Legislature(2001 - 2002)
02/28/2001 09:02 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 73
"An Act making supplemental appropriations and making and
amending other appropriations; and providing for an effective
date."
Co-Chair Donley announced that the bill would not report from
Committee at this hearing.
Department of Health and Social Services
LISA KIRSCH, Assistant Attorney General, Human Services Section,
Department of Law stated that she was the attorney that represented
the Department of Health and Social Services in the Planned
Parenthood versus Perdue case that dealt with abortion funding. She
said she was prepared to either give a brief history of the case or
just answer questions if appropriate.
Co-Chair Kelly requested a brief history.
Ms. Kirsch recounted that the case first arose in June of 1998,
after the General Relief Medical program was eliminated from the FY
99 budget. She specified that the issue arose as a challenge to the
constitutionality of eliminating funding for abortions when the
state provided funding for other pregnancy related services. She
noted there were other grounds as well, but the reasoning used in
the superior court ruling against the state was that the funding
practice was "a violation of the expressed right of privacy in the
Alaska constitution that made this action unconstitutional."
Ms. Kirsch told the Committee that the ruling was appealed and at
the same time, the state requested a stay for the portion of the
order that required the Department of Health and Social Services to
immediately pay for the abortion services. She explained the stay
was requested because the Department of Health and Social Services
felt there was no appropriation that was reasonably available to
cover these services for a variety of reasons. Some of the reasons,
she said relate to the way Medicaid is funded jointly from both the
federal government and the state. She listed another reason as that
Alaska had an entirely separate program, General Relief Medical,
which paid for services that did not receive federal matching
funds.
Ms. Kirsch continued that the stay was denied at the superior court
level and that the state renewed the motion for the stay to the
Supreme Court but did not prevail there either. As a result, she
stated, the department had exhausted all options in terms of
requesting a stay and was in the position of having been ordered by
both courts to pay for the services.
Ms. Kirsch noted that this was the status of the situation during
the 2000 legislative session and that the agency requested a
supplemental appropriation. At approximately the same time, she
stated the state filed a motion to "show cause why we shouldn't be
held in contempt for failing to comply with the court order." She
said that after the legislative session, hearings were held on the
contempt issue and that the court did not actually hold the state
in contempt although the ruling directed the Department of Health
and Social Services to pay for these services within 90 days,
including those services that had been pended during the time of
the appeal.
Ms. Kirsch then stated that in November 2000, the case was argued
before the Supreme Court and that currently the parties are waiting
for a decision. Meanwhile, she said the department has been paying
for the services using general funds appropriated to the Medicaid
program.
Senator Ward had a question regarding the author of the judge's
order instructing the department to pay for the services.
Ms. Kirsch replied that there were several different, interrelated
documents. She noted that initially, "at the hearing, the court
ruled from the bench." She detailed the various documents
pertaining to the court order, saying that the attorneys for the
plaintiffs, Planned Parenthood and the ACLU of New York, prepared
the final judgment at the request of the judge.
Senator Ward asked about the judge's ruling regarding the use of
Medicare general funds.
Ms. Kirsch responded that the judge felt there was nothing that
prevented the department from taking the money out of general funds
that had been appropriated for Medicaid to pay for the abortion
services. She explained that when the judge rules from the bench,
the judge will often ask the prevailing party to draft the
judgment. Therefore, she said, this instance is not unusual.
Senator Ward next asked if the Department of Law had performed a
legal analysis as to whether or not those Medicaid funds are proper
funds under the law to be spent on abortions.
Ms. Kirsch affirmed and noted this is one basis for the appeal. She
stated that this point has been before the superior court and the
Supreme Court as well.
Senator Leman requested a timeline of events. He asked for the
dates of the ruling from the bench and the date the Department of
Health and Social Services made the first payment.
Ms. Kirsch informed that the Committee would be receiving a
chronology. She listed the dates of the evidentiary hearing on the
contempt issue: June 21, 2000; oral arguments and bench ruling:
July 27, 2000; release of the court order: September 18, 2000.
Senator Leman referred to the 90-day deadline for the department to
begin making payments and asked when the count began.
Ms. Kirsch answered that the 90-day deadline began July 27, because
that was the date the court first ruled. She said the matter is
somewhat complex due to the three different groups of claims. She
explained that some claims had been tended since the appeal, others
were received during the process and that still others would be
coming in the future. Therefore, she stated, each group had a
different time frame in which to be paid.
Ms. Kirsch answered Senator Leman's next query stating that the
case had been appealed to the Supreme Court, 30 days after the
superior court's original decision in April 1999. This, she noted
was before the superior court judge issued the 90-day deadline.
Senator Leman asked if the superior court judge could order the
department to pay for the services, knowing the case was on appeal.
