Penalty Amount
$49,000,000
Consumers Affected
7,700
California Attorney General Rob Bonta, alongside six county district attorneys, announced a $49 million settlement with Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals resolving allegations of unlawful disposal of hazardous waste, medical waste, and protected patient health information. Investigations of 16 Kaiser facilities found hundreds of hazardous and medical waste items and over 10,000 paper records containing data of more than 7,700 patients in unsecured dumpsters. The settlement requires Kaiser to pay up to $49 million in penalties and compliance costs, retain an independent auditor for five years of regular audits, and implement enhanced waste and data disposal procedures.
Kaiser must pay up to $49 million total, including $37.513 million in civil penalties, $4.832 million in attorneys’ fees and costs, $4.905 million for supplemental environmental projects, and up to an additional $1.75 million in civil penalties if it fails to spend $3.5 million on enhanced environmental compliance measures within 5 years. Kaiser must retain an independent third-party auditor approved by the AG and district attorneys to conduct 520 trash compactor audits and 40 programmatic field audits annually for 5 years to evaluate compliance. Kaiser must also implement enhanced compliance measures and modified operating procedures to ensure proper disposal of waste and protected health information.
In-house legal teams at healthcare entities should prioritize reviewing vendor agreements with waste disposal, document destruction, and third-party audit providers to ensure compliance with HIPAA and state medical information laws. Waste disposal contracts should include clauses mandating secure disposal of protected health information (PHI), regular compliance audits, and penalties for improper disposal of medical or hazardous waste. Agreements with third-party auditors must align with the settlement’s requirements for audit frequency, scope, and reporting to state enforcement agencies. Internal compliance program clauses in vendor and employment agreements should be updated to require regular staff training on proper PHI and waste disposal, and breach notification clauses should be revised to ensure timely reporting of unauthorized PHI disclosures, including improper disposal incidents. Contracts with environmental compliance vendors should also include requirements for implementing enhanced compliance measures and spending thresholds tied to penalty avoidance as outlined in the settlement.
Entity
Kaiser Foundation Health Plan, Inc., and Kaiser Foundation Hospitals
Industry
HealthcareOfficial Press Release
https://oag.ca.gov/news/press-releases/attorney-general-bonta-announces-49-million-settlement-kaiser-illegal-disposal
kaiser complaint.pdf?
https://oag.ca.gov/sites/all/files/agweb/pdfs/privacy/kaiser_complaint.pdf?
kaiser stipulation.pdf?
https://oag.ca.gov/sites/all/files/agweb/pdfs/privacy/kaiser_stipulation.pdf?
KP Compl Filed 090823
https://oag.ca.gov/system/files/attachments/press-docs/KP%20Compl%20Filed%20090823.pdf
Proposed stipulated judgment
https://oag.ca.gov/system/files/attachments/press-docs/Proposed%20stipulated%20judgment.pdf
California Attorney General Enforcement Page
https://oag.ca.gov/privacy/privacy-enforcement-actions
"Kaiser Foundation Health Plan, Inc., and Kaiser Foundation Hospitals (collectively “Kaiser”)"
"Kaiser will be liable for a total of $49 million"
"Friday, September 8, 2023"
"unlawfully disposed of hazardous waste, medical waste, and protected patient information at Kaiser facilities statewide"
"violate California’s Hazardous Waste Control Law, Medical Waste Management Act, Confidentiality of Medical Information Act, Customer Records Law, and Unfair Competition Law"
"federal Health Insurance Portability and Accountability Act of 1996, known as HIPAA"
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