services. 22 C.C.R. § 70035. The Kaiser
entity defendants operate the Kaiser acute facilities under a license issued
by defendant Department of Health Services to defendant Kaiser Foundation
Hospitals pursuant to § § 1251, 1253, and 1254 of the Health
and Safety Code.
Corporations is responsible for the administration
and enforcement of the Knox-Keene Health Care Service Plan Act of 1975.
H & S Code § 1341. Defendant Brian Thompson is the Acting Commissioner
of Corporations and is sued in his official capacity.
inclusive are unknown to plaintiff who, therefore sues said defendants by such fictitious names. Plaintiff is informed and believes and thereon alleges that each of the defendants designated herein as a Doe may properly be named herein by reason of actions and/or omissions hereinafter alleged. Plaintiff will ask leave of the Court to amend this complaint in order to insert the true names and capacities of said defendants and to join said defendants in this action when the same have been ascertained.
III. GENERAL ALLEGATIONS
1. Relevant Statutory and Regulatory Standards
1. Kaiser is required to provide certain basic health care services to its Health Plan
and to insure these services are available and accessible to enrollees
in their service areas (areas of residence and employment). H & S Code
§§ 1367(i) and 1345(b). These basic mandatory services include
"general nursing care . . . intensive care unit and services, drugs, medications
. . . special duty nursing as medically necessary . . . . 10 C.C.R. §
1300.67(b). Kaiser is also required to provide its Health Plan enrollees
and insure available and accessible emergency health care services on a
24-hour a day, 7 days a week, basis within their health care service plan
areas. 10 C.C.R. § 1300.67(g). Such emergency health care services
must include ambulance services for the areas served by the Kaiser Health
Plan to transport enrollees to the nearest 24-hour emergency facility with
physician coverage designated by the Kaiser Plan. 10 C.C.R. § 1300.67(g).
Within each service area of a plan, basic health care services and specialized health care services shall be readily available and accessible to each of the Plan’s enrollees:
(a) The location of facilities providing the primary health care services of the Plan shall be within a reasonable proximity of the business or personal residences of the enrollees, and so located as to not result in unreasonable barriers to accessibility;
. . . . . . . . . . . . .
(c) Emergency care services shall be available and accessible within the service area 24 hours a day, 7 days a week;
(d) The ratio of enrollees to staff,
including health professionals, . . . shall be such as to reasonably assure
that all services offered by the Plan will be accessible to enrollees on
an appropriate without delays detrimental to the health of the enrollees.
. . . 10 C.C.R. § 1300.67.2.
obligation to regularly evaluate and obtain correction of deficiencies in the delivery of health care services to Kaiser Plan enrollees. Such evaluation must include a "review of the procedures for obtaining health services, the procedures for regulating utilization, peer review mechanisms, internal procedures for insuring quality of care, and the overall performance of the Plan in providing health care benefits and meeting the health needs of the subscribers and enrollees."
H & S Code § 1380(a). Upon DOC
discovery or determination of deficiencies in the delivery of health care
services, DOC is required to provide notice to the licensed health care
service plan and afford a reasonable time to the Plan to correct the deficiencies.
A failure or refusal by the Plan to correct noted deficiencies within the
prescribed time is cause for disciplinary action against the Plan. H &
S Code § 1380(g).
operate as a health care service plan
and the assessment of civil penalties. H & S Code § 1386(a). DOC
may also issue an order directing a plan or its representatives to cease
and desist from engaging in practices violative of the Knox-Keene Act and
may institute civil actions for injunctive and equitable relief, including
the appointment of a receiver to assume control of a defendant plan’s assets
and operations. H & S Code §§ 1391, 1392.
H & S Code § 1279; 22 C.C.R. § 70101(c). In the event DHS discovers deficiencies of compliance with licensing requirements, it "shall notify the hospital of all deficiencies of compliance . . . and the hospital shall agree with the department upon a plan of correction which shall give the hospital a reasonable time to correct such deficiencies." 22 C.C.R. § 70101(e). Failure to correct the deficiencies is the basis for action by DHS to suspend or revoke the health facility license. H & S Code 1294; 22 C.C.R. § 70101(e).
