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COUNTY OF SAN DIEGO, Cross-complainant and Respondent, v. STATE of California et al., Cross-defendants and Appellants.
This is an appeal by the State of California and several of its administrative subdivisions (together State) from a judgment granting a writ of mandamus which required the State to pay the County of San Diego (San Diego) a judgment of many millions of dollars. The State vigorously challenges the procedures and substance by which the superior court reached its result. San Diego responds with equal energy, contending that the repayment of funds owed by the State to San Diego by virtue of clear constitutional direction is now long overdue, and that the administrative delays imposed by the State have created an impasse in redress entitling the superior court to grant this extraordinary relief. As we shall explain, we find that the superior court did have, under these most unusual circumstances, the power to take jurisdiction of the issue and to require redress from the State. We also conclude, however, that the court's order went beyond that necessary to vindicate San Diego's entitlement, that it transgressed upon administrative remedies prescribed by the Legislature which have not yet been utilized, and therefore that certain provisions of the court's order must be annulled.
FACTUAL AND PROCEDURAL BACKGROUNDACONSTITUTIONAL AND LEGISLATIVE OVERLAY
It became apparent, some two decades ago, that friction existed and was building between the State and its governmental subdivisions (cities and counties) in terms of allocation of fiscal responsibility for public programs. It was thought that the State was improperly creating programs to be administered by local agencies without providing the requisite financial support. (See County of Los Angeles v. State of California (1987) 43 Cal.3d 46, 56, 233 Cal.Rptr. 38, 729 P.2d 202.) Reaction to this perception resulted in the passage of California Constitution, article XIIIB, section 6 (which we hereafter refer to by the abbreviation commonly used, “Section 6.”). It provided:
“Whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the state shall provide a subvention of funds to reimburse such local government for the costs of such program or increased level of service․”
As explained in the ballot argument in favor of the amendment, “this measure ․ [w]ill not allow the state government to force programs on local governments without the state paying for them.” (Ballot Pamp., Proposed Amend. to Cal. Const. with arguments to voters, Spec. Statewide Elec. (Nov. 6, 1979) p. 18.)
In 1984 the Legislature adopted detailed provisions for the administration and payment of claims arising from Section 6. Commencing with Government Code section 17500,2 the new statutory framework created a Commission (§ 17525) to adjudicate disputes over the existence of a state-mandated program (§§ 17551, 17557), and vested with the Commission the power to adopt procedures for submission and adjudication of reimbursement claims (§ 17553). A somewhat unique system was devised to establish precedent for a particular mandate, so that one adjudication would constitute final resolution of the issue as to all local agencies with similar claims (§ 17521). The first reimbursement claim made with respect to an alleged state mandated program becomes a “test claim,” and its adjudication then governs all subsequent claims based on the same mandate. (See Kinlaw v. State of California (1991) 54 Cal.3d 326, 332, 285 Cal.Rptr. 66, 814 P.2d 1308.)
THE SAN DIEGO CLAIM
The San Diego claim pertains to the funding of the cost of health care services for medically indigent adults. Before 1983 these services were provided by and funded by the State under its Medi–Cal program. Effective January 1, 1983, however, the Legislature transferred responsibility for care of the medically indigent adults to counties. (Kinlaw v. State of California, supra, 54 Cal.3d at p. 329, 285 Cal.Rptr. 66, 814 P.2d 1308.) San Diego established its program to provide these services, called the “CMS program”, and thereunder cared for the same class of indigent adults who had previously been covered by the State program. Notwithstanding this transfer of administrative responsibility, the State continued to fund the program from its inception in 1983 through June of 1989. This funding came up short, however, in fiscal years 1989–1990 and 1990–1991.
Faced with this shortfall, San Diego's board of supervisors voted in February 1991 to eliminate the CMS program unless additional funding should be forthcoming from the State. When the State declined to provide such funding, San Diego sent notices of program termination to affected individuals and providers. As noted below, however, the program was never actually terminated.
San Diego attempted to follow the statutory claims procedure by filing its first claim with the Commission on March 13, 1991. This claim sought reimbursement for $5.3 million net costs expended by San Diego on the CMS program for fiscal year 1989–1990 in excess of the State's funding for that year. This claim was rejected by the Commission on April 12, 1991. On December 18, 1991, San Diego sent the commission a second claim, seeking more than $21.2 million in excess costs incurred in the CMS program for fiscal year 1990–1991. No response has ever been received from the Commission as respects the second claim.
THE SAN DIEGO LITIGATION
The notice of program termination precipitated the filing, in March 1991, of a class action by CMS beneficiaries (“plaintiffs”) against San Diego to enjoin termination or reduction of the program. San Diego filed a cross-complaint joining the State in the action, alleging that the shift of the responsibility for care of medically indigent adults accomplished by the 1982 legislation constituted a new program which required State funding under Section 6. San Diego alleged that it was excused from complying with the claims provisions of sections 17500 et seq. because other claims had been filed with the Commission which had been denied, hence such filing by San Diego would be “a futile act.”
The plaintiffs' lawsuit against San Diego met initial success by the issuance of a preliminary injunction against reducing or terminating the CMS program. For reasons not relevant to the case against the State, San Diego was able to continue the program and the plaintiffs withdrew their request for a preliminary injunction. By stipulation their complaint against San Diego was dismissed on April 21, 1992.