Ms. Kirsch affirmed and detailed the procedure of requesting a
stay. She stated that the stay issue is resolved in advance of the
contempt matter. She then explained that the issue of contempt
arose because the department was not in compliance with the April
1999 order. She added that the stay issue was first heard in the
superior court because it is the superior court's order that the
department was charged with not complying with.
Senator Leman requested the date that the department issued the
first payment.
JANET CLARKE, Director, Division of Administrative Services,
Department of Health and Social Services, responded that the
department commenced payment of claims on September 26, 2000 and,
"that was just in time of the 90-day requirement from the judge
th
from the July 27 hearing."
Senator Green and Senator Leman questioned whether this was 60 or
90-days.
Ms. Clarke clarified that there is a month-long timeframe in which
the state issues warrants. She explained that the exercise began on
September 26 to ensure that the checks were actually mailed prior
to the October 26 deadline.
Senator Leman requested a list of recipients of those payments and
the amount of the payments to each provider.
Ms. Clarke spoke to confidentiality concerns about providing
specific information about clients saying she was unsure how they
apply to vendors.
Ms. Kirsch added that this data has been provided in the past but
with all identifying information withheld.
Senator Leman asked for "whatever information you can provide to
the fullest extent."
Co-Chair Kelly asked the witness to clarify her earlier statement
about the prevailing party writing the judgments.
Ms. Kirsch explained that, often when a judge rules from the bench,
the judge then directs the prevailing party, the party the judge
ruled in favor of, to draft a judgment, or a final order for the
judge's signature. She continued that the judgment would then be
"lodged" with the court, which is different than "filed", because
it is a document that is subject to the opposing party's
objections. She noted that the opposing party has three days to
raise objections if for instance a prevailing party inserted
language contrary to what the court said, or the opposing party
believes misinterpreted what the judge said or possibly implied
something that was not clearly stated.
Co-Chair Kelly asked if the judgment and the Memorandum Of Decision
were the same.
Ms. Kirsch replied that they usually are, but that judges operate
differently. She stated that often, after a ruling from the bench
there is not a Memorandum of Decision. However, she noted other
times the court would take the matter under advisement at the
hearing and announce that a Memorandum of Understanding is
forthcoming.
Co-Chair Kelly wanted to know if the Memorandum of Decision dated
March 16, 1999, and signed by Judge Sentan was written by the judge
or by Planned Parenthood.
Ms. Kirsch responded that this decision was produced by the court
and granted summary judgment to the plaintiff.
Co-Chair Kelly then asked the definition of "elective" versus
"therapeutic" abortion.
Ms. Kirsch read the definition for therapeutic abortion from 7 AAC
47.290(8), "the termination of a pregnancy certified by a physician
as medically necessary to prevent the death or disability of a
woman or to ameliorate a condition harmful to the woman's physical
or psychological health or that results from actions that would
constitute a crime of sexual assault under AS 11.41.410, 11.41.425,
a crime of sexual abuse of minor under 11.41.434 to 440, or the
crime of incest under 11.41.450.
Ms. Kirsch answered Co-Chair Kelly's next question stating that a
physician must certify an ameliorating psychological health
condition.
Co-Chair Kelly requested from the Department of Health and Social
Services, data on the number of abortions that were performed due
to an ameliorating psychological health condition versus those
performed due to incest or rape or for the immediate physical
health of the mother. He also requested of the rape or incest
situations, "how many of those were actually taken to court and
proven to be rape or incest."
Ms. Clarke agreed to compile that information.
Senator Green asked if the first payments made on September 26
equaled $98,300.
Ms. Clarke affirmed.
Senator Green wanted to know if the services were continuing and
the bills were accruing during the process of the hearing and
trial.
Ms. Clarke detailed the three payments made in September, October
and November that were included in the supplemental request. She
pointed out that the first payment, of $98,3000 was large because
the judge ordered the department to pay all the claims pended from
the prior year.
Senator Green asked if that included claims for services performed
in 1999.
Ms. Clarke answered that it did.
Senator Green then asked where the department obtained the money to
pay those claims.
Ms. Clarke replied that the department did argue in court that all
the state funds in the Medicaid account were general fund matching
funds to the federal Medicaid program. That argument did not
prevail, she noted, and the department was faced with taking those
general fund match dollars that had been appropriated such and
using them as straight general funds.
Senator Green did not see how the judge could require the general
fund match funds to be spent as straight general funds.
Ms. Clarke added that without a separate appropriation, other funds
beside those in the Medicaid account could not be used for the
court-ordered Medicaid payments.
Senator Green next wanted to know if the department submitted
information to the federal government regarding these claims.
