EGGLESTON, SIEGEL & LeWITTER

JAMES E. EGGLESTON #98772

1330 Broadway, Suite 1700

Oakland, CA 94612

(510) 451-9500

(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  
CALIFORNIA NURSES ASSOCIATION,

on behalf of its members and the Kaiser Permanente Health Plan members,

Plaintiffs,

v.

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,

Defendants.

_____________________________________
 

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CASE NO.
 

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").
         2. Kaiser Permanente Medical Care Program ("Kaiser") is an international health care conglomerate consisting of fully integrated operations of various non-profit and for-profit business entities which operates on a consolidated basis as a for-profit enterprise and generates over $20 billion in annual revenues. Kaiser is licensed as an HMO and direct provider of health care services in California and serves over 2.7 million health plan enrollees in Northern California.
         3. Over the past few years, Kaiser has undertaken a commercially motivated plan to withdraw, reduce and eliminate cortically needed acute care and emergency health services in Northern California. Kaiser’s plan includes the phased reduction of emergency health services and deactivation of licensed acute care beds leading to the complete closing of acute hospitals including Kaiser hospitals in Richmond, Martinez and Oakland. Kaiser’s implementation of this plan has resulted in the withdrawal and abandonment of 46% of the licensed acute care bed capacity of its three Contra Costa County acute hospitals in Richmond, Martinez and Walnut Creek. The closing of Kaiser’s Richmond and Martinez facilities will result in additional reductions in licensed beds and burden an already overburdened County emergency health system with an additional emergency load in excess of 75,000 patients annually. 
   1. Kaiser’s health care service reduction plan has been undertake in violation of its obligations as an HMO under the Knox-Keene Act and DOC regulations and its statutory duties as an operator of health facilities licensed by DHS. The DOC and DHS have failed and refused to perform mandatory statutory obligations to undertake meaningful investigation and appropriate corrective actions to halt Kaiser’s unlawful health care service reduction scheme and remedy the health care crisis and resulting harm created by the scheme.
   2. Plaintiff California Nurses Association seeks declaratory and injunctive relief to compel the performance of mandatory statutory duties by DOC and DHS and to enjoin Kaiser’s unlawful and dangerous plan to reduce critically needed acute care and emergency health services.

      II. PARTIES
   3. Plaintiff California Nurses Association ("CNA") was formed in 1901 and was

      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.
   4. Defendant Kaiser Foundation Health Plan, Inc., ("KFHP") is a tax-exempt

      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.
   5. Defendant Kaiser Foundation Hospitals ("KFH") is a tax-exempt 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.
   6. Defendant The Permanente Medical Group, Inc. ("TPMG") is a private, for-profit

      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.
   7. Defendant The Permanente Federation ("TPF") is a private, for profit corporation which governs Permanente Medical Groups around the country including TPMG. TPF 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 operation of the commercial, for profit enterprise known as Kaiser Permanente Medical Care Program. Defendant TPF does business in the County of Contra Costa, California.
   8. Defendant The Permanente Company, ("PermCo") is a for profit subsidiary

      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.
   9. Defendant Kaiser Permanente Medical Care Program ("Kaiser" or "KPMCP") is the

      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.
  10. Defendants KFHP, KFH, TPMG, TPF and PermCo operate as a "Health Service

      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.
  11. The ultimate authority and governance of the integrated, consolidated Kaiser

      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.
  12. The defendant, Department of Corporations ("DOC"), through the Commissioner of

      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.
  13. The defendant, Department of Health Services ("DHS") is responsible for the licensing and certification of health facilities including acute hospitals, and for promulgating regulations, implementing statutory licensing requirements and enforcing statutory and regulatory provisions covering the operation of health facilities. See, e.g., H & S Code §§ 208, 1250, 1251, 1253, 1265. Defendant Sandra Smoley is the Director of the Department of Health Services and is sued in her official capacity.
  14. The true names and capacities of defendants named as Does 1 through 20,

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

            enrollees 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).
         2. The Knox-Keene Act requires that all Kaiser health care services shall be readily available at reasonable times to all enrollees." H & S Code § 1367(e). Regulations of the Department of Corporations implementing Knox-Keene Act Standards required to be met by Kaiser mandate the accessibility of required services:

