Amended  IN  Senate  January 03, 2024
Amended  IN  Senate  April 11, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill
No. 875

Introduced by Senator Glazer

February 17, 2023

An act to add Section 1569.471 to amend Sections 1400, 1401, 1403, 1404, 1404.5, 1405, 1407, 1408, 1409.3, and 1410 of, and to add Sections 1402, 1409.4, 1409.5, 1409.7, 1409.8, 1409.9, and 1409.10 to, the Health and Safety Code, relating to referral sources. health and care facilities.


LEGISLATIVE COUNSEL'S DIGEST


SB 875, as amended, Glazer. Referral source for residential care facilities for the elderly: duties. Health and care facilities: residential care facilities for the elderly: referral agencies.
The California Residential Care Facilities for the Elderly Act generally requires the State Department of Social Services to license, inspect, and regulate residential care facilities for the elderly and imposes criminal penalties on a person who violates the act or who willfully or repeatedly violates any rule or regulation adopted under the act. The act prohibits a placement agency, as defined, from placing an individual in a licensed residential care facility for the elderly if the individual, because of a health condition, cannot be cared for within the limits of the license or requires inpatient care in a health facility. The act requires an employee of a placement agency who knows, or reasonably suspects, that a facility is improperly operating without a license to report the facility to the department, and requires the department to investigate those reports. The act further requires a placement agency to notify the appropriate licensing agency of any known or suspected incidents that would jeopardize the health or safety of residents in a facility. The act specifically makes a violation of these requirements a crime.
Existing law requires a referral agency to obtain a license from the State Department of Public Health in order to refer a person to any extended care facility, skilled nursing home, or intermediate care facility. Existing law exempts a local public agency performing referral services without cost from these provisions. Under existing law, a violation of these provisions is subject to a civil penalty and suspension or revocation of the license.
This bill would additionally require a referral agency to obtain a license from the State Department of Social Services in order to refer a person to a residential care facility for the elderly. The bill would prohibit an extended care facility, skilled nursing home, intermediate care facility, or residential care facility for the elderly from paying a commission or fee to a referral agency that is not licensed, as specified. The bill would prohibit a referral agency from holding any power of attorney or any other property of a person receiving referral services, or to receive or hold a client’s property in any capacity. With respect to a residential care facility for the elderly, the bill would require a referral agency to disclose specified information to each person receiving its services, and to maintain records of those disclosures for a period of 3 years, as specified. The bill would specify that a referral agency licensee would be subject to specified provisions relating to placement agencies for residential care facilities for the elderly. By expanding the definition of a crime, the bill would impose a state-mandated local program. The bill would also require referral agencies to maintain liability insurance in specified amounts. The bill would also make it unlawful for an employee, independent contractor, or other person who is acting on behalf of a governmental agency, hospital, or other health care institution to offer, provide, or accept a payment, rebate, refund, commission, preference, or discount as payment, compensation, or inducement for referring patients, clients, or customers to a facility or licensee.
Existing law makes specified persons mandated reporters of elder or dependent adult abuse, including administrators, supervisors, and licensed staff of a facility that provide care or services for elder or dependent adults. Under existing law, failure to report physical abuse, abandonment, abduction, isolation, financial abuse, or neglect of an elder or dependent adult is a misdemeanor.
The bill would include owners, operators, and employees of a referral agency as mandated reporters. By expanding the crime of failure to report elder or dependent adult abuse, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

The California Residential Care Facilities for the Elderly Act generally requires the State Department of Social Services to license, inspect, and regulate residential care facilities for the elderly and imposes criminal penalties on a person who violates the act or who willfully or repeatedly violates any rule or regulation adopted under the act. The act prohibits a placement agency, as defined, from placing an individual in a licensed residential care facility for the elderly if the individual, because of a health condition, cannot be cared for within the limits of the license or requires inpatient care in a health facility. The act requires an employee of a placement agency who knows, or reasonably suspects, that a facility is improperly operating without a license to report the facility to the department, and requires the department to investigate those reports. The act further requires a placement agency to notify the appropriate licensing agency of any known or suspected incidents that would jeopardize the health or safety of residents in a facility. The act specifically makes a violation of these requirements a crime.

