Seeking Kaiser Permanente Whistleblowers

Seeking Kaiser Permanente Whistleblowers

Hochfelsen & Kani is interested in speaking with current and former employees of Kaiser Permanente. Our firm is investigating several Medicare and Medicaid fraud cases. 

Under the federal False Claims Act (“FCA”), insiders with original information about healthcare fraud involving government programs like Medicaid, Medicare, and TRICARE can help recover taxpayer dollars and receive monetary awards.   

In California, people who come forward with information about Medi-Cal fraud can also file a lawsuit under the California False Claims Act.  

The FCA provides that individuals or companies that knowingly submit false claims for payment to the government are liable for treble (triple) damages and harsh penalties. The FCA allows private citizens to file a complaint on behalf of the government against the entities that defrauded it.

Kaiser Permanente and other California healthcare providers have often incurred False Claims Act violations, including overbilling, illegal kickbacks, and medically unnecessary treatments or procedures.  

Whistleblowers can receive up to 30 percent of the total recoveries resulting from a favorable verdict or settlement. Kaiser Permanente whistleblowers have received millions of dollars in awards for their role in exposing fraud against government-funded health programs. 

Who Is Kaiser Permanente?

Kaiser Permanente is the largest healthcare network in the state of California. An integrated organization that offers both care and coverage, KP currently operates 39 medical centers and nearly 700 medical facilities in California, Washington, Colorado, Georgia, Hawaii, Washington, D.C., Virginia, Maryland, and Oregon. As of December 2018, Kaiser had 12.2 million health plan members and employed 22,914 physicians, 59,127 nurses, and over 215,000 other staff. 

Kaiser Permanente is a managed care consortium composed of three arms, each encompassing a group of entities: the Kaiser Foundation Health Plan, the Kaiser Foundation Hospitals, and the regional Permanente Medical Groups.

This massive consortium claims to be a “non-profit,” but it spends millions of dollars in campaign contributions and other lobbying efforts. In 2018, the Kaiser Foundation Health Plan and Kaiser Foundation Hospitals earned $2.5 billion in net income. Not only is Kaiser massive and spectacularly profitable, but it has successfully navigated its way out of U.S. courtrooms on countless occasions.  

On its website, Kaiser Permanente introduces itself as “one of America’s leading health care providers and not-for-profit health plans,” which focuses on the “total health” of patients through “industry-leading technology advances and tools for health promotion, disease prevention, state-of-the-art care delivery, and world-class chronic disease management.”

Its mission is supposedly to “provide high-quality, affordable healthcare services and to improve the health of our members and the communities we serve.” 

Though it claims to work towards “creating communities that are among the healthiest in the nation,” Kaiser has settled a shocking number of malpractice lawsuits. The healthcare network has often been exposed for practices that put profits over patients’ health and well-being.

Headquartered in Oakland, Kaiser Permanente functions as an umbrella for a large number of medical groups. While KP is supposedly a non-profit, the medical groups that form the network are for-profit companies. About 50 percent of the Kaiser Permanente umbrella’s profits return to these for-profit entities. 

In 1973, the CEO of Kaiser reportedly explained the network’s business model. Edgar Kaiser’s motto is mentioned in the Nixon White House Tapes: “Edgar Kaiser is running his Permanente deal for profit. . . I had Edgar Kaiser come in. . . talk to me about this, and I went into it in some depth. All the incentives are toward less medical care, because. . . the less care they give them, the more money they make.”

In fact, not much appears to have changed since then. After three years with Kaiser, doctors become shareholders. This means that they start getting a percentage of profits, i.e. of every dollar collected (from individual patients and government programs) that is not spent. Thus, doctors have a financial incentive to provide less care.  

We are currently investigating claims that Kaiser Permanente has submitted false claims for payment to Medi-Cal, Medicaid in other states, and Medicare. The government can only reimburse procedures and treatments that are medically necessary and administered to eligible patients. 

Kaiser Permanente has settled lawsuits relating to its patient dumping practices, whereby patients are illegally  “dumped” on government health plans, and taxpayers end up paying for their care. Kaiser has also been involved in litigation in connection with inappropriate Medicare and Medicaid billings. Kaiser Permanente employees have often denounced these practices.

Our firm is concerned that misconduct is ongoing at several Kaiser Permanente affiliates in California and elsewhere. This often results in members receiving substandard care, and doctors and medical groups profiting illegally. 