Ms. Clarke replied that the department reports to the federal
government those abortions that are consistent with the Hyde
Amendment. She explained that the federal government pays a portion
of the costs for abortions covered under that amendment. She noted
that those services performed that do not qualify for federal
reimbursement are not reported to the federal government, because
the state is not requesting funds.
Senator Ward wanted to know if the funds used were federal Medicaid
funds and if that was the reason the department did not report the
claims.
Mr. Clarke explained that the federal government pays 60 percent of
Medicaid costs of submitted claims. However, she reiterated,
because the federal government would not pay a portion of these
claims, they were not submitted. She defined the federal Hyde
Amendment as prohibiting the use of federal funds to pay for
abortions except for situations of rape, incest or when the life of
the mother is at risk. She noted that the services in question do
not qualify under the provisions of the Hyde Amendment and
therefore would not receive federal reimbursement. She stressed
that the payments in question only involve state funds.
Ms. Clarke answered Senator Ward's next question noting that a few
of the performed abortions did qualify for federal funding under
the Hyde Amendment provisions, but that most did not.
Senator Ward remained unclear as to whether the funds were state or
federal.
Ms. Kirsch reiterated that the funds used to make the court ordered
payments were state funds. She explained the Medicaid procedure
where state funds are used to initially pay the entire claim. She
continued that the department then submits the claims that qualify
under the federal Medicaid rules, to the federal government and
receives reimbursement of 60 percent in federal funds for those
services. She noted that the state funds involved could be
designated by the legislature as funds designed to be federally
matched, which is the case with the funds in question. This point,
she continued, was argued before the court stressing upon the fact
that the legislature has appropriated these funds with a condition
upon them that they would be used for services that will be
federally matched. She stated that, "The court, in its order, was
very clear that it was not directing us to spend money, to spend
state money, in such a way that we would be requesting federal
reimbursement."
Senator Ward next asked if the state funds had been first spent for
federally matched services, the federal reimbursement was received
and then that money was used to pay for the abortion services. He
inquired, "I'm just trying to find out if the dollars were spent
before the match was achieved."
Ms. Clarke answered that the state funds in question had only been
used for the abortion claims. She repeated that no federal dollars
were spent on abortion services unless they were consistent with
the Hyde Amendment.
Senator Ward clarified, "the money was taken out of a specific
appropriation for a match and spent on something other than what it
was appropriated for."
Ms. Clarke affirmed.
Senator Ward asserted that in this case, a judge appropriated money
rather than the legislature. He explained this is because the
legislature appropriated funds to be used for federally matched
services, but the judge instructed the department to use those
funds for non-federally matched services.
Senator Green asked what the difference is between a medically
necessary abortion and a therapeutic abortion.
Ms. Kirsch stressed that she has urged the court to use the term
"therapeutic" because it is defined in regulations. She stated that
"medically necessary", is a term that is commonly used within the
Medicaid program, and can mean slightly different things in the
context of different types of service. "But in a very broad and
general sense, medically necessary, usually means that a physician
needs to certify it as something that the patient needs to
ameliorate some kind of harmful condition," she stated. She noted
that in other services, such as transplants, medically necessary
could be defined much more specifically. She gave an example of a
liver transplant that might be medically necessary only when the
patient is in the end stages of a disease, or that perhaps a
certain type of transplant is medically necessary. But generally it
means physician certified or physician recommended, she remarked.
Senator Green remained unclear about the medically necessary
abortions that qualify for federal reimbursement under the Hyde
Amendment, and those that are required by the Alaska court.
Ms. Kirsch explained that part of the confusion could be a result
of the fact that the federal decisions are based on the federal
constitution, whereas this case deals with a state claim in the
state court and therefore subject to the state constitution, which
is different from the federal constitution. She stated, "in terms
of what it would require in order to be constitutional in terms of
a privacy right, there's a different body of case law that applies
to that. I believe that that's the root of the inconsistency that
you're seeing there."
Senator Leman asked if the department distinguished between the
abortions that qualify for federal funding under the Hyde Amendment
and those that do not, and if it intends to seek reimbursement from
the federal government for those that would qualify. He requested a
breakdown of those services.
Ms. Clarke replied that the qualifying services are submitted to
the federal government and that she would provide more details.
Section 8 (a)
Department of Health and Social Services
Medicaid Budget Request Item (BRU)
Medicaid caseload growth of 7% and higher average cost per
month, particularly for hospital and pharmacy costs.
$9,124,700 general funds
$50,652,700 federal funds
$11,412,900 statutory designated program receipts
Ms. Clarke stated that the department had prepared answers to the
questions raised on this request during the previous meeting. She
detailed the clarification made to the children's services data.
