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Why is state only collecting one-third of nursing home fines?

California Watch
By Christina Jewett
April 21, 2010

California lawmakers have called for an audit exploring why state regulators are collecting only about one-third of the fines they have levied against nursing homes in recent years.

A legislative committee unanimously approved the audit in February. It is expected to look at how the funds that were collected have been spent in light of laws that say the money should be used to protect the health of residents in nursing homes.

"The whole point of having citation accounts and the penalty system is to deter nursing homes from doing anything but provide the highest quality care to residents," said Mike Feuer, D-Los Angeles, one of 10 lawmakers who signed a letter calling for the audit. "If the fines coming in are less than a third of (those) issued, it leaves one to wonder if the state is being as effective as it could be in protecting nursing home residents."

The Department of Public Health has levied fines in recent years after workers hit patients, stole from them or left them languishing in dirty diapers.

Records released to California Watch under the Public Records Act show that the state's fine collections are falling behind. In 2005, authorities had collected 60 percent of the fines they levied, about $1.8 of $3 million.

However, by 2008, authorities collected a smaller portion of the fines, about $1.5 million of $5 million that had been assessed, or less than 30 percent.

In contrast, the same state department, the Department of Public Health, has collected nearly 80 percent of the fines it levies against hospitals that fail to report preventable errors, records show.

Kathleen Billingsley, deputy director of the Department of Public Health Center for Healthcare Quality, said in an interview that her office has hired 95 inspectors since 2006 who complete the inspections and have issued a rising number of citations.

Billingsley said nursing homes have the right to appeal fines and do not have to pay until the process is completed in administrative and state courts. When nursing homes are faced with a final fine amount, the department is equipped to force many nursing homes to pay, she said.

The department can garnish a nursing home's Medi-Cal payments to collect unpaid fines, leverage it holds over 75 percent of the state's nursing homes that accept low-income patients.

The state, however, writes off unpaid fines if a facility goes bankrupt, changes ownership or does not accept patients through the Medi-Cal program, a spokesman said.

While the appeal process delays fine collections, there are other reasons nursing homes don't pay the full amount. In 2007, records show, half of the $4 million in nursing home fines issued were categorized as "allowable adjustments."ÊThat means homes may have qualified for a 35 percent discount allowed under law for homes that pay promptly.

In other cases, an administrative law judge or mediator pares down a fine, a scenario that is becoming increasingly common. Since 2005, the number of cases that nursing homes appeal has doubled, from 110 to more than 220 in 2008, Department of Public Health records show.

Critics of the waning fine fund point to a 2004 law that gave nursing homes a powerful incentive to fight the penalties. That law, AB 1629, overhauled nursing home funding and allows nursing homes to bill the state for legal fees spent fighting citations.

It's a scenario that Sen. Elaine Alquist, D-Santa Clara, calls a "perverse incentive." Other advocates call it outrageous and scandalous. "It undermines everything," Alquist said. "We know that enforcement really needs to improve."

And even as more nursing home owners are appealing more cases, they are seeing settlement proceedings end with deeper and deeper discounts. Authorities knocked $320,000 in fines down to $20,000 for one Los Angeles County nursing home, according to Department of Public Health data and citation-review-conference records.

Those fines were accumulated after workers turned off an alarm to a ventilator, an action that prevented workers from immediately realizing that a 90-year-old patient was disconnected from her breathing tube and was slipping away, records show.

Workers at the same home were cited 11 more times for continuing to dismiss the ventilator alerts, records show.ÊThose citations each carried a $20,000 fine, but each was dismissed in an appeal hearing. Lydia Sainz, administrator of Casa Bonita Convalescent Hospital, said the eventual dismissal of the bulk of the fines was the appropriate outcome. She said she felt the state reacted harshly under pressure from the outspoken family of the 90-year-old who died after her ventilator alarm was turned off. And she said the nurses who later dismissed other alarms did so when patients were in no distress.

Sainz said the state's efforts to penalize the facility were a poor use of public funds. "It's really sad because it's hard to work in places like nursing homes and then you get a bad (reputation)," Sainz said. "It's really hard for the nurses."

Other observers, commenting generally on the state's waning rate of fine collections, see the trend as evidence that nursing homes face little accountability if their actions or inactions harm patients. "As long as facilities know there's no punitive damage, nothing will change," said Joan Parks, manager of the nonprofit Ombudsman Services of Northern California.

The Bureau of State Audits report on the nursing home fine fund is expected to evaluate the laws and rules governing the state's collection of the fines and recommend better ways to go forward.