DMHC Fines Kaiser, Anthem $350,000

The Department of Managed Health Care has levied fines this month totaling $350,000 against Kaiser Foundation Health Plan and Anthem Blue Cross of California.

The agency fined Kaiser $250,000 to settle alleged mishandling of a business associate contract with Sure File, an Indio-based firm that stored some 336,000 of the health plan’s patient records under contract, according to a DMHC spokesperson. The Los Angeles Times reported in 2013 that Sure File’s owners had kept the Kaiser patient records in a warehouse shared with another business.

According to the settlement letter, Kaiser had failed to have a proper contract in place for Sure File for the first seven months the entities did business together. Kaiser employees also apparently emailed unencrypted patient records to Sure File during its business engagement, which lasted from 2008 to 2010. The number of records was not disclosed. Kaiser officials have insisted that none of the patient records kept by Sure File were ever accessed by a third party.

However, the DMHC has concluded that Kaiser’s relationship with Sure File violated the federal Health Insurance Portability and Accountability Act, or HIPAA. The HIPAA violation also constituted unfair competition under the California Business and Professions Code, according to the DMHC.

Both the DMHC and Kaiser agreed that the latter would pay the $250,000 fine to settle the matter, which does not include an admission of wrongdoing.

Anthem Blue Cross was also fined $100,000 for 10 instances of cancelling enrollee coverage without providing a proper 30-day grace period under California law. According to DMHC correspondence, in at least one case an enrollee’s coverage was terminated even though their premiums had been fully paid. The agency also concluded that Anthem had failed to respond in a timely manner to its request for information.