Proceedings continued, however, as respects San Diego's cross-complaint against the State. A series of hearings and orders occurred throughout 1991 and 1992, which can best be characterized as “unusual.” 3 The State makes much of the alleged irregularities and errors involved in these procedures. Notwithstanding the issuance of various temporary and procedural orders, no response from the State was ever obtained by San Diego as to the interim orders which as a practical matter was prejudicial to the State. We therefore focus upon the final judgment issued by the court on December 18, 1992, which is the subject of this appeal. The December orders confirm the court's jurisdiction to hear and determine San Diego's claim (thereby rejecting the State's position that failure to exhaust administrative remedies via claim to the Commission bars superior court jurisdiction), determine the amount owed by the State to San Diego for fiscal years 1989–1990 and 1990–1991, prescribe the State funds from which payment is to be made, and (among other provisions) direct payment. Needless to say, no funds have as yet been transported from Sacramento to San Diego.
We must note that, during this period of time, a “test case” had been wending its way through the system based upon a claim for the same relief from mandated spending filed by the County of Los Angeles. As discussed below, this “test” failed its objective by being dismissed before appellate resolution by stipulation of the parties, San Diego being denied permission to join in the appeal.
The State contends the superior court should have dismissed San Diego's cross-complaint for lack of jurisdiction. Citing Kinlaw v. State of California, supra, 54 Cal.3d 326, 285 Cal.Rptr. 66, 814 P.2d 1308, the State asserts the statutory administrative procedures provided San Diego's exclusive remedy for determining the issue whether the 1982 legislation imposed a reimbursable state mandate. According to the State, San Diego was not entitled to “utilize the courts as a vehicle to end-run and preempt the orderly statutory process which the Legislature created as the exclusive means for determining mandate issues.” We conclude, under the circumstances of this case specifically, that San Diego faced an emergency shortfall of funding, its claims presented to the State had either been rejected or ignored, and the Commission had ruled the statute not to be a mandate and had ended five years of litigation on its “test case” without a decision. It would have been a futile pursuit of an illusory remedy for San Diego to be required to make a new claim to the Commission and face more years of litigation with an agency which has made its views on the issue crystal clear. Accordingly, we find the superior court had jurisdiction to adjudicate the issue of whether the statute created a mandate.
In Kinlaw v. State of California, supra, 54 Cal.3d 326, 285 Cal.Rptr. 66, 814 P.2d 1308, taxpayers/citizens brought a lawsuit seeking “a determination that the enactment of AB 799 [the 1982 legislation] created a state mandate within the contemplation of section 6.” (Id. at p. 329, 285 Cal.Rptr. 66, 814 P.2d 1308.) The Supreme Court characterized the issue as whether the State was obligated under Section 6 to reimburse Alameda “for the cost of providing health care services to medically indigent adults who prior to 1983 had been included in the state Medi–Cal program.” (Id. at p. 329, 285 Cal.Rptr. 66, 814 P.2d 1308.) In concluding the taxpayers/citizens did not have standing as plaintiffs to enforce Section 6, the court stated: “The administrative procedures established by the Legislature, which are available only to local agencies and school districts directly affected by a state mandate, are the exclusive means by which the state's obligations under section 6 are to be determined and enforced.” (Id. at p. 328, 285 Cal.Rptr. 66, 814 P.2d 1308.) After analyzing section 17500 et seq., the Supreme Court concluded: “It is apparent from the comprehensive nature of this legislative scheme, and from the Legislature's expressed intent, that the exclusive remedy for a claimed violation of section 6 lies in these procedures. The statutes create an administrative forum for resolution of state mandate claims, and establishes procedures which exist for the express purpose of avoiding multiple proceedings, judicial and administrative, addressing the same claim that a reimbursable state mandate has been created.” (Kinlaw v. State of California, supra, 54 Cal.3d at p. 333, 285 Cal.Rptr. 66, 814 P.2d 1308.) The court also stated: “In short, the Legislature has created what is clearly intended to be a comprehensive and exclusive procedure by which to implement and enforce section 6.” (Ibid.) The court further stated: “The Legislature has established a procedure by which the county may claim any revenues to which it believes it is entitled under section 6.” (Id. at p. 335, 285 Cal.Rptr. 66, 814 P.2d 1308.) The court characterized that procedure as “both adequate and exclusive.” (Ibid.) The court also observed: “The Legislature has the authority to establish procedures for the implementation of local agency rights under section 6. Unless the exercise of a constitutional right is unduly restricted, the court must limit enforcement to the procedures established by the Legislature. [Citations.]” (Id. at p. 334, 285 Cal.Rptr. 66, 814 P.2d 1308.) As we shall explain, under the circumstances here requiring San Diego to resort to the statutory administrative procedures would unduly restrict San Diego's constitutional right under Section 6.
