health plan

Wilfredo Engalla, a 51-year-old Filipino immigrant, alleged in a medical malpractice case that Kaiser doctors misdiagnosed him with colds and allergies for years before eventually informing him he had terminal lung cancer.

He died before his complaint could be heard by an arbitrator, which his Kaiser policy required. His case prompted a withering rebuke from the California Supreme Court, which said Kaiser’s system of arbitrating legal disputes was subject to long delays and unfair to its members. The year was 1997.

Nearly three decades after the landmark decision, the HMO giant — which made a series of sweeping reforms after the ruling — is once again facing questions over whether its arbitration system is stacked against the interests of its members.

Plaintiffs attorneys, legislators and patients say Kaiser’s private and confidential process for arbitrating legal disputes over medical care still has key flaws that favor Kaiser over patients bringing malpractice cases. The company insures about 25% of Californians, including some employees of the Los Angeles Times.

“Kaiser has really lost its way,” said Assemblyman Robert Garcia (D-Rancho Cucamonga). Garcia, who is a longtime Kaiser member, recently introduced a bill to require the California attorney general to oversee arbitrations mandated by any health plan.

Kaiser defended its arbitration system, saying in a statement that it was fair for both patients and the nonprofit.

Many companies and other organizations, including some hospitals, HMOs and physician groups, require their customers or patients to take their complaints to private arbitration rather than to court.

But unlike most other companies, which send claims to large arbitration firms, Kaiser created its own system back in 1971.

Under Kaiser’s system, once a neutral arbitrator is selected, either party can opt to disqualify that person without cause. There is no limit on the number of disqualifications.

Although the health plan designed the system to be fair, patients and their lawyers have alleged that in reality Kaiser’s greater knowledge of arbitrators’ past rulings and its ability to veto arbitrators give it an advantage to pick favorable judges.

Critics such as Arlan Cohen, a physician and attorney who has brought more than two dozen cases against the health plan, say the system also provides a financial incentive to arbitrators to rule in Kaiser’s favor in order to be selected for future cases.

While Kaiser has access to all the decisions made by arbitrators in its system, the patient’s family gets a more limited disclosure of an arbitrator’s history of cases, lawyers say, adding that it’s not easy to see which arbitrators have ruled frequently for Kaiser.

Kaiser said it disagreed that the system allowed it to select favored arbitrators.

“The appointment process is not influenced by whether the arbitrator has ruled for or against KP or has a record of ruling against Kaiser Permanente,” its statement said.

“As required by law, both parties receive information about potential arbitrators and can decline to move forward with any they are not comfortable,” the statement said.

One problem is what experts call the “repeat player effect,” in which a large company appearing repeatedly before the same panel of arbitrators allegedly gains an advantage over the individual bringing a single complaint.

David Allen Larson, past chair of the American Bar Assn.’s dispute resolution section, said the repeat player effect happens because the patient will likely be choosing an arbitrator on the health plan’s system just once, while “Kaiser is selecting them every single day.”

“They know the system. They know the rules,” Larson said of Kaiser. “The entire process gives them an advantage.”

Alan Kang, a lawyer, in a recent petition filed in L.A. County Superior Court, contends that the fees the arbitrators earn from hearing cases — as much as $2,000 an hour — give them an incentive to rule in Kaiser’s favor so they are chosen to hear more cases.

“When a judge’s future income is at stake, it is impossible to be impartial,” Kang wrote in the petition.

The petition seeks to void the December decision of an arbitrator who ruled against the family of Evangelina Aquino, a Kaiser employee who died of cancer at age 40.

Kang, the Aquino family and the medical experts they hired for the case say her cancer would have been treatable if Kaiser doctors had found it with a test they said her symptoms called for. Kaiser argued it was a different kind of cancer that was aggressive and untreatable. The arbitrator agreed with Kaiser in the December decision.

After the ruling, Kang began analyzing data from Kaiser’s system.

His review of dozens of cases in the last six years found that judges overseeing the most cases nearly always ruled for Kaiser.

“The message is clear: deliver wins for Kaiser and you will get additional business,” Kang wrote in his court petition.

