Wall Street Journal - July 21, 2008
Bobby White, bobby.white@wsj.com

State legislators have failed to approve funds to comply with a federal-court order that California fix its prison hospitals. The federal receiver, J. Clark Kelso, said in an interview that he expects to file a motion in federal court as soon as the first week of August for an order to receive the funds. "Fiscally, the state is near bankrupt. So do I want to take this money and cause chaos and pandemonium? No," says Mr. Kelso. "But I have a court order here, and I must move forward."

The showdown is a side effect of the state's inability to fix problems that have plagued the nation's largest state-prison system for decades. In 2002, a federal judge in the U.S. District Court for the Northern District of California deemed the state's prison health-care system so bad that it violated the constitutional prohibition of cruel and unusual punishment. The judge, Thelton Henderson, ordered the state to improve the system.

The case -- part of a 2001 class-action suit against the state that the Prison Law Office, an inmate-advocacy group, filed on behalf of inmates -- brought attention to understaffed prison hospitals and inadequately trained caregivers. In one example cited in the suit, a 76-year-old inmate with the onset of cataracts in both eyes was denied surgery and went blind in one eye and partially blind in the other. An inmate under AIDS treatment was denied medical care on eight occasions, in part because authorities didn't believe the inmate was in pain.

The state made little progress in improving prison health care. In 2005, Judge Henderson turned control of the system over to a federal receiver, Robert Sillen, former head of the Santa Clara Valley Health and Hospital System. When matters still didn't improve, the judge in January appointed J. Clark Kelso, a Pacific University law professor, as the new federal receiver.

Mr. Kelso created a plan calling for construction of seven health-care facilities by mid-2013 to house 10,000 chronically sick and mentally ill inmates. He estimated the plan would cost the state about $7 billion to cover its 160,000 to 170,000 inmates.

Granted a broad set of powers to institute the turnaround, Mr. Kelso worked with state lawmakers to raise the funds through a bond measure. In late May, State Sen. Michael Machado introduced a funding bill for Senate vote. The bill would have authorized nearly $7 billion in revenue bonds repaid over 25 years.

But California Republicans balked at the measure, calling it irresponsible given the state's fiscal situation. "Please show me a community in California with 170,000 citizens and $7 billion health care," Republican Assembly speaker Mike Villines says. "Everyone there would have a personal trainer, a personal chef, probably even a dog walker. The receiver is out of touch with reality."

The Republicans defeated the bill.

"We are in unprecedented waters," says Sen. Majority Leader Gloria Romero, a Democrat. "Some of my colleagues fail to see we are not in the driver's seat. Federal courts and federal law trumps the state."

Mr. Kelso says he has attempted to force the state's hand by authorizing facility designs, accepting bids by construction companies, and sending the invoices to the state controller's office. So far the state hasn't signed off on any invoices, he says. Mr. Kelso threatened at a news conference on July 11 to force the initial cost of construction, about $2.5 billion, from the state.

A spokesman for the controller's office says that such an order would force it to dip into state coffers, increasing the deficit.

Mr. Kelso recently obtained a court order from Judge Henderson to force the California Department of Finance and the state controller's office to open the books for his inspection.

Seth Unger, press secretary for the California Department of Corrections and Rehabilitation, says the department has worked closely with Mr. Kelso to deliver an adequate level of care and has assigned its physicians to aid with overhauling the medical ranks.

State Democrats largely support Mr. Kelso, saying his plan represents a step toward fixing the perennial prison problems that have led Gov. Arnold Schwarzenegger to declare California's prison system in crisis. Republican legislators say the state should first attack the root cause of the health-care issue: overcrowded prisons.

Mr. Kelso has a reputation as a bureaucracy-busting expert for the state. In 2000, then-Gov. Gray Davis appointed him to take over the state's Department of Insurance. Two years later, Mr. Kelso was appointed to turn around California's technology infrastructure as its chief information officer. "I have been around long enough to know how games are played around here," says Mr. Kelso. "I've done everything possible to avoid a crisis, but time is running out."

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