At the time the Supreme Court decided Kinlaw v. State of California, supra, 54 Cal.3d 326, 285 Cal.Rptr. 66, 814 P.2d 1308, the test claim—to determine whether the 1982 legislation created a reimbursable mandate for purposes of Section 6—filed by Los Angeles and joined by San Bernardino had been rejected by the Commission, the Commission's decision had been reversed by the Los Angeles superior court, and the State's appeal was pending in the Second District. (Id. at p. 330, fn. 2, 285 Cal.Rptr. 66, 814 P.2d 1308.) In concluding the administrative procedures created by the Legislature were adequate for full implementation of Section 6, the Supreme Court stated: “The test claim is now before the Court of Appeal. The administrative procedure has operated as intended.” (Id. at p. 334, 285 Cal.Rptr. 66, 814 P.2d 1308.) However, events occurring after its decision in Kinlaw rendered premature the Supreme Court's optimism about the adequacy and effectiveness of the administrative procedure. Neither the statutory scheme nor the Supreme Court contemplated settlement of the test claim.4
In November 1987 Los Angeles filed its test claim. In March 1991—while the State's appeal of the Los Angeles superior court judgment reversing the Commission's denial of the test claim was pending—San Diego sent the Controller an invoice seeking reimbursement for its CMS program costs for fiscal year 1989–1990. In April 1991 the Controller returned San Diego's invoice, noting the issue of State reimbursement of such programs was currently in litigation and no appropriation had yet been given to the Controller for reimbursement of such costs. In December 1991 San Diego sent a similar invoice to the Controller seeking reimbursement for its CMS program costs for fiscal year 1990–1991. San Diego received no response to that invoice. Thus, San Diego made two requests for reimbursement for its CMS program costs but the State did not act on those claims.5
Ultimately the test claim case resolved nothing. After more than five years of administrative and legal proceedings, in December 1992 any effectiveness of that process essentially evaporated. The State and the test claim counties settled their individual disputes and obtained approval of the Second District to dismiss the State's appeal, vacate the Los Angeles superior court judgment favoring the test claim counties, and dismiss the test claim counties' underlying lawsuit. Further, after settlement of the test claim counties' litigation, the State did not take action on San Diego's earlier invoices. As of December 1992, it was apparent the test claim procedures had not, contrary to the apparent legislative intent, created an administrative process capable of “providing an effective means of resolving disputes over the existence of state-mandated local programs.” (§ 17500.) The only administrative remedy available would be for San Diego to file yet another claim and hope to become a “test claim.” If San Diego were so fortunate, it could look to a preordained denial of its claim and it could commence anew litigation of the issue which should have been resolved by the 1987 test claim. If another county were chosen first, San Diego could again wait an undetermined period of years and hope the next time the “test claim” would be resolved on the merits rather than be settled without decision.
As we analyzed the nature of any potential administrative remedy San Diego may have, we asked the Attorney General at oral argument for assistance. We received little comfort from the Attorney General's remarks. Indeed, the Attorney General would not concede San Diego had any remedy after the Los Angeles County test claim case had been settled. Neither did the Attorney General concede that no statute of limitations defense would be available if San Diego began anew its quest for reimbursement. In fact, it was clear to the court following argument the State maintains San Diego has no remedy whatsoever.
In sum, dismissal of the test claim litigation undermined the factual basis for the Supreme Court's statement in Kinlaw v. State of California, supra, 54 Cal.3d 326, 285 Cal.Rptr. 66, 814 P.2d 1308, that the statutory administrative procedures were adequate. Under these circumstances, requiring San Diego to resort to the administrative process would unduly restrict San Diego's constitutional right under Section 6. (Id. at p. 334, 285 Cal.Rptr. 66, 814 P.2d 1308.) As applied here, the administrative procedures were unworkable and wholly inadequate to resolve San Diego's claim the 1982 legislation imposed a reimbursable mandate. Further, the test claim remedy for San Diego was illusory since the Commission had already concluded there was no reimbursable mandate. (Cf. Ogo Associates v. City of Torrance (1974) 37 Cal.App.3d 830, 834, 112 Cal.Rptr. 761.)
In Ogo Associates v. City of Torrance, supra, 37 Cal.App.3d 830, 112 Cal.Rptr. 761, the appellate court stated “the doctrine of exhaustion of administrative remedies has not hardened into inflexible dogma. [Citation.] It contains its own exceptions, as when ․ the aggrieved party can positively state what the administrative agency's decision in his particular case would be. [Citations.]” (Id. at p. 834, 112 Cal.Rptr. 761; accord County of Contra Costa v. State of California (1986) 177 Cal.App.3d 62, 77–78, 222 Cal.Rptr. 750.) San Diego could positively state what the administrative decision on its claim for reimbursement would be since the Commission had already rejected its invoice for fiscal year 1989–1990, ignored its invoice for fiscal year 1990–1991, rejected the test claim, and appealed the adverse judicial determination in the test claim case.
Moreover, since generally only one test claimant may be heard at a time, if after settlement of a previous test claim each county were relegated to seeking a determination sequentially from the Commission about the existence of a reimbursable mandate, the statutory administrative process could consume decades or centuries and render Section 6 meaningless.
Despite the emergency nature of its predicament, San Diego was effectively without any remedy other than this litigation for the State's violation of its constitutional obligation under Section 6 to fund fully San Diego's CMS program. (Cf. Ogo Associates v. City of Torrance, supra, 37 Cal.App.3d at p. 834, 112 Cal.Rptr. 761.)
It is clear a court may find exhaustion of administrative remedies is not required “when pursuit of an administrative remedy would result in irreparable harm [citations]․” (Ogo Associates v. City of Torrance, supra, 37 Cal.App.3d at p. 834, 112 Cal.Rptr. 761.) Certainly, substantial evidence supports the trial court's finding that in light of the situation's “emergency nature” limiting San Diego to the administrative procedures (if any) suggested by the State would result in irreparable harm. Clearly, terminating the CMS program for lack of funding would potentially irreparably harm CMS program beneficiaries and eliminating other programs in order to fund the State-mandated CMS program would potentially irreparably harm other San Diego residents. As San Diego asserts, “It is now clear that the statutory scheme will not resolve this dispute,” and thus requiring “exhaustion now would compound the manifest injustice the State would visit upon [San Diego].”
Thus, since Section 6 imposes on the State a ministerial duty of subvention when it imposes a mandate on a county and since the test claim remedy was not available to San Diego, the superior court had jurisdiction in traditional mandamus under Code of Civil Procedure section 1085 to determine the existence of a reimbursable mandate.