She used a graph to show that while the trend continued to rise,
the rate of growth was leveling out. She added that Medicaid
services are usually in greater demand during the winter.
Section 8 (b)
Department of Health and Social Services
Medicaid BRU
Implement facility rate-setting settlements with Medicaid
service providers.
$23,100 general funds
$34,800 federal funds
Ms. Clarke explained that this request is to pay settlements
currently before the Medicaid Rate Advisory Commission on matters
related to payment of rates to health care facilities. She noted
that there are three different settlements involved: Ketchikan
General Hospital, Cordova Community Medical Center and St. Ann's
Care Center. She explained that these settlements challenge how
rates had been set for these facilities and include audits,
Medicaid and Medicare cost reports, and their implementation. She
stated that the reason these settlements are included as a
Department of Health and Social Services request rather than in the
Judgment and Claims section, is because payments to the facilities
are made through the department's established payment system, which
the Department of Law does not have.
Senator Hoffman requested an explanation of the different match
percentages.
Ms. Clarke responded that it might have to do with the particular
claim involved, the year of the claim and whether the services were
provided while the state was under a 50-percent rate rather than
the current sixty-forty percent match rate with the federal
government.
Section 8 (c)
Department of Health and Social Services
Catastrophic and Chronic Illness BRU
Caseload growth and increased pharmacy costs, which exceed
budgeted amount.
$430,400 general funds
Ms. Clarke stated that this request is to support the state
Catastrophic and Chronic Illness Assistance (CAMA) program through
the end of FY 00. She noted that the legislature authorized $4.3
million to CAMA for FY 01, but that the funds needed to cover the
FY 00 costs are in a separate appropriation and the department
could not transfer funds from other sources. She reminded the
Committee that the legislature established up this program after
eliminating the General Relief Medical program. She stressed that
those eligible for CAMA are the "poorest of the poor." She
explained that to qualify for this program, participants must have
less than $500 in assets, less than $300 monthly income, do not
qualify for any other program or coverage and also have a
qualifying medical condition. She listed the qualifying medical
conditions as: terminal illness, in-patient hospitalization,
chemotherapy treatment for cancer, or chronic conditions, such as
diabetes, seizure disorder, chronic illness or hypertension. She
noted that most of the funds used in this program cover the costs
of prescription drugs. She added that this program helps
participants remain independent and out of institutionalized care
facilities.
Senator Austerman asked if this program operates solely with state
funds.
Ms. Clarke affirmed.
Senator Green wanted to know if there was a comparable federal
program that could provide services to this group of people.
BOB LABBE, Director, Division of Medical Assistance, Department of
Health and Social Services, replied he was unaware on any. He
pointed out that a number of states have similar programs. He
stressed that the Medicaid program is targeted to serve those who
are elderly, blind, disabled or families with children. The people
served by CAMA, he explained, are usually single adults and
childless couples, under age 65, who would not meet the
disabilities requirement for Medicaid coverage. He noted that some
eventually qualify for full disability benefits under the Medicaid
program.
Senator Austerman further clarified that the federal program covers
those with incomes below 200-percent of the national poverty level.
He asked if needy individuals, "once they fall down so far, they
can fall out of all the federal programs."
Mr. Labbe replied that the question is not primarily about income,
but rather because Medicaid doesn't pay for single people unless
they are disabled or elderly.
SFC 01 # 28, Side B 09:49 AM
Mr. Labbe continued that there are some individuals who have very
low incomes, but because they are childless or under 65 and not
disabled, they would not qualify for Medicaid.
Section 8 (a)
Department of Health and Social Services
Medicaid Budget Request Item (BRU)
Medicaid caseload growth of 7% and higher average cost per
month, particularly for hospital and pharmacy costs.
$9,124,700 general funds
$50,652,700 federal funds
$11,412,900 statutory designated program receipts
Ms. Clarke resumed answering the questions posed to the department
at the last hearing. She addressed the Denali KidCare program cost
to the state and the comparison of the children's health expansion
and the federal Medicaid authorized percentage phasing. She
referred to Attachment A [copy on file] that shows the increases
that occurred when the legislature passed the children's health
expansion. At this time, she pointed out, the Medicaid percentage
increased from 50 percent to 59.8 percent, resulting in a $30
million saving to the state. The chart, she said, compares the $30
million savings to the general fund amount spent on the children's
health expansion. She detailed the amount of money the state spent
in FY 99, FY 00 and FY 01, as listed on the chart.
Ms. Clarke then referred to Attachment B, which provides
information about the poverty level standards for different family
sizes.
Mr. Labbe pointed out that 200 percent of the national poverty
level is the standard measurement for qualification into the Denali
KidCare program. He informed that monthly income is used for this
purpose.
