Amended in Senate January 26, 2016

Amended in Senate January 5, 2016

Amended in Senate May 5, 2015

Amended in Senate April 20, 2015

Amended in Senate April 7, 2015

Senate BillNo. 648


Introduced by Senator Mendoza

(Coauthor: Assembly Member Levine)

February 27, 2015


An act to amend Sections 1400, 1401, 1404,begin delete and 1408end deletebegin insert 1404.5, 1405, 1407, 1408, 1409.3, and 1410end insert of, and to add Sections 1402, 1409.4, 1409.6, 1409.7, and 1409.8 to, the Health and Safety Code, relating to health and care facilities.

LEGISLATIVE COUNSEL’S DIGEST

SB 648, as amended, Mendoza. Health and care facilities: referral agencies.

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 licensebegin insert from the State Department of Social Servicesend insert in order to refer a person to a residential care facility for thebegin delete elderly.end deletebegin insert elderly and 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.end insert The bill would prohibit a referral agency from holding any power of attorney or any other property of a person receiving referral services, or from disclosing any personal information of a person receiving services, unless authorized to do so. The bill would require a referral agency to provide a disclosure statement, as specified, to each person receiving its services, and to retain, for 3 years,begin delete a signedend deletebegin insert theend insert acknowledgment from the person being referred, or his or her conservator, guardian,begin insert authorizedend insert family member, or agent under a power of attorney, stating that the disclosure statement was received. The bill would state that failure to provide the disclosure statement or retain the acknowledgment, with the intent to mislead the public on the nature of the services provided, constitutes unfair competition and is subject to a civil penalty of up to $2,500. The bill would also require referral agencies to maintain liability insurance in specified amounts.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

P2    1

SECTION 1.  

Section 1400 of the Health and Safety Code is
2amended to read:

3

1400.  

(a) It is unlawful for any person, association, or
4corporation to establish, conduct, or maintain a referral agency or
5to refer any person for remuneration to any extended care facility,
6skilled nursing home, intermediate care facility, or residential care
7facility for the elderly, or a distinct part of a facility providing
8extended care, skilled nursing home care, or intermediate care,
9without first having obtained a written license as provided in this
10chapter from thebegin delete directorend deletebegin insert State Public Health Officerend insert or from an
11inspection service approved by thebegin delete directorend deletebegin insert State Public Health
12Officerend insert
pursuant to Sectionbegin delete 1257.end deletebegin insert 1257, from the State Department
13of Social Services, or from both, as appropriate.end insert

14(b) It is unlawful for any person, association, or corporation to
15establish, conduct, or maintain a referral agency or to refer any
16person for remuneration to any person or agency outside a
17long-term health care facility, as defined in Section 1418, for
18professional services for which the long-term health care facility
P3    1does not employ a qualified professional person to furnish a
2specific service, including, but not limited to, laboratory,
3diagnostic, or therapy services, unless the long-term health care
4facility complies with current federal and state laws regarding the
5provision of these services and all of the following conditions are
6met:

7(1) The services will be provided in accordance with
8professional standards applicable to the provision of these services
9in a long-term health care facility.

10(2) The long-term health care facility assumes responsibility
11for timeliness of the services.

12(3) Services are provided or obtained only when ordered by the
13attending physician and a notation is made in the resident’s medical
14chart reflecting that the service has been provided to the resident.

15(c) It is unlawful for any person, association, or corporation to
16establish, conduct, or maintain a referral agency or to refer any
17person for remuneration to any residential care facility for the
18elderly for professional services if that facility does not meet the
19licensing standards established in Chapter 3.2 (commencing with
20Section 1560). The referral agency may satisfy this requirement
21by obtaining and relying on the licensing status information for a
22residential care facility for the elderly that is published on the
23Internet Web site of the State Department of Social Services.

begin insert

24(d) It is unlawful for any extended care facility, skilled nursing
25home, intermediate care facility, or residential care facility for
26the elderly, or a distinct part of a facility providing extended care,
27skilled nursing home care, or intermediate care to pay a
28commission or fee to a referral agency that does not have a written
29license as provided in this chapter from the State Public Health
30Officer or from an inspection service approved by the State Public
31Health Officer pursuant to Section 1257, from the State Department
32of Social Services, or from both, as appropriate.

end insert
33

SEC. 2.  