1. The Current Health Care Crisis in Contra Costa County Created by the Planned Withdrawal of Needed Services for Commercial Purposes
1. Over the past few years, Kaiser has led the hospital industry in Northern California including Contra Costa County in implementing a commercially motivated plan to withdraw and eliminate critically needed health care services. The plan includes the following elements:
(a) The systematic deactivation and essential abandonment of licensed general acute care bed capacity accomplished through the elimination of professional staff required for use of licensed beds and the implementation of restrictive "gate keeping" and "early discharge" policies which have the intent and effect of reducing acute hospital utilization. Data compiled by the Office of Statewide Health Planning and Development shows that as of the end of the second quarter, 1997, Kaiser’s plan to deactivate and abandon use of licensed beds in its Contra Costa County facilities was very successful, resulting in the effective deactivation of 46% of the licensed acute care beds at the three Kaiser acute hospitals in Contra Costa County. (See Exhibit 1 attached to this Complaint and incorporated herein.) As of the end of the second quarter, 1997, Kaiser’s acute care bed deactivation plan in Contra Costa County had these results:
Kaiser - Richmond
Licensed beds: 50
Staffed beds: 34
Percentage of licensed beds staffed: 68%
Percentage of licensed beds deactivated: 32%
Kaiser - Martinez
Licensed beds: 204
Staffed beds: 80
Percentage of licensed beds staffed: 39.2%
Percentage of licensed beds deactivated: 61.8%
Kaiser - Walnut Creek
Licensed beds: 388
Staffed beds: 233
Percentage of licensed beds staffed: 60.1%
Percentage of licensed beds deactivated: 39.9%
(b) A planned reduction of emergency health and critical care services. Kaiser has steadily reduced emergency services available at its Richmond and Martinez facilities as well as its Oakland Hospital which serves patients of the Walnut Creek and Richmond facilities. Kaiser is implementing plans to close all three of these facilities in their entirety. Data compiled by the Office of Statewide Health Planning and Development show that during calendar year 1996, Kaiser-Richmond had 38,060 visits to its emergency room representing 18.9% of the total emergency room visits in Contra Costa County and Kaiser-Martinez had 37,653 visits to its emergency room representing 12.2% of the Contra Costa County total. (See Exhibit 2 attached to this Complaint and incorporated herein.) The closing of the Kaiser Richmond and Kaiser Martinez facilities and elimination of emergency medical services at those facilities will burden an already deficient Contra Costa County emergency medical service capacity with more than 75,000 additional patients per year. Kaiser’s elimination of emergency medical services throughout the Northern California region and reduction of services in facilities which remain open has resulted in increasingly longer, dangerous, and sometimes fatal emergency room waits by patients. These dangerous conditions are the direct, foreseeable and known consequences of Kaiser’s deactivation of licensed critical care beds and other acute care beds achieved through the elimination of necessary professional nursing staff. The following examples from a comprehensive investigation and report of findings by the Federal Health Care Financing Administration of the Department of Health and Human Services illustrate the crisis created by Kaiser’s commercially-motivated health care service reduction plan:
1. Patient 71 presented to the emergency department at
Martinez because his oncologist practices at the site; thus, the patient
had a reasonable expectation that the care he would receive would be individualized
to his particular needs, and be directed by, and in concert with, his personal
oncologist’s knowledge of his special needs. This patient was seen and
treated by the ED physician on duty. Interview with the patient’s oncologist
revealed that, although this physician stated his awareness of the availability
of well-developed protocols for the care and treatment of various manifestations
of Sickle Cell Anemias, and although said oncologist described his role
as key in developing these protocols in the East Bay community, no such
protocols were available or employed in the care delivered to this patient,
either in the ED or on the nursing care units. This patient endured a stay
of approximately 23 hours in the ED. He was told he could not be admitted
to the hospital in Martinez because there were no beds available. However,
review of the patients census and of the number of licensed beds available
at the facility at the time does not support the allegation of "no beds
available." (See Exhibit 3 attached to this Complaint incorporated herein,
excerpts of the 8/27/97 Statement of Deficiencies and Plan of Correction
issued by the Health Care Financing Administration of the Department of
Health and Human Services, pp. 83-84.)