When misconduct is exposed in one facility that is part of a network, it is often the case that the wrongdoing is replicated in other locations. Whistleblowers who expose misconduct can often sue wrongdoers in various states, thus becoming eligible to receive awards from all the states involved, and the federal government, too, if a federal program has also been defrauded.

Fines, Multimillion-dollar Settlements, and Fraud Investigations Involving Kaiser Permanente

Kaiser Permanente invests millions of dollars in keeping a pristine image. However, its track record of egregious fraud and systematic violations is no secret to the public. 

Kaiser Fraud in California

In 2009, Kaiser paid $3.75 million to settle false claim allegations. According to prosecutors, between 1996 and 2002, various Kaiser entities falsely reported that residents had been supervised by teaching physicians while they provided certain medical services. Medicare and Medicaid require that teaching doctors be present while residents are providing a number of specific services. 

As Kaiser allegedly failed to comply, the claims for payment submitted for those services are considered “false claims.” The Kaiser umbrella members involved in this case were Kaiser Foundation Hospitals Inc., Kaiser Foundation Health Plan Inc., the Permanente Medical Group Inc., and the Southern California Permanente Medical Group.

In 2006, Kaiser Permanente paid a $2 million fine and a $3 million contribution to organ donation programs in connection with misconduct involving its kidney transplant program in Northern California. 

Patients were allegedly endangered when Kaiser forced them to opt for its newly created San Francisco-based kidney transplant program. Patients in other transplant centers in the state received kidneys twice as often as those in the Kaiser program. This resulted in a high rate of deaths for the patients who transferred to Kaiser. 

Due to flaws in the system, Kaiser even rejected kidneys that were a match for patients on the waiting list. Kaiser’s San Francisco kidney transplant center eventually shut down as a result of the government investigation.

In 2007, Kaiser Permanente faced a record fine of $3 million. The California Department of Managed Health Care penalized KP for its dubious investigations into claims of substandard care and poor physician performance at its California facilities.  

In 2013, Kaiser Permanente paid $9 million to settle a class action lawsuit filed by the families of autistic children who were denied behavioral therapy. Filed in California in April 2009 on behalf of a two-year-old named Andrew Arce, the suit detailed how Kaiser avoided providing expensive (potentially surpassing $100,000 a year) therapy that could teach Andrew and other class members how to communicate, eat, learn, and play.   

In 2015, Kaiser settled a False Claims Act lawsuit filed by a former employee, Chris McGowan, who claimed his employer had falsely certified Medicare Advantage compliance on a regular basis. According to McGowan, the misconduct resulted in billions of dollars in damages to U.S. taxpayers, and Medicare Advantage was a “cash cow” for Kaiser. During the first months of 2008, the company raked $359 million in profits on about 820,000 MA enrollees, while the profit margin for commercial HMO members over the same period was much lower: $527 million on 6.6 million members. The parties settled for an undisclosed amount. 

In 2017, California slapped Kaiser Permanente with another multimillion-dollar fine for providing insufficient patient care data to Medi-Cal. The $2.2 million fine followed another $2.5 million penalty imposed earlier the same year. Without patient care information, Medi-Cal cannot monitor how taxpayer funds are being spent. Kaiser Permanente has often been criticized for its lack of transparency.  

In Medi-Cal managed care, Kaiser, like other insurers, receives a fixed amount per enrollee. This means that, no matter what medical services a patient requires, Kaiser receives the same amount from the government. This creates opportunities for a great deal of fraudulent behavior.

In 2017, Kaiser settled on a $4 million fine to resolve allegations that it had failed to provide managed care enrollees with access to mental health treatment. The settlement came after years of complaints of delayed and insufficient treatment. Examples of Kaiser’s egregious behavior abound. 

One sexual assault victim suffering from PTSD was prescribed antidepressants and denied therapy. Her psychiatrist “[offered] psychotherapy in the community at the patient’s expense and suggested that the patient investigate appropriate group therapy in the community because weekly individual therapy was not available in the Plan, and Plan group therapy did not address sexual assault.”

In 2018, Kaiser Foundation Health Plan settled a 2014 class-action lawsuit initiated by two California families whose children were transferred to institutions funded by the government when they could have received outpatient psychiatric care. Kaiser was allegedly motivated by a desire to shift costs from them to Medi-Cal and other government programs. 

The class action (filed in 2014) involves an undisclosed number of affected individuals. Under the terms of the settlement, each class member received $10,000 and the attorney’s fees were reimbursed up to $1.2 million.   