Senator Wilken wanted to know if eligibility for Denali KidCare
program is based on gross income.
Mr. Labbe replied that the program primarily considers gross
income.
Senator Wilken asked if the gross income includes permanent fund
dividend income.
Mr. Labbe believed permanent fund dividend income is excluded under
state statute.
Senator Wilken shared that he learned that permanent fund dividend
income is excluded from income eligibility requirements for daycare
programs. He stated that if the requirement were different for
Denali KidCare, he would like to know about it. He then calculated
the qualifying income for a family of four at approximately $21 per
hour.
Mr. Labbe affirmed that this family would qualify for insurance
coverage for the children. He noted that the figures listed on the
chart reflect the policy that goes into effect April 1, 2002 and
are based on the latest federal poverty level information.
Senator Wilken questioned the one-member family category shown on
the chart.
Mr. Labbe replied that this is possible in certain situations
because KidCare covers children up to age 19. He explained that 17
and 18-year-olds living on their own could participate in the
program.
Senator Wilken was interested to see the distribution of KidCare
recipients with regards to family size.
Senator Green asked if Medicaid benefits are paid to the
father/husband under the Denali KidCare program.
Mr. Labbe answered that adult coverage is only provided for
pregnant women.
Senator Green asked if therefore, the family size only counted the
women and children in that family.
Mr. Labbe answered that all family members are counted.
Co-Chair Kelly asked if dividends from Native Corporations are
included in the computation of gross income.
Mr. Labbe believed the dividends are counted as income in the month
received, unless they are used for an allowable investment, such as
the purchase of a home. He admitted that the eligibility
requirements are technical and he offered assistance of a staff
member with more knowledge on the issue.
Senator Ward asked if the shareholders of Cook Inlet Regional
Corporation were disqualified after receiving the recent $50,000
dividend.
Mr. Labbe predicted that they did not qualify during the month that
the dividend was received. He was not aware of the specifics of the
situation.
Senator Ward requested that information.
Co-Chair Donley expressed that it was "amazing" that a one-income
family with five children earning over $60,000 annually, qualify
for this program.
Co-Chair Kelly added that the same family, if members of Cook Inlet
Regional Corporation, could receive an additional $100,000 in
Native corporation dividends and still be eligible for Denali
KidCare coverage, with the exception of the one month the dividends
were received.
Senator Green also noted that this hypothetical family is also
eligible for Indian health services.
Ms. Clarke proceeded to Attachment C [copy on file.]
Mr. Labbe detailed that after Denali KidCare was implemented, the
department constructed a project with the Public Assistance Quality
Control Unit to review some questions that were raised. One
question, he shared, is whether participants had health insurance,
or if it was available at the time that they applied for
participation in the program. He stated that the statistical
samples reviewed, showed that 12 percent of participants had other
health insurance at the time of application. Of the remaining 88
percent, he said, 91 percent did not have any insurance available.
Ms. Clarke then referred to Attachment D [copy on file] that
addresses the department's marketing program. She pointed out that
the bulk of the funds in question were from a Robert Wood Johnson
grant to encourage marketing and outreach efforts.
Senator Green asked if this is the exclusive purpose of the grant.
Ms. Clarke answered it is.
Senator Wilken asked if the grants require state matching funds.
Ms. Clarke answered that they do not.
Ms. Clarke summarized there are a number of factors driving up the
cost of Medicare. She referenced the increased number of adults,
disabled and elderly people seeking care as well as the children's
expansion program, which accounts for approximately five-percent of
the general fund in FY 00. She listed the amount of general fund
allocated to Medicaid that are spent on services to the disabled as
35 percent, 16 percent for the elderly and 15 percent on adults.
She stated that the elderly and disabled are two groups of
particular concern with increased growth projected.
Section 8 (d)
Department of Health and Social Services
Subsidized Adoptions BRU
Maintain existing appropriation level for subsidized adoption
and guardianship by replacing TANF funds, which could not be
used for these costs as anticipated.
$1,000,000 general funds
$1,000,000 Inter-Agency Receipts
Ms. Clarke explained that this item is a fund source change
request. She shared that during the previous session, the
department told the legislature that Temporary Assistance for Needy
Families (TANF) funds could be used for this program. However, she
since learned that those funds could not be used. She said that
1,200 of the 1,500 adoptions and guardianships the department
facilitates each month qualify for a federal 4-E program. However,
she informed that the federally provided TANF funds could not be
used to provide the state match to those 4-E funds.
Ms. Clarke stated, "TANF funds must be used to support a family."
She defined this as a minor child with a custodial parent or a
caretaker. She said that adoptions and guardianships by relatives
qualify, but that non-relative guardianships do not.