1982 LEGISLATION IMPOSED REIMBURSABLE MANDATE
The State contends the superior court erred in concluding the 1982 legislation created a “new program” forcing San Diego to incur increased costs and triggering the State's constitutional obligation to reimburse San Diego.6 The State asserts that “for many decades” Welfare and Institutions Code section 17000 has imposed on counties “an absolute, non-delegable obligation to provide health care for their indigent residents.” (Madera Community Hospital v. County of Madera (1984) 155 Cal.App.3d 136, 150–151, 201 Cal.Rptr. 768.) 7 Thus, according to the State, any additional costs incurred by San Diego after the 1982 legislation resulted solely from San Diego's election to make former Medi–Cal beneficiaries eligible for services under such pre-existing obligation.
In reviewing the superior court's ruling on San Diego's petition for writ of mandamus under Code of Civil Procedure section 1085, we are generally confined to inquiring whether substantial evidence supports the court's findings and judgment. (Rodriguez v. Solis (1991) 1 Cal.App.4th 495, 502, 2 Cal.Rptr.2d 50.) However, we review de novo the superior court's legal conclusions about the meaning and effect of constitutional and statutory provisions. (Greenwood Addition Homeowners Assn. v. City of San Marino (1993) 14 Cal.App.4th 1360, 1367, 18 Cal.Rptr.2d 350; Rodriguez v. Solis, supra, at p. 502, 2 Cal.Rptr.2d 50.) Under those standards, we conclude the superior court properly determined the 1982 legislation imposed a reimbursable mandate on San Diego. The objective of Section 6 is to preclude the State from avoiding its spending limits by shifting to local governments programs and their financial burdens which were the State's responsibility before the effective date of that constitutional provision. (Lucia Mar Unified School Dist. v. Honig (1988) 44 Cal.3d 830, 835–836, 244 Cal.Rptr. 677, 750 P.2d 318; County of Los Angeles v. State of California, supra, 43 Cal.3d at pp. 56, 61, 233 Cal.Rptr. 38, 729 P.2d 202.) As we shall explain, the superior court correctly concluded that by the 1982 legislation the State had shifted to San Diego the financial responsibility for funding health care for medically indigent adults without providing the necessary funding; thus Section 6 required a subvention of funds by the State to reimburse San Diego for the costs of its CMS program.
“The concern which prompted the inclusion of section 6 in article XIII B was the perceived attempt by the state to enact legislation or adopt administrative orders creating programs to be administered by local agencies, thereby transferring to those agencies the fiscal responsibility for providing services which the state believed should be extended to the public.” (County of Los Angeles v. State of California, supra, 43 Cal.3d at p. 56, 233 Cal.Rptr. 38, 729 P.2d 202.)
“The goals of article XIII B, of which section 6 is a part, were to protect residents from excessive taxation and government spending. [Citation.] Section 6 had the additional purpose of precluding a shift of financial responsibility for carrying out governmental functions from the state to local agencies which had had their taxing powers restricted by the enactment of article XIII A in the preceding year and were ill equipped to take responsibility for any new programs.” (County of Los Angeles v. State of California, supra, 43 Cal.3d at p. 61, 233 Cal.Rptr. 38, 729 P.2d 202; accord Lucia Mar Unified School Dist. v. Honig, supra, 44 Cal.3d at pp. 835–836, 244 Cal.Rptr. 677, 750 P.2d 318.) Reimbursement from the State “is required if the state transfers fiscal responsibility to a local agency for a program the state deems desirable.” (Id. at p. 836, fn. 7, 244 Cal.Rptr. 677, 750 P.2d 318.)
As of the time article 6 became effective, the State provided health care services to medically indigent adults under the State's Medi–Cal program and San Diego was not required to make financial contributions to Medi–Cal or otherwise pay for the provision of health services to its medically indigent adults. (Kinlaw v. State of California, supra, 54 Cal.3d at p. 329, 285 Cal.Rptr. 66, 814 P.2d 1308; Stats.1971, ch. 577; Welf. & Inst.Code, § 14000 et seq.) 8 Thus, on Section 6's effective date the State—not San Diego—had full financial responsibility for health care services for San Diego's medically indigent adults. However, effective January 1, 1983, the 1982 legislation removed medically indigent adults from the State-funded Medi–Cal program and transferred to San Diego and the other counties the financial responsibility to provide health services for those persons. As a result, San Diego established its CMS program solely to provide medical services previously provided to medically indigent adults under Medi–Cal.
As we previously noted, between 1983 and June 1989, the State funded San Diego's CMS program. However, in fiscal years 1989–1990 and 1990–1991, State funds did not cover San Diego's CMS program expenditures.
The State contends San Diego's program of funding health care for medically indigent adults was based on San Diego's preexisting duty rooted in State legislation antedating Section 6.9 Hence, the State argues, the CMS program was not a “new” state-mandated program created by the 1982 legislation within the meaning of Section 6. Indeed, the State contends this case does not involve any “State” program—whether new or old—but instead pertains only to a “long-standing” San Diego obligation. According to the State, its previous acts of reimbursing San Diego for health care for medically indigent adults constituted a temporary “voluntary” assumption of San Diego's financial responsibilities between 1979 and 1982. Characterizing the 1982 legislation as simply ending the “form” of such voluntary contribution—to wit, through Medi–Cal eligibility—the State contends such voluntarily and temporarily assumed financial responsibility for a preexisting obligation could be reassigned to San Diego without violating Section 6 since a program existing before the effective date of both Section 6 and the 1982 legislation may not be deemed to be a “new” program. We disagree.