Section 1401 of the Health and Safety Code is amended
34to read:

35

1401.  

As used in thisbegin delete chapterend deletebegin insert chapter,end insert “referral agency” means
36a private, profit or nonprofit agency that is engaged in the business
37of referring persons for remuneration to any extended care facility,
38skilled nursing home, intermediate care facility, or residential care
39facility for the elderly, or a distinct part of a facility providing
P4    1extended care, skilled nursing home care, or intermediate care.
2“Referral agency” does not include any of the following:

3(a) A licensed residential care facility for the elderly that does
4either of the following:

5(1) Provides discounts or other remuneration to residents or
6their families for referring new or prospective clients.

7(2) Provides remuneration to staff for marketing or sales offers.

8(b) A resident who refers a new or prospective resident and
9receives a discount or other remuneration from a licensed
10residential care facility for the elderly.

11(c) A licensed residential care facility staff member who receives
12remuneration from the facility for sales or marketing efforts.

13

SEC. 3.  

Section 1402 is added to the Health and Safety Code,
14to read:

15

1402.  

“Residential care facility for the elderly” has the same
16meaning as set forth in Section 1569.2.

17

SEC. 4.  

Section 1404 of the Health and Safety Code is amended
18to read:

19

1404.  

No licensee under this chapter shall have a direct or
20indirect financial interest in any facility doing business with the
21licensee.

22begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 1404.5 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
23amended to read:end insert

24

1404.5.  

A license application shall be submitted tobegin delete the
25departmentend delete
begin insert either or both licensing departments, as appropriate,end insert
26 whenever any of the following circumstances occur:

27(a) Change of ownership of the referral agency.

28(b) Change of name of the referral agency.

29(c) Change of location of the referral agency.

30begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 1405 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is amended
31to read:end insert

32

1405.  

begin insert(a)end insertbegin insertend insert Any person, partnership, firm,begin delete corporationend delete
33begin insert corporation,end insert or association desiring to obtain a licensebegin insert to refer
34persons to extended care facilities, skilled nursing homes, or
35intermediate care facilities, end insert
begin insertor a distinct part of a facility providing
36extended care, skilled nursing home care, or intermediate care,end insert

37 shall file with thebegin delete departmentend deletebegin insert State Department of Public Healthend insert
38 an application on forms furnished by thebegin delete department. The
39applicationend delete
begin insert State Department of Public Health. Any person,
40partnership, firm, corporation, or association desiring to obtain
P5    1a license to refer persons to residential care facilities for the
2elderly shall file with the State Department of Social Services an
3application on forms furnished by the State Department of Social
4Services. The applicationsend insert
shall contain all of the following:

5(a) Name of applicant, and if an individual, whether the applicant
6has attained the age of 18 years.

7(b) Name of referral agency.

8(c) The location of the referral agency.

9(d) The business or occupation engaged in by each applicant,
10and by each partner, officer and director, for at least two years
11immediately preceding the filing of the application. In addition,
12each such person shall submit a statement setting forth whether
13he or she has previously engaged in the operation of a referral
14agency, whether he or she has been involved in, or the subject of,
15a refusal or revocation of a referral agency license, and whether
16he or she has been convicted of a crime other than a minor traffic
17offense.

18(e) If the applicant is a corporation, the name and principal
19business address of each officer and director of the corporation;
20and for nonpublic corporations, the name and business address of
21each stockholder owning 10 percent or more of the stock and the
22name and business address of any corporation member who has
23responsibility in the operation of the facility.

24(f) If the applicant is a partnership, the name and principal
25business address of each partner.