Waiting times were reviewed for those being admitted to the hospital and for those being transferred out. On 5/2, the average was a 7-hour wait before being admitted. On 5/9, one patient waited 10 hours to be admitted and one 13 hours. Of those being transferred out, the wait averaged 9 hours on that day. On 5/28, the wait to be admitted averaged 7 hours. (Exhibit 3, p. 104).
4. Patient 170 is a 40 year-old man who presented to the Martinez ED
at approximately 12:04 p.m. on 9/1/97. He was diagnosed as having an "acute
anteroseptal myocardial infarction" (acute heart attack). His treatment
included treatment with TPA (clot-buster drug used in such cases) and admission
to critical care. Review of the critical care record reveals that this
patient was subsequently transferred, via critical care transport at approximately
2:20 a.m. on the morning of 9/5/97. His transfer was arranged, even though
there were fully equipped critical care beds which stood empty. (See Exhibit
4 attached to this Complaint and incorporated herein, excerpts of 10/28/97
Statement of Deficiencies and Plan of Correction of the Health Care Financing
Administration, p. 18).
(c) Kaiser’s response to the emergency care crisis its health care service reduction plan has created has included a deceptive public relations campaign to convince the public generally and Kaiser Health Plan members specifically that restricted access to emergency care and long emergency room waits are simply the norm and to lower their expectations of better access to care. (Exhibit 5 attached to this Complaint and incorporated herein.)
(d) Kaiser has engaged in the systematic reduction of professional nursing
staff necessary to staff existing, fully equipped, licensed acute care
beds. Examples from the comprehensive findings of the Health Care Financing
Administration reflect the direct, foreseeable and known consequences of
Kaiser’s professional staff downsizing plan:
1. Defendant Department of Corporations was fully advised and aware of the investigations conducted and comprehensive findings of deficiencies by the Health Care Financing Administration in its August 27, 1997 and October 28, 1997 reports of deficiencies at the Kaiser Walnut Creek and Martinez facilities as well as a similar comprehensive report and statement of deficiencies issued on May 23, 1997 for the Kaiser Oakland and Richmond facilities. A "Public Survey Report" issued by DOC on August 14, 1996 had made similar extensive findings of significant deficiencies in the delivery of health care services by Kaiser. The findings of consultants retained by DOC to conduct the survey included the following:
1. The health Plan has failed to demonstrate that oversight processes have been implemented to insure Plan accountability for the patient care functions delegated to the medical centers. . . .
. . . . . . . . . . . . . .
3. The Department cannot find that the Plan is providing coverage for emergency services as required by § 1345(b) [H & S Code].
# The Plan has not demonstrated that processes have been effectively
implemented to insure that members receive medically-appropriate services
in accordance with § 1363.5.
. . . . . . . . . . . . . .
# The Plan fails to meet the Act’s requirements for an effective quality assurance program in accordance with § 1370 and Rule 1300.70.
(See Exhibit 6 attached to this Complaint and incorporated herein, Department of Corporations, Summary of Report of Medical Survey of Kaiser Foundation Health Plan, Inc., Northern California Region, August 14, 1996, pp. 1-2)
In accordance with the requirements of the Knox-Keene Act, the August 14, 1996 Report stated: "[t]he Department will conduct a follow-up survey after six months from the date of this Public Survey Report." (Exhibit 6, p. 1) The Survey Report identified several remedial actions to be taken by Kaiser to correct serious systemic deficiencies in its delivery of health care services. Despite DOC’s own August 14, 1996 findings of serious deficiencies, its mandatory obligation and stated intent to conduct a follow-up survey to determine compliance with specifically-identified remedial measures, and its knowledge of the continuing and substantial deficiencies in the delivery of health care services by Kaiser throughout the Northern California Region as reflected in the Health Care Financing Administration investigations and findings of deficiencies in May (Oakland/Richmond), August (Walnut Creek/Martinez), and October 1997 (Walnut Creek/ Martinez), the DOC has failed and refused and continues to fail and refuse to conduct its follow-up survey, determine compliance or non-compliance with the August 1996 remedial directives, or investigate and take remedial action regarding the significant deficiencies disclosed in the Health Care Financing Administration investigations.
