ARTICLES

Planned Parenthood Becomes Local Giant

Details of Allred Lawsuit

By Cheryl Sullenger

A trial running from May 31 to June 5 before Superior Court Judge Robert Monarch between Southern California's largest abortion providers ended in an out-of-court settlement. Family Planning Associates, owned by mega-abortionist Edward Allred, sued three Southern California Planned Parenthood affiliates in January for engaging in unfair business practices. Allred asked the court for an injunction barring Planned Parenthood from performing abortions in California. The settlement, the details of which were arrived at in judge's chambers, favored Planned Parenthood, according to statements made by Allred's attorney in the hallway outside the Santa Ana courtroom.

At the heart of the suit was Allred's allegation that Planned Parenthood violated its nonprofit status when it pursued and was awarded the Kaiser Permanente abortion contracts.

While Allred's attorney and chief executive officer solemnly gathered their volumes of documents at trial's end, Planned Parenthood attorneys were congratulated by their clients. Mark Salo, CEO of Planned Parenthood of San Diego and Riverside Counties, Jonathan Dunn, CEO of PP of Orange County and San Bernardino, and Nancy Susakki, CEO of Planned Parenthood of Los Angeles shook hands and hugged employees who had been waiting their turns to testify.

"We gave everything to Planned Parenthood," Allred's attorney was overheard to have said during a mobile phone conversation outside the Santa Ana courtroom. "My client did not wish to continue due to the conduct of the judge."

Judge Monarch stated from the onset that he was predisposed to rule in Planned Parenthood's favor based on what he had read in the trial briefs.

Allred had alleged that Planned Parenthood never adhered to a required sliding fee scale for indigent patients, charged women full price who could not afford it, and often turned women away who did not have enough money for the abortion in violation of their nonprofit mission statement. He also alleged that private paying patients were often bumped from their appointments in favor of Kaiser patients, sometimes causing the private paying women a delay that would result in them having to have a costlier two-day abortion.

None of these facts seemed to make an impact on Judge Monarch. At one point the judge remarked that Planned Parenthood, although not perfect, was performing a valuable public service. He admitted that charitable organizations have an advantage over private companies. He stated that he thought that the fee of $300 for an abortion was as close to zero as one could possibly get. He remarked that he recently had hip surgery and joked that he had been charged that much of an aspirin. Judge Monarch did not see anything in the testimony that rose to the level of inappropriate behavior. He told the attorneys that public policy supports the existence of nonprofit clinics like Planned Parenthood and he believes they can peacefully coexist with private enterprise.

According to Allred's lawyer, prior to 1996, Medi-Cal directly reimbursed abortion providers for their services. At this time, most of Planned Parenthood's business consisted of Medi-Cal patients. However, in 1996, legislation was passed that allowed Medi-Cal to refer indigents requesting medical services to HMOs for treatment. The HMO would then be reimbursed by Medi-Cal funds. Kaiser Permanente had contracted with Allred to perform all of their abortion services. At this time Planned Parenthood testified that they began to see a decline in the number of Medi-Cal patients they were seeing. The clients that were serviced by Planned Parenthood were being referred by Medi-Cal to Kaiser, who would refer them to Allred for abortions. Mark Salo testified that at this time Planned Parenthood became concerned about its ability to continue operations.

In 1997, three Planned Parenthood affiliates formed an organization called the California Healthcare Collaborative. This group's purpose was to negotiate with HMOs for abortion contracts. Dixie Newman, vice-president of operations at Planned Parenthood of San Diego and Riverside Counties, negotiated such a deal with Kaiser Permanente, which was signed on October 27, 1997. Salo testified that other HMO contracts have also been acquired by Planned Parenthood, including agreements with Scripps, Signa, and Community Health, to provide abortion.

By 1998, Allred began to suffer a serious loss of business to Planned Parenthood because of the loss of the Kaiser contract. In January of 1999, Allred sued.

His original witness list was over 150 names long. Judge Monarch warned the Allred lawyer he was not inclined to allow so many witnesses if their testimony was duplicative, "Put your big guns first." He would often interrupt Allred's attorney and interfere with his questioning of witnesses. Among witnesses called by the Allred side on the first day of trial was director of clinic operations Liz Obregon.

