DMHC outlines oversight after Kaiser settlement; patients and union describe ongoing access and staffing failures

The California Department of Managed Health Care outlined a multi‑year enforcement timeline and the monitoring steps it is using to track Kaiser Permanente’s promised overhaul of behavioral health services during an informational hearing held May 6 by the Assembly Health Committee in Room 1100.

The department’s director said the October 2023 settlement with Kaiser included a $50 million administrative penalty and a requirement that Kaiser direct $150 million in investments over five years into behavioral‑health programs statewide, and that the plan paid $40 million on Oct. 19, 2023 with $10 million suspended pending completion of corrective actions.

The details matter: the corrective action work plan, the department said, is intended to make longer‑term changes to how Kaiser ensures timely access, referral and continuity of behavioral‑health care under the Knox‑Keene Act. The hearing brought DMHC officials, patients and clinicians to the same room to describe what has changed — and what has not.

DMHC overview and enforcement history

Mary Watanabe, director of the Department of Managed Health Care, told the committee the DMHC has pursued enforcement related to Kaiser’s behavioral‑health delivery since routine and nonroutine surveys first found deficiencies in 2012 and 2015. DMHC initiated a nonroutine survey in May 2022 and a strike‑focused investigation after a Northern California NUHW (National Union of Healthcare Workers) strike that year. The October 12, 2023 settlement resolved those actions, Watanabe said, and requires both the penalty and the multi‑year investment commitment.

"State law requires health plans to provide enrollees with medically necessary care within timely access and clinical standards at all times," Watanabe said. She described the department’s supervisory tools — routine medical surveys every three years, nonroutine focused surveys when patterns of complaints appear, help‑center complaint tracking, and behavioral health investigations authorized in the 2021 state budget.

Watanabe said the corrective action work plan Kaiser submitted initially (Feb. 1, 2024) lacked specificity, prompting iterative meetings and revisions that produced a final plan posted publicly in January and updated March 12, 2025, and that DMHC has begun quarterly oversight meetings (first held April 3, 2025). The department said it will post public quarterly reports and validate reported changes through follow‑up surveys and investigations.

"Generally you shouldn't wait more than two weeks to get an initial appointment," Watanabe told the committee when asked to explain the department's timely‑access expectations. She cited separate standards for urgent, emergent and follow‑up visits and referenced SB 855's requirement that plans arrange out‑of‑network care if the plan cannot provide timely in‑network care.

Enforcement terms and compliance checks

DMHC staff described findings from the 2022 nonroutine surveys — which identified multiple deficiencies in Northern and Southern California — and said that in October 2023 Kaiser committed to a systemic overhaul and the settlement penalties. The settlement includes the $50 million administrative penalty, the $150 million community investment commitment over five years, and a suspended $10 million contingent on satisfactory completion of required corrective actions. Watanabe said the department is negotiating the form and timing of Kaiser’s reimbursement plan for enrollees who were unable to obtain timely care and that more information will be posted when available.

DMHC officials told the committee they use help‑center complaints as an early warning system and that they have received both letters and large complaint volumes from Kaiser enrollees and NUHW. During the 2022 Northern California strike the department received nearly 500 complaints; since the Southern California strike began, the help center had received 153 complaints relating to that event as of the day before the hearing, DMHC said. The department emphasized it may examine medical records, listen to calls, interview witnesses and perform on‑site validation.

Panel testimony: patients, clinicians and union leaders

The second panel brought Kaiser enrollees, clinicians and union leaders to describe on‑the‑ground impacts. Milton Brown, a Kaiser enrollee and clinician with long experience treating suicidality, testified about his daughter's care. Brown said she had inpatient care after an attempt, then waited 11 days for a psychotherapy contact and later experienced lapses in follow‑up that he described as violations of both clinical standards and the law.

"It took a month for her to get the next psychotherapy treatment piece," Brown testified. "Kaiser broke the law."

Licensed clinicians and NUHW leaders described a chronic mismatch between demand and staffing, compressed appointment formats and the substitution of group or recorded content for one‑on‑one clinical care.

