San Francisco — In a victory for California’s elder and disabled consumers, the Schwarzenegger Administration signed a stipulated settlement in which they agreed to cease application of the recently filed “emergency” Medi-Cal recovery regulations until they have complied with the requirements of the Administrative Procedures Act’s advance public hearing, comment and filing provisions.

Plaintiff, California Advocates for Nursing Home Reform (CANHR), filed suit against Governor Arnold Schwarzenegger and other members of his administration in San Francisco Superior Court on April 7, 2005 challenging the adoption of “emergency regulations” by the California Department of Health Services concerning the Department’s Medi-Cal Estate Recovery Program.

CANHR charged the Governor and his Department of Health Services with abusing their discretion in implementing these regulations without the opportunity for advance public comment or hearing and in violation of the Administrative Procedures Act, as no “emergency” exists. The lawsuit also charged that, because of the premature adoption of these illegal regulations, California consumers would suffer irreparable harm.

The stipulation and settlement agreement was approved by the San Francisco Superior Court today and means that the Department of Health Services’ Estate Recovery Regulations approved on an “emergency” basis on March 23, 2005 will not be effective until all of the provisions of California’s Administrative Procedures Act governing the submission and approval of regulations have been satisfied.

Key Points of the CANHR lawsuit:

• While the state Department of Health Services is permitted to pursue claims against the estates of deceased Medi-Cal beneficiaries, who are 55 years or older or who reside in nursing homes, for recoupment of Medi-Cal monies spent on care, it is also required to publish regulations consistent with state and federal laws.
• The issuance of these regulations on an emergency basis would be a violation of the provisions of the Administrative Procedures Act, as no emergency exists that warrants bypassing the advance public comment period before the regulations become effective.
• For the past twelve years, the Department of Health Services has failed to promulgate adequate regulations regarding Medi-Cal recovery. To now allow the Department to bypass the requirements of advance notice and public comment to address a problem created by their own failures would be irresponsible and inequitable to the citizens of California.
• The lack of public notice and hearing pursuant to the Administrative Procedures Act will impose irreparable harm on thousands of California’s long-term care consumers and their family members and will, in the case of one regulatory provision, foster elder fiduciary abuse.

Victory for California Consumers

The Schwartzenegger Administration has used the emergency process numerous times over the past year to avoid the advance public comment and open hearing process.

According to Pat McGinnis, Executive Director of CANHR, “The proposed regulations are already onerous and will have a disastrous effect, particularly on the elderly and on In Home Supportive Services caregivers. To attempt to deny California consumers an opportunity to comment on rules before they are adopted that will have an enormous impact on their lives is unconscionable. This is a victory for California consumers. Now, they have to let their voices be heard.”

CANHR is represented in the lawsuit by the Law Offices of Amitai Schwartz in Emeryville, with assistance from Gregory Wilcox, Esq., Berkeley.