Wilfredo Engalla, a 51-year-old Filipino immigrant, filed a medical malpractice case claiming that Kaiser doctors misdiagnosed his terminal lung cancer as colds and allergies for years. Unfortunately, he passed away before the case was heard by the required arbitration, prompting criticism from the California Supreme Court in 1997. The court highlighted delays and unfairness in Kaiser’s arbitration process.
Three decades later, the issue persists as critics argue that Kaiser’s arbitration system still favors the company over its members in malpractice cases. Kaiser insures about a quarter of Californians, including some Los Angeles Times staffers. According to Assemblyman Robert Garcia (D-Rancho Cucamonga), who recently proposed a bill to involve the California attorney general in overseeing health plan arbitrations, Kaiser has lost its way. Kaiser defends its arbitration system, asserting it is fair for both parties.
Kaiser’s Arbitration System: Structure and Criticism
Kaiser established its own arbitration system in 1971, differing from other companies that use large arbitration firms. Critics, including physician and attorney Arlan Cohen, argue that Kaiser’s knowledge of arbitrators’ track records offers them an advantage. Arbitrators might have financial incentives to favor Kaiser in order to be selected for future cases. David Allen Larson of the American Bar Association highlights the “repeat player effect,” where Kaiser’s frequent presence before arbitrators gives it an edge over one-time complainants.
Alan Kang, a lawyer representing the Aquino family in an arbitration case, contends that arbitrators have incentives to rule in Kaiser’s favor due to potential earnings, up to $2,000 per hour. His analysis discovered that arbitrators frequently ruling for Kaiser are assigned more cases. Kang is seeking to void an arbitrator’s decision against his clients, asserting bias due to these incentives.
Kaiser’s Defense and Process
Kaiser rejects accusations of manipulating arbitrator selections. The health plan states that the process is fair and abides by the law. Both parties receive information about potential arbitrators and can dismiss uncomfortable choices. However, reports show persistent bias concerns among complainants.
After the 1997 court critique, Kaiser reformed the system by setting up the Office of the Independent Administrator. This office, funded partly by a $150 filing fee and a Kaiser trust, independently oversees the selection of arbitrators. Both sides can veto arbitrator choices multiple times during this process. Last year, the system closed 529 cases, with most settling confidentially.
Issues of Confidentiality and Calls for Reform
The closed nature of arbitration and settlement confidentiality raises concerns over patient safety, as noted in a report by the California Research Bureau. Experts argue that lack of transparency might hinder exposure of persistent safety issues. Recent cases, such as the settled claim by the family of Francisco Delgadillo, emphasize these concerns.
Despite reforms, ongoing complaints about arbitration bias have fueled legislative efforts for further changes. Assembly Bill 1770, led by Stephen Martinez and Assemblyman Garcia, aims to involve the attorney general in ensuring fair arbitration practices. If passed, it would introduce additional oversight by state legal officials.
Case Studies
One illustrative case involves Janene Fowler, whose severe symptoms were linked to undiagnosed vitamin B12 deficiency. After years under Kaiser’s care, it was another institution that began treatment, albeit too late to prevent permanent damage. Fowler lost an arbitration case against Kaiser, which disputed the link between her symptoms and the deficiency. Frustrated, Fowler argues the process lacks justice when it remains under the oversight of those being sued.