State Fines HMO $500,000 in Case of Girl With Cancer : Medicine: Regulators say adequate treatment was not provided. TakeCare calls the action unjustified.

State regulators, in an extraordinary action, on Thursday fined a Northern California health maintenance organization $500,000 for failing to provide adequate medical care to a 9-year-old girl with a rare childhood cancer.

The fine against TakeCare Inc. is the biggest financial penalty ever levied against a health plan by the California Department of Corporations, which regulates HMOs. Corporations Commissioner Gary S. Mendoza called the TakeCare case “particularly egregious” and said the health insurer’s actions “put the patient’s life in jeopardy.”

The enforcement action was applauded as an important victory by medical and consumer groups that have been increasingly critical of the HMO industry’s efforts to drive down medical costs--an effort they contend can jeopardize the quality of patient care.

Some of those same groups have also complained of what they see as the state’s lax regulation of HMOs.

“This sends a message to the industry that they need to pay attention to more than just the bottom line,” said Judith Bell, co-director for the San Francisco office of Consumers Union, a watchdog organization.

Steven Thompson, a vice president for the California Medical Assn., the state’s largest physician organization, said the fine sends a message to HMOs that “before you deny treatment, make sure that the denial is based on good, sound medical advice.”

Ria Carlson, spokeswoman for FHP International Corp., a Fountain Valley-based HMO that acquired TakeCare earlier this year, called the fine unjustified, but she said FHP will “work very closely with Corporations to resolve” the matter.

The state alleges that TakeCare failed to provide Carley Christie of Woodside access to a qualified pediatric surgeon when she was diagnosed in January, 1993, with a rare form of childhood kidney cancer known as Wilms’ tumor.

The state also alleges that the Concord-based health plan “retaliated” against Carley’s parents, Harry and Katherine Christie, when they decided to go outside TakeCare’s network of authorized physicians to find a surgical specialist with experience in Wilms’ tumors.

After the successful surgery at Stanford University Hospital, TakeCare refused to cover the $57,000 medical bill, saying the Christies violated their HMO agreement in going outside the network without approval.

The Christies have contended that in the traumatic few days after their daughter was diagnosed with cancer and then scheduled for surgery, they had insufficient time to get the proper authorization. Moreover, they didn’t want their daughter’s surgery to be performed by a physician who lacked experience with Wilms’ tumors.

Carley, now 11, has since recovered from her surgery and subsequent cancer treatment. She is “an active young woman” who plays on her sixth-grade soccer team and takes jazz-dance and piano lessons, said Harry Christie, an electronic equipment salesman.

“Thank God we made the decision we did, because we know Carley got the best medical care to ensure her survival,” Christie said.

The Christies have been waging a battle with TakeCare and state regulators for nearly two years to get compensation in their case. Earlier this year, an independent state arbitrator ruled in favor of the Christies and ordered TakeCare to reimburse them for their medical and some legal expenses.

Although the fine was a record for state regulators, some HMO members, however, have won multimillion-dollar damage awards in treatment-denial cases that have been decided in court.

Mendoza, who has ruffled the feathers of health insurers since taking over the Department of Corporations’ top job a year ago, said his decision is an attempt to “make certain that the quality of patient care is not compromised in this era of cost containment.”

Mendoza said his department receives about 2,000 complaints a year from HMO members, a small figure when compared to the many millions of Californians who belong to such plans.

But the Consumer Union’s Bell says that figure doesn’t necessarily represent the true number of HMO complaints.

“There are plenty of complaints, but consumers either don’t know they can file with the Department of Corporations or they don’t think the agency will do something,” she said, noting that few people are as persistent as the Christies in pursuing claims.