STAND. COM. REP. NO. 1742

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 1518
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Finance, to which was referred S.B. No.
1518 entitled: 

     "A BILL FOR AN ACT RELATING TO GOVERNMENT OPERATIONS,"

begs leave to report as follows:

     The purpose of this bill, as received, is to improve the
effectiveness of state government by requiring all State agencies
to identify their goals, objectives, and policies and report
annually to the legislature.

     Based upon an urgent request from the Administration to
consider a proposal to close the Hawaii State Hospital (HSH) and
to authorize the Director of Health to privatize HSH's current
functions and services, your Committee circulated a proposed
draft of this bill to encourage further discussion and progress
toward resolution of the issues facing HSH.

     The Department of Health (DOH) testified in strong support
of the proposal.  The Attorney General (AG) described the overall
legal issues which this draft seeks to address.  The Hawaii
Government Employees Association, the United Public Workers, and
a concerned individual commented on the proposal.

     Since 1989, the State and the United States Department of
Justice have encountered a number of complex problems with the
HSH.  These problems include clinical, operational, and
managerial functions that involve both the hospital staff and

 
 
 
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administration.  More recently, in January of 1999, the State was
given a final deadline to improve problem areas at the HSH.

     By December 20, 1999, the State must show full compliance
with a federal court order to comply with federal law relating to
people with serious mental illnesses.  The DOH testified that the
optimum way is to move toward serving patients through community-
based private providers.  If this deadline is not met, the AG
testified that severe sanctions will be imposed by the federal
court, including the potential appointment of a special federal
master to administer HSH and the State's entire mental health
system.  The DOH noted that the appointment of a federal master
will result in the State relinquishing all authority over HSH and
the community mental health system.  As such, the federal master
would have unrestrained authority to require expenditure of State
moneys without State input or control.


BACKGROUND

     The AG provided a brief summary of the major events leading
up to this final deadline, including:

     ·    In 1989, Department of Justice (DOJ) attorneys found
          unacceptable conditions at HSH;

     ·    On March 7, 1991, the DOJ filed a federal court
          complaint under the Civil Rights of Institutionalized
          Persons Act (CRIPA), 42 U.S.C. section 1997, et seq, to
          enjoin the State from depriving persons residing at HSH
          of rights, privileges, or immunities secured or
          protected by the United States Constitution;

     ·    On September 19, 1991, a Settlement Agreement and Order
          was filed in federal court requiring the State to
          complete performance of the assurances contained in the
          Settlement Agreement by December 31, 1993;

     ·    In 1994, the State was found to be in noncompliance
          with the Settlement Agreement and was found in contempt
          of the court order;

     ·    On January 19, 1995, a contempt order was filed with an
          extensive Remedial Plan requiring complete performance
          by December 31, 1995;

     ·    In May, 1996, the DOJ found that the State was not in
          compliance with the court orders;


 
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     ·    On June 28, 1996, a Stipulation and Order was filed,
          extending the deadline for complete compliance to June
          1, 1997, and specifying remedial actions, including
          development of community-based mental health services
          for HSH patients and the discharge of HSH patients not
          requiring hospitalization;

     ·    In November, 1997, DOJ found instances of noncompliance
          at HSH and private hospitals providing care for
          children and adolescents (the adolescent ward at HSH
          was closed in 1991);

     ·    On February 13, 1998, a Stipulation and Order was
          filed, extending the deadline for compliance to January
          3, 1999, and requiring the development of a patient
          treatment program individualized to meet to each
          patient's needs; and

     ·    On February 1, 1999, the court found HSH to be grossly
          out of compliance and ordered the formation of a
          Compliance Committee, with members to be appointed by
          February 28, 1999, and a written report naming the
          members to be filed by March 15, 1999.

     In addition, the court has set the following deadlines:

     ·    By June 1, 1999, the Compliance Committee must identify
          all outstanding material issues;

     ·    By June 15, 1999, programs to rectify each material
          issue must be in place and a status report identifying
          all the problems made by the Compliance Committee with
          the proposed solutions must be filed; and

     ·    By December 20, 1999, a status conference will be held
          to determine if there is material compliance by the
          State.


CONCERNS

     Your Committee has reviewed the past events and is aware of
the history of problems at HSH.  Since the Settlement Agreement
in 1991 and utilizing the service delivery model currently in
place, the State has been unable to establish and implement a
compliance plan that comports with federal law as interpreted by
the federal courts.


 
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     Your Committee has carefully considered the current
situation facing DOH with regard to HSH.  Your Committee
understands the need for prompt action given the time constraints
presented by the federal court order in this ongoing suit.  Your
Committee is also very concerned that failure by the State to
take corrective action in accordance with a court-approved
compliance plan will result in severe sanctions: the possible
appointment of a special master to assume control of HSH and the
State's mental health programs and services, or fines of up to
$50,000 a day.

