Battle Over CMS Funding Back in Court : Dispute: The county says it is owed $22.2 million by the state for picking up the tab on the medical program. The state, however, says it is actually the county that should be paying.

San Diego County is owed more than $22.2 million that it was forced to spend on health care for 25,000 medically indigent adults when the state government reneged on promises to provide funding for the County Medical Services program, county attorneys contended as a court hearing on the alleged debt opened Wednesday in Superior Court.

CMS “is a program that, by statute and constitutional law, is required to be financed by the state of California,” said Diane Bardsley, a chief deputy county counsel. “We are not required to use any general fund money to run this program.”

The medical program for uninsured indigent and working poor residents has been at the center of a closely watched legal battle since the county Board of Supervisors voted to shut it down in March when state funding ran out.

A successful lawsuit filed by Legal Aid lawyers on behalf of CMS recipients prevented closure of the program, which pays for hospital care, medicine and doctor visits, and sparked the legal tussle.

In a major victory for the county, Superior Court Judge Michael I. Greer ruled June 25 that the state is responsible for funding the program. Now county officials want reimbursement for money they spent during the past two fiscal years when, they claim, the state required them to spend $41 million to provide the care without providing the 70% funding it promised when it shifted responsibility for the program to counties in 1982.

Wednesday’s opening arguments and testimony marked the second phase of the court case, a two-day hearing ordered by Greer to determine how much money the state should pay the county. In a tentative ruling before the hearing began, Greer dismissed the state’s claim that he lacks the authority to order the state to pay up.

“I’m persuaded that this court does have the power to order the state to meet its obligations,” he told the attorneys.

Two other court cases on medical funding issues have advanced farther through the state judicial system and are being closely watched by San Diego county attorneys. The state Supreme Court has already heard arguments in an Alameda county case, but a ruling may not come down because of a procedural defect in the lawsuit, Bardsley said.

A second case brought by Los Angeles and San Bernardino counties is before the state Court of Appeal, she said. State attorneys have said they may appeal Greer’s rulings.

In their opening arguments, the state lawyers contended that the county actually overspent its budget for the program--using money appropriated from at least one other state funding source--and could be responsible for reimbursing the state nearly $20 million.

They argued that the county actually spent more than the required $41 million, using funds from the California Health Care to Indigents Program that were intended only as a supplement to the state funding for CMS. In fact, said Deputy Atty. Gen. Bradley Solomon, the county could owe the state $19.4 million.

“The state gave to the county revenue far in excess of what they spent on CMS,” Solomon said.

Bardsley said that, although “it is true the county of San Diego applied certain revenues to get us through the shortfall . . . that does not relieve (the state) of their legal obligation” to fund CMS.

Deputy County Counsel Valeri Tehan told Greer that the state owes the county slightly more than $1 million for fiscal 1989-90 and an estimated $21.1 million for fiscal year 1990-91, which ended June 30.

County lawyers also will attempt to show Greer that money is available for the health programs in the state budget, and that it can be found in state funding sources generally related to the CMS program.