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State let Kaiser, OHSU escape oversight
Malpractice claims Lax enforcement kept 18 years of cases unreported, including red flags about Dr. Jayant M. Patel
Monday, November 07, 2005
The Oregonian

For more than a decade, state regulators allowed Kaiser Permanente Northwest and Oregon Health & Science University to avoid reporting malpractice claims made against their doctors, despite laws tailored to require such reports.

Legislators crafted the laws to give the state's physician watchdog agency a key tool for finding potentially dangerous doctors. But weak enforcement of the laws has left the state's Board of Medical Examiners missing 18 years' worth of data on malpractice cases involving about one in every seven Oregon doctors.

That lack of data had consequences.

If Kaiser had been reporting malpractice claims, the first clues about Dr. Jayant M. Patel would have arisen in 1993, when two Portland men sued over operations that left them impotent. During the next three years, Patel's work as a surgeon figured in five more malpractice claims, none of which was reported to the board.

Instead, Oregon regulators learned about Patel in mid-1998, and then only when Kaiser informed them after restricting his practice. Patel, who left Kaiser in 2001, made international headlines earlier this year in Australia, where authorities said 13 of his patients at a Queensland hospital died because of substandard care he provided.

Patel's case shines a spotlight on Oregon's largely unseen physicians oversight system, which was among the first to require malpractice insurers to report any claims they received. The idea was simple: Medical experts would sift through the claims, then investigate if they suspected negligence or detected a pattern of incompetence.

But the two state agencies responsible for collecting the reports and enforcing the law paid scant attention to compliance through the 1990s, an investigation by The Oregonian found. And when regulators eventually pushed Kaiser and OHSU to report, the health system and university dragged their heels and argued the laws didn't apply to them.

The Board of Medical Examiners did not learn until 2000 that Kaiser had quit filing reports nine years earlier. Kaiser's explanation for doing so, regulators now assert, was based on an erroneous reading of the law.

In OHSU's case, Kathleen M. Haley, executive director of the board, said she learned soon after taking the job in 1994 that claims weren't being relayed. Haley said she pressed university officials about the issue for years.

OHSU began reporting in September, when it submitted its first claim to the board. By comparison, OHSU has been sued for malpractice dozens of times in the past 10 years and paid out settlements of at least $6.2 million.

The Oregon Insurance Division has authority to fine insurers up to $10,000 for not reporting claims and has general jurisdiction over Kaiser, which insures its own doctors. Yet division Administrator Joel Ario said the medical board never came to his agency with a request for enforcement action against Kaiser.

Last year, Kaiser began reporting at Haley's request. But the health maintenance organization, which has 470,000 clients in Oregon and Washington, told The Oregonian that it has no legal duty to do so. And neither Kaiser nor OHSU would say whether it intends to fill in gaps in the malpractice reports that accrued over the years.

Legacy Health System, which insures about 200 employed and contract physicians, also has never reported malpractice claims, The Oregonian found. Legacy's case, however, results from a loophole in the law that left self-insured systems out. Although Kaiser also self-insures, it is a special type of insurer that lawmakers specifically wanted to report.

Taken together, the reporting gaps mean many of the state's 9,500 active doctors slipped through a key component of the state's patients safety net. Malpractice reports triggered more than 10 percent of the medical board's 313 investigations last year. Since 1995, 18 of 469 investigations prompted by the reports led to disciplinary actions.

Though malpractice claims don't necessarily indicate negligence on a doctor's part, they are considered a reliable enough indicator of possible problems that 41 of the 70 state medical and osteopathic licensing boards mandate that they be reported. Thirty-two boards also require self-insured health systems such as Kaiser and Legacy to report.

Oregon lawmakers wanted a malpractice reporting system that would cover all the state's doctors, said former Sen. Joyce Cohen, a Portland Democrat involved in expanding the reporting law in 1987.

"The object here is to have a record here of doctors who were not performing appropriately. The BME needs to know that, and ultimately the public needs to know that, too," Cohen said.

The making of a law

Historically, the medical profession had been allowed to police itself. But the climate was changing in 1975, when the Oregon Legislature took up the issue amid a malpractice insurance crisis.

Around the country, evidence had mounted that state boards were allowing dangerous doctors to keep their licenses, provided they quietly resigned and moved elsewhere. With the support of the Oregon Medical Association and the Board of Medical Examiners, lawmakers gave state regulators some powerful new tools.

The board gained the power to subpoena records. For the first time, doctors were obligated to turn in physicians they suspected of incompetence. Lawmakers also required insurance companies to report any negligence claim filed against a doctor to the board and gave the board power to obtain settlement details.