Kaiser Permanente has not only settled numerous fraud lawsuits. Its model for boosting profits at the expense of taxpayers has allegedly inspired other healthcare sector companies to defraud government programs. In 2003, Bayer paid the federal government $257 million and pleaded guilty to criminal charges relating to its scheme to overcharge government programs for its drug Cipro. 

According to a whistleblower complaint, it was a manager from Kaiser Permanente who taught the pharmaceutical company how to defraud the government. Bayer allegedly sold Cipro to Kaiser Permanente for a lower price than it charged Medicaid. This is illegal because drugmakers are required by law to give government healthcare programs the lowest price they charge to any customer. Kaiser allegedly relabeled the Cipro bottles purchased from Bayer with its own name to cover up the fraud. 

In spite of this history of violations and cover-ups, Kaiser Permanente does not seem to have learned from its mistakes. In 2019, the California Department of Managed Health Care hit the HMO with numerous enforcement actions. It is important to learn about Kaiser’s past misconduct because this can help you and your attorney frame the narrative of your fraud allegations before the defendants spin the facts their own way, as they have been doing for decades. 

In April 2019, the California Department of Managed Health Care issued a Cease and Desist Order to stop Kaiser’s practice of denying coverage for fertility preservation services to patients who are about to undergo treatments like chemotherapy, which may lead to infertility. In August 2019, Kaiser was fined for breaching medical information confidentiality.   

Kaiser Fraud in Oregon

In 2009 Kaiser NW agreed to pay the government $1.83 million to resolve allegations that it defrauded Medicare. Between 2000 and 2004, Kaiser NW submitted claims for payment to Medicare for hospice services provided to patients who lacked the required terminal illness certification. Without this document, the patients were not eligible for hospice care reimbursements.

The terminal illness certification is required to ensure that Medicare beneficiaries receive medically necessary hospice care. When there is no medical necessity, Medicare billings are considered fraudulent. 

Kaiser Fraud in Washington

In July 2019, a lawsuit that had remained under seal since 2012 revealed that Seattle’s Group Health Cooperative, a Kaiser affiliate, allegedly bilked Medicare out of millions of dollars. A former Group Health billing manager claims the company misrepresented that patients were sicker than they actually were in order to increase Medicare billings. 

The whistleblower, Teresa Ross, introduced evidence that Group Health Cooperative defrauded taxpayers out of at least $8 million. 

According to Ross, the fraud scheme was an attempt by the Kaiser affiliate to offset financial losses incurred in 2010. The DOJ is currently investigating her allegations. The complaint states that “The fraudulent practices described in this complaint are a product of the belief, common among [Medicare Advantage] organizations, that the law can be violated without meaningful consequence.” Group Health, an established Washington HMO, joined Kaiser Permanente in 2017.

The alleged misconduct involves inflated risk scores. Medicare billings involving Medicare Advantage members are directly proportional to the seriousness of each patient’s condition. Sicker patients trigger higher Medicare reimbursements, and Ross recalls hearing a Group Health executive referring to the alleged scheme as an “exciting opportunity” to make “a lot of money.” 

Group Health billed government health plans $12 million after a medical chart review that took place in late 2011. Ross and one of her colleagues found the review presented systematic problems. For example, the company billed for “major depression” in a patient whose doctor wrote that he had an "amazingly sunny disposition." The whistleblower claims that three out of four of the claims submitted at the time were for unjustified higher charges. According to the lawsuit, billings resulting from the chart review, which was carried out by a consulting firm, amounted to $35 million for 2010 and 2011. The consultants were paid millions to find ways to increase Medicare billings, Ross claims.

Kaiser’s History of Cost-Cutting  

In 2013, Kaiser paid $4.9 million to the family of a San Diego teenager who suffered permanent brain injury after his breathing tube was dislodged at a Kaiser hospital. As it is common when Kaiser loses a case in arbitration, the company offered the plaintiffs more money if they refrained from discussing the details of the case in public. Luckily, they refused, and the truth came out.   

Kaiser’s history of malpractice, and how they deal with those cases, is very revealing for anyone looking to sue the consortium under the False Claims Act. As an advocacy group put it, “They will lie, cheat and steal to win, and on the rare occasion they don’t win, they will go to any lengths necessary to prevent these stories from getting out.” This is one of the reasons whistleblowers need an attorney with extensive experience filing FCA cases.