            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.
   1. The Knox-Keene Act requires that all facilities to be utilized by Kaiser Health Plan members shall be licensed by the Department of Health Services, if such license is required by law and shall conform to all licensing and operational requirements for the provision of health care services to Kaiser Health Plan enrollees. H & S Code § 1367(a). The Act also requires that all personnel employed by or under contract to Kaiser shall be licensed or certified by their respective board or agency where such license or certification is required by law. H & S Code § 1367(b). Kaiser must be able to demonstrate that medical decisions are rendered by qualified medical providers, without interference by fiscal and administrative management. H & S Code § 1367(g).
   2. The Knox-Keene Act imposes on defendant Department of Corporations an

      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).
   3. Disciplinary action includes suspension and revocation of the DOC license to

      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.
   4. Prior to any material modification of its plan or operations, Kaiser must give notice to and receive specific approval for the proposed modification. H & S Code § 1352(b).
   5. The Department of Health Services issues "licenses" for the operation of health facilities upon application and demonstration of competence and ability to provide services for which a license is requested. H & S Code § 1265. The license issued by DHS constitutes the basic permit to operate a health facility with a specifically authorized number and classification of beds. H & S Code § 1251; 22 C.C.R. § 70041. DHS is authorized, and has promulgated, regulations defining bed classifications for health facilities subject to its licensing and regulatory authority. H& S Code § 1250.1. The DHS has determined that general acute care bed classification includes beds designated for burn, coronary, intensive care, medical-surgical, pediatric, peri-natal, rehabilitation, acute respiratory or tuberculosis patients receiving 24-hour medical care. 22 C.C.R § 70034(a), 70042(a)(1). A licensed, general acute care hospital may also be licensed by DHS to provide special or supplemental services including basic emergency medical services, comprehensive emergency medical services and standby emergency medical services. H & S Code §§ 1255, 1256.1; 22 C.C.R. § 70067, 70411, 70451, 70653.
   6. A licensed health facility, including an acute care hospital may voluntarily suspend on a temporary basis, the use of a portion of its licensed bed capacity upon proper notice and review by DHS. The licensed health facility is prohibited from using "voluntary suspension" authority to deactivate licensed beds. H & S Code § 1271.1(a); 22 C.C.R. § 70131.
   7. A licensed health facility is required to apply and receive DHS approval for a variety of operational changes affecting the availability of health care services authorized by the license including an increase or decrease of licensed bed capacity, a change in location of hospital services, or a change of bed classification. 22 C.C.R. § 70105.
   8. DHS is required to periodically inspect each licensed health facility as often as necessary to insure the quality of care being provided and no less than once every two years. 

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.)
   2. Nine complaints have been made to the Department of Health Services since April 1997 regarding long waits for treatment in the ER of the Walnut Creek campus. Investigation of those complaints has substantiated long waits for treatment, long waits for admission to the hospital or transfer out to another hospital Statistical data has verified an increase in ambulance traffic since March 1997 when the Martinez ER went to stand-by status. There has not been a corresponding increase in staffing, though. A comparison of January 1997 to May 1997 shows an increase of 20% in ambulance arrivals. This translates to an increase in acuity of patients coming to the emergency room with increased demands on existing staff. (Exhibit 3, p. 102).
   3. Those patients who leave without being seen has also markedly increased. In 1996, patients who left the ER without being seen averaged 3%. In April 1997, those who left without being seen was 7.5% and in May, 6.8%. Five days were reviewed in May 1997. On 5/7, 11% left without being seen, on 5/28, 12% left without being seen. For example, patient 4 went to ER at 2:45 p.m. on 4/29/97 with severe abdominal cramps. When she got disgusted and left at 7:35 p.m., she still had not seen a physician. Many patients are told they may have to wait for several hours before being treated.