1. On March 12, 1997, plaintiff California Nurses Association
filed a complaint with defendant DOC regarding Kaiser’s plan for the systematic
withdrawal and elimination of emergency health care services and intensive
care services in Northern Alameda County and Western and Central Contra
Costa County. The CNA complaint alleged that Kaiser was engaged in "medical
redlining" of certain communities within its health care service plan areas
which presented a substantial risk of harm to these communities because
of an existing shortage of necessary emergency health and intensive care
services. The complaint warned that Kaiser’s medical redlining scheme presented
a clear and present danger to the public health because of the exposure
of Kaiser Health Plan enrollees and residents of the redlined communities
to increased risk of death and serious injury due to the lack of safe and
accessible emergency health and intensive care services. (See Exhibit 7
attached to this Complaint and incorporated herein, Complaint for License
Revocation/Suspension, Civil Penalties, and Cease and Desist Orders; Request
to Institute Action for Injunctive and Other Equitable Remedies, pp. 1-2)
The complaint requested an immediate hearing, the issuance of cease and
desist orders and DOC initiated civil action for injunctive relief. Defendant
DOC failed and refused and continues to fail and refuse to take any action
to investigate, conduct a hearing, present to Kaiser for response, or process
in any manner CNA’s March 1997 complaint. Defendant DOC has inexplicably
declined investigation and processing of this complaint despite confirmation
of the deficiencies alleged in that complaint and unfortunate subsequent
occurrence of serious health care risks warned of by CNA in the complaint
reported by the Health Care Financing Administration in its comprehensive
findings and statement of deficiencies issued on May 23, 1997. (See Exhibit
8 attached to this Complaint and incorporated herein, excerpts of Statement
of Deficiencies and Plan of Correction issued by the Health Care Financing
# On December 9, 1997, CNA again protested the elimination of maternity
care services at the Kaiser Oakland Hospital and partial transfer of services
to a non-Kaiser facility. (See Exhibit 10 attached to this Complaint and
incorporated herein). Defendant DOC did not investigate or take any action
on this complaint and instead approved the elimination of services at Oakland
IV. FIRST CAUSE OF ACTION
[Department of Corporations]
(a) failing and refusing to investigate and initiate meaningful and effective remedial action to correct serious, and substantial deficiencies in the availability and accessibility of safe and adequate health care services guaranteed to Kaiser Health Plan members (H & S Code § 1367(a));
(b) failing and refusing to investigate and take remedial action necessary to correct serious deficiencies in the delivery of health care services by Kaiser acute care facilities and operations as required by the license obligations of these facilities. (H & S Code § 1367(a));
(c) failing and refusing to conduct a follow-up evaluation and assure compliance with specific remedial directives issued in its Survey Report of August 1996 and failing and refusing subsequent evaluation and appropriate remedial action despite knowledge of Kaiser’s continuing failure of compliance and continuing implementation of its plan to reduce the availability and accessibility of critically needed acute care services for Kaiser Health Plan members. (H & S Code §§ 1380(a), (g));
(d) DOC has failed and refused to perform mandatory duties to protect Kaiser Health Plan members and insure the availability and accessibility of safe and adequate health care services for these members by failing to take action to stop the closing of Kaiser Martinez Hospital and by tacitly approving this significant withdrawal of critically needed acute care and emergency services through deliberate omission and inaction.