This bill additionally would impose requirements for referral sources, defined to mean any specified county department, stated-funded program, entity, or person that is engaged in identifying senior housing options at residential care facilities for the elderly. The bill would require a referral source, before sending a compensated referral, as defined, to a residential care facility for the elderly, to provide a person or their representative with specific written, electronic, or verbal disclosures that include, among others, the referral source’s privacy policy. The bill would additionally require a compensated referral source to comply with additional requirements that include, among others, maintaining a minimum amount of liability insurance coverage. The bill would impose civil penalties for a violation of these provisions, as specified, in addition to any other remedy available by law.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NOYES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1400 of the Health and Safety Code is amended to read:

1400.
 (a) It is unlawful for any person, association, or corporation to establish, conduct conduct, or maintain a referral agency or to refer any person for remuneration to any extended care, care facility, skilled nursing home or home, intermediate care facility facility, residential care facility for the elderly, or a distinct part of a facility providing extended care, skilled nursing home care, or intermediate care, without first having obtained a written license therefor as provided in this chapter from the director State Public Health Officer or from an inspection service approved by the director State Public Health Officer pursuant to Section 1257. 1257, from the State Department of Social Services, or from both, as appropriate.
(b) It is unlawful for any person, association, or corporation to establish, conduct, or maintain a referral agency or to refer any person for remuneration to any person or agency outside a long-term health care facility, as defined in Section 1418, for professional services for which the long-term health care facility does not employ a qualified professional person to furnish a specific service, including, but not limited to, laboratory, diagnostic, or therapy services, unless the long-term health care facility complies with current federal and state laws regarding the provision of these services and all of the following conditions are met:
(1) The services will be provided in accordance with professional standards applicable to the provision of these services in a long-term health care facility.
(2) The long-term health care facility assumes responsibility for timeliness of the services.
(3) Services are provided or obtained only when ordered by the attending physician and a notation is made in the resident’s medical chart reflecting that the service has been provided to the resident.
(c) It is unlawful for any person, association, or corporation to establish, conduct, or maintain a referral agency or to refer any person for remuneration to any residential care facility for the elderly for professional services if that facility does not meet the licensing standards established in Chapter 3.2 (commencing with Section 1569). The referral agency may satisfy this requirement by obtaining and relying on the licensing status information for a residential care facility for the elderly that is published on the internet website of the State Department of Social Services.
(d) It is unlawful for any extended care facility, skilled nursing home, intermediate care facility, or residential care facility for the elderly, or a distinct part of a facility providing extended care, skilled nursing home care, or intermediate care, to pay a commission or fee to a referral agency that does not have a written license as provided in this chapter from the State Public Health Officer or from an inspection service approved by the State Public Health Officer pursuant to Section 1257, from the State Department of Social Services, or from both, as appropriate.

SEC. 2.

 Section 1401 of the Health and Safety Code is amended to read:

1401.
 As used in this chapter chapter, “referral agency” means a private, profit or nonprofit agency which that is engaged in the business of referring persons for remuneration to any extended care, care facility, skilled nursing home or intermediate care facility facility, or residential care facility for the elderly, or a distinct part of a facility providing extended care, skilled nursing home care, or intermediate care. “Referral facility” does not include any of the following:
(a) A licensed residential care facility for the elderly that does either of the following:
(1) Provides discounts or other remuneration to residents or their families for referring new or prospective clients.
(2) Provides remuneration to staff for marketing or sales offers.
(b) A resident who refers a new or prospective resident to a licensed residential care facility for the elderly and receives a discount or other remuneration from the licensed residential care facility for the elderly.
(c) A staff member of the licensed residential care facility for the elderly who receives remuneration from the facility for professional services, including, but not limited to, sales and marketing efforts, on behalf of that facility.

SEC. 3.

 Section 1402 is added to the Health and Safety Code, to read:

1402.
 “Residential care facility for the elderly” has the same meaning as set forth in Section 1569.2.

SEC. 4.

 Section 1403 of the Health and Safety Code is amended to read:

1403.
 (a) Each application for a license or renewal of license under this chapter shall be accompanied by an annual Licensing and Certification Program fee set in accordance with Section 1266. fee. Each license shall expire 12 months from its date of issuance and application for renewal accompanied by the fee shall be filed with the director not later than 30 days prior to the date of expiration.
(b) The State Department of Public Health shall set the annual Licensing and Certification Program fee in accordance with Section 1266.
(c) (1) The State Department of Social Services shall set the annual Licensing and Certification Program fee at an amount no greater than the amount required to cover the reasonable and actual costs of administering the licensing program.
(2) The State Department of Social Services shall, no later than February 1, 2025, and no later than February 1 of each year thereafter, submit a proposed fee schedule as part of its budget proposal to the Legislature.

SEC. 5.

 Section 1404 of the Health and Safety Code is amended to read:

1404.
 No licensee under this chapter shall A licensee under this chapter shall not have a direct or indirect financial interest in any medical facility doing business with the licensee.

SEC. 6.