26(g) Evidence of the right to occupy the premises where the
27referral agency is to be located.

28(h) A copy of the partnership agreementbegin delete ofend deletebegin insert orend insert the Articles of
29 Incorporation, if applicable.

30(i) A copy of the current organization chart.

31(j) A schedule of fees to be charged and collected by the referral
32agency, and a statement of the method by which each fee is to be
33computed or determined.

34(k) A declaration that the licensee will not have any financial
35interest in any health facility doing business with the referral
36agency.

37(l) Evidence satisfactory to thebegin insert licensingend insert department that the
38applicant demonstrates reputable and responsible character and
39the capability to comply with this chapter.

P6    1begin insert

begin insertSEC. 7.end insert  

end insert

begin insertSection 1407 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is amended
2to read:end insert

3

1407.  

(a) Any licensee desiring to voluntarily surrender his
4or her license for cancellation or temporary suspension shall notify
5thebegin insert licensingend insert department in writing as soon as possible and, in all
6cases, at least 30 days prior to the effective date of cancellation or
7temporary suspension of the license.

8(b) Any license placed in temporary suspension pursuant to this
9section may be reinstated by thebegin insert licensingend insert department within 12
10months of the date of the voluntary suspension on receipt of an
11application and evidence showing compliance with licensing
12requirements.

13

begin deleteSEC. 5.end delete
14begin insertSEC. 8.end insert  

Section 1408 of the Health and Safety Code is amended
15to read:

16

1408.  

(a)  Upon verification of compliance with this chapter
17and with the approval of thebegin insert licensingend insert department, thebegin insert licensingend insert
18 department shall issue the license to the applicant.

19(b) begin delete For applicants who solely end deletebegin insertWhen licensing referral agencies
20that end insert
provide referrals to residential care facilities for the elderly,
21thebegin delete departmentend deletebegin insert State Department of Social Servicesend insert is not required
22to conduct an onsite licensing inspection as a condition of verifying
23compliance with this chapter.

24(c) As a condition of verifying compliance with this chapter,
25thebegin insert licensingend insert department may require an applicant to submit a copy
26or example of the disclosure statement required by Section 1409.4.

27(d) If the applicant is not in compliance with this chapter, the
28begin insert licensing end insertdepartment shall deny the applicant a license.
29Immediately upon the denial of any license, thebegin insert licensingend insert
30 department shall notify the applicant in writing. Within 20 days
31of receipt of thebegin delete department’send delete notice, the applicant may present
32his or her written petition for a hearing to thebegin insert licensingend insert department.
33begin delete The proceedingsend deletebegin insert Proceedings conducted by the State Department
34of Public Healthend insert
shall be conducted in accordance with Section
35100171.

36begin insert

begin insertSEC. 9.end insert  

end insert

begin insertSection 1409.3 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
37amended to read:end insert

38

1409.3.  

(a) The licensee shall notifybegin delete the departmentend deletebegin insert either or
39both licensing departments, as appropriate,end insert
within 10 days in
40writing when a change of stockholder owning 10 percent or more
P7    1of the nonpublic corporate stock occurs. The writing shall include
2the name and principal mailing addresses of the new stockholder.

3(b) When a change of agency manager occurs,begin delete the departmentend delete
4begin insert either or both licensing departments, as appropriate,end insert shall be
5notified in writing within 10 days by the licensee. The notification
6shall include the name of the new agency manager.

7(c) Each licensee shall notifybegin delete the departmentend deletebegin insert either or both
8licensing departments, as appropriate,end insert
within 10 days in writing
9of any change of the mailing address of the licensee. The writing
10shall include the new mailing address of the licensee.

11(d) When a change in the principal officer of a corporate
12licensee, chairperson, president, or general manager, occursbegin delete the
13departmentend delete
begin insert either or both licensing departments, as appropriate,end insert
14 shall be notified within 10 days in writing by the licensee. The
15writing shall include the name and principal business address of
16the officer.

