Kaiser Permanente’s Arbitration System Faces Renewed Scrutiny

Wilfredo Engalla, a 51-year-old Filipino immigrant, filed a medical malpractice case alleging Kaiser doctors misdiagnosed him with colds and allergies for years before revealing he had terminal lung cancer. He passed away before his case could be heard by an arbitrator, as mandated by his Kaiser policy. His case drew a strong reprimand from the California Supreme Court in 1997, criticizing Kaiser’s arbitration system for being slow and unfair.

Decades after this landmark decision, Kaiser, which implemented major reforms post-ruling, faces ongoing concerns over its arbitration system’s fairness. Attorneys, legislators, and patients argue Kaiser’s private arbitration process still contains key flaws favoring the company over patients in malpractice cases. Kaiser covers about 25% of Californians, including some Los Angeles Times employees.

Assemblyman Robert Garcia (D-Rancho Cucamonga), a longtime Kaiser member, recently introduced a bill advocating for the California attorney general to oversee mandated arbitration by health plans. Kaiser defended its system, stating it ensures fairness for both patients and the nonprofit.

Kaiser’s Unique Arbitration Process

Many organizations require private arbitration for disputes, but unlike others, Kaiser developed its own system in 1971. Within this system, either party can disqualify an arbitrator without cause, with no limit on disqualifications. Critics argue that Kaiser’s deeper understanding of arbitrators’ past decisions, coupled with the power to veto, gives it an edge.

Arlan Cohen, a physician and attorney experienced in cases against Kaiser, points out financial incentives for arbitrators to favor Kaiser to secure future selections. While Kaiser reviews all arbitrators’ decisions, patients reportedly receive limited information, struggling to identify arbitrators with pro-Kaiser rulings.

Kaiser, though, denies selecting biased arbitrators. The company’s statement asserts that the process is impartial, with both parties informed about potential arbitrators, and empowered to reject uncomfortable appointments.

Repeat Player Effect

The “repeat player effect” benefits large companies appearing repeatedly versus individuals bringing single complaints. David Allen Larson from the American Bar Association explains, while Kaiser regularly appoints arbitrators, patients generally select one arbitrator temporarily. This familiarity with the process grants Kaiser an advantage.

Alan Kang, representing a recent case, highlights monetary incentives for arbitrators, earning up to $2,000 hourly, to rule favorably for Kaiser. This issue arose after a December ruling against Evangelina Aquino’s family, claiming her cancer was misdiagnosed. Post-verdict, Kang’s analysis revealed that frequented arbitrators predominantly sided with Kaiser.

Kaiser declined questions regarding its arbitration system and Kang’s claims, reaffirming their commitment to a fair and accessible arbitration process. Kaiser emphasizes that arbitrators, independently selected by both parties, are not Kaiser employees.

System Improvements and Criticisms

Arbitration can be beneficial, reducing legal costs and expediting resolutions. Kaiser finances arbitration fees, saving families substantial amounts otherwise spent on legalities. These arbitrations sidestep prolonged litigation, though appealing arbitration decisions remains challenging.

Kaiser’s system underwent reforms after the 1997 court critique, establishing the Office of the Independent Administrator. This office, financially independent from Kaiser, selects retired judges and lawyers for arbitrator roles. Both sides can dismiss arbitrators deemed unsuitable, albeit limited by procedural rules.

Despite reforms, critics argue secrecy in arbitrations conceals systemic patient safety issues. Confidentiality may prevent scrutiny of poor practices that public court cases might deter.

Historical Cases and Ongoing Concerns

In December 2023, Francisco Delgadillo awaited care for chest pain in a Kaiser ER for eight hours before passing away. Investigations revealed regulatory violations. The Delgadillo family’s confidential settlement underscores concerns about arbitration secrecy.

Stephen Martinez, campaigning for legislative reform, recalls his wife’s breast cancer misdiagnosis. Despite expert testimony challenging Kaiser’s examination, their case faced an adverse arbitration ruling, pushing for state Senate consideration of Assembly Bill 1770. This bill directs the attorney general to ensure fair arbitrations.

Kaiser expresses concerns that the bill may overlap state oversight, affecting its current arbitration framework. Kaiser’s arbitration system resolved 529 cases last year, with arbitrations in favor overwhelmingly benefiting Kaiser.

In Search of Justice

Janene Fowler, a patient experiencing severe health issues due to alleged Kaiser negligence, is another example. Her disability, partially attributed to a vitamin B12 deficiency, prompted her to seek justice through arbitration. Despite expert medical opinion corroborating her claims, the arbitration favored Kaiser. Fowler remains frustrated by the system, feeling unheard and unsupported.

Fowler criticizes Kaiser’s treatment and arbitration handling, questioning the fairness of a system run by those being challenged.