A former Kaiser physician once wrote a report about Kaiser’s cost-cutting practices. The document refers to the practice of pill splitting, which was exposed in the court case Timmis v. Kaiser. According to the physician, by 2003, Kaiser had made “some 500 million dollars from this medication game.”

The doctor, Charles Phillips, MD, also pointed to a variety of fraudulent behaviors he observed at Kaiser, including, “the race to call disease ‘end stage’ once it is found, the latter term allowing Kaiser to tap into new federal monies” and, “the advertising illusion that doctors are salaried and not for profit and are ready to spend appropriate time with patients.”

Because Kaiser is protected by mandatory arbitration and California’s malpractice award caps, it is very important for whistleblowers with information about False Claims Act violations to come forward. While the chance for redress is very rare for Kaiser patients who have been victims of malpractice, systematic wrongdoing that constitutes a violation of the FCA can and should be prosecuted. If you are aware that Kaiser Permanente is defrauding taxpayers, this is your chance to seek justice. 

A ‘Nonprofit’ with Massive Profits 

In 2015, when the state of California revoked Blue Shield’s tax-exempt status, the insurer was forced to pay tens of millions of dollars in retroactive taxes to the IRS. Prompted by the ‘nonprofit’s’ staggering $4.2 billion reserves, the sanction ignited a controversy about Kaiser Permanente’s tax-exempt status. 

At the time, Kaiser had $21.7 billion in reserves, over 1,600 times the amount required by the State of California. Permanente claims that it maintains such reserves because of its unique structure, comprising a health plan and a hospital system. But experts, like UCLA health care policy professor Gerald Kominski, believe Kaiser hoards an unnecessary amount of reserves.  

Kaiser Permanente’s reported total operating revenue was $72.7 billion for 2017 and $ 79.7 billion for 2018. In 2017, the network’s operating income was $1.7 billion in 2017 and $1.9 billion in 2018.  By the end of 2018, Kaiser had 12.2 million members, 400,000 more than the previous year.  

Kaiser Permanente Whistleblowers May be Entitled to Cash Awards

Whistleblowers filed 645 False Claims Act lawsuits during the 2018 fiscal year, resulting in recoveries amounting to $2.1 billion. Healthcare industry whistleblowers help the government recover money for programs like Medicare, TRICARE, and Medicaid, which fund healthcare for America’s “most vulnerable and deserving citizens.”

False Claims Act lawsuits that expose fraud by healthcare providers help prevent billions of dollars in losses and deter potential fraudsters, who want to cheat the system by inflating billings, offering kickbacks, and billing for services never rendered.  

Healthcare is a massive industry, and the government lacks the resources to oversee each providers’ activities. Without tips from whistleblowers, fraud often goes undetected. 

Under the federal and California False Claims Acts, whistleblowers can be eligible for substantial cash awards. 

If a whistleblower suit results in a favorable verdict or settlement, the tipster can receive between 15 and 30 percent of the total recoveries. Though most FCA cases relate to fraud against government health programs, the State of California also allows whistleblowers to sue fraudsters and receive awards when the defrauded entity is a private insurer. 

When doctors receive unwarranted speaking fees and luxury travel/dining in exchange for boosting Medicare and Medicaid billings, the resulting claims for payment violate the False Claims Act. If they recommend procedures more expensive than needed to boost an insurer’s profits, or bill for doctor visits when a patient has been seen by someone who is not a doctor, this can also be grounds for an FCA lawsuit.

Do you have information about companies, senior managers, doctors, or other Kaiser employees engaging in any behaviors that may result in False Claims Act violations and healthcare fraud? 

We may be able to help you stop the fraud, and help the unknowing victims receive better care. Call us today.

Call for Kaiser Permanente Whistleblowers

If you were ever an employee of any entity affiliated with Kaiser Permanente or one of its subsidiaries, and have information about False Claims Act violations or any other kind of wrongdoing, please contact us. 

Defrauding Medicaid, Medicare, and other government programs is a crime. 

Healthcare fraud costs taxpayers billions of dollars every year. Call us for a confidential consultation. Any sensitive information you share with our whistleblower attorneys will be subject to the attorney client privilege.


David Kani

David Kani is a Southern California based trial lawyer with a focus on class actions and whistleblower (False Claims Act, SEC and others) cases.

To connect with David: [hidden email] or 714-907-0697.
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David Kani & Steve Hochfelsen are represented by Elite Lawyer Management, managing agents for America's best attorneys.