17

begin deleteSEC. 6.end delete
18begin insertSEC. 10.end insert  

Section 1409.4 is added to the Health and Safety
19Code
, to read:

20

1409.4.  

(a) Before referring a person to any facility, a licensee
21shall provide the person with a disclosure statement containing all
22of the following:

23(1) Whether the licensee has an agreement or contract with the
24facility to which the person is being referred.

25(2) That a commission or fee will be received by the licensee
26from the facility as a result of the referral, if applicable.

27(3) Any gift or exchange of monetary value between the facility
28and the licensee that is in addition to, or in lieu of, a commission
29or fee.

30(4) Any fee charged to the person or persons by the licensee.
31The notice shall include a description of the services being rendered
32for that fee and the licensee’s refund policy.

33(5) The licensee’s contact information, including address and
34telephone number, and the licensee’s privacy policy. The privacy
35policy may be provided as an Internet Web site link consistent
36with provisions set forth in Section 22575 of the Business and
37Professions Code.

38(6) The date of the licensee’s most recent tour or visit to the
39facility and, as appropriate, a hyperlink to, or copy of, the most
40recent evaluation report for a residential care facility for the elderly
P8    1to which the person is being referred, prepared pursuant to Section
21569.33 and published by the State Department of Social Services.

3(7) Information regarding the type of facility and the services
4offered by the facility.

5(8) The contact information, including address andbegin delete phoneend delete
6begin insert telephoneend insert number, of the State Department of Social Services or
7State Department of Public Health, as appropriate, and the contact
8information for filing consumer complaints, including contact
9information for the local long-term care ombudsman. If the
10disclosure statement is provided electronically, the contact
11information for each department and the local long-term care
12ombudsman may be provided as a hyperlink.

13(b) (1) The disclosure statement shall be dated and shall contain,
14in addition to the requirements of subdivision (a), the name of the
15person being referred.

16(2) If the disclosure is provided in written form, it shall be
17printed in 16-point bold type.

18(3) If the disclosure statement is provided electronically, it shall
19be consistent with provisions set forth in Title 2.5 (commencing
20with Section 1633.1) of Part 2 of Division 3 of the Civil Code, and
21shall be displayed on a secured Web page in a larger type than the
22surrounding text.

23(c) The licensee shall provide the disclosure statement pursuant
24to subdivision (a) in the same language in which the licensee
25negotiates any referral services with the person receiving services.

26(d) The disclosure statement shall be signed or otherwise
27acknowledged by the person being referred, or his or her
28conservator, guardian,begin insert authorizedend insert family member, or agent under
29a power of attorney, stating that the disclosure statement required
30by this section was received. The acknowledgment shall be
31executed with one of the following:

32(1) The signature of the person being referred, or his or her
33conservator, guardian,begin insert authorizedend insert family member, or agent under
34a power of attorney on the exact disclosure statement.

35(2) An electronic signature that is consistent with standards set
36forth in Title 2.5 (commencing with Section 1633.1) of Part 2 of
37Division 3 of the Civil Code and includes the date, time, and
38Internet provider address and displays the exact disclosure
39statement document.

P9    1(3) A faxed confirmation that includes the date, time, and fax
2number and displays the exact disclosure statement document.

begin insert

3(4) A telephonic, oral acknowledgment of the person being
4referred, or his or her conservator, guardian, authorized family
5member, or agent under power of attorney, which shall be
6recorded, with that person’s consent, consistent with Sections 632
7and 632.7 of the Penal Code. This paragraph does not authorize
8an in-person, oral acknowledgment.

end insert

9(e) The acknowledgment required by this section shall be
10retained for a period of no less than three years.

