Kaiser, California's largest healthcare provider, has agreed to a $49 million settlement with the state Attorney General's Office and six district attorneys, including in San Mateo County, for illegally dumping hazardous waste, medical waste, and the protected health information of more than 7,000 patients at Kaiser facilities statewide, Attorney General Rob Bonta announced on Friday, Sept. 8.

The improperly dumped items posed a serious risk to anyone who might come into contact with them, Bonta said.

Undercover inspections between 2015 and 2017 were initiated by district attorney's offices in Alameda, San Bernardino, San Francisco, San Joaquin, San Mateo and Yolo counties. The California Department of Justice joined the district attorneys and expanded the investigation of Kaiser’s disposal practices further throughout the state. The lawsuit, which was filed in San Joaquin County Superior Court, named Kaiser Foundation Health Plan and Kaiser Foundation Hospitals as defendants.

Kaiser failed to properly characterize waste generated at its facilities, did not properly contain and label waste, use registered transporters, prepare required shipping and tracking documentation, train employees and shred or destroy papers with protected health information, Bonta said.

The investigators monitored dumpsters from 16 Kaiser facilities, including in San Mateo County. They found large quantities of improperly discarded medical waste, bodily fluids, body parts, syringes, medical tubing, pharmaceuticals, and hazardous items, such as aerosols, cleaning products and batteries. More than 10,000 paper records containing the information of at least 7,700 patients were also found, Bonta said. The dumpsters were destined for municipal landfills rather than hazardous waste disposal sites.

"Nurses, physicians and patients could inadvertently touch blood or bodily fluids containing dangerous pathogens. Custodians and sanitation workers could be stuck by a needle. An aerosol can that wasn't fully empty could explode and start a fire in a trash bin or in the back of a garbage truck making its way through neighborhood streets," Bonta said.

"The hazardous items found in Kaiser's dumpsters also posed serious risks to our environment, especially if they're dumped in a landfill that's not built to contain hazardous waste or that has a damaged lining. Batteries containing toxic, corrosive chemicals could leach into the surrounding environment and pollute the soil and groundwater. Prescription medications could leach into the water table and affect our drinking water."

He added that hazardous chemicals could start a fire that pollutes the air and harms the local ecosystem. "It also shouldn't be overlooked that the communities too often who live near landfills and transfer stations are disproportionately lower income and people of color," Bonta said.

In addition to the hazardous materials, Bonta also took aim at Kaiser's alleged careless disposal of patient records, which included information about surgeries and procedures that would not have been casually discarded by a patient.

"This is a huge violation of patients' privacy that also puts them at risk for medical identity theft. All the items I mentioned should have been disposed of in a secure, cautious and specifically regulated way. They were not. They should not have been tossed in an easily accessible trash can or dumpster, or dumped in a public landfill," he said.

As a healthcare provider, Kaiser should know that it has specific legal obligations to properly dispose of medical waste and safeguard patients’ medical information, Bonta said.

Kaiser Permanente said in a statement that it takes the disposal of materials and patient privacy seriously.

"About six years ago we became aware of occasions when, contrary to our rigorous policies and procedures, some facilities’ landfill-bound dumpsters included items that should have been disposed of differently. Upon learning of this issue, we immediately completed an extensive auditing effort of the waste stream at our facilities and established mandatory and ongoing training to address the findings. All Kaiser Permanente staff and physicians in California take this required annual training. We also introduced specialized equipment, instructions, and receptacles placed closest to where waste is generated to ensure all types of waste are disposed of properly, and we introduced more environmentally friendly products to enhance our long-standing environmental compliance measures," Kaiser said.

"We are not aware of body parts being found at any time during this investigation. There were isolated examples of what appeared to be small amounts of tissue," the health care provider added.

Kaiser has developed a three-step approach to remedy the issues that includes: facilities assessments to identify the types of waste generated and to provide the correct receptacles for staff and physicians; include rounds to observe disposal techniques and "just in time" training to ensure compliance with proper practices; and annual training for every employee and physician in California on proper waste disposal.

"We take this matter extremely seriously and have taken full responsibility to acknowledge and, in cooperation with the California Attorney General and county district attorneys, correct our performance regarding landfill-bound trash where it may have fallen short of our standards. We dedicated many hours to identifying and closing gaps to strengthen our regulated waste disposal program and are confident in our ability not only to meet the monitoring and reporting requirements of this settlement, but to comply with the numerous requirements that apply to the different kinds of waste that result from caring for millions of Californians," Kaiser said.

Kaiser hired a third-party consultant and conducted more than 1,100 trash audits at its facilities in an effort to improve compliance after being notified of a joint law enforcement investigation. Kaiser also modified its operating procedures to improve its handling, storage and disposal of waste, Bonta said.

"I am pleased that Kaiser has been cooperative with my office and the district attorneys’ offices, and that it took immediate action to address the alleged violations,” he added.

Bonta was joined during the press conference by San Mateo County Deputy District Attorney Ken Mifsud and District Attorneys Pamela Price of Alameda, Brooke Jenkins of San Francisco, and Ron Freitas of San Joaquin counties.

“As the largest healthcare provider in the state, Kaiser has an extraordinary responsibility to the public and to its own patients to ensure that hazardous waste, potentially infectious human waste materials, and highly sensitive patient health information are handled according to state laws and not sent to municipal landfills not equipped to handle those wastes. Our Environmental Unit continues to work with San Mateo County environmental regulators and colleagues across the state to investigate and prosecute entities that break the law and endanger the environment,” San Mateo County District Attorney Stephen M. Wagstaffe said in a statement.

As part of the settlement, Kaiser will pay $47.2 million, which includes $37.5 million in civil penalties; $4.8 million in attorneys’ fees and costs; and $4,905,000 for supplemental environmental projects, primarily environmental prosecutor training. Kaiser would pay an additional $1.75 million in civil penalties if, within five years of the entry of the final judgment, Kaiser has not spent $3.5 million at its California facilities to implement enhanced measures to ensure compliance with relevant provisions of the law that are alleged to have been violated.

The health care provider must retain an independent third-party auditor – approved by the Attorney General’s Office and the district attorneys – who will perform no less than 520 trash-compactor audits at Kaiser’s California facilities to help ensure that regulated waste, including items containing protected health information, are not unlawfully disposed of; and conduct at least 40 field audits each year for five years to evaluate Kaiser’s compliance with hazardous waste, medical waste and protected health information laws.

Kaiser’s unlawful disposals are alleged to violate California’s Hazardous Waste Control Law, Medical Waste Management Act, Confidentiality of Medical Information Act, Customer Records Law, and Unfair Competition Law. The disposals are also alleged to violate the federal Health Insurance Portability and Accountability Act of 1996, known as HIPAA.

The current action was not the first against Kaiser. The California Department of Justice filed a lawsuit against Kaiser in 2014 after it delayed notifying its employees about an unencrypted USB drive that was discovered at a Santa Cruz thrift store. The drive contained more than 20,000 employee records. Kaiser paid $150,000 in penalties and attorneys' fees, and agreed to comply with California's data breach notification law in the future, provide notification of any future breach on a rolling basis, and add additional training regarding the sensitive nature of employee records.

Kaiser has also been the subject of prior enforcement actions by local prosecutors for mismanagement of regulated wastes.

Kaiser, which is headquartered in Oakland, is the state's largest health care provider, with more than 700 facilities statewide and serving approximately 8.8 million Californians in addition to members of the public seeking emergency care from Kaiser facilities.

A copy of the complaint and proposed stipulated judgment, which details the settlement terms and remains subject to court approval, can be found here and here.