State Reaches Settlement in Lawsuit Affecting Foster Children Needing Mental Health Services

A federal district court has approved a settlement that will force the state to change how it treats and houses foster children and children at imminent risk of foster care placement who require mental health services. 
The long-running case, known as Katie A. vs. Bontá, was settled on December 1. The state will now provide intensive home-based services and intensive care coordination to certain children in the Child Welfare System under Medi-Cal, the state’s Medicaid system. Other requirements include state responsibility for instructing providers on delivering care as a Medicaid services, creating an interagency task force to identify and deliver care to children in need of covered mental health services, and increased coordination with care providers and county child welfare systems. 
The Department of Health Care Services has posted documents related to the lawsuit and settlement agreement here. 

First 5 Commissions Win Budget Lawsuit

A Fresno Superior Court Judge ruled state legislation that redirects $1 billion in local First 5 funding “invalid,” finding the legislation attempts to illegally amend Proposition 10 without voter approval. 

Judge Debra Kazanjian issued her ruling on November 21 regarding the state’s 2011-12 budget solution (AB 99) to sweep $1 billion in county First 5 funding to help pay for the state’s Medi-Cal and Healthy Families Programs. 

Ten local First 5 Commissions sued the state after AB 99 was passed in March with a two-thirds legislative vote. The Judge wrote in her ruling that “to claim that transferring decision-making from local communities to the state legislature is ‘consistent’ with Proposition 10 is like asking the court to find that black means white.”

The state Department of Finance has said that the ruling won’t affect the state’s 2012-13 budget, expected to be released in January by Governor Brown. There will be no immediate effect on the Medi-Cal or Healthy Families Programs, as the Brown Administration did not implement AB 99 while defending it in court.

State Takes Steps to Form New Department of State Hospitals 

Governor Brown’s proposal to create a new Department of State Hospitals became a step closer to reality when the Department of Mental Health (DMH) announced the elimination of about 600 state hospital positions this week. 

The move, which also includes efforts to streamline and reduce state psychiatric hospital costs, comes in advance of the Governor’s January budget. Governor Brown’s 2011-12 budget included the idea to carve out a new Department of State Hospitals from DMH, which would oversee five mental hospitals and two prison psychiatric programs. The Governor’s 2012-13 budget is expected to flesh out the details, including the scope and costs of the state’s newest department. 

The Administration has included a number of documents on its proposal, including a budget. The Administration is proposing to increase the cost of county bed rates at state hospitals. County bed rates are below actual patient cost of care. According to the Administration, the General Fund supplements the difference between county bed rates and patient cost of care. Rate increases in 2012-13 will align rates with actual cost of care. The Department is estimating $20 million in revenue associated with the proposal. The new department may also eliminate lapsed contracts and order physician reductions to achieve a projected savings of $173 million next year. 

The 600 positions that were eliminated may not result in actual layoffs of state employees, as many will be transferred from DMH to the new Department of State Hospitals. The state plans to hold a series of Town Hall-style meetings to hear concerns from patients, employees, and other stakeholders in the coming months. For more information about the transition plan, including a 271-page report on the organizational and fiscal problems at DMH, please visitwww.dmh.ca.gov.