• Jeopardy for Calif. Hospitals: Fines Going Up--Way Up
  • October 22, 2008 | Authors: M. Steven Lipton; Dennis S. Diaz; Kathleen H. Drummy; Gabrielle B. Goldstein
  • Law Firms: Davis Wright Tremaine LLP - San Francisco Office ; Davis Wright Tremaine LLP - Los Angeles Office ; Davis Wright Tremaine LLP - San Francisco Office
  • What you need to know: Fines for initial violations will double and subsequent fines will be even higher.

    When: Jan. 1, 2009

    Why: The California Legislature believes that “the current administrative penalties for immediate jeopardy violations are not sufficient to discourage facilities from committing these violations.”

    On Sept. 30, 2008, Gov. Arnold Schwarzenegger signed Senate Bill 541 into law. In addition to establishing penalties for patient privacy violation, discussed in our advisory “New Calif. Legislation Strengthens Patient Privacy,” SB 541 also provides increased penalties for regulatory violations that result in “immediate jeopardy” of patients in situations in which a health care licensee's noncompliance with one or more requirements of licensure has caused, or is likely to cause, serious injury or death to the patient.

    Background

    In 2006, the California Department of Public Health (DPH) was granted authority to assess penalties against hospitals up to $25,000 per violation for immediate jeopardy. The legislation authorized an increase of the penalties up to $50,000 upon the adoption of regulations implementing the immediate jeopardy law. In addition, the DPH has authority to assess penalties of $100 per day for late reporting to the DPH of the occurrence of an “adverse event.”

    Beginning in 2007, the DPH has cited numerous hospitals for immediate jeopardy, and assessed civil penalties, and has posted the deficiencies on the DPH Web site. To date, the DPH has validated 169 immediate jeopardy cases and fined 42 hospitals for 61 violations (about $1,525,000). SB 541 is sponsored by the DPH in the belief that the current fines are too low.

    Higher penalties

    Effective Jan. 1, 2009, SB 541 increases the sanctions for immediate jeopardy.

    Before adoption of the new immediate jeopardy regulations:

      • First violation: up to $50,000
      • Second violation within three years: up to $75,000
      • Third and subsequent violations within three years: up to $100,000

    After adoption of the new immediate jeopardy regulations:

      • First violation: up to $75,000
      • Second violation within three years: up to $100,000
      • Third and subsequent violations within three years: up to $125,000

    SB 541 also increases the penalties for deficiencies that do not pose immediate jeopardy from $17,500 to up to $25,000 per deficiency.

    What should hospitals do?

    The fines generated by sanctions have been used to hire more surveyors who are tasked with identifying immediate jeopardy cases. Despite the number of immediate jeopardy citations within the first year of the program, few hospitals have elected to appeal their sanctions. In some cases, hospitals have been cited even though there was no patient injury; in a few cases, no patient was even affected by the immediate jeopardy action cited by the DPH.

    In view of the tiered sanctions and the inconsistent application by the DPH of its sanctions authority, hospitals need to look closer at their actions and the licensing surveys, and decide whether there is merit to appealing the penalty rather than just paying the fine and moving on.