BILL ANALYSIS Ó SB 1558 Page 1 Date of Hearing: May 16, 2012 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair SB 1558 (Kehoe) - As Amended: March 29, 2012 Policy Committee: AppropriationsVote: Urgency: Yes State Mandated Local Program: No Reimbursable: SUMMARY This bill appropriates $2.6 million ($1.3 GF; $1.3 Federal Trust Fund) to the Department of Justice (DOJ) to pay the settlement in Darling v. Douglas, U.S. District Court, Northern District. Any funds appropriated in excess of the amount required for the payment of this claim shall revert to the General Fund. FISCAL EFFECT This bill appropriates $2.6 million ($1.3 million GF; $1.3 million Federal Trust Fund) to DOJ. This settlement also provides for 7% interest beginning 90 days after the effective date of the settlement, which is Feb. 25, 2012. This amounts to about $500 per day, beginning May 25, 2012. Any funds appropriated in excess of the amount required will revert to the appropriate fund. COMMENTS 1)Rationale. This bill is one of two or three annual bills carried by the Appropriations chairs to provide appropriation authority for legal settlements approved by DOJ and the Department of Finance (DOF). These settlements were entered into lawfully by the state upon advice of counsel (DOJ). They are binding state obligations. 2)The Darling v. Douglas case . The plaintiffs, participants in an optional Medi-Cal program, Adult Day Health Care (ADHC) SB 1558 Page 2 brought suit in August 2009 contending the Department of Health Care Services (DHCS) did not have an adequate transition plan in place prior to the elimination of ADHC. Plaintiffs did not challenge the elimination, but contended DHCS was required to provide replacement services before eliminating the program. Plaintiffs asserted that the changes to the program would place them at risk of unnecessary institutionalization, alleged their due process rights were violated and that the restrictive new eligibility criteria violated federal Medicaid requirements. In November 2011, the parties agreed to a settlement. Under the terms of the settlement agreement, a new program, Community-Based Adult Services (CBAS), would be provided to qualifying ADHC participants and enhanced case management would be provided to those who do not qualify for CBAS. The settlement provides that both programs will eventually only be offered through managed care plans (except in areas where a plan does not operate). The settlement pays for attorneys' fees to plaintiffs' counsel of $2.2 million for all work performed prior to the court's approval of the settlement agreement and an additional $400,000 to cover any work performed regarding implementation and compliance with the agreement for the duration of the settlement (30 months). 3)Related Legislation . a) SB 730 (Kehoe), chaptered in February 2012, appropriated $13 million to DOJ to pay for six settlements, with interest in two cases. b) AB 140 (Fuentes) and SB 206 (Kehoe), both chaptered in 2011, appropriated funds for state settlements last year. Analysis Prepared by : Geoff Long / APPR. / (916) 319-2081