“Whether the shifting of costs is accomplished by compelling local governments to pay the cost of entirely new programs created by the state, or by compelling them to accept financial responsibility in whole or in part for a program which was funded entirely by the state before the advent of article XIIIB, the result seems equally violative of the fundamental purpose underlying section 6 of that article.” (Lucia Mar Unified School Dist. v. Honig, supra, 44 Cal.3d at p. 836, 244 Cal.Rptr. 677, 750 P.2d 318, fn. omitted.) At the time Section 6 became effective, the State funded health care for medically indigent adults without contribution by San Diego. Thus, since the State entirely funded such program when Section 6 was adopted, the State was constitutionally precluded from transferring the financial responsibility for such program to San Diego without subvention. (Ibid.)
Section 6's subvention requirement was not made inapplicable simply because the State's funding of a preexisting program before that constitutional provision's effective date was allegedly temporary or voluntary. Certainly nothing in the legislative history presented to us in this case contains a legislative declaration its Medi–Cal eligibility scheme was temporary or a voluntarily assumed burden of the several counties. (Cf. County of Los Angeles v. State of California, supra, 43 Cal.3d at p. 56, 233 Cal.Rptr. 38, 729 P.2d 202.) 10 Neither was Section 6's requirement of subvention made inapplicable because San Diego had a preexisting residual duty to indigents under Welfare and Institutions Code section 17000.11 Instead, the determinative fact was the State's compelling San Diego through the 1982 legislation to accept responsibility for a program which had been funded entirely by the State at the time Section 6 became effective. (Lucia Mar Unified School Dist. v. Honig, supra, 44 Cal.3d at p. 836, 244 Cal.Rptr. 677, 750 P.2d 318.) 12 Thus, San Diego's provision of coverage for its medically indigent adults under the CMS program constituted “a new program or higher level of service” within the meaning of Section 6.13
Asserting any new costs incurred by San Diego after enactment of the 1982 legislation resulted only from San Diego's own election to make former Medi–Cal beneficiaries eligible for CMS program services, the State contends the superior court erred in concluding such legislation effectively imposed a “mandate” on San Diego. According to the State, the 1982 legislation did not require San Diego to provide increased services to indigents. We disagree.
Contrary to the State's contention, San Diego was not free to decline to fund health services for medically indigent adults after enactment of the 1982 legislation. San Diego had a statutory obligation to provide health care to medically indigent adults. (Welf. & Inst.Code, § 17000; former Health & Saf.Code, § 1442.5, subd. (c).) 14 At the time Section 6 was adopted, medically indigent adults were eligible for health care under Medi–Cal funded by the State. Thus, to the extent of the health care provided by Medi–Cal, the State was funding the medically indigent adult health care that San Diego was statutorily obligated to provide and San Diego was relieved of that financial burden. However, when the 1982 legislation eliminated medically indigent adults from certain Medi–Cal coverage, the level of burden on San Diego increased since San Diego was required to resume responsibility for providing those persons with health services previously provided by the State. (Lucia Mar Unified School Dist. v. Honig, supra, 44 Cal.3d at p. 836, 244 Cal.Rptr. 677, 750 P.2d 318.) By deleting medically indigent adults from Medi–Cal eligibility at a time when Welfare and Institutions Code section 17000 and former Health and Safety Code section 1442.5, subdivision (c), required health care for medically indigent adults, the State effectively “mandated” a new program or higher level of service on San Diego.
In sum, the Legislature's decision through the 1982 legislation to declare medically indigent adults ineligible for Medi–Cal—after the State had borne full responsibility for such persons' health care at the time Section 6 was adopted—effectively transferred responsibility for the health care of medically indigent adults from the State-funded Medi–Cal program to San Diego. Essentially, the State unloaded a portion of its Medi–Cal program onto San Diego with the requirement San Diego provide funding. However, the State did not meet its constitutionally mandated duty to reimburse San Diego. Hence, upon correctly concluding the State's shift to San Diego of financial responsibility for the health care of medically indigent adults constituted imposition of a reimbursable mandate, the superior court properly issued a writ of mandamus directing the State to perform its nondiscretionary constitutional obligation to fund fully San Diego's CMS program.
THE STATE REQUIRED A MINIMUM FUNDING LEVEL OF ABOUT $41 MILLION FOR SAN DIEGO'S CMS PROGRAM
The superior court concluded former Welfare and Institutions Code section 16991, subdivision (a)(5), obligated San Diego to operate its CMS program for fiscal years 1989–1990 and 1990–1991 at the funding level of fiscal year 1988–1989.15 The court stated: “The clear intent of [Welfare and Institutions Code] section 16991(a)(5) is to maintain the same funding and service levels for MISP counties and MISP/CMS patients in fiscal years 1989–90 and 1990–91 as existed in the base year 1988–89.” The court concluded the CHIP “maintenance of effort” provision of former Welfare and Institutions Code section 16990, subdivision (a), required San Diego to spend at a minimum about $41 million annually on CMS.16 Evidence indicated the fiscal year 1988–1989 funding level was $41,008,163. Hence, the court properly found such amount established the baseline for San Diego's damages claim.
The State contends the superior court erred in finding the CMS program levels for the years in issue were fixed by the State at about $41 million. According to the State, nothing in CHIP, the 1982 legislation, San Diego's CHIP funding contract, or any other authority required San Diego to set its CMS program expenditure level at any particular amount. The State asserts the superior court's “erroneous” interpretation of Welfare and Institutions Code section 16990 “directly inflated the judgment.” The State's position is that even if the 1982 legislation created a reimbursable mandate, San Diego was not required to spend a minimum of about $41 million annually on its CMS program, but instead could have provided a lesser level of service. We cannot subscribe to this contention.
