BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1558|
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THIRD READING
Bill No: SB 1558
Author: Kehoe (D)
Amended: 3/29/12
Vote: 27 - Urgency
SENATE APPROPRIATIONS COMMITTEE : 6-1, 4/12/12
AYES: Kehoe, Walters, Alquist, Lieu, Price, Steinberg
NOES: Dutton
SUBJECT : Department of Justice
SOURCE : Author
DIGEST : This bill appropriates $1,300,000 from the
General Fund to the Department of Justice (DOJ) to pay the
settlement and accumulated interest in Darling v. Douglas ,
United States District Court, Northern District of
California, Case No. 4:09-cv-03798-SBA. Any funds
appropriated in excess of the amount required for the
payment of this claim shall revert to the General Fund.
This bill also appropriates $1,300,000 from the Federal
Trust Fund to DOJ to pay the settlement and accumulated
interest in Darling v. Douglas , United States District
Court, Northern District of California, Case No.
4:09-cv-03798-SBA. Any funds appropriated in excess of the
amount required for the payment of this claim shall revert
to the Federal Trust Fund.
ANALYSIS :
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Claims Settlement
Darling, et al v. Douglas, et al . United States District
Court, Northern District of California, Case No.
4:09-cv-03798-SBA
In Darling v. Douglas , plaintiffs, participants in an
optional Medi-Cal program, Adult Day Health Care (ADHC)
brought suit contending that the Department of Health Care
Services (DHCS) did not have an adequate transition plan in
place prior to the elimination of ADHC. Plaintiffs filed
their initial complaint on August 18, 2009. Plaintiffs did
not challenge the elimination per se, but contended that
DHCS was required to provide replacement services before
the DHCS could eliminate 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 Medicaid requirements.
In mid-November 2011, the parties agreed to settle the
litigation. Under the terms of the settlement agreement, a
new program, Community-Based Adult Services (CBAS), would
be provided to those ADHC participants who qualify and
enhanced case management would be provided to those who do
not qualify for CBAS. The settlement agreement provides
that both programs will eventually only be offered through
managed care plans (except in areas where a plan does not
operate).
The settlement agreement provides for payment of attorneys'
fees to plaintiffs' counsel in the amount of $2.2 million
for all work performed prior to the court's approval of the
settlement agreement and an additional $400,000 to be
billed for the length of the agreement (30 months) for any
work performed regarding implementation and compliance with
the agreement.
Judgments against the state are enforceable under
Government Code Section 965.5. In California Federal
Savings and Loan Association v. City of Los Angeles (1995)
11 Cal.4th 342, the court held the rate of interest on a
judgment against a local government is seven percent based
upon Government Code Section 970.1. The language in
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Government Code Section 970.1 is identical to Government
Code Section 965.5.
The court concluded: "Section 970.1, subdivision (b), of
Division 3.6 of Title 1 of the Government Code, which
provides that '�a] judgment ... is not enforceable under
Title 9,' exempts local public entities from Title 9 of the
Code of Civil Procedure. Division 3.6 does not, however,
itself set a rate of postjudgment interest for claims
against the state or local public entities. Accordingly,
pursuant to Article XV, Section 1, of the California
Constitution, '�i]n the absence of the setting of such rate
by the Legislature,' the applicable rate of postjudgment
interest to be paid by local public entities is seven
percent per annum." (Id. at pp. 344-345)
For this settlement, interest of 7% begins commencing 90
days after the effective date of the settlement (February
25, 2012) or May 25, 2012.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
Appropriates $1,300,000 from the General Fund and
$1,300,000 from the Federal Trust Fund.
* Interest of 7% commencing 90 days after the effective
date of the settlement (February 25, 2012) or May 25,
2012.
SUPPORT : (Verified 4/16/12)
Department of Justice (source)
Department of Finance
DLW:mw 4/23/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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