BILL ANALYSIS �
SB 558
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Date of Hearing: July 13, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 558 (Simitian) - As Amended: May 3, 2011
Policy Committee: JudiciaryVote:7-3
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill:
1)Lowers the standard of proof-in cases of elder or dependent
adult physical abuse or neglect brought under the Elder Abuse
and Dependent Adult Civil Protection Act (EADACPA)-from clear
and convincing to a preponderance of the evidence.
2)No longer requires-in order to receive compensatory damages or
attorney's fees and costs-a showing of clear and convincing
evidence against an employer, for the acts of an employee
under (1), that the employer had advance knowledge of the
unfitness of the employee and employed him or her with a
conscious disregard of the rights or safety of others, or
authorized or ratified the wrongful conduct for which the
damages are awarded, or was personally guilty of oppression,
fraud, or malice. An award of punitive damages would still
require a showing of clear and convincing evidence.
FISCAL EFFECT
The principal state impact of this bill will be General
Fund/federal fund cost pressure, potentially in the hundreds of
thousands to millions of dollars, on Medi-Cal payments to
skilled nursing facilities (SNFs) resulting from increases,
linked to increased litigation, in professional liability
insurance (PLI) costs for these facilities.
Under current law, for freestanding (AB 1629, 2004) SNFs, the
portion of their reimbursement rate for PLI is capped at the
75th percentile, computed on a geographic peer group basis. The
current average capped cost for PLI is $2.13 per patient day.
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For providers whose actual PLI costs exceed this cap, Medi-Cal
does not reimburse providers for the additional cost increment,
and instead deposits the General Fund portion of this increment
into the Skilled Nursing Facility Quality and Accountability
(QAS) Fund. (Moneys in the QAS Fund are used to provide
supplemental payments to SNFs that improve the quality and
accountability of care to SNF patients.) The 2011-12 Budget Act
includes a net 7.6% reduction in payments to SNFs, however, this
does not affect calculations of reimbursement rates from these
providers.
There will be cost pressure on SNF reimbursement rates to the
extent the provisions of this bill lead to an increase in
litigation and a resulting increase in PLI premiums for
providers. The extent of such an increase is unknown. Based on
the current annual number of Medi-Cal bed-days in AB 1629
facilities (approximately 23 million), for every one cent
increase, on average, in reimbursed PLI costs to these
providers, total Medi-Cal costs would increase by $230,000 (50%
GF/50% federal funds). To the extent PLI increases were
incurred by providers whose PLI rate is above the cap, as
discussed above, providers would not be reimbursed for this
increase and instead the General Fund portion of this
incremental cost would be deposited in the QAS Fund. Any impact
on Medi-Cal reimbursement rates would not occur prior to
2013-14, because rates are based on annual cost data from two
years prior.
Freestanding SNFs are reimbursed according to the "AB 1629"
methodology (after the 2004 authorizing legislation).
Distinct-part SNFs, such as those operated by hospitals, who
provide about 1.8 million Medi-Cal bed days annually, are
reimbursed according to a different cost-based methodology. As
mentioned above, Medi-Cal rates for freestanding SNFs reimbursed
under AB 1629 directly incorporate PLI rates as a cost component
for rate development purposes. To the extent this bill increases
litigation, however, there is potential for increased cost
pressure beyond that related to PLI, for attorney's fees and
other litigation-related administrative costs that are not
reflected in PLI rates. This cost pressure would occur for both
freestanding and distinct-part SNFs.
Overall, even though PLI rates and other costs are reflected in
the state's reimbursement methodology, this bill may not by
itself directly increase General Fund expenditure due to the
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AB 1629 cap on the aggregate growth of reimbursement rates. In
addition, SNF reimbursement rates, including the recognition of
PLI and other cost categories, are subject to annual stakeholder
negotiations. To the extent that SNFs experience increases in
the cost of doing business, however, this bill will increase
pressure on the state to increase rates, as Medi-Cal pays for
the majority (about two-thirds) of the SNF bed-days in the
state.
COMMENTS
1)Background . A standard of proof is a threshold level of
reliability of evidence that must be met to be considered
dispositive of the thing to be proven. There are three general
evidentiary standards of proof: the criminal beyond a
reasonable doubt standard, the clear and convincing standard,
and the preponderance of the evidence standard. The clear and
convincing standard requires a party to prove that the fact is
highly probable to be true. To satisfy the preponderance
standard, which is used in most civil cases, a party must
provide evidence showing that the existence of a fact at issue
is more likely true than not.
The EADACPA was enacted in 1992 to provide enhanced remedies
to ensure adequate representation of victims in cases of elder
and dependent adult physical and financial abuse or neglect.
At that time, the standard of proof necessary to establish a
claim under EADACPA was set high through the use of the clear
and convincing standard of proof. AB 2611 (Simitian)/Chapter
886 of 2004) separated out the provisions for elder and
dependent adult financial abuse and reduced the standard of
proof necessary to establish financial abuse to preponderance
of the evidence. The evidentiary standard for proving physical
abuse or neglect remained at the higher clear and convincing
standard.
2)Purpose . This bill, sponsored by California Advocates for
Nursing Home Reform, California Alliance for Retired
Americans, Congress of California Seniors and Consumer
Attorneys of California (CAOC), lowers the evidentiary
standard in physical abuse and neglect civil cases brought
under EADACPA to preponderance of the evidence. Notably,
EADACPA requires that for an elder or dependent adult to be
successful in court, he or she would still have to prove that
the physical abuse or neglect was the result of recklessness,
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oppression, fraud or malice, on the part of the defendant.
This bill thus lowers the standard of proof, but the elements
of the action that must be proved remain the same.
The sponsors argue that the current, higher standard of proof
is very difficult to show in most elder and dependent adult
abuse cases because the elderly, ill, or disabled victims may
be unable to testify as to the specific facts of the abuse or
neglect they suffered, or in some cases, the victim is already
deceased by the time the case is filed on their behalf.
The bill also lowers the standard of proof for an award of
damages and attorney's fees against an employer. Currently
EADACPA provides that, in order to receive an award of any
damages or attorney's fees and costs against an employer, the
victim must show, by clear and convincing evidence, that the
employer consciously employed the unfit employee, the employer
authorized or ratified the employee's wrongful conduct, or the
employer itself was personally guilty of oppression, fraud, or
malice, a standard usually reserved for punitive damages.
This bill leaves that standard in place for an award of
punitive damages against an employer, but provides that this
additional hurdle does not apply to the recovery of
compensatory damages or attorney's fees and costs from an
employer. Supporters argue that this change appears to support
the original intent of EADACPA - better access to the legal
system to address claims of elder and dependent adult abuse.
3)Opposition includes the California Association of Health
Facilities (CAHF), the California Hospital Association, the
California Medical Association, the Cooperative of American
Physicians, and Aging Services of California. With regard to
fiscal impacts, opponents generally assert the likelihood of
increased litigation, due to the lowered standard of proof and
enhanced remedies, and resulting cost increases. The CAHF
cites annual studies showing a history of increased litigation
and liability insurance costs for nursing homes since
enactment of EADACPA in 1991, and argue that SB 558 will have
similar cost impacts, thus draining resources away from
patient care.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081
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