Bill targeting Kaiser executive compensation disclosure moves forward
California’s Senate Judiciary Committee passed a bill last week that aims to boost public disclosure requirements for deferred compensation of executives at not-for-profit health systems.
AB 1404, drafted by Democratic California Assembly member Miguel Santiago, would close an alleged loophole that allows not-for-profit systems to hide deferred compensation when not-for-profit entities are used to provide a supplemental retirement plan to employees who work for a for-profit arm of the company. The bill would require organizations to tell the secretary of state the total amount of deferred compensation allocated by the not-for-profit entity every year, the name and title of each individual, whether taxes were paid on the deferred compensation, and the agreement or legal document governing the deferred compensation.
Santiago and the SEIU-United Healthcare Workers West union specifically called out Kaiser Permanente, alleging that its for-profit medical group does not take “financial responsibility for its $7.7 billion supplemental retirement plan,” instead passing it off to the not-forprofit wing of the integrated delivery system.
Kaiser said in a statement that the union’s claims are “flat out wrong” and it is “misusing the legislative process to try to influence contract bargaining.”
“The retirement plan for physicians of the Southern California Permanente Medical Group is the only retirement plan for about 11,000 current and retired physicians, and is very similar to the retirement plan enjoyed by the employees of Kaiser Permanente, including the 24,981 who are represented by SEIU-UHW in Southern California,” the company said. “The only significant difference is that the physician retirement plan is not trust-funded.”
A recent Modern Healthcare analysis found that the 25 highest-paid not-for-profit health system executives received a combined 33.2% increase in total compensation in 2017, rising to $197.9 million from $148.6 million in 2016. Two Kaiser executives made that list.