Marcella Faye Gallagher served as supervising attorney for California’s Department of Managed Health Care during the 2012 audit of the HMO’s mental health plan, which sought to ensure it complied with state law by providing prompt access to services, according to the report.
During the six months she worked on the audit, Ms. Gallagher “helped pick” members of the audit team, determined the scope of the audit, counseled the audit analysts, “advised on documents to be requested from Kaiser” and edited the preliminary audit report, the state FPPC told the LA Times.
After Ms. Gallagher left her post as supervising attorney and joined Kaiser in July 2012, she helped the insurer defend itself against the audit findings by providing both verbal and written feedback on corrective action plans other Kaiser employees were drafting in response to the Department of Managed Health Care’s audit, according to the report. The audit had identified significant problems, including Kaiser failing to provide patients with mental health appointments within 10 business days of a request, as required by the state. As a result, Kaiser was fined $4 million by the state.
Subsequently, Ms. Gallagher has agreed to pay a $3,000 administrative fine to the FPPC for violating the prohibition against state administrators accepting pay to assist firms in the same audit proceedings in which they were involved while still in their state jobs.
The case against her comes from a complaint filed by Sal Rosselli, president of the National Union of Healthcare Workers, which represents 4,500 Kaiser employees.
“Ms. Gallagher’s switching of sides not only causes an appearance of impropriety, it appears to constitute serious legal violations and a severe breach of the public’s trust given that it undermines a regulatory enforcement matter affecting millions of California consumers enrolled in California’s largest HMO,” Mr. Rosselli wrote in the formal complaint, according to the report.
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