The Oakland-based health plan declined to answer questions about its arbitration system and Kang’s claims, but said in a statement that its “arbitration process is designed to be fair, impartial, and accessible to all members. While some arbitrators may handle multiple Kaiser Permanente-related cases, they are not employed by Kaiser Permanente, and they are selected by both parties, in accordance with the law.”

“We recognize that arbitration cases often involve difficult and deeply personal experiences for patients and families,” the statement said, “and we take all concerns raised through these processes seriously.”

Kaiser’s unique arbitration system

Arbitration can have advantages over the court system, including allowing Kaiser to save on legal costs, which otherwise would raise the price of premiums it charges to families, employers and governments.

Kaiser offers to pay the arbitrators’ fees, which can save families tens of thousands of dollars.

Arbitration may also lead to faster outcomes, possibly avoiding years of litigation. Unlike civil litigation, arbitration decisions are especially difficult to appeal.

After the criticism by the state Supreme Court in 1997, Kaiser reformed the system by creating the Office of the Independent Administrator. The office is funded by a Kaiser trust and the $150 fee each patient filing a claim must pay, said Marcella Bell, who serves as the independent administrator.

Bell said the office works independently from Kaiser.

The office selected 195 retired judges and lawyers to serve on a panel that patients and Kaiser can choose from when selecting a neutral arbitrator to oversee and decide a malpractice case.

Rules written by the independent administrator, in consultation with the health plan and an advisory board, allow Kaiser and the family to cut an arbitrator they don’t like, at multiple steps in the process.

The administrator’s office randomly selects 12 members from its panel. Both sides can each remove any four of those arbitrators. The two sides then rank the remaining arbitrators in order of preference. The administrator selects the top-ranked arbitrator to hear the case.

The two parties then still have the ability to disqualify that selection without cause.

Members of the United Nurses Assns. of California and Union of Healthcare Professionals strike outside Kaiser Permanente in Oakland on Jan. 28.

(Jessica Christian / San Francisco Chronicle)

Last year, Kaiser’s arbitration system closed 529 arbitration cases.

The arbitrators threw out 14% of the cases, ruling in favor of Kaiser’s motion for summary judgment, and dismissed an additional 5% of cases on technical or procedural grounds.

Only 23 cases, or 4% of the total, went to a hearing. Among those, the arbitrator decided for Kaiser in 17, with the patient winning the remaining six.

Patients and their families withdrew their claim in 20% of the cases. About half of those patients did not have a lawyer and had tried to represent themselves.

The parties settled for an undisclosed sum in 57% of the cases. The settlements are confidential.

Patient safety questions

Those who have studied the use of arbitration by Kaiser and other HMOs for medical malpractice claims say the secrecy of the settlements and the closed hearings could keep safety problems from coming to light.

“The secrecy of arbitration proceedings may prevent publicity that could reveal poor doctors,” the California Research Bureau warned in a report in 2000 that analyzed Kaiser’s system. That compares with public court cases that could deter “bad behavior” in the future, the researchers wrote.

In December 2023, 53-year-old Francisco Delgadillo arrived at the Kaiser ER in Vallejo with severe chest pain. After an initial assessment, he waited eight hours for care, according to state regulators.

He died in the lobby. A state and federal investigation found multiple violations, including that Kaiser failed to have a licensed nurse monitoring the dozens of patients in the ER’s waiting room.

The Delgadillo family filed an arbitration claim. Their lawyer Jeff Mitchell said the case settled for a confidential sum and he could not discuss it.

Mitchell agreed that the secrecy raised patient safety concerns.

“They love the system, otherwise they would not be so hellbent to keep it,” Mitchell said of Kaiser’s repeated efforts to dispel criticism. “They don’t want these cases to get in front of juries.”

A licensed practical nurse attends to a patient at a Kaiser Permanente in Culver City in September.

(Allen J. Schaben / Los Angeles Times)

Calls for reform

Despite the changes Kaiser made after the 1997 court decision, patients and their families have continued to complain.

According to the administrator’s 2025 annual report, the “most common” complaint the office heard last year was about the neutral arbitrator.

“Most complained that the arbitrator was biased, partisan, unjust, and in Kaiser’s favor,” the report said.

Stephen Martinez, a retired aerospace engineer from Bellflower, is leading the effort to pass the state bill introduced by Garcia.

At an April hearing in the state Assembly, Martinez spoke about how his wife had found a lump in her breast and asked for an appointment with her longtime caregiver at Kaiser to examine it. Instead she was sent to a physician assistant, who dismissed it, he said.

“The PA prescribed warm compresses, a sports bra, and limited chocolate,” Martinez testified. “We would later find that Lindalee did have breast cancer that had already spread.”

Martinez and his wife said they spent $175,000 on lawyers and medical experts to bring that arbitration case. A chief breast surgeon at Kaiser and another surgeon who had retired from that job both testified that the Kaiser physician assistant failed to follow the health system’s guidelines.

Kaiser’s expert argued that the physician assistant did an appropriate exam and that his low suspicion of breast cancer was reasonable. The neutral arbitrator concurred and ruled against the couple.

After passing the Assembly, Assembly Bill 1770 is now in the state Senate for consideration. The bill lets the attorney general decide what actions they will take to ensure health plan arbitrations are handled fairly and transparently. If the bill passes, the state would add four deputy attorneys general, a legal analyst and three legal secretaries to do that work, according to a legislative analyst’s report.

Kaiser says it has concerns about the bill, including that it would “create overlapping state oversight and duplicative reporting requirements.”

Kaiser Permanente’s corporate offices in downtown Oakland in January 2025.

(Jane Tyska / East Bay Times via Getty Images)

Questions of a missed diagnosis

When Janene Fowler was 22, her body seemed to turn against her. She grew weak, pain shot through her hands and feet, her heart raced. She soon required a wheelchair.

Fowler’s medical chart detailed what could have caused her disabling problems. A test eight years before had found a deficiency of vitamin B12, according to the chart. Over the years, Kaiser doctors noted problems such as depression, unexplained pain, shortness of breath, a sore tongue and an abnormal gait — all possible symptoms of vitamin B12 deficiency.

In February 2022, after her family complained about her not being able to see a neurologist, she got an appointment. The specialist noted her vitamin deficiency, telling the nurse to start her on a supplement at once. But the treatment did not begin because the paperwork was lost, her medical records show.

Two weeks later, Fowler left Kaiser to see a doctor at UCLA. A doctor there quickly started injections of B12.

Her symptoms gradually got better, but her new doctors say the years-long deficiency left permanent damage. She still can’t walk without help.

The arbitrator, a retired judge, sided with Kaiser’s doctors and experts, who questioned whether Fowler’s problems were caused by a deficiency of vitamin B12. While one test showed a deficiency, he noted that a second test failed to confirm it. He wrote that Fowler and her lawyers had failed to prove that Kaiser “breached its duty of care.”

Cohen, Fowler’s lawyer, asserted that the retired judge’s decision was contrary to UCLA medical records, which detail her deficiency and treatment.

Fowler now spends most of her time at home. She can’t drive. She often falls when she tries to get around with a cane. She loves to cook, but said she burns herself when she tries.

“My hands don’t really do what I tell them,” she said.

Kaiser declined to answer questions about her case, citing patients’ privacy rights.

Fowler said she’s angry about how the health plan’s doctors and its arbitration system treated her.

“I thought I was going to die, and no one at Kaiser seemed to care,” she said. “What justice can you have in a system that is run by those you are trying to sue?”

The Directors Guild of America on Thursday night said it approved a four-year contract with the major studios.

The new contract will boost studio contributions to DGA’s healthcare plan, increase minimum salaries and offer AI protections. The DGA declined to say how many voted in favor of the contract, but in a memo to members, union President Christopher Nolan and National Executive Director Russell Hollander said members “voted overwhelmingly” to ratify it.

“Throughout this process, our focus was clear: protect our members, strengthen the Guild, and address the challenges facing our industry during a period of profound change,” Nolan and Hollander wrote in a memo to members sent on Thursday. “… We have achieved critical wins that put the Guild in a position to further protect our members economic and creative rights now and into the future.”

The newly ratified contract provides some stability in Hollywood, about three years after a summer of strikes led by the Writers Guild of America and performers guild SAG-AFTRA. WGA approved a contract with major studios under the Alliance of Motion Picture and Television Producers in April and SAG-AFTRA members ratified their contract in June. All the contracts extend the terms to four years instead of three years, which studios had sought out.

