State asks judge to reject fund seizure

California Atty. Gen. Jerry Brown has asked a federal judge to reject a request by the overseer of prison healthcare to seize $8 billion from the state treasury for a construction plan that is shrouded “under a veil of secrecy.”

Brown, in a filing with U.S. District Judge Thelton Henderson on Monday and in an interview Tuesday, said the order sought by court-appointed federal receiver J. Clark Kelso to raid the state treasury would violate California’s sovereign rights.

He said it also would transgress other provisions of the U.S. Constitution and federal law governing prisons, and would have a catastrophic effect on the state’s already shaky finances.

Kelso has asked Henderson to hold Brown’s clients, Gov. Arnold Schwarzenegger and Controller John Chiang, in contempt of court for failing to provide the funding.

Brown said Kelso had offered “woefully inadequate justification” that a court order for so much spending, to fund medical facilities with 10,000 beds, was needed to bring healthcare in prisons up to constitutionally required levels. He said in a separate filing that Kelso’s aides threatened state lawyers with court sanctions if they revealed specifics of his plan to the public. “The $8 billion consists of a gigantic plan that has never been disclosed to the public, and I think that is completely inconsistent with . . . the right of the people to know how their money is going to be spent,” Brown told reporters in Sacramento. “All those plans for all those beds and rooms . . . remain virtually under a veil of secrecy, and that veil should be stripped aside.”

Kelso and his staff responded that Brown was twisting the facts and that the attorney general’s lawyers had participated in the decision to seal the document. The receiver’s chief of staff, John Hagar, said that only the court has the power to allow the plan, still a draft, to be made public.

The draft has been circulating among potential contractors and state officials involved in developing plans to build seven medical facilities for sick and mentally ill prisoners.

“There is no veil of secrecy,” Kelso said in a statement. “If there is any veil of secrecy here, it is apparently the veil that the attorney general has placed over his own head.”

Hagar said both Brown’s and Schwarzenegger’s aides had contributed to the scope of the construction plans, by agreeing that Kelso also would build medical facilities for the mentally ill and dental patients, which were not part of his original responsibilities. He said they never objected as the receiver’s office developed its plans in consultation with the court.

“We have not heard a word from the state of California, not from Arnold Schwarzenegger, nor from Jerry Brown,” Hagar said. “For people to tell us at this date that they’ve got questions about the program that they helped design, I don’t think they’re going to get a very warm reception when they go to court.”

A hearing is scheduled before Henderson on Oct. 6.

Kelso was appointed by Henderson as part of an inmate lawsuit alleging that healthcare in state prisons has been so poor for years that inmates have been dying from neglect and inadequate treatment.

He unveiled his plan to spend billions on construction in January with the blessing of Schwarzenegger, who sent it to lawmakers in his budget proposal in January. That plan would have entailed borrowing most of the money.

Republican state senators, however, rejected Kelso’s plan in May. Last month, Kelso went to court to seek an order forcing the state to turn over the money, which would dramatically increase its $15.2-billion budget shortfall.

On Monday, it appeared that the conflict would be averted as Republican and Democratic lawmakers included borrowing money for the receiver as part of their budget plan.

But that deal fell apart late at night, when Republicans objected to language in another bill that would have codified the state’s existing practice of giving some prisoners one day off their sentences for every day served.

Democrats, after previously agreeing to Republican demands to kill other proposals that would have allowed inmates to earn more time off their sentences, refused to remove this one as well. So Kelso’s plan never came up for a vote.

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michael.rothfeld@latimes.com