Funds Cutoff Stands at Hillcrest Hospital : U.S. Judge Rejects County’s Arguments in Plea to Restore Federal Medicare Aid

A federal judge Monday rejected San Diego County’s latest bid to stop the federal government from ending Medicare funds for the county’s Hillcrest mental health hospital.

U.S. District Judge William B. Enright ruled that the federal Department of Health and Human Services followed proper procedures when it decided to end payments to the hospital because of lapses in patient care.

Enright’s ruling paves the way for the department to cut off more than $1 million the federal government pays the county each year for its treatment of patients under Medicare, a federal health program for the aged and disabled.

The reimbursements will end as soon as the Department of Health and Human Services publishes a public notice in a local newspaper, probably by the end of this week, said Harry McDonagh, the department’s assistant regional attorney. He said the county will receive another 30 days’ reimbursement for its treatment of patients admitted to the hospital before Feb. 17.

David Janssen, the county’s assistant chief administrative officer, said he was disappointed but not surprised by Enright’s ruling.

“We knew this was a long shot,” Janssen said. “It was something we had to try.”

Janssen said the county will decide in the next day or so whether to appeal Enright’s ruling while at the same time preparing another appeal under federal health regulations. But the cutoff of funds will go forward even as that administrative appeal is pending.

Janssen said the effects of the cut will not be felt by the hospital for several months because of the 30-delay and a lag in billing. He said the long-term impact on patients will not be known until after the Board of Supervisors approves the county budget for the fiscal year beginning July 1.

Enright, whose Feb. 13 temporary order blocking the government’s action expired Monday, made his ruling after listening to arguments from Phillip L. Kossy, a deputy county counsel, and John Robinson, an assistant U.S. attorney.

Kossy argued that the county’s right to due process had been violated by the federal government’s action. He said the federal Department of Health and Human Services had never fully informed the county of the evidence that was being used against it.

He said the review was also unfair because it was based solely on patients’ medical records and those records were from treatment given only through May, 1985. He said many of the cases used against the county were handled by two psychiatrists who are no longer at the mental hospital. And Kossy argued that the department’s inspector general failed to take into account evidence showing that the county had made improvements at Hillcrest since the federal review was completed.

“All this results in a precipitous decision,” Kossy said. “This is the first time these regulations have been used, and obviously they need some improvements.”

But Robinson argued that an order stopping the government from cutting off funds to Hillcrest would send a message to other hospitals in California and across the nation that they can let the quality of their care slip without fear of consequences. He said San Diego County would not have made changes at Hillcrest except for the fear of losing federal funds.

“Once the media turned on the county, once the spotlight was turned on the facility, once the federal government . . . said the funds were going to be cut off, the county improved and they’re still improving,” Robinson said.

Enright called it a “very difficult case” and said his jurisdiction was limited to the question of whether the federal government followed proper procedures in cutting off the funds. He found that the regulations had been followed.

Enright said he could not rule on the substantive issue of the quality of care at the hospital.

“The issue before me is not whether the correct decision was reached, but whether they complied with the process they were required to under the law,” Enright said.