San Francisco Superior Court Rules Against DHCS Withhold of San Francisco Unified School District (SFUSD) on Grounds of Free Care

The San Francisco Superior Court sides with SFUSD in its petition against the State to be reimbursed for regular education health services. The Court has ordered that the State of California must either reimburse SFUSD for regular education health claims using state funds, or it must challenge CMS and obtain federal money to reimburse SFUSD.

“…the Court finds that, unless or until the Department of Health and Human Services or the Departmental Appeals Board (DAB) issues a final determination demonstrating to the contrary, “federal financial participation” is available within the meaning of California Welfare & Institutions Code Section 14132.06 for covered LEA services, otherwise reimbursable in accordance with state and federal law, that are provided under circumstances that do not meet the requirements of the “free care” principle. Accordingly, it is ordered that:

(1) The District is entitled to a Peremptory Writ ordering Respondents to reimburse the District for claims submitted by the District after September 10, 2009 for covered “LEA services” that are otherwise reimbursable in accordance with state and federal law.

(2) The order in paragraph 1 above is stayed, and issuance of a writ held in abeyance, to allow Respondents an opportunity to determine whether they will seek federal financial participation from the federal government for the services described in this order, and if they decide to do so, to seek federal financial participation promptly and in good faith…”

San Francisco Superior Court, October 8, 2009: Case No. 509-499

In 2005, DHCS withheld $305,000 from San Francisco Unified School District (SFUSD) on the basis of CMS’s free care rule. SFUSD filed a lawsuit against the State of California to protest enforcement by DHCS of the rule.

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