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August 14, 2008 -- Los Angeles Times (CA)

Federal Overseer Seeks to Seize $8 Billion for California Prison Health Care

By Michael Rothfeld, The Los Angeles Times

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Sacramento -- The court-appointed overseer for healthcare in state prisons moved Wednesday to seize $8 billion from the California treasury, asking a federal judge to hold Gov. Arnold Schwarzenegger and California Controller John Chiang in contempt of court.

With the state mired in fiscal crisis, J. Clark Kelso, the federal receiver, asked U.S. District Judge Thelton Henderson to force officials to turn over the money he says he needs to raise healthcare in the state's prisons to constitutional standards after years of neglect.

Henderson, who appointed Kelso as part of an inmate lawsuit, has previously ordered the state to cooperate with the receiver.

Kelso also seeks $2 million in daily fines against the state for refusing to fund thousands of needed medical beds. He told reporters Wednesday that he went to court "with great reluctance and yet a sense of firm conviction."

"We have fully explored and exhausted every avenue for securing this funding in a manner that least affects California's budget and immediate cash needs," Kelso said. "But the state's leaders have failed to act."

Kelso previously requested $7 billion to build and renovate medical facilities, but the total has increased because he agreed to dental and mental health clinic upgrades to comply with court orders in separate legal cases.

"Is Clark Kelso out of his mind?" state Sen. Jeff Denham (R-Atwater) said in a news release Wednesday mocking the receiver. "The idea of providing $8 billion for state-of-the-art healthcare for murderers like Charles Ng, Richard Allen Davis and Scott Peterson is sheer lunacy."

Kelso said Wednesday that his facilities would provide basic care; he said almost half the cost was related to guarding patients.

At a news conference and in his filing to the judge, Kelso detailed a series of unsuccessful efforts he had made this year to obtain the money from Schwarzenegger, Chiang and state lawmakers as they struggled with a $15.2-billion budget gap.

The federal courts have found the state incapable of fixing California's system of prison medical care, which is so flawed that dozens of inmates have died needlessly in recent years because of medical mistakes, a lack of access to treatment and other problems.

Kelso is planning seven facilities for the long-term medical, mental health and dental care of 10,000 inmates, and he is planning to renovate clinics at the state's 33 prisons. But, he said, he is in danger of running out of cash for construction in the fall. And with the budget now more than six weeks late, he said he could not allow "the state's fiscal and budget meltdown" to interfere with his mission.

Schwarzenegger, in an interview Tuesday, said he respected the receiver and called him "a smart man," but he suggested that making demands would backfire.

"I think he has to be a part of the team, and he can't be floating out there by himself because otherwise everyone would be out there trying to derail him," Schwarzenegger said. "And I would not wish that on anybody."

After the court filing Wednesday, Schwarzenegger spokesman Aaron McLear said in a statement that the administration "will continue to work cooperatively with the receiver and the Legislature to move forward in a fiscally responsible way to provide the necessary funding for the receiver's efforts."

Chiang said in a statement that he could not turn over any cash without legislative authorization or a court order.

"At this time, there is neither," he said.

Kelso, who hopes to break ground on his first facility in February, requested an order for the state to provide $3.1 billion in the current fiscal year, increasing the state's deficit.

He wants the rest of the money by 2012, a year before he hopes to complete his construction.

The receiver said he preferred that the state decide how it provided the money, whether through borrowing or in cash. But he asked that Henderson impose the $2 million in daily fines until the state acquiesces, increasing by $1 million a day every 10 days, that would be set aside for his use.

He also asked that the judge order interest earnings from a $31-billion state investment account to be allocated for him.

Kelso requested a hearing before Henderson in San Francisco on Sept. 22 and said Schwarzenegger and Chiang should be required to attend personally.

Schwarzenegger agreed to Kelso's $7-billion plan and included it when he proposed his budget in January. But legislation that would have authorized borrowing for most of the funding was blocked twice by Republicans in the state Senate in May.

The Republicans declined to approve funding for the receiver without an agreement with Democrats on a separate plan to build regular prison beds and also balked at the price tag.

Democratic lawmakers have generally supported Kelso's efforts.

"I'm disappointed, because it could have been resolved," said state Sen. Gloria Romero (D-Los Angeles), chairwoman of the Senate's public safety committee, referring to the Senate rejection of the borrowing plan.

If the state has to pay Kelso in cash, it "gives us an even bigger hole" in the budget, she said.

Kelso said he could not wait any longer.

"The federal courts have clearly indicated for 30, 40 years that inmates have not lost the right to receive basic medical care," he said. "So there is a constitutional obligation here. This is not something the state has a choice about."

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Times staff writers Patrick McGreevy and Nancy Vogel contributed to this report.

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