BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  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
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            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