When People Speak, What Does the System Say Back?

Kaiser Permanente's $556 million settlement raises a harder question about speak-up culture: What happens when concerns surface, but the organization's incentives are sending a different message?

We tell people to speak up.

Raise the concern.

Tell your manager.

Call HR.

Use the hotline.

Go to Compliance.

Say something when something doesn't seem right.

And when people don't speak, we often ask why.

Were they afraid?

Did they believe it wouldn't matter?

Did leadership create enough psychological safety?

Those are important questions.

But there is another question organizations need to ask:

What happens when people do speak?

Because an organization can create channels for truth to enter and still have systems powerful enough to overwhelm what people are saying.

A recent $556 million settlement involving Kaiser Permanente offers a case worth examining.

What happened

In January 2026, five Kaiser Permanente affiliates agreed to pay $556 million to resolve federal False Claims Act allegations involving Medicare Advantage risk-adjustment submissions.

The Justice Department alleged that between 2009 and 2018, Kaiser pressured physicians to add diagnoses to patients' medical records after visits, sometimes months or more than a year later, in ways the government contended did not comply with Medicare requirements.

Kaiser has disputed the government's characterization of its practices, and the settlement does not constitute an admission of wrongdoing or liability.

That distinction matters.

This is not an examination of whether Kaiser “committed fraud.”

It is an examination of something the public record allows us to see much more clearly:

What happens inside an organization when concerns about a practice exist alongside systems designed to produce more of the result connected to that practice?

Because according to the government's allegations, people inside Kaiser were speaking.

The concerns were already inside the organization.

According to the government, the concerns weren't hidden. People inside Kaiser were raising them.

Physicians questioned the practices. Kaiser's own compliance audits identified problems with some of the medical-record addenda.

And in 2011, according to the complaint, a medical coder within Kaiser brought something even more concerning directly to several executives: more than half of the physicians she had spoken with said they felt pressured to add diagnoses they hadn't considered, evaluated or treated. Some believed their bonuses could be affected.

So this wasn't simply a matter of whether people were willing to speak up.

They were speaking.

The leadership question is what happened after the concerns were already in the room.

What did the organization say back?

Not necessarily with words.

With its systems.

Every organization has more than one voice.

Policies speak.

Leaders speak.

Compliance departments speak.

Managers speak.

But so do goals.

Metrics.

Performance reviews.

Dashboards.

Bonuses.

Deadlines.

Recognition.

And money.

The government alleged that Kaiser wasn’t simply asking physicians to document more diagnoses. It set specific targets for physicians and facilities, tracked who was falling short, made the financial impact of missing those targets clear, and tied financial incentives to meeting them.

Now put that alongside what was happening inside the organization.

Physicians were raising concerns.

Compliance audits were identifying problems.

And the system was still rewarding the result those concerns were about.

That is where this case gets interesting.

Because when employees are raising concerns while the organization continues to reward the very thing they’re questioning, what are people actually being told matters most?

This is where speak-up culture gets tested.

An open door is useful.

A hotline can be useful.

A compliance department is necessary.

None of those things, by themselves, tell you whether an organization actually knows how to respond to unwelcome information.

The test comes after the concern arrives.

Does it change anything?

Can it interrupt a process?

Does someone have the authority to stop what is happening?

Does the organization examine whether the concern is isolated or systemic?

Does the organization even consider the concern?

Do leaders look at the conditions producing the behavior?

And perhaps most importantly:

What happens when the concern conflicts with something the organization is measuring, rewarding or financially depending on?

That's when we find out which message actually has power.

“Filing a complaint was a last resort, not a first step.”

Dr. James Taylor, one of the former Kaiser employees whose whistleblower case was resolved through the settlement, said afterward that he had believed the problems could be fixed internally.

He described moments of progress followed by solutions being undone.

And then he said something leaders should sit with:

“Filing a complaint was a last resort, not a first step.”

That sentence matters beyond this case.

We sometimes encounter a whistleblower complaint, lawsuit, government investigation, union grievance, public accusation or employee departure and treat that moment as the beginning of the problem.

It may not be.

Sometimes external escalation is what happens after internal escalation has already failed.

By the time a problem reaches the outside world, the organization may have had multiple opportunities to see it, hear it and respond to it.

Which means one of the questions leaders should ask when something finally erupts is not simply:

How did this happen?

Ask instead:

Where did this information appear earlier?

Who knew?

Who raised it?

Where did it go?

What happened next?

And what inside the organization had more power than the warning?

The Decision Before the Decision™

This is where incentives become more than a compensation issue.

They become part of decision architecture.

Imagine an organization saying:

We value compliance.

And then the operating environment says:

Here is the target.

Here is how your performance compares.

Here is the financial consequence of missing it.

Here is the incentive attached to achieving it.

Those are not neutral administrative mechanisms. They are instructions. And sometimes they speak louder than anything written in a policy. That doesn't mean incentives automatically produce misconduct. It means leaders have to examine what their systems are teaching people to prioritize. Because the decision before the decision may have been made long before anyone confronted a specific ethical or compliance question.

It may have been embedded in what the organization chose to measure, reward and repeatedly emphasize.

Look at the Person. The Leader. And the System.

The Person–Leader–System lens helps us resist the easiest explanation.

Person

What did individual employees understand? What concerns did they have? What choices did they make?

Leader

What expectations did managers and executives communicate? What happened when concerns reached leadership? What behavior did leaders reinforce, challenge or allow?

System

What did the organization's metrics, incentives, processes, reporting mechanisms and accountability structures encourage?

None of those perspectives alone gives us the whole picture.

Together, they reveal something leaders can easily miss:

An organization can say one thing and systematically reinforce another.

And when that happens, the system often wins.

Listen to what your organization rewards.

The Kaiser settlement resolved allegations. It did not determine liability.

But the documented allegations still give leaders something worth examining inside their own organizations.

Not:

Could this happen here?

Something more useful:

Where are our organizational messages competing with one another right now?

Where does policy say one thing while the incentive says another?

Where are employees being asked to raise concerns while simultaneously being rewarded for keeping something moving?

Where has the same concern surfaced more than once?

Where has someone raised an uncomfortable truth only to watch the organization eventually return to business as usual?

And if an employee told us today that something wasn't working—

which voice inside our organization would be louder?

Theirs?

Or the system?

Because you can tell people to speak up.

But if everything else in the organization tells them what results matter most, don't be surprised when the incentive system speaks louder.

Decisions Under the Microscope

Decisions Under the Microscope examines consequential public decisions through the Person–Leader–System lens—not to assign guilt from a distance, but to understand what leaders and organizations can learn from how decisions, incentives and systems actually work.

When your People systems are sending competing signals, the problem rarely stays contained to HR.

Fractional Chief People Officer support helps organizations examine the leadership practices, accountability structures and People infrastructure shaping what employees actually experience—and what the organization ultimately produces.

Explore Fractional Chief People Officer Support →

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Kimberly D. Sanders
Executive Strategist • Creator of the PLS Framework™ and The Third Perspective™ • Diagnosing before prescribing.