Deal Reached on Bill to Allow State Fines of Hospitals

The hospital industry and key California lawmakers have reached agreement on a bill that would allow the state to fine hospitals for patient-care lapses that cause serious injury or death.

During a hastily called Assembly committee hearing Monday night, lawmakers agreed to cut the top penalties from $100,000 to $50,000 and prevent the state Department of Health Services from levying fines for “minor violations” of its regulations.

In response, the California Hospital Assn. agreed to lift its opposition to the bill.

The proposed fines are a response, in part, to recent revelations of problems at hospitals across the state, including scandals that forced the closure of three transplant programs in the last year.

The bill, which would take effect Jan. 1, must be approved by Thursday, when the Legislature adjourns for the year. Gov. Arnold Schwarzenegger’s administration said Tuesday that it supported the new version of the bill.

“The bill significantly expands our ability to protect patient health and safety by increasing the number of enforcement tools available to the state,” said Nicole Evans, a spokeswoman for the California Health and Human Services Agency.

Assemblywoman Wilma Chan (D-Alameda), chairwoman of the Assembly Health Committee, agreed, adding that the road to final passage should be “pretty smooth” without the hospital group’s opposition.

Supporters and former opponents of the legislation said they could live with the deal, though both said it wouldn’t be their first choice.

“Are all of us, including all of our members, satisfied with this compromise? The answer to that question is no,” said C. Duane Dauner, president of the hospital trade group. “Do I believe that it is reasonable under the circumstances to serve the best interests of patients and of hospitals? The answer is yes.”

Dauner said the Legislature would have been better served by taking more time to study the issue.

The Service Employees International Union, which has many members throughout the state who are hospital workers, sees the bill as an important first step, said Beth Capell, a lobbyist for the labor group. “We’ve never had fines for hospitals in California,” she said. “This unequivocally establishes the principle.”

The bill, SB 1312, would bring California in line with several other states, including New York, New Jersey and Texas, which allow for hospital fines. Until now, California has permitted fines against nursing homes and health maintenance organizations, but not hospitals.

The bill would impose penalties in two stages. The first would allow fines of up to $25,000 to be levied every time a hospital is cited for putting patients in “immediate jeopardy” of serious injury or death.

The state later would be allowed to impose fines of up to $50,000 in cases of immediate jeopardy. But first, regulators would have to draft rules taking into account a hospital’s history of compliance and how quickly it attempted to fix problems, among other factors. For less serious violations, inspectors could impose fines of up to $17,500.

Hospitals would be permitted to appeal the penalties and would not be required to pay them until their appeals had been exhausted.

Dauner of the California Hospital Assn. said he could not predict how many hospitals would be fined if the legislation were approved or whether hospital officials would automatically appeal.

SEIU lobbyist Capell predicted that hospitals would take notice of the policy change: “We expect they will pay more attention.”