After reform, Kaiser still in spotlight
Six years ago, the California Supreme Court ruled that Kaiser Foundation Health Plan's system for arbitrating legal disputes was poorly regulated, prone to long delays and generally stacked against the best interests of Kaiser's members.
The court's harshly worded decision came in the landmark case of Wilfredo Engalla, a 51-year-old Filipino immigrant who claimed in a malpractice lawsuit that Kaiser doctors misdiagnosed him with colds and allergies for years before finally informing him he had terminal lung cancer.
The case went to private arbitration because Kaiser's policies require that all such disputes be settled outside public courtrooms. The giant HMO then took five months to select an arbitrator. Engalla died the next day. Soon after the Supreme Court ruling, Kaiser announced plans to overhaul its arbitration process in an effort to address criticism of its system. In 1999, the company created the Office of Independent Administrator, or OIA, to oversee the revamped program. The company promised the changes would dramatically speed up the resolution of cases, provide safeguards to ensure fair hearings, and address what some critics said was Kaiser's undue influence over the state's private arbitration system.
The question today is whether the reforms have made a difference. Are Kaiser patients who file malpractice claims better off today than they were six years ago?
The answer is more important than it may initially appear. Kaiser now covers 6 million Californians, or nearly a third of all privately insured people in the state. Roughly 1,000 Kaiser members file malpractice claims each year, alleging serious errors from surgical mistakes to misdiagnoses like Engalla's.
What's more, Kaiser is one of the nation's most influential health-care companies. To help cope with the rising malpractice insurance rates, more California insurers and physician groups are moving toward the insurer's binding arbitration model. And several states, including Texas and Florida, are studying Kaiser's program as they seek to revamp their medical malpractice systems.
Nearly everyone who follows such issues -- including consumer groups, medical providers, attorneys and state officials -- agrees that Kaiser has made significant progress in rectifying some of the issues highlighted in the Engalla case. For example, one of the harshest accusations made in the case was that Kaiser intentionally stalled the arbitration process because company lawyers knew that the potential judgment would be smaller if Engalla died before the case was heard. (Kaiser had denied that allegation.)
