Kaiser settles allegations it called for mental health patients to drop insurance

Oakland, Calif.-based Kaiser Permanente's health plan settled a case alleging that the healthcare giant urged mental health patients to cancel coverage, according to court records recently cited by The Sacramento Bee.

Five things to know:

1. The settlement, provided to Becker's by the National Union of Healthcare Workers, resolves a 2014 lawsuit initially brought by Douglas Kerr, whose son Matthew Szitkar-Kerr has schizophrenia and is bipolar. Another plaintiff, Barbara Knighton, later joined the suit.

2. Plaintiffs allege that Kaiser Foundation Health Plan urged severely disabled patients — hospitalized in Kaiser's psychiatric facility and placed under a conservatorship — to cancel their health plan through Kaiser.

"Specifically, Kaiser advises its psychiatric patients that continued treatment will only occur if the patient cancels his or her healthcare plan, rendering that patient uninsured," the complaint states. "Kaiser then transfers these patients to non-Kaiser facilities, where — because of their lack of Kaiser insurance — their psychiatric care is paid for by the government through Supplemental Security Income, Medi-Cal [the state's Medicaid program], Medicare and/or … through the Los Angeles Department of Mental Health."

3. The complaint argues that Kaiser's actions violate the California Mental Health Parity and Addiction Equity Act, which requires insurers to provide the same benefits for physical and mental health conditions.

4. John Nelson, Kaiser vice president of communications, disputed the lawsuit's allegations. He told Becker's in a statement that Kaiser has never required severely disabled people to cancel their coverage. But he said there have been relatively rare occasions when Kaiser members were housed in a specialized locked mental health facility that preferred Medi-Cal coverage to private insurance.

"In some of these cases, cancellation of Kaiser Permanente coverage was required to enter the facility. However, this was not Kaiser Permanente's requirement, and we cover many members' care at such facilities," said Mr. Nelson. "Any decision to cancel coverage was made by a court-appointed conservator. Kaiser Permanente has consistently disputed the claims in this lawsuit, and we continue to do so."

5. As part of the settlement, Kaiser is required to notify mental health physicians, therapists, social workers, discharge planners and case managers regarding coverage of locked residential psychiatric facilities. The healthcare organization must also inform these stakeholders about how Kaiser members in conservatorships should be transferred to psychiatric facilities. The settlement  requires Kaiser to pay each plaintiff $10,000 and pay attorney's fees up to $1.2 million.


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