11(f) begin insert(1)end insertbegin insertend insert If the disclosure statement, or any other referral-related
12document, is provided electronically, the licensee shall provide a
13written copy, in 16-point bold type, to the person being referred,
14or his or her conservator, guardian,begin insert authorizedend insert family member, or
15agent under power of attorney following any referral. This written
16copy may be provided by fax, email, or other means of electronic
17communication, if appropriate.

begin insert

18(2) Recorded telephonic acknowledgments shall, upon request,
19be provided in an easily accessible format to the person being
20referred or the licensing department within five days of the request.

end insert

21(g) Any violation of this section with the intent to directly or
22indirectly mislead the public on the nature of services provided by
23the referral agency will constitute unfair competition which
24includes unlawful, unfair, or fraudulent business acts or practices
25and unfair, deceptive, untrue, or misleading advertising. Any person
26or entity that engages in unfair competition shall be liable for a
27civil penalty not to exceed two thousand five hundred dollars
28($2,500) for each violation.

29

begin deleteSEC. 7.end delete
30begin insertSEC. 11.end insert  

Section 1409.6 is added to the Health and Safety
31Code
, to read:

32

1409.6.  

(a) It is unlawful for a licensee to share any personal
33information, including, but not limited to, the name, address, age,
34gender, or medical information of the person receiving services
35from the licensee, with any unauthorized person or third-party
36affiliate of the licensee, unless authorized pursuant to subdivision
37(b).

38(b) Before making a referral to any facility or facilities, the
39person being referred, or his or her conservator, guardian, family
40member, or agent under power of attorney, may authorize the
P10   1licensee to share his or her personal information, as well as the
2name and a description of the care or services needed by the
3individual being referred, with a facility or facilities for purposes
4of the referral. The personal information, or other information
5shared, shall be limited to only that information which is necessary
6to complete the referral process. The authorization shall be obtained
7in either of the following ways:

8(1) As a separate authorization form that clearly discloses that,
9by executing an acknowledgment in the manner described in
10subdivision (d) of Section 1409.4, the individual is consenting to
11the disclosure of his or her personal information to a facility or
12facilities for which they are being referred. This acknowledgment
13shall include the name and location of the facility or facilities that
14will receive the personal information and the format in which the
15personal information will be shared.

16(2) As part of the disclosure statement required by Section
171409.4 if it clearly indicates that the individual is consenting to
18the referral agency’s disclosure of his or her personal information
19to a facility or facilities for which her or she is being referred. The
20authorization shall include the name and location information of
21the facility or facilities that will receive the personal information
22and the format in which the personal information will be shared.

23(c) The licensee shall not share the contact information of an
24individual who has not provided his or her authorization pursuant
25to subdivision (b).

26

begin deleteSEC. 8.end delete
27begin insertSEC. 12.end insert  

Section 1409.7 is added to the Health and Safety
28Code
, to read:

29

1409.7.  

It is unlawful for a licensee to hold any power of
30attorney for a person receiving placement referral services from
31that licensee, or to receive or hold a client’s property in any
32capacity.

33

begin deleteSEC. 9.end delete
34begin insertSEC. 13.end insert  

Section 1409.8 is added to the Health and Safety
35Code
, to read:

36

1409.8.  

On and after July 1, 2016, all persons, associations, or
37corporations licensed pursuant to this chapter shall maintain
38liability insurance coverage in an amount of at least one million
39dollars ($1,000,000) per person occurrence and three million dollars
P11   1($3,000,000) in the total annual aggregate, for negligent acts or
2omissions by the licensee.

3begin insert

begin insertSEC. 14.end insert  

end insert

begin insertSection 1410 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
4amended to read:end insert

5

1410.  

Thebegin insert licensingend insert department may suspend or revokebegin delete licensesend delete
6begin insert a licenseend insert issued under this chapter for violation of any provisions
7of this chapter or rules and regulations promulgated hereunder. In
8addition, thebegin insert licensingend insert department shall assess a civil penalty in
9the amount of fees received by a licensee as a result of a violation
10of any provisions of this chapter or rules and regulations
11promulgated hereunder. Proceedings to suspend or revoke a license
12begin insert conducted by the State Department of Public Healthend insert shall be
13conducted pursuant to Section 100171.



O

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