"We were giving the board essentially the same powers as a police agency," said James Kronenberg, chief operating officer of the Oregon Medical Association and one of the principal proponents of the 1975 reforms.

Oregon's law had an immediate impact. Doctors stepped up reporting, encouraged by confidentiality rules that also passed in 1975. By 1980, the state's rate of disciplining medical professionals was the highest in the country.

Yet behind the scenes, problems developed. As regulators tracked malpractice cases, they repeatedly stumbled across instances in which reports had not been filed. In addition, the board's small staff was overwhelmed by the number of claims it collected. Board members hired consultants and volunteered on their own to assess whether cases should be more thoroughly investigated, according to former board officials.

Records show that Kaiser filed numerous malpractice claim reports during those years.

In 1986, the Oregon board hired its first medical director, anesthesiologist Dr. Donald P. Dobson, to sift through malpractice reports, bolstering the patchwork of volunteers and consultants.

A year later, the 1987 Legislature took up the reporting issue again as part of a broader overhaul of medical malpractice laws that also set limits on damages in lawsuits against government agencies.

When the problem of gaps in reporting emerged during hearings, records show that Dobson told lawmakers the system was worth strengthening. About 10 percent of malpractice claims involved physicians who needed to make adjustments in their practices, he said. And of those, one in 10 resulted in a disciplinary action.

The Board of Medical Examiners, officials recall, became the key advocate for rewriting the law, which then carried a fine of $2,000 for failing to report. Lawmakers raised the fine to $10,000, and they added explicit language to force "health care service contractors" -- HMOs such as Kaiser -- to follow the rules that applied to other malpractice insurers.

The logic was straightforward: If HMOs were paying out settlements on behalf of their doctors, they needed to tell regulators.

The reporting problems appeared to be solved.

"A technical cleanup"

On April 18, 1991, the House Business and Consumer Affairs Committee held one of the most routine -- and arcane -- hearings imaginable. The subject: a bill intended to clean up Oregon's insurance laws and bring them in line with other state codes.

Buried deep in the bill was a proposal to delete the words "self-insurance association" from the malpractice reporting law. The Insurance Division administrator at the time, James R. Swenson, assured lawmakers the language was the equivalent of touch-up paint on a car, "a technical cleanup" that changed nothing of consequence.

The phrase "self-insurance association" had some history. In 1975, in the face of rising malpractice premiums, the Legislature had taken steps to create a state professional liability fund that would provide malpractice insurance to all doctors. Lawmakers drafted language on reporting malpractice claims to make sure the fund, called a "self-insurance association," would have to comply.

The idea of a state malpractice fund eventually fizzled. But in 1991, the outdated language requiring a self-insurance association to report claims remained in the law. As part of their cleanup bill, lawmakers simply deleted the superfluous phrase. There was no debate.

Soon after, Kaiser stopped reporting malpractice claims to the state.

The nonprofit now says it did so because it is "self-insured" and therefore exempt under the 1991 change. But whether Kaiser notified the board that it planned to stop reporting is unclear.

In an Oct. 23 letter to The Oregonian, Kaiser officials said the HMO did take up the matter in 1991 with medical board managers, who agreed with its interpretation of the law. But Kaiser declined to specify which board managers were involved or provide any records documenting the 1991 discussions.

The Oregonian filed a records request with regulators seeking all related documents, but none turned up.

Two key officials at the time -- John Ulwelling, the board's former executive director, and Paul Sundermier, an assistant attorney general who handled its legal issues -- said they don't remember such conversations with Kaiser.

Ulwelling said he was surprised to find out from a reporter that Kaiser had not reported claims from 1991 to 2004. "When I left the board in '94, everybody assumed everybody was reporting everything they had," he said.

The board's other senior manager in 1991 was the medical director, Dr. Harvey D. Klevit, a pediatrician who joined the board in 1990 after 24 years as a Kaiser doctor and manager. As medical director, Klevit reviewed all malpractice claims submitted to the board.

Ulwelling said Klevit, who retired in 1995 and died Sept. 4, didn't tell him Kaiser ceased reporting.

"We never had that conversation," Ulwelling said.

Haley cites OHSU promises

Haley came to the board in 1994 with strong credentials. A former New York assistant attorney general, she had worked for a decade as executive director of the Oregon Psychiatric Security Review Board. At the medical board, one of the first things she noticed was that OHSU wasn't reporting malpractice claims.