     At the same time, your Committee wants to ensure that people
with serious mental illness who are institutionalized at HSH or
who may require hospitalization in the future will have their
needs met.  Ultimately, the goal of this proposal or any other
plan addressing this issue must be to facilitate an adequate
quality of care for persons needing mental health services as
required by federal law.  This proposal presented by DOH and
implemented by the suggested amendments is ambitious and
dramatic.  In your Committee's view, the proposal has merit.

     Your Committee, however, has concerns about the DOH plan
that has been put together quickly under severe time constraints.
Because of the speed with which the plan was created, your
Committee is not confident that all of the parties affected by
the plan have adequately participated in its creation and
therefore may not be committed to its successful implementation.

     While stating that additional mental health resources would
be needed to provide a more comprehensive, broad-based community-
based treatment, the DOH has testified that programs and services
are currently available in the private sector that conform to
CRIPA standards to meet the needs of those patients who do not
need to be institutionalized.  However, some of the private
sector providers questioned the DOH's assessments and noted that
the DOH may have underestimated the extent to which these
community treatment services are available.

     Consequently, your Committee has concerns regarding whether
hospital level care will be available on all islands should this
bill pass and HSH is closed.  Your Committee acknowledges that
there may be a number of current patients who are from the
neighbor islands.  Upon closure of HSH, the parents or legal
guardians of these patients may request that they be returned to
the communities from which they came so that they can be close to
their families.  Therefore, your Committee requests the DOH to
include the Hawaii Health Systems Corporation (HHSC) in the
planning phase in the event that some of these patients can be
transferred to an HHSC facility on the neighbor islands.

 
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     In addition, your Committee notes that other viable
alternatives have not been fully discussed or explored.  For
example, one possible plan might be to merge the patients
currently residing at Waimano Training School and Hospital with
those at HSH so that resources may be maximized and used
efficiently and effectively.

     Finally, your Committee has concerns that the plan may not
satisfy the demands of the federal court as set forth in the
March 18, 1999, court order.  Further, your Committee does not
feel that the additional funds requested by DOH, over and above
amounts already included in the pending budget for operation of
HSH, to implement the plan have been adequately justified.


FURTHER DISCUSSION

     Despite these concerns, your Committee recognizes that the
premise underlying this bill is consistent with standard current
practices to comply with CRIPA and otherwise serve the seriously
mentally ill.  Throughout the nation, many jurisdictions have
successfully moved from the institutionalization of the mentally
ill to community-based treatment and rehabilitation settings.
Your Committee supports this general trend of
deinstitutionalization with its promise of high-quality and
specialized care on a cost-effective basis.

     Your Committee intends to pass the proposed draft for the
primary purpose of furthering discussions and refinement of the
plan to address HSH.  As this measure continues through the
legislative process, however, your Committee recommends that any
action taken by the House of Representatives be conditioned on
receipt of the following assurances from DOH:

     (1)  That the plan will satisfy the conditions of the court
          order; and 

     (2)  That any and all funds requested above and beyond the
          current appropriations for HSH are justified.  

     To this end, your Committee specifically requests that DOH,
through the Office of the Attorney General, seek the approval of
the Department of Justice, the United States Attorney, and the
federal court of the plan and their assurances that the plan
will, upon timely implementation to conclusion, comply with all
requirements of the court order and the lawsuit.  Your Committee
urges that such approvals be sought, and if appropriate, obtained
under expedited proceedings in the current case.  Your
Committee's obvious concern is the possibility that the

 
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Legislature authorize and fund DOH's initiatives, only to see it
rejected by the federal court.

     Your Committee also requests of DOH, as soon as possible, a
full itemization of all associated costs together with a
timetable for complete implementation.  Your Committee's specific
concerns include the unanswered question of why current
appropriations, which exceed $30 million per year, are not
sufficient to accomplish DOH's goals, especially given that DOH
appears to project the cost of privatizing these services at $17
million.

     Your Committee has amended this bill by deleting its
substance and inserting the substance of the proposed draft.  To
ensure the continued discussion of the issues presented, your
Committee has further amended this measure by:

     (1)  Deleting the amount of the appropriation;

     (2)  Creating a legislative oversight committee to evaluate
          the plan as it evolves and the funds required for its
          implementation; and

     (3)  Making technical, nonsubstantive revisions for style
          and clarity.

     In doing so, your Committee reiterates its intention to
facilitate full and timely compliance with CRIPA in a manner that
best utilizes the increasingly scarce financial resources of the
State.

     As affirmed by the record of votes of the members of your
Committee on Finance that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
1518 as amended herein, and recommends that it pass Second
Reading in the form attached hereto as S.B. No. 1518, H.D. 1, and
be placed on the calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Finance,



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair