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Kaiser Permanente – a Business not Health Care Plan – April 17, 2005

While I spent much of 2004 focused on clarifying that the Kaiser Permanente Medical Care Plan – abbreviated to Kaiser Permanente or KP – is a for profit health care plan, after the Kansas City documents I got last month I believe that KP is best seen as a for profit business plan with the illusion that it produces health care.  Below are are some of the quotes I have retyped and now used in medmal reports.  They were filed in 2003 by Dr. Waxman of Kansas City, Kansas, who was a partner in that permanente group for almost a decade; he thought that Oakland had pulled out most of the physician profit – taxing off $4 million to support the MidAtlantic program – on the way to closing the unit.  This is his analysis through his attorney.

  [And from Kansas court records]: “13. That in addition to the MSA [Medical Service Agreement with its requirement for a 50-50 split in Article K] PMG and Kaiser – KC executed a document known as a memorandum of understanding (hereinafter referred to as ‘MOU’) which allocated revenues between the parties, set salaries and set forth a formula for dividing profits.

“14. The relationship between PMG and Kaiser-KC is a defacto ‘partnership.’ Kaiser Permanente’s (the Defendants collectively) literature, internal documents and internal memorandum, and even its public statements and advertising are full of descriptions of this relationship as a ‘partnership.’ The relationship is a ‘symbiotic’ one and one of ‘interdependence,’ a relationship where each depends on the other.  Kaiser Permanente handles the ‘business side’ and PMG handles the ‘medicine side’ (although those divisions are murky at best, if any divisions could be said to exist).  Kaiser – K.C., Kaiser-California, and PMG documents repeatedly refer to ‘partnership,’ ‘joint responsibility,’ ‘joint control,’ ‘joint management,’ ‘joint efforts,’ and ‘joint coordination.’

“15.  An arrangement for sharing for profits and losses clearly exist by virtue of the MSA and by virtue of the way the compensation between the two entities works, as well as the sharing of ‘losses’ by virtue of the ‘at risk’ corridors.  From the ‘Kaiser Permanente’ joint enterprise the two share all ‘net income’ ‘economic rewards’ (profits) and ‘excess expenses’ as well as ‘economic risks’ (losses).     

“16.   The relationship between Kaiser – K.C., Kaiser-Hospitals, Kaiser-California and PMG is a classic ‘partnership/joint venture/joint enterprise’ to share costs, to allocate profits/losses and to jointly manage the enterprise.  Kaiser Permanente and PMG are a combination of persons who are engaged in the joint prosecution of a particular transaction for their mutual benefit or profit.

“17.  Critical elements of the Kaiser Permanente joint venture are: 1) Mutual right of control, 2) Community of interest, 3) Right to share profits, 4) Obligations to share in losses.

“18.  Two of the main areas of joint control are: a. Financial aspects of control over medical care expenses that Kaiser – K.C. and PMG both exercise.  Kaiser – K.C. describes its ‘budgets and ‘cost control’ as the critical components of the doctors’ practice; and b. Quality assurance, quality control, almost certainly described as a joint undertaking with ‘joint responsibility’ on almost every committee.”  

“19.  Any ‘independent contractor’ language in the MSA and other documents is a ruse: this ‘form’ language should be ignored in favor of the substance of the true relationship of the parties.  The agreement to ‘share profits’ creates a presumption of partnership on the part of Kaiser-California, Kaiser-Hospitals, Kaiser – KC and PMG.” [as it would in the Denver areas as well]   

“20.  The parties have even given their ‘partnership’ a name: ‘Kaiser Permanente.’  This partnership name is used prominently in public, and fosters the public’s perception of the two entities actually being one entity providing medical care.  The partnership name also causes confusion in the public’s perception that there are not three separate, distinct legal entities.

“21.  Defendants Kaiser-California, Kaiser – K.C., Kaiser-Hospitals and PMG integrated their resources to achieve a common business purpose.  The Defendants along with PMG are not operated as separate entities, but integrate their operations and resources to achieve a common business purpose.  They are in reality a single business enterprise.  The Kaiser Defendant Corporation: a. Are not operated as separate entities; and
b. Integrate their resources for a common business purpose.

“22. The Kaiser Defendant Corporation are not maintained as separate entities because they have:
a. Common employees;
b. Common offices;
c. Centralized accounting;
d. Payment of wages by one corporation to another corporation’s employees;
e. Common business name;
f. Services rendered by the employee of one corporation on behalf of another corporation;
g. Interlocking directors;
h. Bills, expenses, wages, and salaries paid by one corporation one behalf of another;
i. Services rendered by one corporation on behalf of another;
j. [no j]
k. Inexplicably intertwined business operations;
l. Undocumented transfer of funds between corporations;
m. Share allocation of profits and loses between corporations.
“23. The foregoing factors establish that the Defendants, along with PMG, operated as a single business enterprise, integrating their resources to achieve a common business purpose.

“24.  Defendant Kaiser-California exercises control and supervision over its subsidiaries.  Kaiser-California also owns all trademark, copy right and licensing rights to Kaiser Permanente name logo, and symbols.  In order to insure the viability of these trademarks and copy rights, Kaiser-California exercises control over Kaiser – K.C., Kaiser Hospitals, and PMG, including control of significant corporate policies and procedures, day-to-day decision-making and over quality of care.  Kaiser-California holds itself out in Kansas as ‘Kaiser Permanente’ and allows Kaiser – K.C. and PMG to utilize those trade names, trademarks, and logos, without charge, but for Kaiser-California benefit.” (page 5 through 8 of official 2001 petition of Dr. Waxman in Kansas City, Kansas, Johnson County record page 147 through 149)

  [Shared by C. Phillips, MD. on April 17, 2005; he received the documents directly from and copied by the court. May be shared with anyone.]