Ms. Clarke then shared that to qualify for TANF funds for
guardianships, the department is able to consider only the income
of the child. For adoptions however, she stated that income of the
entire family must be considered. She relayed department concerns
about imposing on the adoptive families requesting income
information after these families have agreed to adopt special needs
children. Therefore, she stated that TANF funds would not be used
for those adoptions. She also noted that Alaska's TANF funds could
not be used to fund out of state guardianships and adoptions. All
that remained, she stressed, were the approximately 126 relative
guardianships in Alaska each month, at a monthly cost of $900,000.
Ms. Clarke continued that the department planned to utilize TANF
funds for the approximately 126 qualifying cases. However, she said
that the amount paid in a guardianship is considered "basic
maintenance" and therefore subject to all of the standing TANF
rules. In particular, she pointed out the assignment of child
support and work requirements.
Ms. Clarke summarized that under these circumstances, the
department was unable to use the TANF funds in the subsidized
adoption program. She assured "if we could have used this money we
would have."
Senator Hoffman wanted to know what the TANF funds were then spent
on.
Ms. Clarke replied that the funds were not being spent. She
explained that to do so, the department would have to receive
legislative authority to spend the funds elsewhere.
Senator Hoffman asked if the funds would lapse.
Ms. Clarke replied that the TANF funds are part of the state block
grant and do not lapse. She explained that the state does not
receive the funds until they are expended, but that they are
located in an "Alaska" account in Washington DC. She added that the
department tracks the balance of the account and that the state
does not earn interest.
[Note: the spreadsheet supplied by the Office of Management and
Budget separates Section 8 (d) into two items.]
Section 8 (d)
Department of Health and Social Services
Community Development Disabilities Grants BRU
Technical correction in fund source from $120,000 GF to
GF/Mental Health.
And
Section 8 (d)
Department of Health and Social Services
Services to Chronically Mentally Ill BRU
Technical correction in fund source from $203,000 GF to
GF/Mental Health.
Ms. Clarke shared these one-time fund source changes make a
technical correction as recommended by the Department of Law.
Section 8 (e)
Department of Health and Social Services
Probation Services BRU
Appropriate interest earnings on the Juvenile Accountability
Incentive Block Grant trust to the program.
$125,000 Statutory Designated Program Receipts
Ms. Clarke spoke to this request from the Division of Juvenile
Justice. She noted that the fund source is interest earned on the
Federal Juvenile Accountability Incentive block grant. She
explained one of the requirements of this block grant is to earn
interest on the grant and spend it on qualifying programs. She said
an oversight prevented the inclusion of this item in the regular FY
01 budget.
Co-Chair Donley asked what projects the division planned to spend
the funds on.
Ms. Clarke replied that $75,000 would be spent for production of a
training video for use in the Alaska Court System for juveniles,
caregivers and victims. She said the remaining $50,000 would be
used to improve the Wide-Area Network Program Connectivity to law
enforcement, courts and schools. She warned that if the funds were
not expended by June 30, 2001, they would be revoked.
Co-Chair Donley wanted to know who decided the best use of these
funds.
Ms. Clarke answered that it was the division director. She added
that the intent is to use the funds on one-time items, and that
they must be spent for qualified purposes.
Section 8 (f)
Department of Health and Social Services
CMHG/Designated Evaluation and Treatment BRU
Growth in services needed for Designated Evaluation and
Treatment.
$974,100 general funds
Ms. Clarke stated this request is for general fund/mental health
funds for grants to those hospitals that participate in the
Designated Evaluation and Treatment program. She explained that
this "last resort" payment program provides mental health
evaluation and treatment in local hospitals for indigent
individuals.
Ms. Clarke listed the FY 00 and FY 01 costs for several communities
to demonstrate the cost increase. She noted that Fairbanks and
Juneau are the main participants in the program with Mat-Su
participating primarily for transportation services. She stated
that the Fairbanks Memorial Hospital expanded its psychiatric care
unit in the middle of the previous year, and that the department
was behind in planning for the increase in services.
Ms. Clarke stressed the main benefit of this program is the ability
to address community concerns about mentally ill individuals in the
correction system. Since inception, she pointed out, that community
has severely reduced the number of mentally ill individuals sent to
correctional institutions. She added that the number of patients
transported from Fairbanks and Juneau to the Alaska Psychiatric
Institute has been dramatically reduced.
Section 8 (g)
Department of Health and Social Services
Vital Statistics BRU
Reduce backlog of requests for birth, death and other
certificates using increased receipts from fees.
$225,000 Receipt Supported Services
Ms. Clarke noted that this request would fund three items, the
first being to cover the $10,000 cost of a new lease in the
Fairbanks office. She continued that $35,000 would be used to hire
nonpermanent employees to reduce or eliminate the current backlog
of mail requests for vital records. She finished with the third
item to utilize $170,000 in receipt supported services funds to
replace the same amount of general funds, which would be
transferred to Public Health Nursing to pay for the salary
increase.