Cassandra Gutierrez Thompson, LCSW and NUHW member who works in Kaiser’s ADAPT program in Southern California, testified that therapy sessions there are limited to 30 minutes and compared the program to a "factory‑like setting" where clinicians see 14–16 patients back to back, leaving little time for documentation, specialized care or breaks. She told the committee that the compressed model can result in inappropriate placements and delays in care for higher‑acuity patients.

"This model creates a factory‑like setting where both clinicians and patients feel like they're on a conveyor belt together," she said. "This approach is not aligned with clinical standards."

Sofia Mendoza, president of NUHW, and other union representatives described a broader pattern they attribute to long‑term underinvestment in behavioral health at Kaiser, particularly in Southern California, and said that inequities in compensation, staffing and working conditions have driven strikes and labor disputes. Mendoza noted DMHC citations dating back to the mid‑2000s and highlighted the 2023 enforcement action.

"The root of the problem is the ongoing systemic undervaluation of behavioral health care by Kaiser Permanente," Mendoza said.

Advocates and clinical associations who offered public comment urged stronger transparency, clearer measurable benchmarks and faster relief for affected enrollees. Lauren Fink, senior director of public policy at the Kennedy Forum, recommended standardized public reporting of parity metrics, mandatory reprocessing of improperly denied claims, and corrective actions tied to clear, published benchmarks.

Specific access concerns raised at the hearing

- Continuity of care: Witnesses said patients frequently could not see the same clinician for successive visits, a particular problem after hospitalization or higher‑acuity care. DMHC staff acknowledged that while timely‑access rules require offers of appointments within standards, those offers do not guarantee the same clinician.

- Appointment limits and scheduling rules: Clinicians and advocates said Kaiser’s practice of allowing patients to have "one appointment on the books" at a time (i.e., requiring attendance before scheduling a next visit) impedes weekly or regularly scheduled therapy for working patients and those needing continuity.

- Treatment modality and quality: DMHC and witnesses discussed Kaiser’s use of group therapy, virtual modalities and recorded webinars; clinicians said these practices sometimes substituted for clinically appropriate one‑on‑one care.

- External network reliance: Panelists described an increased use of contracted, external providers (including virtual‑only vendors) during staffing shortages and strikes. Clinicians cautioned that external referrals can create gaps in integration and accountability, language and cultural mismatches, additional fees or obligations for members, and limited oversight of the quality of care provided.

DMHC’s stated next steps and member resources

DMHC said it will continue quarterly meetings with Kaiser (where Kaiser provides written quarterly reports), validate reported implementation with follow‑up nonroutine surveys and investigations, and post publicly available documents on the department website under the "Kaiser settlement" page. Watanabe urged enrollees with access problems to contact the DMHC Help Center for real‑time assistance. DMHC also said it is working with Kaiser on a reimbursement plan for members who paid out of pocket when in‑network timely care was unavailable.

Why this matters

DMHC officials emphasized the size of Kaiser’s footprint in California — roughly one in four residents are Kaiser members — and said successful transformation at Kaiser could have statewide effects. At the same time, patients and clinicians described concrete instances of missed or delayed care that, they said, contributed to harm in individual cases. The hearing underscored the gap between regulatory enforcement on paper and the day‑to‑day experiences of members and providers.

What the record shows and what remains unresolved

DMHC published the nonroutine survey reports and the corrective action work plan and has begun monitoring implementation through quarterly reports and follow‑up surveys. Several witnesses asked for clearer, date‑specific benchmarks, stronger public reporting of parity metrics, and faster remedies (for example, reprocessing claims and formal interim requirements for out‑of‑network reimbursement) to ensure enrollees are made whole while longer‑term reforms proceed.

The department told the committee it will post the format and first public quarterly report soon and that additional enforcement remedies remain available under the Knox‑Keene Act if Kaiser fails to meet its obligations.

The committee hearing closed after public comment. DMHC officials and clinician, patient and union representatives left a record of both regulatory progress and continuing complaints that the Legislature may use to consider additional oversight or statutory changes.