City officials alleged as many as 150 patients were dumped on Skid Row from the two hospitals during a two-year period.
"We will not stand idly by while society's most vulnerable are dumped in the gutters of Skid Row," Delgadillo said in a statement.
Calls seeking comment from College Hospital were not immediately returned
Under the settlement, the hospitals agreed to give $1.2 million to charities that care for the mentally ill and homeless and to pay $400,000 in civil penalties.
In one case, the city attorney's office said Steven Davis, 32, a bipolar schizophrenic, was driven 40 miles to the Union Rescue Mission last year from College Hospital in Costa Mesa. The next day, the shelter contacted the hospital and asked them to pick up Davis, saying they were unequipped to treat him.
A van from the hospital came for Davis but dropped him at another Skid Row shelter instead of returning him to the hospital or another health care facility, according to the city attorney's office.
From there, Davis wandered the streets before ending up at a clinic that contacted his family and found a place for him to board and receive treatment, the city attorney's office said.
College Hospitals attorney Glenn Solomon said a settlement had been reached and denied any wrongdoing by the hospitals.
Last May, the hospital's chief executive officer Wayne Lingenfelter denied dumping patients. He said Davis requested discharge to the Los Angeles shelter and had adequate health care in place.
Attorney David Daniels, who represents Davis, said College Hospital will also be required to develop protocols for discharging psychiatric patients to "ensure homeless psychiatric patients will have the dignity and the continuum of care that everyone leaving a hospital deserves."
(Copyright 2009 by The Associated Press. All Rights Reserved.)