By Haley's reading, OHSU was swept under the reporting mandate by the 1987 malpractice overhaul. While setting caps on damages, lawmakers also required public agencies to report claims against a doctor or other health professional in their employ. This was less than what was required of private insurers, which were supposed to disclose not only claims, but also court judgments and settlements of any malpractice case.

In meetings over several years, Haley said, lawyers for the hospital repeatedly assured her OHSU would begin reporting. But little happened until September, she said, when the university reported a single claim. The Oregonian asked OHSU for records of all settled malpractice suits since 1995 and received a list of 28 cases.

The board has no written record of Haley's conversations with OHSU. Another board official, Dr. John Enbom, medical director from 1995 to 1997, said he recalled both Kaiser and OHSU arguing they were exempt from the law. OHSU officials also disputed Haley's account, saying they never promised to comply until recently.

The university's chief administrative officer, Steve Stadum, said officials had consistently relied on legal advice from the attorney general's office "15 or 20 years ago." The advice was that OHSU had an out because its doctors, as public employees, weren't legally liable for acts taken in their official capacity, he said.

Although OHSU could be sued, Stadum said, its doctors could not. As such, he said, the university regarded any malpractice claims that named its doctors as invalid and not subject to the reporting law.

Stadum said the university changed policy a couple of months ago as part of a broader patient safety initiative.

"It was our intention over the last few years to do it, and we didn't," Stadum said. "That was a mistake."

Kaiser, state differ on law

Haley said her staff first noticed that Kaiser wasn't reporting claims against its doctors in 2000. She queried Kaiser officials, who asserted the HMO was exempt because the law had changed in 1991 and Kaiser was self-insured.

She believed that a separate section of the 1987 law obligated Kaiser to report. As she read it, the statute's reference to reporting by "health care service contractors" made Kaiser the same as any other insurance company covering medical malpractice.

The legislative record appears to support her view. When lawmakers were hammering out the final language of the law in 1987, a senator involved in the conference committee explained that it was meant to cover HMOs -- "Kaiser-Permanente-like structures."

Haley said she turned to the Insurance Division but received only vague advice.

In an Oct. 10, 2000, e-mail exchange, division staffers discussed the Kaiser issue. Michael Lamb, an actuary at the Insurance Division who has since retired, implied that the law could be seen as covering Kaiser but that insurance regulators did not "wrestle" HMOs into reporting malpractice claims.

"We didn't take that to the max," Lamb acknowledged.

Haley said a back-and-forth dialogue continued until Kaiser agreed to submit reports. The HMO reinstituted reporting voluntarily in late 2003, it said in a statement to The Oregonian. Kaiser also said it had quit reporting in 1991 because the law changed "to exclude reporting by self-insured entities."

But Ario, the Insurance Division administrator, said Kaiser's interpretation of the 1991 change is wrong. Kaiser is not "a self-insurance association" -- the term that was stricken from the law -- and is not entitled to an exemption on those grounds, he said.

"The repeal of the term self-insurance association in 1991 does not and did not affect Kaiser in any way," Ario said. As for the medical board's position that Kaiser must submit malpractice claims, Ario said: "We don't have a problem with the BME's position requiring the reporting."

In its statement to The Oregonian, Kaiser also contended that despite being a health care service contractor, it is not required to report because the HMO does not "issue or underwrite professional liability insurance."

Kaiser assumes liability for negligence claims against its doctors, and spent $17 million on public and professional liability claims in 2004. But the nonprofit believes it is different from commercial insurers because it doesn't charge its doctors a premium and doesn't issue policies, Kaiser spokesman Jim Gersbach said.

Enforcement at issue

Although his agency has the power to issue fines, Ario said the medical board never asked him to do so. Haley said she didn't know fines were a possible enforcement tool until The Oregonian asked her about them. She said she now wants to ask the Legislature to put enforcement authority directly in the medical board's hands.

"The board's mission is protecting the public, and the board has to have good information coming to it to do its job," Haley said.

After learning from a reporter that Legacy Health System was not submitting claims, Haley said she would send a letter to the group asking for voluntary reporting. Legacy spokeswoman Lisa Wood said the group had not yet received the letter but will "carefully review it."

Haley said she also will consult with the 11-member board, made up of physicians and two public members, about whether to ask Kaiser and OHSU to fill in the missing claim data that span more than a decade.

Though some of those cases may be many years old, they could prompt reviews by the medical board, which automatically opens a case file when a malpractice payment tops $100,000, when a physician is the subject of several claims, or when even a single claim appears to be an instance of gross medical negligence, Haley said.

Don Colburn of The Oregonian staff contributed to this report. Steve Woodward: 503-294-5134; Susan Goldsmith: 503-294-5131;

2005 The Oregonian

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