Bill Would Allow Fines for Hospitals

Spurred by hospital scandals, the state Legislature is considering granting new powers to California regulators -- allowing them to fine hospitals up to $100,000 for serious lapses in patient care.

The bill, currently on the Assembly floor, would bring hospitals in line with nursing homes and health plans, both of which can be fined under state law.

The legislation also would give California’s Department of Health Services the same authority as its counterparts in other large states, including New York, New Jersey and Texas, which can impose penalties for hospital violations.

One leading patient safety expert applauded the move.

“I think it would usher in a new era,” said Dr. Kenneth W. Kizer, who unsuccessfully sought similar legislation during his tenure as state health director from 1985 to 1991. “Hospitals are going to have to, in many cases, start paying more attention.”

Gov. Arnold Schwarzenegger’s administration “strongly agrees” with the concept of hospital fines and is working with the bill’s authors but has not taken an official position on it, said Nicole Evans, a spokeswoman for the state Health and Human Services Agency.

The bill is part of a broader push to bolster oversight of health facilities. In this year’s budget, the agency received funding to hire 141 additional inspectors for hospitals, nursing homes and other health centers, reversing years of reductions brought on by state budget woes, Evans said.

Although the topic has been discussed at least since June, the legislation appears to have gained traction in recent days in part because of scandals that forced the closure of three transplant programs in the state within the last year. An amendment to add the penalties was introduced in the Assembly only this week and was approved Thursday by a 44-31 vote.

Because the Legislature is set to adjourn next week for the year, the bill’s prospects for passage are uncertain. However, even opponents say fines are likely to be approved eventually.

The bill is supported by the Service Employees International Union and the California Nurses Assn., which represent many hospital workers in the state and often publicize hospital lapses during contract talks. The California Medical Assn. also supports the legislation. It is opposed by the California Hospital Assn., the industry trade group.

In justifying the fines, the bill’s supporters point to the recent transplant fiascoes, as well as a long history of lapses at Martin Luther King Jr./Drew Medical Center, a public hospital near Watts.

Assemblywoman Wilma Chan (D-Alameda), chairwoman of the Assembly Health Committee, also cited several “horrible” examples of hospital neglect and abuse identified by state inspectors.

A 12-year-old boy, she said, was repeatedly sodomized and beaten during a weeklong stay in an adolescent psychiatric unit, but it took staff members days to figure out what was happening. A patient died after a feeding tube became dislodged, sending formula into the lungs instead of the stomach. A physician was killed by an aggressive psychiatric patient because the hospital did not have adequate staffing.

“The bottom line is that one ought to go to a hospital to be healed, not to be injured,” said Sen. Elaine Alquist (D-Santa Clara), the bill’s author. “Hospitals need to be a safer place.”

Hospital industry representatives have successfully resisted fines in the past. Now, they say they do not oppose them per se but object to the bill as written. They say that it is being rushed through the Legislature with little debate and that the issue should be part of a larger overhaul of the state’s antiquated hospital regulations.

“We’re not trying to kill this bill. We’re just trying to get it amended so that it’s reasonable,” said C. Duane Dauner, president of the California Hospital Assn.

Dauner said he worries that some hospitals could be fined out of existence and that unions would inundate the state with complaints in the hopes of drawing large fines.

Currently, state inspectors have limited options after encountering serious problems at a hospital: keep it open, close the affected unit or pull the hospital’s license. The state also can refer the matter to federal regulators, who can revoke Medicare funding but rarely do so.

“It is simply not realistic that you are ever going to close one down unless the care is so egregious that the public is demanding it,” said Kizer, the former California health director.

Fines are significant beyond the financial penalty because they can draw public attention to a hospital’s woes. When the state health department fines a nursing home for a serious violation, for instance, the agency issues a news release.

The bill would impose fines in two stages. The first step, which would take effect Jan. 1, would allow fines of up to $25,000 to be levied every time a hospital is cited for putting patients in “immediate jeopardy” of harm or death. That phrase is the same used by federal regulators to threaten a hospital’s Medicare funding.

The state later would be allowed to impose fines of up to $100,000, but only after regulators drafted rules taking into account factors such as a hospital’s history of compliance.

The transplant scandals demonstrated how uneven the state’s oversight and regulation of healthcare institutions is, said SEIU lobbyist Beth Capell.

St. Vincent Medical Center in Los Angeles and UCI Medical Center in Orange were forced to close their liver transplant programs last year after allegations of wrongdoing, but hospital regulators did not have the authority to fine them.

Kaiser Permanente closed its kidney transplant program in May. But because Kaiser is an HMO in addition to being a hospital operator, the state Department of Managed Health Care was able to fine it $2 million and require it to contribute $3 million to organ donation outreach.

Capell likened the current sanctions issued by hospital inspectors to “little parking tickets.” Once the hospital submits an acceptable plan to fix the problem -- no matter how serious it is -- the deficiency carries no penalty, becoming little more than a historical footnote, she said.

charles.ornstein@latimes.com