 Section 1404.5 of the Health and Safety Code is amended to read:

1404.5.
 A license application shall be submitted to the department either or both licensing department, as appropriate, whenever any of the following circumstances occur:
(a) Change of ownership of the referral agency.
(b) Change of name of the referral agency.
(c) Change of location of the referral agency.

SEC. 7.

 Section 1405 of the Health and Safety Code is amended to read:

1405.
 Any person, partnership, firm, corporation or association desiring to obtain a license shall file with the department an application on forms furnished by the department. The application corporation, or association desiring to obtain a license to refer persons to extended care facilities, skilled nursing homes, or intermediate care facilities, or a distinct part of a facility providing extended care, skilled nursing home care, or intermediate care, shall file with the State Department of Public Health an application on forms furnished by the State Department of Public Health. Any person, partnership, firm, corporation, or association desiring to obtain a license to refer persons to residential care facilities for the elderly shall file with the State Department of Social Services an application on forms furnished by the State Department of Social Services. The applications shall contain all of the following:
(a) Name of applicant, and if an individual, whether the applicant has attained the age of 18 years.
(b) Name of referral agency.
(c) The location of the referral agency.
(d) The business or occupation engaged in by each applicant, and by each partner, officer officer, and director, for at least two years immediately preceding the filing of the application. In addition, each such person shall submit a statement setting forth whether he or she the person has previously engaged in the operation of a referral agency, whether he or she the person has been involved in, or the subject of, a refusal or revocation of a referral agency license, and whether he or she the person has been convicted of a crime other than a minor traffic offense.
(e) If the applicant is a corporation, the name and principal business address of each officer and director of the corporation; and for nonpublic corporations, the name and business address of each stockholder owning 10 percent or more of the stock and the name and business address of any corporation member who has responsibility in the operation of the facility.
(f) If the applicant is a partnership, the name and principal business address of each partner.
(g) Evidence of the right to occupy the premises where the referral agency is to be located.
(h) A copy of the partnership agreement of or the Articles of Incorporation, if applicable.
(i) A copy of the current organization chart.
(j) A schedule of fees to be charged and collected by the referral agency, and a statement of the method by which each fee is to be computed or determined.
(k) A declaration that the licensee will not have any financial interest in any health facility doing business with the referral agency.
(l) Evidence satisfactory to the licensing department that the applicant demonstrates reputable and responsible character and the capability to comply with this chapter.
(m) For a licensee to refer persons to residential care facilities for the elderly, both of the following:
(1) A declaration that the licensee will either conduct a suitability determination of each person who seeks a referral from the licensee and who is referred to a facility or facilities, or will comply with the requirements of subparagraph (G) of paragraph (1) of subdivision (b) of Section 1409.4. For purposes of this subdivision, “suitability determination” means a determination made by the licensee that the facility offers services to meet the needs of the person seeking a referral because of the following considerations:
(A) The level of care requested by the person seeking the referral.
(B) The cost of the facility and the ability of the financial means of the person seeking the referral.
(C) The social needs and preferences of the person seeking the referral.
(D) The geographic location of the facility and the geographic preference of the person seeking the referral.
(2) A declaration that the licensee trains all employees who make referrals to residential care facilities for the elderly regarding all of the following issues:
(A) All of the provisions of this chapter that apply to a referral agency, including, but not limited to, instruction on how to comply with all of those provisions.
(B) State governance and administrative functions of agency operations, including resident assessment and admission procedures.
(C) The psychosocial and physical needs of the elderly.
(D) Community supports, cultural competency, and sensitivity to residents’ needs.

SEC. 8.

 Section 1407 of the Health and Safety Code is amended to read:

1407.
 (a) Any licensee desiring to voluntarily surrender his or her their license for cancellation or temporary suspension shall notify the licensing department in writing as soon as possible and, in all cases, at least 30 days prior to the effective date of cancellation or temporary suspension of the license.
(b) Any license placed in temporary suspension pursuant to this section may be reinstated by the licensing department within 12 months of the date of the voluntary suspension on receipt of an application and evidence showing compliance with licensing requirements.

SEC. 9.

 Section 1408 of the Health and Safety Code is amended to read:

1408.
 (a) Upon verification of compliance with this chapter and with the approval of the licensing department, the licensing department shall issue the license to the applicant.

(b) If the applicant is not in compliance with this chapter, the department shall deny the applicant a license. Immediately upon the denial of any license, the department shall notify the applicant in writing. Within 20 days of receipt of the department’s notice, the applicant may present his or her written petition for a hearing to the department. The proceedings shall be conducted in accordance with Section 100171.