The “maintenance of effort” provision of former Welfare and Institutions Code section 16990, subdivision (a), stated a county must maintain at least the same level of all county health service programs as existed in fiscal year 1988–1989 or risk losing CHIP funding. Further, as the superior court properly found, the State advised San Diego “more than once that any CMS Program reduction would result in funding reductions.” The record shows the State told San Diego any CMS program reduction would result in the loss of various revenues. The State's contract with San Diego involving CHIP funds for fiscal year 1989–1990 required maintenance of each health care program in San Diego's health service plan and budget at the 1988–1989 funding and service level. The State by letter threatened to terminate CHIP funding if San Diego terminated its CMS program when State funds were exhausted. Based on the State's communications with San Diego, San Diego's health services department's deputy director reasonably understood if a program was supplemented by any CHIP funds such program had to be maintained at the fiscal year 1988–1989 funding level in order to meet the maintenance of effort requirement. The State also calculated the reimbursement under former Welfare and Institutions Code section 16991, subdivision (a)(5), for fiscal year 1989–1990 based on a $41,008,163 program level. The evidence therefore supports the conclusion that the State required the funding and service levels of San Diego's CMS program in fiscal years 1989–1990 and 1990–1991 continue at a minimum at the 1988–1989 level.
The superior court therefore did not err in finding the State required San Diego to fund its CMS program for fiscal years 1989–1990 and 1990–1991 at least at the 1988–1989 funding level of $41,008,163. (Former Welf. & Inst.Code, §§ 16990, 16991, subd. (a)(5).)
DAMAGES AND REMEDIES
After concluding the State was constitutionally obligated to reimburse San Diego for the full cost of its CMS program, the superior court entered judgment ordering issuance of a peremptory writ of mandamus commanding the State to “fully fund” San Diego's CMS program for fiscal year 1989–1990, fiscal year 1990–1991, and future years. The writ also commanded the State to reimburse San Diego for costs incurred in fiscal years 1989–1990 and 1990–1991 in the amount of $21,944,187.40, minus any additional SLIAG and “hold harmless” reimbursement moneys San Diego might receive for fiscal year 1990–1991. The judgment further specified various “appropriated but unencumbered funds” as “reasonably available to be reached by order of this Court to satisfy this judgment.”
The State contends that even if the superior court had jurisdiction to determine the merits of San Diego's mandate claim, it lacked authority to grant the remedies ordered in the judgment. According to the State, the remedies imposed by the superior court “blatantly violate the separation of powers doctrine.” Specifically, the State asserts the precise amounts to be reimbursed should be determined by the Commission in its expertise. The State also asserts the superior court had no authority to issue charging orders against various specified appropriations to satisfy the judgment. As we shall explain, the damages/remedial portions of the judgment must be reversed and the matter remanded to the Commission to determine the reimbursement amount and appropriate statutory remedies.
Under the administrative procedures of section 17500 et seq., once a State-imposed reimbursable mandate is found to exist, the Commission must make complex evidentiary determinations of the amounts to be reimbursed to local agencies, adopt “parameters and guidelines” for reimbursement of claims, and adopt an estimate of statewide costs. (§§ 17557, 17610; Cal.Code Regs., tit. 2, §§ 1183.1–1183.3, 1184–1184.2; Kinlaw v. State of California, supra, 54 Cal.3d at p. 332, 285 Cal.Rptr. 66, 814 P.2d 1308.) 17 The Commission must submit the adopted parameters and guidelines to the Controller who must pay (and audit) subsequent claims “from funds made available for that purpose.” (§ 17558, subd. (a).) The Commission must also make semiannual reports to the Legislature on the number of mandates found and their estimated statewide costs. (§ 17600.) When a mandate's estimated statewide cost exceeds $1 million, a local government claims bill is introduced in the Legislature. (§ 17612, subd. (a).) If the Legislature deletes funding for a mandate from the local government claims bill, the affected local agency may seek declaratory relief from the Sacramento County Superior Court to declare such mandate unenforceable and enjoin its enforcement. (§ 17612, subd. (c).) In sum, once a reimbursable mandate is found, the statutory scheme provides for “the method of payment of claims (§§ 17558, 17561)” and “reporting procedures which enable the Legislature to budget adequate funds to meet the expense of state mandates (§§ 17562, 17600, 17612, subd. (a).)” (Kinlaw v. State of California, supra, at pp. 331–332, 285 Cal.Rptr. 66, 814 P.2d 1308.) The actions of the Commission are subject to judicial review pursuant to Code of Civil Procedure section 1094.5. (§ 17559.) Further, reimbursement to local agencies “is to be provided only through this statutory procedure. (§§ 17550, 17552.)” (Kinlaw v. State of California, supra, at p. 332, 285 Cal.Rptr. 66, 814 P.2d 1308.) Thus, we conclude the damages portion of the judgment must be reversed and the matter remanded to the Commission for determination of the exact amount of any reimbursement due San Diego.
