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---



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          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.





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          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 




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          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.





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                                  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.


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