Gregory Elarms, 58, will be housed at Napa State Hospital until his competency is restored, at which time he would return to San Mateo County to face murder charges, Deputy District Attorney Al Giannini said.
San Mateo County Superior Court Judge Mark Forcum in July ruled that Elarms was incompetent to stand trial for the June 9, 2010, murder.
Elarms is suspected of following Lewis from the San Mateo Medical Center to Hillsdale Mall and shooting him once in the stomach with a .44-caliber handgun outside his car.
About six months after the crime, Elarms contacted San Mateo investigators claiming to have a tip about the unsolved case.
As he was being questioned, Elarms allegedly confessed to killing Lewis, even describing the shocked look on Lewis' face after he shot him, San Mateo police Detective Rick Decker testified at Elarms' preliminary hearing.
Elarms was charged with murder, discharging a gun in the course of murder, being a felon in possession of a firearm, and the special circumstance of lying in wait, which could make him eligible for the death penalty.
Giannini said today that the district attorney's office would seek life in prison over the death penalty, should Elarms eventually be tried for murder.