Mrs. Obregon testified that Planned Parenthood had always had a sliding fee schedule so that no one is turned away because her lack of ability to pay. Mrs. Obregon testified that the current price for a first-trimester abortion, which composes most of their business, is $340. It was determined that the fact that the fee could slide to zero was not told to patients on a routine basis. During the week of the trial that policy was changed so that women are now told of the sliding fee scale on the telephone as they are scheduling an appointment. It was noted by the judge that the change in policy, as well as other recent procedural changes in the operations of Planned Parenthood, were litigation driven; however, he saw no impropriety in this.

Former Riverside center manager for Planned Parenthood, Sharon McMurtry, told a different story. McMurtry testified that she was told to charge one fixed price for all first-trimester abortions. If a patient did not have that amount McMurtry was instructed to urge the woman to apply for Medi-Cal, a time-consuming process many women did not want to wait for. According to McMurtry, the sliding fee scale was "for [employees'] eyes only" and was never to be shown to patients. Several times McMurtry had requested that the fee be reduced but each time Obregon had denied her request. McMurtry said that she was forced to turn away 3-4 women per week because of their lack of abilty to pay the full price for an abortion. During McMurtry's tenure as center manager, she was forced to reschedule private paying patients in order to accomiodate Kaiser patients. Dixie Newman had told McMurtry to give preferential treatment to Kaiser patients because the contract "is our bread and butter." According to McMurty's testimony this practice resulted in a delay to at least five women in six months that led to them having two-day second-trimester abortions. Former appointment specialist Gabriela Garcia, who was responsible for the rescheduling, testified that this happened 2-3 times per month.

McMurtry testified that the clinic she managed in Riverside was only allowed to perform abortions up to 20 weeks. After that the abortion had to be done in a facility that had access to a blood bank, which her clinic did not. Sonograms were done on every abortion patient to confirm the size of the fetus prior to abortion. Part of McMurtry' s job entailed duties in the "POC" lab. [POC stands for Products of Conception -- a euphemism for the dismembered baby's body.] She was required to measure each fetus after the abortions to confirm fetal age. She became concerned when she began measuring fetuses that were 22-26 weeks in gestation. She said that the doctors were complaining to her that the babies were too big. They discovered that the ultrasound machine was improperly calibrated. McMurtry stated that she complained "with intensity" to her superiors, including Obregon, about this and other conditions but nothing was done. McMurtry was eventually demoted from her position and left Planned Parenthood on June 30, 1999.

Further tesitmony revealed that the number of abortion patients seen by Planned Parenthood has risen dramatically over the past three years. Salo bragged of seeing more new patients last year than any other Planned Parenthood organization in the world. He had previously testified that they perform only 4,400 abortions per year. This testimony did not agree with the information in his 1998-1999 annual statement, where Salo claimed Planned Parenthood performed 13,140 abortions during that 12-month period. Planned Parenthood's financial officer testified that May 1, 1999, through May 1, 2000, they had billed Medi-Cal directly for abortions in the amount of $511,000. Kaiser Permanente had been billed $852,000 for abortion services during that same time. According to Salo, Kaiser is charged $290 per first trimester abortion. Private paying patients are charged $340 for the same procedure.

Salo testified that Planned Parenthood of San Diego and Riverside received about $1 million is charitable contributions each year. About $15,000 of those contributions go to the Gunn Fund and the Make A Difference Fund that provide money for abortions for women who cannot afford them. Salo testified that the Gunn Fund has a balance of approximately $2,000, proving that Planned Parenthood does provide free abortions and is not in violation of their non-profit status.

After getting the Kaiser contract, Planned Parenthood of San Diego and Riverside was able to expand from one abortion clinic to four, including Encinitas, Riverside, and, until the week of trial, Indio. Planned Parenthood of Orange and San Bernardino Counties were able to open a second abortion clinic in Orange in addition to their original facility in Upland as a result of the Kaiser contract.

A chambers conference was called during the second day of trial. It was learned that the court had been informed that Governor Gray Davis had signed AB 2393 into law. According to a Senate analysis of the bill, it establishes that it is now legal for non-profit clinics like Planned Parenthood to contract with HMOs and other third parties. The bill was introduced at the behest of Planned Parenthood and was prompted by Allred's lawsuit. (The bill was aggressively opposed by Allred.) This legislation cut the legs out from most of Allred's case.

When asked about the settlement agreement, Allred's lawyer would only say that whenever an agreement like this is reached there is compromise. Did he feel his client compromised? "Oh, we compromised a great deal."

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