Consumer Advocate Reaction to $55M Fine on LA Care Health Plan

Today, the California Department of Managed Health Care (DMHC)  and the Department of Health Care Services (DHCS) fined the L.A. Care health plan $55 million dollars for tens of thousands of violations that resulted in delayed or denied care. Going back several years, L.A. Care systematically failed to handle grievances timely, by not giving consumers authorization for timely care, and by failing to ensure that LA County Department of Health Services provided timely access to care, especially specialty care.
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For Immediate Release: Friday, March 4, 2022

CONTACT: Rachel Linn Gish, director of communications, Health Access California, rlinngish@health-access.org, 916-532-2128 (cell)

CONSUMER ADVOCATE REACTION TO $55M FINE ON LA CARE HEALTH PLAN

  • Largest fine ever imposed on a health plan, yet not enough given the tens of thousands of violations, including care delayed and denied, leading to patient harm and deaths.
  • SB 858 (Weiner) introduced this year would increase the level of fines for health plans to update outdated standards.

SACRAMENTO & LOS ANGELES: Today, the California Department of Managed Health Care (DMHC)  and the Department of Health Care Services (DHCS) fined the L.A. Care health plan $55 million dollars for tens of thousands of violations that resulted in delayed or denied care. Going back several years, L.A. Care systematically failed to handle grievances timely, by not giving consumers authorization for timely care, and by failing to ensure that LA County Department of Health Services provided timely access to care, especially specialty care.

“L.A. Care failed its patients in handling grievances, authorizing treatments, and ensuring timely access to care. Californians died as a result. Others suffered from unjustified delays that resulted in avoidable harm. These fines are not just merited but modest given the systemic issues and scale of the harm for tens of thousands of consumers suffered over a number of years,” said Diana Douglas, policy and legislative advocacy manager for Health Access California. “While these may be the largest fines ever, that does not mean that they are sufficient to deter future bad behavior. LA Care has 2.5 million enrollees who depend on it to get the care they need when they need it.”

For context, LA Care had revenues exceeding $8.3 billion in 2020 with administrative costs of $452 million. (Annual Report 2019-2020: Financial Overview | L.A. Care Health Plan (lacare.org))

SB 858 by Senator Scott Wiener, sponsored by Health Access, would increase the minimum fines imposed by DMHC from a maximum of $2,500 per violation to a minimum of $25,000. This fine amount has not been updated since 1975 when gas was 59 cents a gallon. Fine amounts for violations related to grievance handling and other specific consumer protections have not been updated since 1999 or 2000—and in the last 20 years, health insurance premiums have not just doubled, premiums today are four times as high as they were in 1999. SB 858 would increase fine amounts by four, based on the rate of increase in health insurance premiums since 1999. SB 858 also increases future fine amounts by the same percentage that premiums increase.

“We appreciate the Departments for following up and taking these actions, even if these problems should not have been allowed to get to this point. We urge not just greater fines on the health plan, but for LA Care to immediate agree to a corrective action plan to fix these systemic problems as soon as possible,” said Douglas. “Californians who rely on Medi-Cal managed care deserve the same timely access to care and the same consumer protections as every other Californian, including those who go to Cedars Sinai or Stanford. We are alarmed by not just the lack of proper oversight by LA Care, but also about the cavalier disregard of the LA County Department of Health Services for its contractual obligation to provide timely access to care and other basic consumer protections.”

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