(b) When issuing a license to a referral agency that provides referrals to residential care facilities for the elderly, the State Department of Social Services is not required to conduct an onsite licensing inspection as a condition of verifying compliance with this chapter.
(c) As a condition of verifying compliance with this chapter, the licensing department may require an applicant to submit a copy or example of the disclosures required by Section 1409.4.
(d) If the applicant is not in compliance with this chapter, the licensing department shall deny the applicant a license. Immediately upon the denial of any license, the licensing department shall notify the applicant in writing. Within 20 days of receipt of the notice, the applicant may present their written petition for a hearing to the licensing department. Proceedings conducted by the State Department of Public Health shall be conducted in accordance with Section 100171.
(e) For purposes of compliance with this chapter, an applicant is not required to have a physical place of business within the state.

SEC. 10.

 Section 1409.3 of the Health and Safety Code is amended to read:

1409.3.
 (a) The licensee shall notify the department either or both licensing departments, as appropriate, within 10 days in writing when a change of stockholder owning 10 percent or more of the nonpublic corporate stock occurs. The writing shall include the name and principal mailing addresses of the new stockholder.
(b) When a change of agency manager occurs, the department either or both licensing departments, as appropriate, shall be notified in writing within 10 days by the licensee. The notification shall include the name of the new agency manager.
(c) Each licensee shall notify the department either or both licensing departments, as appropriate, within 10 days in writing of any change of the mailing address of the licensee. The writing shall include the new mailing address of the licensee.
(d) When a change in the principal officer of a corporate licensee, chairperson, president, or general manager, occurs the department manager occurs, either or both licensing departments, as appropriate, shall be notified within 10 days in writing by the licensee. The writing shall include the name and principal business address of the officer.

SEC. 11.

 Section 1409.4 is added to the Health and Safety Code, to read:

1409.4.
 (a) The following definitions shall apply for purposes of this section:
(1) “Facility” means a residential care facility for the elderly as defined in Section 1569.2.
(2) “Licensee” means a referral agency licensed pursuant to Section 1405.
(b) (1) Before referring a person to a facility, a licensee shall disclose all of the following to the person:
(A) A description of the licensee’s service.
(B) The licensee’s contact information, including business address, email address, and telephone number.
(C) A licensee’s privacy policy, or, if the licensee maintains an internet website, a link or URL to the privacy policy on the internet website.
(D) Whether and under what circumstances the licensee will be paid a fee by facilities to which the person is referred.
(E) That the person or their representative may request at any time by email or by submitting a letter that the licensee cease contact with the person or their representative at points of contact they designate, such as telephone numbers and email addresses, and that the licensee will cease contact in response to that request and also cease making additional referrals on behalf of the person or their representative.
(F) The following statement: “Information regarding inspections, evaluations, complaints, and citations associated with any of California’s residential care facilities for the elderly, also known as assisted living facilities, can be viewed at the State Department of Social Services Community Care Licensing Division internet website at www.cdss.ca.gov. Additionally, during a health-related state of emergency, information about the active cases within residential care facilities for the elderly may also be posted on this internet website.”
(G) The following statement: “State law does not require that we determine whether facilities to which we refer you are suitable for you based upon your care and social needs, financial means, and location. The list provided is not comprehensive of all options available for residential care facility in your area.” This statement shall be followed by a link to the callongtermcarecompare.org internet website maintained by the California Department of Aging.
(H) A statement that the person’s information may be sold or shared for purposes other than those necessary to make an authorized referral and a link to an internet website where a person can opt out of selling or sharing or, if the licensee does not maintain an internet website, a description of how the person can opt out of their selling or sharing of their information.
(2) The licensee shall make the disclosures pursuant to this subdivision in the same language in which the licensee negotiates any referral services with the person receiving services.
(c) (1) The information and disclosures required by subdivision (b) shall be provided to the person or their representative in a clear and conspicuous manner designed to give actual notice of its contents and may be provided, together or separately, in either of the following methods:
(A) A written disclosure in at least 12-point, Arial-equivalent bold font, either in hardcopy form or by electronic means. If the person or their representative provides the licensee with an email address, the licensee shall send an electronic version of the disclosure to the person or their representative’s email address.
(B) An oral disclosure given telephonically and recorded with the consent of the person or their representative. The disclosure shall be spoken clearly, and in a pitch and tone that is understandable to the consumer. If an oral disclosure is provided, a written disclosure as described in subparagraph (A) shall also be sent to the person or their representative.
(2) The licensee shall maintain records of the disclosures set forth pursuant to subdivision (a) for a period of three years and shall provide additional copies of the disclosures to the person, their representative, or the facility, upon written request.
(d) (1) In addition to the other requirements of this section, a licensee shall comply with all of the following:
(A) Use a nationally accredited service provider to perform background checks on representatives of the licensee who have direct contact with persons or their representatives.
(B) Accept remuneration only from residential care facilities for the elderly with which the licensee has a written contract.
(C) Post a privacy policy on every internet website the licensee operates, through a conspicuous link, in a similar manner as other similarly posted links used by the business on its home page. If the licensee does not maintain an internet website, then it shall provide the person or their representative with a written copy of the privacy policy.
(D) Cease making referrals on behalf of the person or their representative as soon as feasible but not more than 10 days after receipt of an oral, electronic, or written request, pursuant to subparagraph (E) of paragraph (1) of subdivision (b).
(E) Cease contacting a person or their representative as soon as feasible but not more than 10 days after receipt of an oral, electronic, or written request, pursuant to subparagraph (E) of paragraph (1) of subdivision (b).
(2) In accordance with Section 1798.120 of the Civil Code, the person or the person’s representative shall have the right, at any time, to direct the licensee not to sell or share their personal information, as defined in paragraph (1) of subdivision (v) of Section 1798.140 of the Civil Code, for any purpose other than those necessary to make an authorized referral.
(3) The following definitions apply for purposes of this subdivision:
(A) “Electronic request” means either an email to the electronic address that the licensee has authorized in its privacy policy for receiving those requests, or completing an online form on the licensee’s internet website that it has posted for submitting those requests.
(B) “Oral request” means a request via the recorded telephone line that the licensee has designated on its internet website or in its privacy policy for processing those requests.
(e) (1) In addition to any other remedy available by law, a licensee that violates subdivision (b) or (d) is subject to a civil penalty of between two hundred fifty dollars ($250) and one thousand dollars ($1,000) for each violation. A district attorney or a city attorney may institute a proceeding in superior court to recover the civil penalty under this subdivision and to restrain and enjoin a violation of subdivision (b) or (d).
(2) A licensee subject to this section shall comply with the requirements of Section 1569.47.

