[March 22, 2013]

Health Care Advocates Our SALUD Request Attorney General to Take Action in Alleged Unlawful Operation

STATEMENT FROM OUR SALUD COMMUNITY ADVOCATES NESTOR VALENCIA AND ELBA ROMO:

Advocates for the Latino community of East Los Angeles have sent the following letter to Attorney General Kamala D. Harris, requesting a full investigation into HealthCare Partner's (HCP) alleged illegal operation.

HealthCare Partners is a Torrance-based medical group who currently manages care for more than half a million Los Angeles area residents. In October 2012, HealthCare Partners merged with DaVita, Inc., a Denver-based, publicly-traded dialysis company with no previous ties to California. The $4.4 billion merger was the largest consolidation in healthcare history. This merger was completed with no requirements pursued by the Department of Managed Health Care to force licensure by HCP.

Normal protocol requires consumers to take up issues of health care delivery with the Department of Managed Health Care (DMHC). Our SALUD sent their request for investigation directly to the Attorney General's office.

"The DMHC's abandonment of oversight responsibility of this medical group has forced Our SALUD to take this issue to the state's top counsel," said advocate Elba Romo, Our SALUD community. "We hope that AG Harris considers the gravity of this issue and conducts a full investigation of this renegade medical group."

It is a time of change in California and all over the nation as states begin to prepare for the implementation of provisions under the Affordable Care Act. HCP has been deemed a pioneer Accountable Care Organization (ACO) under this new health care reform, allowing them to lead the way in this new venture.

"This is a business model that clearly puts profits before patients and certainly should not be the benchmark for such significant reform," said Nestor Valencia, Our SALUD community advocate. "Patient lives have already been affected by HCP's unlawful operation. California state officials have the duty to ensure more patients aren't impacted and that HCP is held accountable for its actions. Standing idle will only propel HCP as a health care leader and set a dangerous precedent among all medical groups that wrongful actions will not be penalized but actually prove profitable."

Nestor Valencia and Elba Romo, Our SALUD community advocates, are available for interviews and further comment.

Our SALUD letter to the Attorney General:

Dear Attorney General Harris,

Please consider this letter a formal request to immediately undertake a full investigation into HealthCare Partners (HCP), as it has been operating as an HMO in California without the proper Knox-Keene Act license for more than a decade. We are writing to you to initiate this investigation because the state agency assigned to provide oversight and regulation on this matter, the California Department of Managed Health Care (DMHC), has failed to provide the necessary oversight and enforcement for the claims we are making.

It is our understanding that the following statements are true.

• HCP is not a licensed HMO in California
• HCP directly and/or indirectly accepts full risk for patient care including the responsibility to pay for hospital care
• Despite DMHC having discussions with HCP about obtaining a license, HCP has not obtained a license
• DMHC has not restrained HCP's conduct nor undertaken any enforcement action regarding HCP's failure to obtain a license

Under California law only an entity with a Knox-Keene license may accept risk for institutional care.

Healthcare Partners (HCP) does not have such a license. Also, only an entity with a Knox-Keene license may direct and deny institutional care for its membership. HCP, which is unlicensed, directs and denies its members' institutional care. This is setting a statewide precedent for prospective medical groups, implying licensure is not a requirement and no consequences are to be had if you do not carry these credentials.

This has real world consequences. For example, HCP limits its members' ability to access hospitals to those in its contracted network, even though under the law the membership is entitled to go to any hospital in their health plan's network. For instance, HCP would deny its members the ability to access such world-class institutions as UCLA Medical Center and Cedars-Sinai medical center, even though those hospitals would be in the network of the members' health plan.

The DMHC was in communication with HCP through all of 2012 and told us during a meeting with them in December that HCP agreed to pursue licensure. State lawmakers have raised concerns, yet responses from the Department have been insufficient. In December 2012, Brent Barnhart, the director of DMHC, responded in a letter to Sen. Darrell Steinberg that the department "has been actively engaged in discussions with HCP regarding its business model." Since no action has been taken by the DMHC then we presume that the DMHC is either in collusion with HCP or unable to regulate.

Your office has made it a priority to scrutinize and review the negative impacts healthcare consolidation can have on California residents. Currently, your office is holding up the Express Scripts merger, investigating Sharp (News - Alert), Scripps and Sutter Health System for unlawful healthcare consolidation. A similar red flag should have been raised when dialysis giant DaVita Inc. purchased HealthCare Partners for a staggering $4.4 billion. This was the largest healthcare merger in U.S. history which was made possible by HCP's aforementioned unlawful activities and the likely non-disclosure of material evidence during the merger. As a result, Davita HealthCare Partners is one of the largest health care groups in the country yet they continue to operate without a license and profit handsomely for it.

Patients are dying and lives are being destroyed, as described in a recent class action suit against HCP. We are not asking your office to adjudicate on those cases, but rather to investigate HCP's failure to obtain a license, potential collusion with the DMHC, and profiteering at the expense of patients.

These issues are worrisome as they address not only the legality of HCP's operation and the oversight of a state regulator, but more importantly the care of more than half a million patients. With that in mind, we will continue to advocate for our communities. However, we would like to do so knowing your office will pursue a full investigation. Our goal is not to taint the reputation of a reputable and trustworthy medical operation but rather to advocate for the correction of wrongdoings.

We can be contacted at (424) 272-5386.

About Our SALUD

Our SALUD (Somos Aliados Latinos Unidos por la Dignidad - Latino Allies United for Dignity), is a grassroots coalition and healthcare watchdog representing civic, community and business leaders from the Southern California Latino communities. We believe that our low-income, minority communities deserve quality healthcare access equal to other communities. We believe our communities are not unlike other communities in California which are yearning for best practices and quality health care. With the new Affordable Care Act, we believe the legislators shall bring transparency and good government practices in implementing new health care delivery models, which should include exceptional, free of conflict-of-interest, community-patient focused decision makers at every level.

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