Healthcare Giants Kaiser and USC’s Keck Clash over $544,000 Bill

Wednesday, June 04, 2014
Godzilla, left, and Mothra

It’s not only patients who get jacked around on costs, from time to time, by doctors, hospitals and insurance companies. Sometimes the healthcare industry turns on itself.

Keck Hospital of USC sued Kaiser Permanente two weeks ago after getting stuck with a $544,000 bill for surgery on a patient with insufficient insurance. The lawsuit, filed in Los Angeles County Superior Court, alleges that Kaiser sent a patient in its Los Angeles Medical Center’s Intensive Care Unit to Keck for open heart surgery last year knowing that he had exhausted his $75,000 annual insurance benefit limit.

Kaiser functions as both an insurer and medical provider. It is not unusual for it to transfer patients to other hospitals for certain kinds of treatment and, in fact, has had an ongoing relationship with Keck since 1994.

Keck said in the suit that a Kaiser representative assured them they were only seeking better care for the patient and he was covered by insurance.

Kaiser denied that and won’t pay the bill.

The insurance company maintains it only approved transfer of the patient, who needed heart-valve replacement, to a skilled nursing facility based on his level of coverage, and wouldn’t have agreed to pick up the tab at Keck.

For lack of a smoking gun document that flat out states the terms of the transfer, Keck is making its case on supporting evidence. For instance, the suit points out that Kaiser requested private clinical information about the patient that can only be legally shared with a patient’s insurance company, giving them a false impression of its liability.

Oakland-based Kaiser is the state’s largest HMO. The nonprofit had a net income of $2.7 billion last year on $53.1 billion of operating revenue. It is one of the largest healthcare providers in the country.

Mark V. Pauley, a professor of healthcare management at the University of Pennsylvania's Wharton School, told the Los Angeles Times that the lack of communication between the two healthcare giants “may be a sign of dysfunction.”

But Pauley didn’t specify if he meant that in an administrative or pathological way.

–Ken Broder


To Learn More:

USC, Kaiser Tangle over $544K Bill (by Barbara Wallace, Courthouse News Service)

USC Hospital Sues Kaiser over Nonpayment of Bill (by Stuart Pfeifer and Chad Terhune, Los Angeles Times)

Keck Hospital Sues Kaiser Permanente (by Matt Lemas, USC Daily Trojan)

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