Moreover, the superior court exceeded its authority in ordering the State to satisfy the judgment by issuing warrants against various specified legislative appropriations. (Kinlaw v. State of California, supra, 54 Cal.3d at pp. 335–336, 285 Cal.Rptr. 66, 814 P.2d 1308; City of Sacramento v. California State Legislature (1986) 187 Cal.App.3d 393, 398, 231 Cal.Rptr. 686.) “If article XIII B, section 6, is read to require an appropriation of moneys for the reimbursement of mandated costs, the matter is nonetheless one in which political power to accomplish that end is vested in the Legislature. ‘Under our form of government the judicial department has no power to revise even the most arbitrary and unfair action of the legislative department, or of either house thereof, taken in pursuance of the power committed exclusively to that department by the constitution.’ [Citation.] The legislative power to enact laws, including appropriations, is committed exclusively to the legislative department by the Constitution. [Citation.]” (Ibid., fn. omitted.) As noted, the statutory “remedy for the failure to fund a program is a declaration that the mandate is unenforceable. That relief is available only after the Commission has determined that a mandate exists and the Legislature has failed to include the cost in a local government claims bill, and only on petition by the county. (§ 17612.)” (Kinlaw v. State of California, supra, at pp. 335–336, 285 Cal.Rptr. 66, 814 P.2d 1308, fn. omitted.) In Kinlaw the Supreme Court also noted “since a determination that a state mandate has been created in a judicial proceeding rather than one before the Commission does not trigger the procedures for creating parameters and guidelines for payment of claims, or for inclusion of estimated costs in the state budget, there is no source of funds available for compliance with the judicial decision other than the appropriations for the Department of Health Services. Payment from those funds can only be at the expense of another program which the department is obligated to fund. No public policy supports, let alone requires, this result.” (Id. at p. 336, 285 Cal.Rptr. 66, 814 P.2d 1308.) Thus, the authority set forth in Kinlaw v. State of California, supra, and City of Sacramento v. California State Legislature, supra, compels the conclusion the superior court erred in issuing charging orders against specified appropriations to satisfy the judgment.18 Hence, the remedial portion of the judgment must also be reversed and the matter remanded to the Commission to provide appropriate statutory remedies including reimbursement.
THE STATE'S REMAINING CONTENTIONS *
The portions of the judgment determining the State imposed on San Diego a reimbursable mandate at a base level of $41,008,163 are affirmed. The portions of the judgment determining the reimbursement amount and specifying various appropriations as available to satisfy the judgment are reversed. The matter is remanded to the Commission to determine the reimbursement amount and appropriate statutory remedies. Each side shall bear its own costs on appeal.
2. All statutory references are to the Government Code unless otherwise specified.
3. The court first orally granted a preliminary order of some sort against the State (April 8, 1991); it issued a written alternative writ directing the State to show cause why it should not assume the CMS program funding (May 2, 1991); after a hearing on June 25, 1991 the court issued an order (July 1, 1991) granting San Diego's request for a peremptory writ of mandamus against the State; a “statement of decision” was issued on September 5, 1991; additional hearings were held early in 1992 which resulted in a “second amended” statement of decision on March 10, 1992; additional hearings were held in December 1992 which led to the final issuance of a peremptory writ on December 4, 1992 and a judgment in favor of San Diego and against the State on December 18, 1992.
4. San Diego describes any administrative remedy here as “illusive” because the State assertedly “prevented” the issue of the funding of services for medically indigent adults “from ever being decided under the statutory scheme which it claims to be the exclusive remedy” by stipulating with the test claim counties to dismiss the appeal and underlying lawsuit in the test claim case upon compromising and settling those claims on the eve of appellate oral argument. According to San Diego, “the State utilizes the mandate claims procedure to avoid indefinitely its constitutionally-imposed fiscal obligations.” San Diego asserts adoption of the State's argument that the mandate claim procedure divested the superior court of jurisdiction over this dispute “would inexorably tie the fiscal fate of [San Diego] and its taxpayers to the viability of the ‘test claim.’ ” Characterizing the State's conduct as “arbitrary and clearly unreasonable actions tantamount to gross abuse” of the process (United Farm Workers v. Superior Court (1977) 72 Cal.App.3d 268, 140 Cal.Rptr. 87), San Diego contends the “State successfully circumvented the test claim procedure it urges upon this Court as every county's exclusive remedy” and asserts we “should not assist the State in its efforts to avoid constitutional obligations through such tactics.”
5. The superior court concluded the State's failure to act on those claims constituted evidence supporting a finding resort to the statutory administrative process would be futile.
6. In County of Los Angeles v. State of California, supra, 43 Cal.3d 46, 233 Cal.Rptr. 38, 729 P.2d 202, the Supreme Court concluded the drafters of Section 6 and the electorate intended the word “programs” in Section 6 to mean “programs that carry out the governmental function of providing services to the public․” (Id. at p. 56, 233 Cal.Rptr. 38, 729 P.2d 202.) San Diego's funding of health care for medically indigent adults was a “program” effecting the governmental function of providing services to medically indigent adults requiring care.
7. Welfare and Institutions Code section 17000 provides: “Every county and every city and county shall relieve and support all incompetent, poor, indigent persons, and those incapacitated by age, disease or accident, lawfully resident therein, when such persons are not supported and relieved by their relatives or friends, by their own means, or by state hospitals or other state or private institutions.”“The obligation of counties to care for their poor and indigent long antedates the federal and state participation in such care though programs such as Medi–Cal.” (Madera Community Hospital v. County of Madera, supra, 155 Cal.App.3d at pp. 150–151, 201 Cal.Rptr. 768.)
8. “At the time section 6 was adopted, the state was funding Medi–Cal coverage for these persons [medically indigent adults] without requiring any county financial contribution.” (Kinlaw v. State of California, supra, 54 Cal.3d at p. 329, 285 Cal.Rptr. 66, 814 P.2d 1308.) Indeed, the State acknowledges San Diego's statutory obligation to contribute to the cost of Medi–Cal was repealed in 1979.
