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Doctors Sue California for Raiding Their Licensing Fees

Cheryl Clark, for HealthLeaders Media, October 15, 2009

California Gov. Arnold Schwarzenegger is illegally exacerbating an "imminent crisis in healthcare" because forced worker furloughs are delaying the state Medical Board's approval of applications from 7,200 new doctors, says a lawsuit filed by the California Medical Association.

Most of the doctors are fresh out of residency training and ready to go.

"By raiding the special fund that supports the Medical Board, and by imposing debilitating furloughs on its staff, the state is obstructing the Medical Board from ensuring that more duly licensed physicians can deliver health care to Californians," according to the CMA lawsuit. The documents were filed Wednesday in San Francisco Superior Court. The applications, the lawsuit claims, are "mired in the backlog."

"This policy is ultimately harming the public and exacerbating the shortage of physicians in California," says Long Do, CMA's director of litigation. "Now, a review of a doctor who wants to practice takes 5.5 months—three times longer than required by law," he says.

Additionally, CMA officials are concerned that the furloughs are delaying malpractice investigations, which is keeping the board from "discharging its mandate to protect the public through its investigatory and disciplinary responsibilities." Since only 17% of disciplinary investigations result in an public accusation, the cloud over the remaining 83% of the accused physicians' practices is allowed to unnecessarily persist, Do says.

Until the malpractice issue is resolved, doctors under investigation must disclose the issues to their medical groups, hospitals, and health plans—and may even lose privileges at a practice or hospital in the interim.

Schwarzenegger spokeswoman Rachel Arrezola says the governor is doing everything possible "to deal with California's $60 billion deficit over the last year." She says he disagrees with the legal challenge to his authority to order furloughs of fee-based agencies, adding he's entitled to do it "when there's a fiscal crisis."

"It's important to keep in mind that in this tough economy, just as every family and business is forced to cut back, the governor believes state government ought to do the same," says Arrezola.

Although furloughs have been ordered for nearly all state workers, the CMA thinks it has a great case. That's because the Medical Board's 263-person staff is entirely funded not from the state general fund, but by license fees of about $800, which the state's 125,000 doctors are required to pay every two years. Other agencies funded exclusively by license fees are also on forced furlough, and there has been discussion among some that they too should be excluded.

With furloughs of three days a month, money that would have paid Medical Board staff salaries for about 5,100 hours a month, is instead covering state operating costs.

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