BILL ANALYSIS Ó SENATE HEALTH COMMITTEE ANALYSIS Senator Ed Hernandez, O.D., Chair BILL NO: AB 641 A AUTHOR: Feuer B AMENDED: June 28, 2011 HEARING DATE: July 6, 2011 6 CONSULTANT: 4 Trueworthy 1 SUBJECT Long-term health care facilities: civil penalties SUMMARY Eliminates the citation review conference (CRC) process from the citation appeals process for long-term care (LTC) facilities, and allows fines to be levied from both state and federal agencies when an incident violates both state and federal laws. CHANGES TO EXISTING LAW Existing law: Provides for the inspection and licensure of LTC facilities by the California Department of Public Health (DPH). Establishes the Long-Term Care, Health, Safety, and Security Act of 1973 (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 pursuant to state laws and the recommendation that a federal civil monetary Continued--- STAFF ANALYSIS OF ASSEMBLY BILL 641 (Feuer) Page 2 penalty be imposed for the same action. Establishes a citation and appeals process that includes a CRC. This bill: 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 (L&C) determines that a LTC facility is out of compliance with both state and federal requirements. Eliminates the CRC appeals process for all levels of state citations. Repeals existing law requesting DPH to develop recommendations to address the findings published in the June 2010 State Auditor 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." FISCAL IMPACT According to the Assembly Appropriations committee analysis, AB 641 would likely have a minimal fiscal impact on DPH operations. DPH indicates the total annual costs for CRCs are $470,000, but staff is redirected from other priority assignments in order to complete work for CRCs. Eliminating CRCs would free up staff resources within the L&C program to focus on other activities, some of which currently have a backlog. BACKGROUND AND DISCUSSION According to the author, this bill eliminates the CRC process which has proven to be redundant evidenced by the fact that most resolutions of citations are made in later administrative or legal appeals. AB 641 also allows for fines to be levied from both state and federal agencies when laws of both bodies are violated simultaneously in an incident. STAFF ANALYSIS OF ASSEMBLY BILL 641 (Feuer) Page 3 The author states that as of February 2010, more than 600 citations were backlogged awaiting CRCs; some of the appeals were made 8 years prior. This backlog is due in part by insufficient staffing which has led to delays in setting CRC hearings. LTC facilities are then unable to resolve citations they feel were unwarranted, and facility residents who may have experienced violations do not receive justice when these violations are stuck in appeal for years. There have also been instances where a settlement did not reflect the level of violation. The author cites an example where one appeal upheld a Class AA violation, but the settlement reduced the monetary penalty from $100,000 to $1,000 falling well below the Class AA monetary penalty amount (minimum $10,000). The author argues that it makes sense to eliminate the CRC process in favor of the more trusted appeals processes before an administrative law judge or a California Superior Court. California is one of a few states that bar a monetary penalty from both a state and federal agency when a citation involves noncompliance with both a state and federal law. It makes sense to allow both entities to act if the laws of either were violated. By removing this prohibition, it allows the DPH to make a recommendation to CMS to levy a monetary penalty. The author argues there are no requirements for this to occur on each and every citation but rather gives DPH this option for the most egregious violations. State auditor report At the request of the Joint Legislative Audit Committee, the California State Auditor produced an audit report in June of 2010, examining DPH. 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 a CRC as of February 2010. According to DPH, delays in the CRC process may encourage LTC facilities to appeal STAFF ANALYSIS OF ASSEMBLY BILL 641 (Feuer) Page 4 citations and request CRCs as a way to delay paying their monetary penalties. SB 853 (Budget and Fiscal Review Committee), Chapter 717, Statutes of 2010, required DPH, in consultation with stakeholders, to develop recommendations to address this report, and provide recommendations to the Legislature no later than March 1, 2011. In January 2011, DPH solicited input from stakeholders and issued recommendations in April 2011. AB 641 reflects the revised recommendations of DPH. Prior legislation 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 and to provide the recommendations to the fiscal and policy committees of the Legislature no later than March 1, 2011. AB 2555 (Feuer) of 2010, would make a one-time appropriation of $1.6 million from the State Health Facilities Citation Penalties Account to the California Department of Aging for local LTC Ombudsman Programs. AB 2555 was held on the Senate Appropriations Suspense File. AB 392 (Feuer), Chapter 102, Statutes of 2009, requires that at least one-half of the funds in the State Health Facilities Citation Penalties Account be used to restore funding for local LTC Ombudsman Programs. AB 935 (Feuer) of 2009 was substantially similar to AB 392. AB 935 was held on the Assembly Appropriations Suspense File. Arguments in support Supporters write AB 641 allows for both state and federal penalties to be levied when both state and federal violations occur and gives DPH the necessary discretion when finding serious and blatant violations. Supporters argue the CRC process is inefficient and redundant and by removing the CRC process, nursing home oversight will be streamlined. Supporters write AB 641 will strengthen the oversight protection for the vulnerable residents in skilled nursing facilities. STAFF ANALYSIS OF ASSEMBLY BILL 641 (Feuer) Page 5 PRIOR ACTIONS Assembly Health: 13- 4 Assembly Judiciary: 7- 2 Assembly Appropriations:12- 5 Assembly Floor: 52- 24 POSITIONS Support: Advocacy, Inc. Alzheimer's Association, California Council Bet Tzedek Legal Services California Advocates of Nursing Home Reform California Alliance of 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 Oppose:None received. -- END --