BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 641
                                                                  Page  1

          Date of Hearing:   April 26, 2011

                            ASSEMBLY COMMITTEE ON HEALTH
                              William W. Monning, Chair
                     AB 641 (Feuer) - As Amended:  April 14, 2011
           
          SUBJECT  :   Long-term health care facilities: civil penalties.

           SUMMARY  :  Streamlines the citation appeals process for long-term 
          health care facilities (LTC facilities), increases the maximum 
          fine for Class "B" citations for LTC facilities and allows fines 
          to be levied from both state and federal agencies when an 
          incident violates both state and federal laws.  Specifically, 
           this bill  :   

          1)Repeals existing law requesting the Department of Public 
            Health (DPH) to develop recommendations to address the 
            findings published in the June 2010 report entitled, 
            "Department of Public Health: It Reported Inaccurate Financial 
            Information and Can Likely Increase Revenues for the State and 
            Federal Health Facilities Citation Penalties Accounts (State 
            Auditor report)."

          2)Revises state law to enable DPH to recommend that the federal 
            Centers for Medicare and Medicaid Services (CMS) impose a 
            federal civil monetary penalty when DPH's Licensing and 
            Certification Division determines that a LTC facility is out 
            of compliance with both state and federal requirements.

          3)Increases the maximum penalty amount for Class "B" citations 
            for LTC facilities from $1,000 to $5,000.

          4)Eliminates the citation review conference (CRC) appeals 
            process for all levels of state citations.  

           EXISTING LAW  :

          1)Provides for the inspection and licensure of LTC facilities by 
            DPH.

          2)Establishes the Long-term Care, Health, Safety, and Security 
            Act of 1973 (LTC Safety Act), which permits DPH to assess 
            penalties against LTC facilities for violation of prescribed 
            state statutes, regulations, and federal standards pertaining 
            to patient care.  Prohibits the issuance of both a citation 








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            pursuant to state laws and the recommendation that a federal 
            civil monetary penalty be imposed for the same action.

          3)Requires monies collected as a result of the penalties imposed 
            pursuant to the LTC Safety Act, to be deposited into either 
            the State Health Facilities Citation Penalties Account or the 
            Federal Health Facilities Citation Penalties Account (State 
            and Federal Accounts), and used, upon appropriation by the 
            Legislature, for the protection of health or property of 
            residents of LTC facilities.

           FISCAL EFFECT  :   This bill has not yet been heard by a fiscal 
          committee.


           COMMENTS  :    

           1)PURPOSE OF THIS BILL  .  According to the author, LTC facilities 
            are unable to resolve citations they feel are unwarranted and 
            LTC facility residents, who may have been violated, do not 
            receive justice in a timely manner due to the prolonged CRC 
            appeals process which at times can take years.  The author 
            maintains that it makes sense to remove the CRC appeals 
            process as an available option to LTC facilities in favor of 
            the more trusted appeals processes in existing law, such as an 
            administrative law judge or a California Superior Court.

          The author further argues that Class "B" citations for LTC 
            facilities include serious pest infestation, providing an 
            inadequate or unimplemented care plan, and a wide range of 
            emotional, physical, and sexual abuse.  The author maintains 
            that even though a monetary penalty of $100 to $1,000 may be 
            appropriate for some violations in this category, the most 
            injurious and serious cases warrant a monetary penalty of up 
            to $5,000.  Additionally, according to the author, Class "B" 
            citations for LTC facilities have not been modified since 
            1985.  

          The author also argues that California is one of a few states 
            that bars a monetary penalty from both a state and federal 
            agency when a LTC facility action involves noncompliance with 
            both a state and federal law.  The author asserts that it 
            makes sense to allow both entities to act if the laws of 
            either were violated.  By removing this prohibition, this bill 
            allows DPH to make a recommendation to the CMS to levy a 








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            monetary penalty.  According to the author, there are no 
            requirements in this bill that such levies should be done for 
            each and every citation and this bill provides DPH with the 
            discretion to cite a higher penalty for the most egregious 
            violations.

           2)PENALTY ACCOUNTS  .  DPH is responsible for licensing and 
            monitoring more than 2,500 LTC facilities.  Teams of 
            evaluators from DPH inspect LTC facilities to ensure that they 
            meet applicable federal and state requirements and that they 
            investigate any complaints made against a LTC facility.  
            Generally, if a team finds during a survey or complaint 
            investigation that a LTC facility is not in compliance with a 
            state requirement, DPH may impose a civil monetary penalty, 
            and if the team finds noncompliance with a federal 
            requirement, it may make a recommendation to CMS that it 
            impose a monetary penalty.  Under current law, however, only 
            one entity can levy a fine for the violation.  California is 
            one of the few states which prohibits federal and state 
            agencies from acting concurrently when their respective laws 
            have been violated.  Monetary penalties collected from LTC 
            facilities are deposited into either the State or Federal 
            Accounts.  Monies from these accounts are to be used, upon 
            appropriation by the Legislature, in accordance with state and 
            federal law for the protection of health or property of 
            residents of facilities, including, but not limited to the 
            following:  a) Relocation expenses incurred by the state, in 
            the event of a LTC facility closure; b) Maintenance of LTC 
            facility operation pending correction of deficiencies or 
            closure, such as temporary management or receivership; c) 
            Reimbursement of residents for personal funds lost; and, d) 
            Costs associated with informational meetings required under 
            existing law.  In addition, in recent years, the California 
            Department of Aging (CDA) has received an appropriation from 
            the Federal Account for its LTC Ombudsman Program which is 
            charged with investigating and seeking to resolve complaints 
            made by, or on behalf of, LTC facilities' residents.

           3)STATE AUDITOR REPORT  .  At the request of the Joint Legislative 
            Audit Committee, the California State Auditor produced an 
            audit report in June of 2010.  This State Auditor report 
            examined DPH's management of the State and Federal Accounts 
            and the effectiveness of its collection of civil monetary 
            penalties imposed on LTC facilities.  The State Auditor report 
            concluded that DPH and the former California Department of 








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            Health Services have overstated the fund balances for the 
            Federal Account on the fund condition statements since at 
            least 2004-05.  Errors made have masked the fact that the 
            Federal Account is now nearly insolvent.  A primary concern 
            with the financial condition of the Federal Account is the 
            fact that in recent years it has funded CDA's LTC Ombudsman 
            Program.

          According to the State Auditor report, state law specifies that 
            LTC facilities are not required to pay monetary penalties on 
            contested citations that have not been resolved.  LTC 
            facilities may contest a monetary penalty by requesting an 
            appeal through the CRC process in which an independent hearing 
            officer from DPH's Office of Legal Services makes a 
            determination on whether to uphold, modify, or dismiss the 
            citation.  Because of DPH's staffing issues and workload 
            priorities, more than 600 citations - with corresponding 
            monetary penalties amounting to nearly $5 million - were 
            awaiting CRC as of February 2010.  According to DPH, delays in 
            the process for CRC may encourage LTC facilities to appeal 
            citations and request CRCs as a way to delay paying their 
            monetary penalties.

          After reviewing DPH's process for issuing and collecting 
            monetary penalties, the State Auditor identified that the 
            monetary penalty amounts specified in state law have not been 
            updated regularly to reflect the rate of inflation.  The State 
            Auditor reported that if the monetary penalty amounts that DPH 
            actually collected from fiscal year 2003-04 through March 2010 
            reflected the rate of inflation, that DPH could have collected 
            nearly $3.3 million more.  The largest revenue increase, 
            according to the State Auditor report, totaling more than $2.2 
            million, would have resulted if state law had adjusted the 
            penalty amounts for Class "B" violations.
           
          4)SUPPORT  .  The National Senior Citizens Law Center, Bet Tzedek 
            Legal Services, California Advocates for Nursing Home Reform 
            (CANHR), the Congress of California Seniors, Disability Rights 
            California and the Alzheimer's Association all write in 
            support stating that this bill will assist in providing better 
            oversight for LTC facilities and protecting residents by 
            ensuring citation appeals are properly dealt with in a timely 
            manner and violations are met with a proper level of response. 
             CANHR further states that the citation system for LTC 
            facilities is badly broken and is not serving its goal of 








