Health Workers Union Seeks Probe Of Kaiser Ex-Regulator Hire

KaiserSeptember 24, 2013

By Erica Teichert

Law 360, Washington (September 20, 2013, 6:27 PM ET) — The National Union of Healthcare Workers urged a California regulator Wednesday to investigate whether the health care giant Kaiser Permanente violated state anti-corruption laws by hiring a former regulator to defend it against a government investigation.

Marcy Gallagher, a former attorney for California’s Department of Managed Health Care, oversaw the regulatory agency’s probe into Kaiser’s alleged “substandard health care” until she resigned her position in July 2012. Just weeks later, she joined Kaiser’s defense team against the very investigation she ran, the NUHW’s complaint said.

That move may have violated the California Political Reform Act, according to the union, and it urged the California Fair Political Practices Commission to investigate any wrongdoing and prevent Gallagher from working on Kaiser’s behalf and jeopardizing DMHC’s ongoing investigation.

“After switching sides from a ‘government regulatory agency’ to a ‘regulated business,’ we believe that Ms. Gallagher then aided, advised, counseled and assisted Kaiser in executing its ongoing response to the same DMHC investigation that she had spearheaded,” the NUHW’s complaint said. “After Kaiser hired her, Ms. Gallagher apparently trained Kaiser’s officials on how to answer questions posed by DMHC investigators in advance of the DMHC’s upcoming site visits scheduled for October of 2013. These site visits have been scheduled to determine whether Kaiser has corrected the violations discovered during the initial phase of the investigation that was headed by Ms. Gallagher.”

Thanks to Gallagher’s help, the NUHW alleged, Kaiser may be able to thwart additional regulatory sanctions stemming from the investigation.

In particular, the union claimed Gallagher and Kaiser may have violated the Political Reform Act’s provisions that prevent government workers from “switching sides” to work in the private sector on the very investigations they headed for their former employers and another ban on private companies influencing prospective employment for investigators.

“Given the temporal proximity of Ms. Gallagher’s departure from the DMHC and her subsequent hiring by Kaiser, we are extremely concerned that she may have engaged in employment negotiations with Kaiser while she still served as the DMHC’s lead official responsible for investigating Kaiser’s substandard mental health services,” the NUHW said.

The NUHW also voiced concern that Gallagher may have disclosed confidential information to Kaiser that she learned during her tenure overseeing the DMHC investigation, and it claimed that she and Kaiser’s executives must be aware of the potential illegal advice she’s given to the health care provider.

The FPPC complaint comes just weeks after the NUHW filed a state lawsuit against the state’s Affordable Care Act health exchange for unlawfully contracting with Kaiser after it was fined $4 million over issues with its mental health services.

In a Sept. 4 complaint, the union said the exchange “plainly has violated its statutory duty” by contracting with Kaiser after the DMHC found it didn’t properly monitor mental health care services available to plan beneficiaries. State rules require that the state health exchange contract only with plans that comply with regulatory requirements, the NUHW said.

The $4 million fine, the second largest in DMHC history, comes just months after the department released a report elaborating on the four plan deficiencies it found. According to the DMHC, Kaiser hasn’t acted swiftly enough to correct the issues.

The fine followed a November 2011 complaint by the union’s mental health clinicians on behalf of their patients, according to the union.

A representative for Kaiser could not immediately be reached for comment.

—Additional reporting by Sindhu Sundar. Editing by Jeremy Barker.