The AMPTP in a statement thanked DGA, WGA and SAG-AFTRA “for their thoughtful and collaborative approach to negotiations.”

“Together, we reached agreements that deliver substantial gains for guild members while supporting greater stability across the entertainment business,” the AMPTP said. “We are encouraged by the trust built throughout this cycle and look forward to building on that momentum to advance opportunity and shared success across our industry.”

The new DGA contract starts on July 1 and runs through June 30, 2030. Key aspects of the agreement include requiring the studios to increase their contribution to DGA’s health plan by 24.4% over four years. In return, the DGA would support “modest” increases to the eligibility threshold and annual premiums.

The contract also increases minimum salaries on many jobs by 2.5% in the first year and up 3% for each of the following years in the agreement.

It also adds more rules around the use of AI technology, including requiring that directors oversee any footage created by artificial intelligence.

The Directors Guild of America’s national board on Friday unanimously recommended its membership vote in favor of a four-year contract with the major studios that would increase wages, boost contributions to its health plan and establish guardrails surrounding AI technology.

“We entered this negotiation with three main priorities: secure our Health Plan, protect jobs, and ensure that our members remain secure as AI continues to impact our industry,” DGA President Christopher Nolan said in a statement. “We succeeded in these areas and gained in many others.”

Under the proposed contract, major studios would increase their contributions to the DGA’s health plan by 24.4% over four years, the largest since the plan was founded. In return, the DGA would recommend changes to its plan’s trustees including “modest” increases to the eligibility threshold and annual premiums, the DGA said on Friday.

The contract also increases minimum salaries for most jobs by 2.5% in the first year and up 3% for each of the following years in the agreement. Directors of network non-prime time strip dramatic programs will see their minimum salaries increase 2.5% for each year under the agreement.

The union, which represents more than 19,500 directors and members of directorial teams in areas such as film, commercials and news, said the agreement helps the union’s push for a federal production incentive. Hollywood creatives believe such a benefit could prevent U.S. entertainment jobs from moving overseas where production costs can be significantly lower. The proposed agreement secures a commitment that most senior management at the major studios represented by the Alliance of Motion Picture and Television Producers “would engage in meaningful advocacy for a federal production incentive above and beyond the ongoing lobbying efforts of the Motion Picture Association,” according to the DGA.

The contract also adds more guardrails to AI technology, including treating footage created by artificial intelligence as the same as footage shot by a camera, meaning it will still be under the director’s control, according to the DGA. Major studios will also be required to notify the DGA if an employer decides to license a director’s work to train a generative AI system to create new work, the union said. The agreement also establishes an employer-funded program to enhance directors’ AI skills.

“With these gains, a four-year Agreement was both appropriate and necessary to provide stability and potential for growth at a moment when the industry has been experiencing contraction,” Nolan said in a note to members on Friday.

DGA and AMPTP reached the tentative contract earlier this week. At that time, AMPTP said “we appreciate the hard work and commitment of our guild partners in achieving a fair deal that helps advance a stable and successful entertainment industry.”

DGA members will have until June 25 at 5 p.m. to vote on the plan. If approved, the contract would go into effect July 1 and run through June 30, 2030.

SAG-AFTRA members overwhelmingly approved a four-year TV and film deal with major studios including Netflix, Disney and Warner Bros. Discovery on Thursday night, increasing minimum wages and addressing concerns about the use of AI performers.

The deal, which was expected to be approved, received the support of 91% of SAG-AFTRA members who voted on the agreement, which starts July 1 and ends June 30, 2030. The union represents 160,000 performers, including actors, stunt performers and influencers.

“This agreement builds on the foundation members fought to establish and carries that work into the next chapter of our industry,” said SAG-AFTRA President Sean Astin in a statement. “It delivers meaningful gains in compensation, strengthens protections around artificial intelligence and digital identity, reinforces the long-term security of members’ benefit plans and recognizes the realities of how performers work today.”

Under the new deal, the length of the agreement between SAG-AFTRA and major studios represented by the Alliance of Motion Picture and Television Producers expands from three years to four years.

It also boosts minimum wage by 3% annually, increases contributions to the health plan by 1% and expands the bonus to the union’s Success Bonus Distribution Fund based on residuals that performers get for popular streaming programs.