V. SECOND CAUSE OF ACTION
[Department of Health Services]
(a) Despite notice and actual knowledge of Kaiser’s systematic withdrawal of acute care services to be provided under DHS license and permanent deactivation of licensed acute care beds without obtaining DHS approval, DHS has failed and refused to undertake investigation and initiate meaningful and effective remedial action to correct Kaiser’s blatant violations of license and statutory obligations DHS has a mandatory duty to enforce. (H & S Code §§ 1271.1(a), 1279, 1294; 22 C.C.R. §§ 70101, 70105, 70131); and
(b) Despite notice and actual knowledge of Kaiser’s intended closure and permanent reduction of licensed acute beds and emergency health services without application for and DHS approval of such operational changes, DHS has failed and refused to undertake investigation and meaningful and effective corrective action to remedy Kaiser’s repudiation of statutory and license obligations to maintain these services, including services provided at Kaiser Martinez Hospital.
VI. THIRD CAUSE OF ACTION
[Kaiser Permanente Medical Care Program]
40 of the Complaint.
VII. IRREPARABLE HARM
WHEREFORE plaintiff prays for judgment as follows:
1. For a declaration that Kaiser’s withdrawal, elimination and reduction of acute care
emergency health services in the Northern California region is in violation
of the Knox-Keene Act and Kaiser’s statutory obligations as a licensed
direct care provider;
to immediately undertake investigation of pending complaints of plaintiff CNA and ongoing deficiencies in Kaiser’s delivery of health care services, hold hearings and take appropriate remedial action to correct these deficiencies, including immediate action to stop the closure of acute care facilities and emergency health operations and restoration of services Kaiser has withdrawn, eliminated or restricted so as to make such services unavailable and inaccessible to Kaiser Health Plan members;
3. For a declaration that DHS has mandatory obligations under the Health & Safety Code to immediately undertake investigation of ongoing deficiencies in Kaiser’s delivery of health care services, hold hearings and take appropriate remedial action to correct these deficiencies, including immediate action to stop the closure of acute care facilities and emergency health operations and restoration of services Kaiser has withdrawn, eliminated or restricted so as to make such services unavailable and inaccessible to Kaiser patients and consumers;
4. For a preliminary injunction and permanent injunction, enjoining Kaiser and all
its affiliated and related entities and operations, and their agents, servants and employees, and all persons acting under, in concert with, or for, or on behalf of them, as follows:
1. From closing any acute care facility or reducing any acute care or
emergency health service currently provided by Kaiser for a period of at least 12 months in order to permit a full and adequate investigation, public hearings, and appropriate remedial action by DOC and DHS;
B. From falsely representing to Kaiser Health Plan members and the public
generally by affirmative acts, statements
or omissions, that Kaiser’s plans for withdrawing, eliminating, or reducing
acute care or emergency health services are lawful, beneficial, necessary
or appropriate, and requiring Kaiser to affirmatively publish, broadcast
and advertise in a manner, frequency, method of communication and level
comparable to Kaiser’s advertising and marketing of its health plans, and
as approved by plaintiff, public service marketing and advertising for
a period of one year to correct Kaiser’s misleading and deceptive marketing
and advertising and to educate Kaiser Health Plan members and health care
consumers generally regarding the causes of current shortages in the availability
and accessibility of acute care and emergency health services and Kaiser’s
plans to remedy a health care crisis created by Kaiser’s planned reduction
of these needed services;
health services Kaiser has withdrawn, eliminated or reduced to the maximum levels of services expressly provided in Kaiser health facility licenses or necessarily required to adequately and safely provide for the maximum level of services provided by such licenses; and to immediately develop a plan for increasing acute care and emergency health services above the maximum levels of service specified by Kaiser licenses to levels that are appropriate and adequate in consideration of Kaiser’s significantly greater and continuously increasing Health Plan membership.
1. For a preliminary injunction and a permanent injunction compelling
DOC and DHS to perform mandatory obligations
to halt, correct and remedy Kaiser’s withdrawal, elimination and reduction
of needed acute care and emergency health services;
common benefit conferred on 2.7 million
Kaiser Health Plan members and other non-member residents of communities
served by Kaiser facilities in Northern California; and
DATED: January 26, 1998 EGGLESTON, SIEGEL & LeWITTER
JAMES E. EGGLESTON
Attorneys for Plaintiff
California Nurses Association