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Federal Court Orders California DOC to Pay $58 Million In Overdue Medical Bills

by John E. Dannenberg

On March 30, 2006, the U.S. District Court, N.D. Cal., ordered the California Department of Corrections and Rehabilitation (CDCR) to pay its backlog of overdue medical subcontractors bills within 60 days. The bills, some as old as four years, and totaling $58 million, had been submitted by contract medical providers at all of the 33 CDCR prisons, but not paid purely due to bureaucratic gridlock. As a result of non-payment, some providers were refusing to provide needed services, putting constitutionally adequate medical health care at risk.

Upon recommendation of the court's recently appointed CDCR health care receiver (see: PLN, Mar. 2006, p.1, Federal Court Seizes California Prisons Medical Care; Appoints Receiver With Unprecedented Powers), the court responded to the receivers emergency request to break the obvious logjam that was impeding prisoner medical care. The court called this yet another chilling example of the inability of the CDCR to competently perform the basic functions necessary to deliver constitutionally adequate medical health care, adding, the abdication not only threatens the health and lives of inmates but also has significant fiscal implications for the State.

The court referred to the March 27, 2006 report of its appointed Correctional Expert John Hagar, which noted CDCRs failure to competitively bid work and its use of flawed negotiating practices, acceptance of excessive rates of compensation and failure to follow existing CDCR contracting policies. The court was further chagrined when Hagar reported that although CDCR agreed to fix the discrepancies, all they really did was agree to more bureaucratic largesse such as plan to make a recovery plan. Bluntly stated, the court described this as a stunning example of the States bureaucratic inaction (trained incapacity) and said the responsible state contracting agencies just stuck their collective heads in the sand.

Even at CDCRs California Medical Facility (hospital prison), there were dozens of contracts with doctors and other entities including cardiology, radiology, eye prostheses and emergency surgery that remained unpaid.
Contractors were beginning to simply refuse more medical services, denying critical medical care even for prisoners urgently medically transferred to CDCRs own hospital.

The court ordered a three-point recovery plan. First, all overdue bills were to be paid within 60 days of the courts order, with all claimants notified of their coming payment within 30 days. In addition, all new invoices must be paid within 60 days, until a new contracting procedure is in place. The order applies as well to frustrated vendors who had sought legal and financial relief through the Victims and Government Claims Board [formerly, Board of Control]. Second, CDCR was ordered to establish and fund within 30 days at least one full time contract analyst at each of its 34 prisons where one does not currently exist. CDCR must report to the Receiver the progress on its hiring program, and train all such new analysts within 15 days. Third, the court ordered CDCR to essentially reinvent its contracting process, streamlining it considerably. The order listed six specific administrative changes to State policy and procedure to this end, which are due to be implemented within 180 days.

Until then, the court excused CDCR from following state laws that impede the courts schedule. The order closed ominously by stating that any inability to successfully implement the streamlined procedures may not be construed as an excuse for failing to provide constitutionally adequate medical health care services to all CDCR prisoners in the interim, leaving the Receiver expressly empowered to order all appropriate remedies. See: Plata v. Schwarzenegger, U.S.D.C. (N.D. Cal.), Case No. C01-1351TEH.

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Related legal case

Plata v. Schwarzenegger