Section 18
Various Agencies
Miscellaneous Claims and Stale-dated Warrants BRU
$85,500 general funds
$141,100 federal funds
Ms. Clarke referred to the department's claims, noting that federal
funds could be received to cover some of the claims. She stated
that many of the claims are for medical services provided to
children in state custody, which could be Medicaid eligible.
Co-Chair Donley interrupted to ask if there were any claims
utilizing general funds.
Ms. Clarke answered yes and summarized these into two categories.
The first category, she explained related to single-audits
performed on grantees where it was determined that the department
owes additional money from a prior fiscal year. She detailed the
second category dealing with medical bills incurred by children
while in state custody. She said it was initially thought that
these children qualified for Medicaid or other health care
coverage, but it was later learned that they did not qualify.
Therefore, she stated, the state must pay for the medical services
since the child was in state custody.
Section 19 (a) (6)
Department of Health and Social Services
Medicaid BRU
AR 22520-00 Medicaid Services Special FY 00 ratification.
$4,268,866.67 general funds
Ms. Clarke commented that this request "comes about from a variety
reasons." She listed the primary reason as the understanding that
the department would not have ratification at the end of FY 00.
However, she said the federal government deferred federal revenues
the department had claimed. She stressed that the department should
still receive those funds, but without that revenue, the general
fund ratification is necessary.
Ms. Clarke explained these claims qualify for 100 percent federal
reimbursement under the Indian Health Service program. She detailed
the process of deferring questionable claims. She said the deferred
claims are reviewed a second time and if still found questionable,
are disallowed. At this point, she stated, the decision could be
appealed. She noted that the claims in question are in the deferral
stage. She relayed that Mr. Labbe, Director, Division of Medical
Assistance, has opined that claims would be approved, either in the
review stage or during appeal.
Ms. Clarke assured that if the federal funds are received, the
state funds would revert to the general fund.
Senator Green wanted to know if there would be a penalty for
waiting to appropriate these funds until the following year.
Ms. Clarke replied that she did not think there would be except
that, "it probably would make the accountants uncomfortable."
Department of Law
DEAN GUANELI, Chief Assistant Attorney General, Legal Services
Section, Criminal Division, Department of Law gave an overview of
Civil Rule 82; the court rule that allows prevailing parties in
litigation to recoup a portion of their attorney fees. He explained
that the amount of attorney fees recouped is generally based on a
percentage of the amount awarded in the case following a sliding
scale. However, he pointed out that most of the cases that the
state is involved in are public interest litigation pertaining to
injunctions and changes in state policy, and do not include cash
awards. For these cases, he continued, Civil Rule 82 provides for a
recoup of 30 percent of the attorney fees if the case in question
goes to trial and 20 percent if the case does not go to trial. He
noted that the Planned Parenthood public interest litigation is the
one case that the Criminal Division is currently involved.
Co-Chair Donley remarked that he was surprised that the Criminal
Division has handling this. He asked how it became a Criminal
Division matter.
Mr. Guaneli responded that the decision was made at the early
states of the litigation based on review letters issued by the
Civil Division that expressed doubts about the constitutionality of
the legislative actions to withhold funding from the abortion
services. He said that if the Civil Division handled that
litigation, it might be perceived in some quarters that the
division was not vigorously handling the case.
Co-Chair Donley wanted to know if the Civil Division transferred
funds to the Criminal Division to cover the costs of defending this
case. He spoke of additional funds appropriated to the Criminal
Division to offset increased funding to the Public Defenders
Agency.
Mr. Guaneli assured that the Criminal Division did receive funds
from the Civil Division for this purpose. He added that because the
case has proceeded faster than anticipated, that all of the funds
had not yet been expended.
Mr. Guaneli continued detailing the attorney fee award to Planned
Parenthood. He stated that approximately $77,000 in attorney fees
was awarded to Planned Parenthood for the trial court portion of
the litigation, and $27,000 in attorney fees for the appeal
portion. He calculated 20 percent of the trial court amount to be
$15,000 and 20 percent of the appeal court amount at approximately
$5,000.