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).
# Patient 171 is a 77 year-old man who presented to the Martinez ED on 8/31/97 at approximately 8:24 a.m., with complaints of feeling "weak and leaning to the left since 2:00 a.m. today." He further complained of chest pain with onset while in the ED, with "less discomfort" after he was medicated with nitroglycerine (a drug used to dilate the blood vessels in the heart muscle). His documented history includes coronary artery disease, acute MI (heart attack) 6/92, history of diabetes and TIAs (transient ischemic attacks), which are episodes of injury to brain tissue, which accounts for about 80% of strokes. Although there were fully equipped critical care beds standing empty, the patient was transferred to Mt. Diablo Medical Center at approximately 12:35 p.m. The transfer record indicates "appropriate care (was) unavailable" due to "no available beds." Review of patient census for critical care for that date reveals the hospital failed to staff available critical care beds, thus necessitating transfer of this elderly man. Diagnoses at the time of transfer were: "chest pain, possible CVA" (cerebrovascular accident: refers to stroke). (Exhibit 4, pp. 18-19)
# Patient 179 is a 74 year-old man who presented to the Martinez ED on 9/12/97 at approximately 10:28 p.m. with complaints of dizziness, weakness, spitting/coughing up blood for a week and history of ulcerative colitis and bleeding ulcers. The ED physician assigned a diagnosis of "possible pulmonary embolus" (a mass of undissolved matter or clot, in the pulmonary artery or one of its branches). Treatment in the Martinez ED included the intravenous administration of Heparin (an anti-coagulant, or drug that inhibits clot formation and can increase the risk of bleeding or hemorrhage; patients on anti-coagulant therapy should be handled as little as possible to protect from injury. The hospital’s own internal "anti-coagulant standard" states: "even small bumps or scratches may bleed excessively because of anti-coagulant therapy."). Although there were fully equipped, empty beds in the critical care unit, (CCU), no nursing staff was provided for this patient at the Martinez CCU. Therefore, the patient was transferred to the CCU at Mt. Diablo Medical Center at approximately 3:00 a.m. on 9/13/97. (Exhibit 4, p. 19)
# Patient 183 is a 62 year-old woman who presented to the Martinez ED on 8/31/97, with constant chest pressure/pain. She was diagnosed as suffering an acute inferior wall myocardial infarction (heart attack). Treatment in the ED included the administration of streptokinase (a thromboembolytic, or clot-busting drug, which increases the risk of bleeding; unnecessary handling should be avoided, and other protective measures such as padded siderails should be employed to protect the patient). Although the record indicated that the patient was admitted to the CCU . . . , review of the PATIENT TRANSFER FORM reveals that the patient was, in fact, transferred via CCT to a hospital in Vallejo. The transferring M.D. stated the reason for the transfer was "no available beds." Review of the patient census and staffing records reveals that there were unoccupied, fully equipped beds in the critical care unit, but the hospital failed to provide the necessary qualified nursing staff for patient care delivery in the critical care unit. (Exhibit 4, p. 20)
# Patient 185 is a 33 year-old woman who presented to the Martinez ED at approximately 9:21 p.m. on 9/1/97, complaining of headache, dizziness and weakness in her hands; she stated that she was feeling the same as when she had a previous stroke in 1995. She had a documented history of CVA (stroke), hypertension (high blood pressure), and cardiomyopathy (disease of the heart muscle). The patient underwent lab tests and a CT scan of the brain. This scan revealed evidence of a stroke in the right side of her brain. She was subsequently transferred (via CCT) to Mt. Diablo Medical Center on 9/2/97 at approximately 1:30 a.m. The CCU at the Martinez site had unoccupied, fully equipped beds available which were not staffed for patient care. (Exhibit 4, p. 20)

(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:
# Based on clinical record review, document review, staff interviews and statements of patients/family, the hospital [Walnut Creek/Martinez] failed to insure adequate numbers of registered nurses, licensed vocational nurses and other personnel to provide nursing care to all patients as needed. (Exhibit 3, p. 27)
# The emergency department logs (for March and May 1997) for the Martinez and Walnut Creek campuses were randomly reviewed. Administrative nursing staff and a staff position acknowledge that waiting times in both EDs were increased by the failure of the hospital to provide nursing staff to care for patients who required admissions. (Exhibit 3, p. 30)
# Confidential employee complaints targeted the labor and delivery unit as being short-staffed for RNs. They stated that core staffing had been increased by only one staff each shift after the move to their present unit (March 1996). They said the number of stuff is inadequate because the nurses are now responsible for recovering mothers and babies after delivery and are responsible for post-anaesthesia recovery. These nurses are also doing triage and advice calls. Because of the lack of L&D nurses, many are mandated to work overtime. . . . . An interview with the manager of the unit verified the lack of back-up nurse availability, increased nurse call-ins and the necessity of overtime work for the existing staff. . . . The staffing ratio is supposed to be one RN to two laboring patients. Patients are to have one-to-one staffing when, (a) complete and pushing, (b) during first hour after birth, (c) patient in labor with twins, (d) patient receiving magnesium sulphate, (e) patient with complicated medical disease, (f) patient with amnioinfusion or fetal distress, (g) patients requiring increased emotional support. These confidential interviews revealed that the above-stated staffing criteria is not met and poses a significant potential danger to mothers and babies. Patients requiring one-to-one monitoring are not getting it. (Exhibit 3, pp. 30-31)

         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 department cannot find that the Plan provides reasonable access to services in accordance with § 1367(e) and continuity of care in accordance with § 1367(d).

