DMHC outlines enforcement history, quarterly oversight of Kaiser after 2023 settlement

Mary Watanabe, director of the California Department of Managed Health Care, told the Assembly Health Committee on May 6 that the department has taken repeated enforcement steps against Kaiser Permanente dating back to 2012 and will use quarterly monitoring and follow-up surveys to verify Kaiser’s compliance with the settlement agreement and state law.

Watanabe said the department regulates about 140 health plans covering nearly 30 million Californians and has used routine three‑year audits, non‑routine surveys and targeted investigations to identify problems. She described a 2012 enforcement action that led to a $4,000,000 fine, repeated follow‑up findings in 2015 and 2016, a 2017 settlement, a 2022 non‑routine survey that uncovered deficiencies in Northern and Southern California, and a 2023 enforcement settlement that required structural change at Kaiser.

The settlement announced Oct. 12, 2023, included a $50,000,000 administrative penalty, required Kaiser to invest $150,000,000 over five years in innovative programs beyond legal obligations, and authorized a $10,000,000 suspended penalty if Kaiser failed to meet obligations. Watanabe said Kaiser paid $40,000,000 on Oct. 19, 2023; the remaining $10,000,000 remains suspended pending corrective actions. She described the corrective action work plan as Kaiser’s initial blueprint and said DMHC required further detail before accepting a revised plan. DMHC posted a corrected work plan and a March update to its website and held the first mandatory quarterly meeting with Kaiser on April 3, 2025.

Why this matters: Kaiser insures roughly 9,000,000 Californians — about one in four residents — and Watanabe said that transforming care at Kaiser could affect access and quality across the state. "Ultimately, the metrics by which the DMHC will hold the plan accountable is whether the plan is complying with the law, which we refer to as the Knox‑Keene Act," she said.

DMHC described the enforcement and monitoring tools it has used and plans to use. The department said it initiated a 2022 non‑routine survey because of a 20% rise in Kaiser behavioral‑health complaints to its help center and letters from the National Union of Healthcare Workers. The 2022 non‑routine survey identified 11 deficiencies in Northern California, eight in Southern California and one statewide deficiency, with the primary shortfalls involving timely access for urgent, non‑urgent and follow‑up behavioral‑health appointments. DMHC also opened a targeted investigation into Kaiser's response to the 2022 NUHW strike in Northern California and later opened an investigation related to the Southern California strike (investigations are confidential under federal and state law, DMHC said).

DMHC officials described monitoring steps: mandatory quarterly written reports from Kaiser, quarterly meetings in which the department will press for more specific metrics and a planned on‑site non‑routine follow‑up survey and behavioral‑health investigations that will validate reported changes. Watanabe said DMHC is working with Kaiser on a member reimbursement plan for enrollees who sought but were unable to get timely, clinically appropriate behavioral‑health services in‑network; DMHC said it will post details when the plan is finalized.

DMHC also described real‑time assistance to enrollees through its help center, which the department said is staffed by attorneys and non‑attorney expert staff who assist members seeking appointments or appealing denials. Watanabe said the help center had received 153 complaints since the Southern California strike began nearly seven months earlier; she contrasted that with nearly 500 complaints received during the 10‑week 2022 Northern California strike, when a larger share of complaints were about timely access. The department said most Southern California complaints involved members wanting to see their striking provider rather than a different in‑network or external clinician.

DMHC officials reiterated enforcement options in the Knox‑Keene Act and noted the department could bring additional enforcement actions separate from the existing settlement if Kaiser fails to comply. Watanabe said the corrective‑action timeline in the settlement effectively gives Kaiser two years from agreement signature to make the required changes, subject to extension, but that the department prefers quarterly reporting because it allows iterative fixes and additional data requests during implementation.

Watanabe encouraged enrollees who cannot get care to contact the DMHC help center and to consult DMHC’s public webpage (dmhc.ca.gov) for posted materials related to the Kaiser settlement and corrective action work plan. The department said it expects to publish the first public quarterly report soon.