9. See, e.g., Welfare and Institutions Code section 17000 (added by Stats.1965, ch. 1784, § 5, p. 4090); former Welfare and Institutions Code section 2500 (added by Stats.1937, chs. 369 & 464, pp. 1097, 1406); and Health and Safety Code section 1442.5 (added by Stats.1974, ch. 810, § 3, p. 1765).
10. Section 6's alternate phrase “higher level of service” must “be read in conjunction with the predecessor phrase ‘new program’ to give it meaning. Thus read, it is apparent that the subvention requirement for increased or higher level of service is directed to state mandated increases in the services provided by local agencies in existing ‘programs.’ ” (County of Los Angeles v. State of California, supra, 43 Cal.3d at p. 56, 233 Cal.Rptr. 38, 729 P.2d 202.)
11. The language of Welfare and Institutions Code section 17000 indicates any such preexisting duty becomes effective only if the State does not assume financial responsibility. (Cf. Mooney v. Pickett (1971) 4 Cal.3d 669, 681, 94 Cal.Rptr. 279, 483 P.2d 1231; County of L.A. v. Dept. of Social Welfare (1953) 41 Cal.2d 455, 458, 260 P.2d 41; County of Los Angeles v. Frisbie (1942) 19 Cal.2d 634, 639, 122 P.2d 526; Boehm v. Superior Court (1986) 178 Cal.App.3d 494, 499, 223 Cal.Rptr. 716.)
12. In Lucia Mar Unified School Dist. v. Honig, supra, 44 Cal.3d 830, 244 Cal.Rptr. 677, 750 P.2d 318, the Supreme Court stated: “To hold, under the circumstances of this case, that a shift in funding of an existing program from the state to a local entity is not a new program as to the local agency would, we think, violate the intent underlying section 6 of article XIIIB.” (Id. at p. 835, 244 Cal.Rptr. 677, 750 P.2d 318.)
13. That shift in responsibility from the State to San Diego also came within the provisions of section 17514 defining “Costs mandated by the state” to mean “any increased costs which a local agency or school district is required to incur after July 1, 1980, as a result of any statute enacted on or after January 1, 1975, or any executive order implementing any statute enacted on or after January 1, 1975, which mandates a new program or higher level of service of an existing program within the meaning of Section 6 of Article XIII B of the California Constitution.”
14. Former Health and Safety Code section 1442.5, subdivision (c), provided in part that “the availability of services, and the quality of the treatment received by people who cannot afford to pay for their health care shall be the same as that available to nonindigent people receiving health care services in private facilities in that county.”
15. Former Welfare and Institutions Code section 16991, subdivision (a)(5), a portion of the California Healthcare for Indigents Program (CHIP), at relevant times provided: “If the sum of funding that a county received from its allocation pursuant to Section 16703 [MISP], the amount of reimbursement it received from federal State Legalization Impact Assistance Grant [SLIAG] funding for indigent care, and its share of funding provided in this section is less than the amount of funding the county received pursuant to Section 16703 in fiscal year 1988–89 the state shall reimburse the county for the amount of the difference. For the 1990–91 fiscal year, if the sum of funding received from its allocation, pursuant to Section 16703 and the amount of reimbursement it received from State Legalization Impact Assistance Grant funding for indigent care that year is less than the amount of funding the county received pursuant to Section 16703 in the 1988–89 fiscal year, the state shall reimburse the amount of the difference. If the department determines that the county has not made reasonable efforts to document and claim federal SLIAG funding for indigent care, the department shall deny the reimbursement.”
16. Former Welfare and Institutions Code section 16990, subdivision (a), the “maintenance of effort” requirement involving use of CHIP funds, at relevant times provided: “Any county receiving an allocation pursuant to this chapter shall, at a minimum, maintain a level of financial support of county funds for health services at least equal to its county match and any overmatch of county funds in the 1988–89 fiscal year, provided that this amount shall be adjusted annually by the amount of any increase in county funding required by subdivision (b) of Section 16704. For purposes of this article, each county's level of financial effort shall be determined by either the 1988–89 county health services plan and budget required pursuant to Section 16700 or by the report of estimated actual expenditures, revenues, and net county costs for the 1988–89 fiscal year, required pursuant to Section 16706 after review and adjustment by the department. The level of financial effort required for compliance with this section for future fiscal years shall be based upon the plan and budget submitted for the fiscal year by the county pursuant to Section 16700 and this chapter.”
17. The Commission may retain expert assistance in performing its duties. (§ 17527, subd. (f).)
18. San Diego contends the superior court had authority to order payment of a State debt “from an existing unexpended, unencumbered appropriation” available to the State. (Mandel v. Myers (1981) 29 Cal.3d 531, 174 Cal.Rptr. 841, 629 P.2d 935; Long Beach Unified Sch. Dist. v. State of California (1990) 225 Cal.App.3d 155, 275 Cal.Rptr. 449; Carmel Valley Fire Protection Dist. v. State of California (1987) 190 Cal.App.3d 521, 234 Cal.Rptr. 795.) The superior court agreed with San Diego. However, reliance on those cases is misplaced. Unlike the situation here, those cases involved legislative and executive refusals to appropriate reimbursement after exhaustion of administrative and judicial remedies. (See Butt v. State of California (1992) 4 Cal.4th 668, 698–703, 15 Cal.Rptr.2d 480, 842 P.2d 1240.) Here the legislative and executive branches have not been afforded the opportunity to consider making an appropriation to satisfy a final judgment.
FOOTNOTE. See footnote 1, ante.
HUFFMAN, Acting Presiding Justice.
FROEHLICH and HALLER, JJ., concur.
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