County Ordered to Refund Health Inspection Fees

A Superior Court judge has ordered Los Angeles County to refund nearly $11 million in health inspection fees it held in special accounts instead of spending it to ensure that food sold in restaurants and supermarkets is safe.

On Tuesday, as the Board of Supervisors--prodded by a KCBS-TV Channel 2 investigation--ordered the health department to report on its inspections of supermarkets, officials pondered the broader implications of the judge’s ruling.

Judge Kurt Lewin’s order was issued late Friday as part of a lawsuit filed on behalf of health inspectors. They contend that the county overcharged businesses for inspections and, rather than spend the money on health inspections, either socked it away in other accounts or spent it elsewhere.

During that time, a hiring freeze kept the inspection unit understaffed by as many as 100 investigators, officials said.

The impact of the county’s diversion of money, said taxpayer attorney Richard Fine, who litigated the case, was “a biological time bomb. . . . People got sick in restaurants because inspections weren’t done.”

According to Fine, “the county collected the money and did not protect the public.”

Lewin’s ruling is a single-paragraph order finding that $10.8 million of the money was surplus and an additional $12 million can be used to cover past deficits. In a hearing last year, Lewin said the money “will be used to either reduce or hold the fees level for the next two or three years.”

But county officials late Tuesday had a different interpretation of the ruling, saying that they can also spend the surplus on inspections.

John Schunhoff, chief of operations for the county’s public health office, said the health inspection operation historically ran a deficit so the county initially held the money to be safe. It only continued to hold the funds, he said, because of the litigation and had planned to use the funds on health inspections.

He said the department agrees with the judge’s ruling. “It’s not appropriate to build up surpluses year after year,” he said.

Fine scoffed at that, saying that the county lengthened its hold on the money by rejecting an offer to settle the case for $10 million last year. And supervisors said the practice was outrageous and that they have recently been phasing it out.

Supervisor Mike Antonovich noted that the Board of Supervisors had chided health department officials for failing to use the money last year.

But Fine said the board was to blame for holding the money. “He’s right, it never should have happened because he should have been watching,” Fine said.

The health department began storing surplus funds in 1993. Los Angeles County was in the midst of a deep recession and its expensive hospital system started teetering on the brink of bankruptcy. Fine said the board approved a 33% increase in the inspection fee amid a hiring freeze, and surplus money began to accumulate.

The union filed the lawsuit that year, initially trying to compel the department to give its members a raise. But the case evolved into a taxpayer suit to force the department to return the money to businesses that were overcharged.

As the lawsuit wound its way through the courts, a report on restaurant safety on KCBS-TV last year spurred supervisors to boost the ranks of health inspectors. Another report that aired Sunday, showing old meat being packaged as fresh food in some supermarkets and delis, led supervisors Tuesday to question Schunhoff on the practice.

“It happens frequently,” Schunhoff said, noting that although a tactic may be distasteful it is not illegal.