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            protecting LTC facility residents from abuse and neglect.  
            CANHR argues that DPH issues many thousands of deficiencies to 
            LTC facilities for violating state and federal standards 
            without imposing any financial penalties.  In the overwhelming 
            majority of cases, a LTC facility must merely file a plan of 
            correction when it is cited for violations, CANHR maintains.  
            CANHR also argues that the increase in Class "B" citations is 
            long overdue.  According to CANHR, the value of Class "B" 
            citations has greatly eroded because they have not been 
            adjusted since 1985, a period of 26 years.  CANHR maintains 
            that by increasing the top Class "B" citations to $5,000, this 
            bill will enable DPH to better match citations to the harm and 
            trauma suffered by residents who have suffered abuse and 
            neglect.  All supporters state that it is imperative that 
            quality care for our older adults is provided.
           
          5)OPPOSE UNLESS AMENDED  .  The California Association of Health 
            Facilities (CAHF) is opposed unless amended to this bill.  
            CAHF supports citation appeals before an administrative law 
            judge, however, according to CAHF, DPH would like to use 
            "retired annuitants" to review some appeals under this appeals 
            process.  In order to ensure unbiased consideration, CAHF 
            maintains that it is important that those making decisions in 
            the appeal process be separate from the staff issuing 
            citations and fines.

          CAHF also writes that they are opposed to making a 500% increase 
            in the amount of Class "B" citations by raising them to 
            $5,000.  CAHF asserts that this is an excessive penalty for 
            regulatory violation that by definition does not result in 
            harm.  CAHF argues that the State Auditor report, upon which 
            this recommendation is based, appears to have been structured 
            to evaluate the citation process from one perspective - how 
            revenue could be increased to provide a viable, secure source 
            of funding for the state LTC Ombudsman Program in the future.  
            According to CAHF, there was no attempt to assess the process 
            in the context of its underlying purpose - to ensure provider 
            compliance with federal and state licensing and certification 
            requirements.

          CAHF, lastly, argues that at DPH discretion, facilities already 
            can be cited either under the state or federal enforcement 
            systems.  CAHF argues to protect LTC facilities from being 
            penalized twice for the same incident of noncompliance, the 
            Legislature passed a law which prevents DPH from recommending 








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            the federal monetary penalties be issued based on a 
            state-survey.  According to CAHF, imposing both state and 
            federal monetary penalties for a single incident of 
            non-compliance violates the prohibition against a "dual 
            enforcement" and is fundamentally unfair.

          CAHF states that unless this bill is amended to delete the 
            increased penalties and dual enforcement process they are 
            opposed to this measure.

           6)PREVIOUS LEGISLATION  .

             a)   SB 853 (Budget and Fiscal Review Committee), Chapter 
               717, Statutes of 2010, requires DPH, in consultation with 
               stakeholders, to develop recommendations to address the 
               findings published in the June 2010 State Auditor report.  
               Requires DPH to provide the recommendations to the fiscal 
               and policy committees of the Legislature no later than 
               March 1, 2011.

             b)   AB 2555 (Feuer) of 2010 would have appropriated $1.6 
               million from the State Account to CDA for local LTC 
               Ombudsman Programs.  AB 2555 was held on the Senate 
               Appropriations Suspense File.

             c)   AB 392 (Feuer), Chapter 102, Statutes of 2009, requires 
               that at least one-half of the funds in the State and 
               Federal Accounts be used to restore funding for local LTC 
               Ombudsman Programs.

             d)   AB 935 (Feuer) of 2009 was substantially similar to AB 
               392 was held on the Assembly Appropriations Suspense File.

           7)DOUBLE REFERRAL  .  This bill has been double-referred.  Should 
            this bill pass out of this committee, it will be referred to 
            the Assembly Judiciary Committee.
             
             
           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Advocacy, Inc.
          Alzheimer's Association
          Bet Tzedek Legal Services








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          California Advocates for Nursing Home Reform
          California Alliance for Retired Americans
          California Long-Term Care Ombudsman Association
          California Senior Legislature
          Catholic Charities of California United
          Congress of California Seniors
          Council on Aging, Orange County
          Disability Rights California
          Foundation Aiding The Elderly
          National Senior Citizens Law Center
          Ombudsman and HICAP Services of Northern California

           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Tanya Robinson-Taylor / HEALTH / (916) 
          319-2097