Mr. Guaneli emphasized however, "The 20 percent figure in Rule 82
in these kinds of cases really is just a starting point. There is a
whole laundry list of factors the court can consider in adjusting
that presumptive fee up or down." He shared that in fact, one of
the justices that dissented from the adoption of that "laundry
list" said, "this is really gonna unduly complicate and prolong
attorney's fees litigation because any attorney worth his or her
salt, is going to try to find a way under those list of exceptions
to try to bury that amount." In addition, Mr. Guaneli pointed out,
there is a "catchall" exception that allows, "any other equitable
factor that the court deems relevant." Therefore, he stated the
court has the flexibility to adjust the presumptive 20 percent. He
surmised that in public interest litigation the adjustment would
most often be an increase. He shared that the court takes into
consideration for example, the complexity of the issues, the
reasonableness of the fees and the difficulty of the work. He
opined that unless the court awards an amount close to the full
cost of attorney fees, attorneys would be discouraged from arguing
public interest litigant cases. He speculated that the court would
also award an amount higher than the 20 percent figure in this
case.
Co-Chair Donley wanted to know how much more than 20 percent did
the court award.
Mr. Guaneli was unable to detail all the exceptions but pointed out
that the state was ordered to pay a little over $100,000, while the
total 20 percent calculation is $20,000 under Rule 82.
BARBARA RITCHIE, Deputy Attorney General, Civil Division,
Department of Law, addressed the three public interest litigation
items of the Civil Division. She listed them as: Trustees for
Alaska, Cook Inlet Keeper versus State of Alaska, Department of
Natural Resources, pertaining to the permit for leasing and the
beluga whale issue, and the superior court and Supreme Court levels
of Northern Alaska Environmental Center and Sierra Club et. al.
versus State of Alaska, the Northern Intertie case. She noted that
in addition to the reasons given by Mr. Guaneli regarding the
difficulties in determining attorney's fees, these cases are
considered Administrative Appeals and are subject to additional
factors. She explained these cases are appeals of the final agency
decision brought under Appellate Rule #601 Appeals, and are not
original actions. Therefore, she stressed, Civil Rule #82, which
applies to original actions, does not apply to these cases under
current law. She continued that in administrative appeals cases,
attorney's fees are determined under Appellate Rule #508, which
states that attorney's fees are determined by the court and gives
no presumptive schedule.
Co-Chair Donley asked the witness to review the cases that did have
trial decisions.
Ms. Ritchie responded that these cases did have trial court
decisions, but were administrative appeal cases and subject to
Appellate Rule #508.
SFC 01 # 29, Side A 10:36 AM
Ms. Ritchie continued that most Administrative Appeals would not go
to trial, but would instead have briefings and arguments in an
"appellate capacity" with the superior court sitting as the first
level appeal. Therefore, she stated it is difficult to ascertain
whether the attorney's fee reimbursement rate of 20-percent for
non-trial cases, or 30-percent for trial cases, would apply.
Ms. Ritchie used the previous explanations to address the Northern
Intertie case. She stated that at the superior court level, the
court awarded $54,000 for reasonable attorney's fees. She noted
that the plaintiff had requested $108,000, and through litigation,
the Department of Law received a fifty-percent reduction. She
calculated the 30-percent rate at $16,230, and the 20-percent
reimbursement rate at $10,820. Similarly, she listed the figures
for the Supreme Court, noting that the court awarded $45,000, of
the $102,000 requested for attorney's fees, which would be $13,500,
using the 30-percent rate calculation and $9,000 under the 20-
percent rate calculation.
Co-Chair Donley shared that he has received correspondence from
individuals who have read public reports on judgments the state
pays and are distressed at the amount of money the executive branch
pays to particular advocacy groups. He stressed it is important to
discuss the issue and to dispel the appearance of impropriety.
Ms. Ritchie next addressed the Cook Inlet Keeper case. She shared
that the appellants had requested almost $118,000 in attorney's
fees and the department obtained a reduced amount of $76,000. She
calculated that a 30-percent award would have been $23,000 and a
20-percent award would have been $15,000.
Senator Ward asked for clarification that an Administrative Appeal
is not governed by the same court rules that apply to litigations
against individuals.
Ms. Ritchie responded to Senator Ward's next question by explaining
that Administrative Appeals are governed by appellate rules that
are different from the civil rules, which apply to an original
action. She stated that this process is common for other states, as
well as with the federal government.
Co-Chair Donley added that one difference is that some cases were
considered public interest litigation. He referred to a bill passed
by the legislature the previous session, but vetoed by the governor
regarding attorney's fees reimbursement for public interest
litigation. He spoke of a 1998 case, which set the precedent to no
longer pro-rate public interest litigation based on portions of the
case in which the plaintiff prevailed. He stated that the plaintiff
is now awarded the full cost of attorney fees even if the plaintiff
lost 90-percent of the entire case, only prevailing on one or more
point.
Ms. Ritchie stated that public interest litigants were involved in
both administrative appeals and original cases.
Co-Chair Donley stated that the remaining questions raised in the
previous hearing would be addressed "informally" outside of the
meeting, rather than by conducting an executive session.
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