. . . . . . . . . . . . . .

# 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 Administration).
   2. On June 2, 1997, plaintiff CNA filed a second complaint with defendant DOC regarding Kaiser’s plans to close the Oakland Hospital Women’s Services Unit (Labor and Delivery, Obstetrics, Neo-natal Intensive Care). (See Exhibit 9 attached to this Complaint and incorporated herein, Request for Immediate Cease and Desist Orders and for Action for Injunctive Relief to Prevent Serious Harm and Injuries to Patients). DOC refused to investigate and to process the June 1997 complaint by CNA. 

# 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 Hospital.
# On or about January 20, 1998 Kaiser announced it would close all of its Martinez Hospital in-patient services at 8:00 a.m. on January 26, 1998. Kaiser made this announcement notwithstanding the fact that its application for approval by defendant DOC of the Martinez Hospital closing had not been approved. Plaintiff CNA is informed and believes and alleges thereon that at the time of this Complaint on January 26, 1998, defendant DOC had not approved or taken action on Kaiser’s application to DOC for approval of the closing of the Kaiser Martinez Hospital. Although Kaiser applied for DOC approval for closing its Martinez Hospital and previously applied and obtained such approval for eliminating maternity care services at its Oakland Hospital, Kaiser representatives publically announced on January 24, 1997 that Kaiser would proceed with the Martinez Hospital closing without DOC approval because Kaiser now believes that DOC has no authority to approve, disapprove, or otherwise regulate its decision to close Martinez Hospital and eliminate all acute care services provided at the Hospital.
# Defendant Department of Health Services ("DHS") has been on notice and had actual knowledge of Kaiser’s commercially-motivated plan to reduce critically needed health care services throughout the Northern California Region including Contra Costa County by suspending use and permanently deactivating licensed acute care beds through the planned, permanent reduction of professional nursing staff and other staff necessary for use of the licensed beds as intended, required and promised Health Plan members by Kaiser. Defendant DHS had such awareness and knowledge as a result, inter alia, of receiving patient complaints regarding the systematic reduction of necessary staff and resulting de facto deactivation of licensed beds. (See Exhibit 3, p. 102, ¶ 4 attached to this Complaint and incorporated herein.) Plaintiff CNA is informed and believes and alleges thereon that defendant DHS was aware and had knowledge of Kaiser’s plan for systematically deactivating licensed acute beds and reduction of acute care services by virtue of its participation in and receipt of the results of the Health Care Financing Administration investigation and the reports of deficiencies issued by the HCFA in May, August, and October 1997.
# Plaintiff CNA is informed and believes and alleges thereon, that Kaiser failed and refused and continues to fail and refuse to apply for DHS approval to decrease the licensed bed capacity it has undertaken in its acute hospitals in Northern California and that defendant DHS has taken absolutely no action to stop Kaiser’s calculated and phased elimination of licensed beds and concomitant reduction in the availability of health care services for Kaiser Health Plan participants.
# Defendant DOC and defendant DHS have tacitly approved and effectively sanctioned Kaiser’s commercially motivated and dangerous plan to withdraw and eliminate critically needed acute care and emergency health services in the Northern California Region including Contra Costa County. Kaiser’s plan seeks to profit by the elimination of costly services Kaiser committed to provide to Health Plan members in consideration of fixed per member/per month Health Plan premiums and resulting realization of a surplus of premium revenue over costs. Kaiser’s commercially motivated plan has succeeded in eliminating critically needed health care services from targeted communities, reducing its costs, and generating large increases in surplus revenue. Other direct providers of health care services in the Northern California Region including Contra Costa County have followed Kaiser’s lead as the dominant force in these health care markets in reducing and eliminating "costly" acute care services in efforts to compete with Kaiser. Although these direct care providers are not directly regulated by defendant DOC, the acute care facilities they operate are licensed and regulated by defendant DHS. Plaintiff CNA is informed and believes and alleges thereon that DHS has similarly refused to investigate or undertake required corrective and remedial actions regarding the unapproved deactivation of licensed acute care beds by these other health care providers and has failed and refused and continues to fail and refuse to undertake mandatory obligations to investigate and correct these deficiencies. As a result, there has been a significant pattern and practice of unlawful acute hospital deactivation of licensed beds through permanent reductions in professional staff necessary for operation of these beds, placing increasingly severe restrictions on the availability of critically needed acute care services and emergency services in Contra Costa County and throughout Northern California. As of June 30, 1997, approximately 43% of the licensed acute care bed capacity of Contra Costa County had been deactivated as a result of the planned reduction of health care services by direct care providers. (See Exhibit 1).