SEC. 12.

 Section 1409.5 is added to the Health and Safety Code, to read:

1409.5.
 Owners, operators, and employees of a referral agency licensed pursuant to Section 1405 are mandated reporters of elder or dependent adult abuse pursuant to Section 15630 of the Welfare and Institutions Code.

SEC. 13.

 Section 1409.7 is added to the Health and Safety Code, to read:

1409.7.
 It is unlawful for a referral agency licensed pursuant to Section 1405 to hold any power of attorney for a person receiving placement referral services from that licensee, or to receive or hold a client’s property in any capacity.

SEC. 14.

 Section 1409.8 is added to the Health and Safety Code, to read:

1409.8.
 On and after July 1, 2025, all persons, associations, or corporations licensed pursuant to Section 1405 shall maintain liability insurance coverage in an amount of at least one million dollars ($1,000,000) per person occurrence and two million dollars ($2,000,000) in the total annual aggregate, for negligent acts or omissions by the licensee.

SEC. 15.

 Section 1409.9 is added to the Health and Safety Code, to read:

1409.9.
 A licensee shall display the licensee’s name and license number on all advertising, promotional or marketing material, and internet websites paid for, or operated by, the licensee.

SEC. 16.

 Section 1409.10 is added to the Health and Safety Code, to read:

1409.10.
 (a) It is unlawful for an employee, independent contractor, or other person who is acting on behalf of a governmental agency, hospital, or other health care institution, including, but not limited to, medical professionals, physicians, nurses, social workers, discharge planners, therapists, and geriatric care managers, to offer, provide, or accept a payment, rebate, refund, commission, preference, or discount, whether in the form of money or other consideration, as payment, compensation, or inducement for referring patients, clients, or customers to a facility or licensee.
(b) For the purposes of this section, the following terms have the following meanings:
(1) “Facility” means a residential care facility for the elderly as set forth in Section 1569.2.
(2) “Licensee” means a referral agency that is licensed pursuant to Section 1405.

SEC. 17.

 Section 1410 of the Health and Safety Code is amended to read:

1410.
 The licensing department may suspend or revoke licenses a license issued under this chapter for violation of any provisions of this chapter or any rules and regulations promulgated hereunder. In addition, the licensing department shall assess a civil penalty in the amount of fees received by a licensee as a result of a violation of any provisions of this chapter or rules and regulations promulgated hereunder. Proceedings to suspend or revoke a license conducted by the State Department of Public Health shall be conducted pursuant to Section 100171.

SEC. 18.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.