The contract also addresses concerns about the growing use of artificial intelligence in TV and film and its impact on actor jobs. Last year, many actors spoke out about Tilly Norwood, a computer-generated “actor” and whether synthetic characters like her could threaten their livelihoods. Some performers have also advocated for getting paid if their likenesses are used to create such characters made through AI systems.

Not all members were in favor of the contract, saying it did not go far enough in protecting performers against AI.

“It normalizes the use of AI replicas and synthetic performers rather than drawing a firm line protecting human performers and their jobs,” said Chuck Slavin, a background actor and performer.

Slavin, a former New England local board member, ran against Astin for SAG-AFTRA president last year.

Producers agreed to “a principle strongly favoring human performances” and that producers would only use a synthetic if it “brings significant additional value to the motion picture.” If a producer decided to use a synthetic in a role that could be done by a human, they would need to notify the union and bargain in good faith.

Additionally, the contract merges the pension plans of the Screen Actors Guild and the American Federation of Television and Radio Artists, which were previously separate but combined in 2012 to form SAG-AFTRA.

Their health plans were consolidated in 2017, but the pensions have remained separate . That was a major sticking point with members, some of whom couldn’t qualify for benefits as their contributions were split between two plans. Studios agreed to boost their overall contributions to the combined plan by 1%.

SAG-AFTRA’s deal comes after the Writers Guild of America members also approved an agreement with the AMPTP in April.

The groups were able to agree on contracts this year, without striking as they did in 2023.

“SAG-AFTRA’s leadership brought a genuine commitment to partnership, and together with the WGA agreement, these deals demonstrate what is possible when the industry works toward practical solutions that support its long-term stability,” AMPTP said in a statement.

The Directors Guild of America began negotiations with AMPTP last month, with its contract expiring on June 30.

Staff writer Cerys Davies contributed to this report.

Union leaders trumpeted gains in SAG-AFTRA’s tentative contract with the major studios, citing stronger AI protections and the consolidation of previously separate pension plans.

“The theme of this negotiation really has been about looking out for the future of performers, and I think that the contract delivers on that,” Duncan Crabtree-Ireland, SAG-AFTRA’s chief negotiator, said in an interview Tuesday.

After striking the deal a little over a week ago, SAG-AFTRA said its national board approved the proposed contract on Monday.

The union‘s membership, which includes more than 160,000 actors, broadcast journalists, dancers, DJs, stunt performers, voice-over artists and other entertainment professionals, will begin voting on the new contract later this week.

“The scope of the contract is something that I hope the members find meaningful,” SAG-AFTRA President Sean Astin said.

One of the chief gains, he said, was merging of the pension plans of the two previously separate unions — the Screen Actors Guild and the American Federation of Television and Radio Artists — fourteen years after they agreed to combine.

Their health plans were consolidated in 2017, but the pensions have remained separate until the current negotiation cycle. That was a major sticking point with members, some of whom couldn’t qualify for benefits as their contributions were split between two plans. Studios agreed to boost their overall contributions to the combined plan by 1%.

Union leaders also pointed to stronger protections against AI, including new guidelines that govern how studios should use generative AI and that strongly favor “human performances.”

The guardrails state that producers should not intend to use AI in a human role unless a synthetic actor brings “significant additional value” to the production. The contract draws a distinction between a digital replica that is created with a performer’s consent vesus a synthetic digital character that is not authorized.

“Digital replicas are derived from human beings who have compensation and other protections available to them,” Astin said. “If it can’t be done like that, then they’ve got to bargain with us for some very unique use of synthetics…That’s a pretty high bar.”

Under the new contract, minimum wage rates will increase by 3% annually. The agreement also boosts the so-called bonus for residuals that performers get on most-watch streaming shows. Members will increase their contribution to the health plan by 1%.

The actors’ union first began negotiations with the Alliance of Motion Picture and Television Producers in February and extended those talks in March. They were briefly paused to allow the studios to finish negotiations with the writers’ union.

SAG-AFTRA joins WGA as the latest Hollywood union to strike a four-year deal with the studios. The previous contract term was three years.

The Directors Guild of America is the last union that still needs to land its own agreement. Negotiation sessions with the studios started on Monday. The contract is set to expire on June 30.