State Ordered to Release $539 Million : Finances: Ruling would provide funds for Medi-Cal and in-home care payments held up by budget impasse. Attorney general’s office plans appeal.

Capping a week of court rulings that got vital payments flowing despite the state’s record-breaking budget deadlock, a federal judge Thursday ordered the state to release $539 million to providers of medical and social services--including hard-pressed in-home care workers.

Acting on a request by a state employees union and a nonprofit legal foundation, U.S. District Judge Jack E. Tanner issued a temporary restraining order in Sacramento that forces the state to release $489 million in Medi-Cal funds to thousands of hospitals, doctors and pharmacies.

He also ordered the payment of $50 million to 134,000 people who provide in-home care for the elderly and disabled and who have not been paid in more than a month. Before the court ruling, many had reported being down to their last few dollars.

Many home-care workers, who clustered inside the federal courtroom Thursday, welcomed Tanner’s ruling.

“I just hope we get the checks soon,” said Genie Scott, who receives $499 a month to take care of a 91-year-old woman. “It’s been hard. We’ve been . . . getting by day by day.”

Katrina Wash, an in-home worker who is supposed to receive $263 a month, said she had been unable to afford even a bus ride since she stopped receiving her state paycheck. But she said it’s been even tougher for the two 90-year-old men she cares for. “They’re helpless. If I can’t provide for them, they’re going to die,” she said.

Controller Gray Davis, who supported the legal action, said that without the court ruling he would not have been able to release the funds until the Legislature and governor adopt a state budget for the fiscal year that began July 1.

When the judge’s ruling was announced at 11 a.m., Davis was in the Assembly chamber, where lawmakers were meeting to vote on a series of budget bills. Speaker Willie Brown (D-San Francisco) announced the ruling and told Davis: “Now you can make the payments.”

Thursday’s ruling came a week after a similar action by another federal judge, who ordered the state to release $149 million in welfare funds. Earlier this week, a Sacramento County Superior Court judge ordered the state to release $330 million in Medi-Cal funds to hospitals and nursing homes by Monday.

Tanner’s order, which releases all of the Medi-Cal funds immediately, apparently supersedes the Superior Court ruling. “I want clients to get their services right now,” the judge said.

Deputy Atty. Gen. Eugene Hill had argued that the court should not intervene in the state budget process, but Tanner shot back: “The political process is fine, but for those that can’t help themselves--that’s just tough. That’s what you’re saying.”

Hill said his office would appeal Tanner’s ruling to the U.S. 9th Circuit Court of Appeals in San Francisco.

Despite the ruling, about $800 million, mainly to meet the state’s mid-month payroll and obligations to local governments, remains frozen because of the budget impasse, according to Davis’ office.