Health & Medicine

Why one Sacramento family’s $127 million jury award is up for discussion this election year

Debbie Birch, a kidney patient, has her blood drawn for testing during a regular appointment at the Davita Dialysis clinic in Nampa, Idaho, on March 4, 2016.
Debbie Birch, a kidney patient, has her blood drawn for testing during a regular appointment at the Davita Dialysis clinic in Nampa, Idaho, on March 4, 2016. McClatchy file

Federal court records detail what happened.

Sacramento resident Irma Menchaca left her home the morning of June 6, 2008, for kidney dialysis treatment at DaVita University Dialysis Center in Campus Commons. She had begun regular treatments five years earlier because of her end-stage renal disease.

She arrived at the clinic and reported no health complaints, and by 9:45 a.m., she started what should have been a 180-minute treatment. But at 10:40 a.m., Menchaca was found unresponsive. Emergency personnel tried to revive her, but the 57-year-old wife and mother was pronounced dead on site.

Jurors in the wrongful death case in Colorado brought by her family concluded her survivors should receive $127 million in damages.

Yet news of this wrongful death award might never have reverberated to California if the company and a powerful labor union weren’t locked in a high-stakes, multimillion-dollar battle for voter sentiment here.

SEIU-United Healthcare Workers West has poured more than $7.9 million so far into an effort to persuade California voters to approve a statewide proposition that would limit the amount of profits that kidney dialysis companies such as DaVita and Fresenius can keep. Those companies have countered, putting at least $7.2 million into the opposition effort. The measure, now known as Proposition 8, won’t be decided until the November election.

The union and its supporters say the companies are sacrificing quality of patient care and the cleanliness of facilities in pursuit of profits that will wow Wall Street. The companies and their supporters say the SEIU-UHW has been trying unsuccessfully to organize dialysis center workers for years and that their true goal in pushing Prop. 8 is to gain higher wages for potential union members.

The Sacramento Bee is working harder to cover the local health care community. Have a story idea? Email Cathie Anderson

The Menchacas’ civil case, however, lent new evidence to SEIU-UHW’s contention that Denver-based DaVita is putting financial interests ahead of patient care.

Filed in federal court in Colorado, the lawsuit lists cardiac arrest as the cause of Menchaca’s death, attributing it to DaVita’s failure to alert Menchaca or her kidney specialist to a change in the acid concentrate DaVita was using to filter waste from her blood, ensure a healthy pH balance and correct any electrolyte abnormalities.

The company saved millions of dollars by switching to a dry acid concentrate called GranuFlo, the lawsuit alleged, and it had been shown that this new formula could lead to a dangerous biochemical imbalance that triggers abnormal heart rhythms and cardiac arrest.

Fresenius, the maker of GranuFlo, had informed DaVita of these dangers as early as 2003, but the company neither informed its patients nor physicians of the risks, and it didn’t stop using the product, according to the suit. If physicians had known, the lawsuit continued, they could have told the clinic staff how to avoid complications.

In March 2012, the U.S. Food and Drug Administration recalled GranuFlo, saying that its use could result in cardiopulmonary arrest and death if prescriptions did not take into account acetate levels. The FDA took corrective action and required Fresenius to include a warning about the prescription problem.

“What did DaVita do to mitigate those risks? Nothing,” plaintiffs’ attorneys Robert Carey and Stuart Paynter wrote in a July 11 op-ed in The Denver Post. “It switched to GranuFlo without telling the treating doctors. ... The reason DaVita acted this way was clear: Treating doctors would have rebelled had they been told that DaVita was using GranuFlo just to save money, with no clinical benefit and, for patients like ours, a 600 percent to 800 percent increase in the risk of cardiac arrest, according to the evidence admitted.”

DaVita’s chief medical officer, Allen R. Nissenson, defended his company in another July op-ed: “Strikingly, this lawsuit centers not on the product itself, but on the way we communicated to caregivers about GranuFlo, a powdered product that has been used in tens of millions of dialysis treatments over 25 years, and continues to be used in tens of millions of treatments today. The verdict is shocking when you consider the actual facts and science in this case. Our teammates did the right things, in the right way, and we would do it again the same way in the future.”

Nissenson described early warnings about GranuFlo as unsubstantiated speculation and said DaVita scores highly on clinical outcomes according to key benchmarks set by the U.S. Centers for Medicare and Medicaid Services.

Jurors, however, connected DaVita’s actions with the deaths of Menchaca and two other people included in the lawsuit — Madera resident Gary Gene Saldana and Chicago-area resident Deborah Hardin, dealing a total judgment of $383.5 million against the company.

SEIU-UHW argues that DaVita and Fresenius have a virtual monopoly in California, owning 72 percent of the clinics in the state, and Prop. 8 is intended to force them to invest more of their profits into patient care.

The initiative requires clinics and their “governing entity” to issue refunds annually to patients or their payers if revenue exceeds 115 percent of the costs of direct patient care and health-care improvements, and it provides for fining clinics that don’t issue refunds within 210 days of the end of a company’s fiscal year.

Because the profit cap is over and above what’s spent on patient care, the union says, companies have no incentive to limit spending on wages, equipment or facilities.

Yahoo Finance reported that DaVita recorded net income of $663.6 million in 2017 and Fresenius $1.3 billion, plus Fresenius’ operating profit margin was 12.4 percent and DaVita’s about 15 percent last year.

The average operating margin for the S&P 500 companies was 11 percent in 2017, according to market analyst Chris Murphy.

“Rather than investing in patients and the workers, they’re sending it (profit) back to their shareholders, their investors,” said SEIU-UHW spokesman Sean Wherley, “and as a result, there is no on-the-ground accountability to both improve the quality of life for these patients and the conditions for them and the workers taking care of them every day.”

Dr. Bryan Wong, a kidney specialist and a medical director for both DaVita and Fresenius, said the company’s centers, especially in California, are highly regarded. Medicare and Medicaid evaluates dialysis clinics on hundreds of requirements, and California has more clinics with four- or five-star ratings than any other state, he said.

He said the SEIU-UHW is putting its campaign to increase wages for dialysis clinic workers ahead of the interests of the roughly 66,000 dialysis patients across the state.

Instead of improving services, he argued that the initiative would ultimately result in clinic closures, making it harder for patients to find one. It’s a challenge to manage, he said, in an industry in which 90 percent of the customers are covered by Medicare or Medi-Cal, programs that don’t cover the full cost of dialysis care.

Opponents of Prop. 8 hired former California legislative analyst Bill Hamm’s economic think tank the Berkeley Research Group to assess the measure’s financial impact, and the report projected that 83 percent of dialysis clinics wouldn’t be able to cover costs if the measure passes.

“No company, either independent or nonprofit, can operate under these conditions,” Wong said. “So what’s going to happen? Patient care is going to suffer.”

After being on dialysis more than a year, Jennifer Hinton of Louisburg was put on the kidney transplant list in North Carolina. Heather Robinson, the mother of four patients in the pediatrician’s office where Jennifer works, started praying for Je

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