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
AB 641
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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