$2M in Healthy San Francisco Funds Collected From Restaurants

The San Francisco attorney's office this week announced that so far it has collected nearly $2 million from area restaurants as part of an investigation into discrepancies between surcharges placed on diners' bills to cover the costs of providing employee health benefits under Healthy San Francisco and funds actually used to provide health care coverage to employees, the San Francisco Business Times' "Bay Area BizTalk" reports (Frojo, "Bay Area BizTalk," San Francisco Business Times, 1/3).

Background on Healthy San Francisco

The city launched Healthy San Francisco in 2007 to provide health insurance coverage to adult residents who earn too much to qualify for Medi-Cal, but not enough to purchase private insurance. Medi-Cal is California's Medicaid program.

Healthy San Francisco receives funding from the city, the federal government, patient contributions and fees imposed on San Francisco businesses that do not provide health coverage for their workers. The program receives no funding from the state.

Over the past five years, Healthy San Francisco has evolved from its origins as a safety-net insurance option to a program that covers about 85% of San Francisco's uninsured residents (California Healthline, 7/31/13).

To cover the costs of providing employee health benefits under Healthy San Francisco, many restaurants place a surcharge on diners' bills.

Background on S.F. Restaurant Investigation

Last year, San Francisco City Attorney Dennis Herrera said that the city was investigating whether some restaurants were profiting from such surcharges.

The Office of Labor Standards Enforcement estimated that only about one-third of the $14 million that restaurants have collected in surcharges has been used for workers' health benefits (California Healthline, 1/28/13).

Details of Collected Funds

The $2 billion in collected funds were the result of the one-year investigation targeting restaurant employers who exploited the program's surcharge provision, "Bay Area BizTalk" reports.

Fifty-seven restaurants were involved investigation.

Many of the restaurants reached voluntary settlements after a one-time 50% amnesty offer from Herrera, including:

• 5A5 Steak Lounge, which paid $18,883;
• Burma Superstar, which paid $10,045; and
• Paxti's Pizza, which paid $205,000.

Meanwhile, other restaurants were cleared of wrongdoing after the investigation found that the discrepancies were the result of inadvertent reporting errors. Those restaurants include:

• 1300 on Fillmore;
• 25 Lusk; and
• Lark Creek Management

The collected funds will be distributed to nearly 4,000 eligible employees of 38 different restaurants who were allegedly owed money for health care ("Bay Area BizTalk," San Francisco Business Times, 1/3).