IV. FIRST CAUSE OF ACTION

[Department of Corporations]

 
# Plaintiff realleges and incorporates by reference herein, the allegations of ¶¶ 1-36 of this Complaint.
# Defendant Department of Corporations has failed and refused to perform mandatory, ministerial duties imposed by the Knox-Keene Act with respect to Kaiser’s systematic reduction in the availability of and access to safe and adequate health care services for Kaiser Health Plan members by, inter alia, the following acts and omissions:

(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]

 
# Plaintiff realleges and incorporates herein by reference the allegations of ¶¶ 1 through 38 of this Complaint.
# Defendant Department of Health Services has failed and refused to perform mandatory, statutory duties to insure the provision of safe and adequate acute care and emergency health services by Kaiser Hospitals licensed by DHS by, inter alia, the following acts and omissions:

(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]

 
# Plaintiff realleges and incorporates by reference the allegations in ¶¶ 1 through

40 of the Complaint.
# Plaintiff CNA, as representative of members of the general public, and as representative of members of the community of Kaiser Health Plan members, consumers and patients, and as representative of registered nurses employed by Kaiser, has a right to assurance that Kaiser will act lawfully and fairly in its business practices in the consolidated operations of Kaiser Permanente Medical Care Program as a health care service plan and direct provider of medical and health care services, pursuant to California Business and Professions Code § 17200, et seq.
# At all times relevant to this Complaint, Kaiser, and its various affiliated entities and integrated operations have engaged in immoral, unethical, oppressive, unscrupulous and deceptive business practices, substantially injurious to Kaiser Health Plan members, consumers and patients and residents of communities in which Kaiser operates acute care facilities.
# Kaiser’s commercially motivated withdrawal and elimination of critically needed acute care and emergency services has been accompanied by unscrupulous and deceptive marketing and advertising promoting misleading and false justifications and explanations for severe reductions in critically needed health care services.
# Plaintiff CNA has repeatedly demanded that Kaiser cease and desist implementation of its reckless and dangerous plan for withdrawing, eliminating, and severely restricting acute and emergency health services. Kaiser has refused, and still refuses to refrain from reducing the availability and accessibility of safe and adequate health care services. Kaiser’s conduct described herein constitutes unfair business practices, as defined in Bus. & Prof. Code § 17200, et seq.

VII. IRREPARABLE HARM

[All Defendants]

 
# Plaintiff realleges and incorporates by reference herein, the allegations in ¶¶ 1 through 45 of this Complaint.
# Kaiser’s commercially motivated withdrawal, elimination and restriction of critically needed acute care and emergency health services and DOC’s and DHS’s failure and refusal to undertake and perform mandatory duties and obligations requiring meaningful investigation and effective remedial actions to stop Kaiser’s dangerous plan, if continued, will cause irreparable injury to plaintiff’s members as health care consumers and patients of Kaiser and to members of the general public including 2.7 million Kaiser Health Plan members in Northern California and others who reside in communities in which Kaiser operates acute care facilities. Kaiser’s success in implementing its reduction of care plan has already created a severe shortage of critically needed staffed acute care beds and emergency health services because of the acquiescence in this plan by DOC and DHS, threatening severe, permanent, irreparable damage to the overall availability and quality of health care in Contra Costa County and throughout Northern California.
# Because of Kaiser’s continuing and willful unlawful conduct and repudiation of statutory and regulatory protections for Kaiser Health Plan members and patients, and because of DOC’s and DHS’s continuing wilful disregard of mandatory obligations to correct Kaiser’s reckless destruction of health care standards and elimination of needed services, plaintiff is entitled to preliminary and permanent injunctive relief restraining such conduct in the future.

WHEREFORE plaintiff prays for judgment as follows:

         1. For a declaration that Kaiser’s withdrawal, elimination and reduction of acute care

            and 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;
         2. For a declaration that DOC has mandatory obligations under the Knox-Keene Act

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;
   3. Requiring Kaiser to immediately restore all acute care and emergency

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;
   5. For costs of this action and award of reasonable attorney’s fees based on the

      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
   6. For such other relief as the Court deems just and proper.

DATED: January 26, 1998 EGGLESTON, SIEGEL & LeWITTER

JAMES E. EGGLESTON

_____________________________

  Attorneys for Plaintiff

California Nurses Association