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,begin delete andend delete 1404begin insert, and 1408end 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 license in order to refer a person to a residential care facility for the elderly. 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, unlessbegin delete expresslyend delete 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, forbegin delete 4end deletebegin insert 3end insert years, a signed acknowledgment from the person being referred, or his or her conservator, guardian, 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 the director or from an inspection service approved
11by the director pursuant to Section 1257.

12(b) It is unlawful for any person, association, or corporation to
13establish, conduct, or maintain a referral agency or to refer any
14person for remuneration to any person or agency outside a
15long-term health care facility, as defined in Section 1418, for
16professional services for which the long-term health care facility
17does not employ a qualified professional person to furnish a
18specific service, including, but not limited to, laboratory,
19diagnostic, or therapy services, unless the long-term health care
20facility complies with current federal and state laws regarding the
21provision of these services and all of the following conditions are
22met:

23(1) The services will be provided in accordance with
24professional standards applicable to the provision of these services
25in a long-term health care facility.

P3    1(2) The long-term health care facility assumes responsibility
2for timeliness of the services.

3(3) Services are provided or obtained only when ordered by the
4attending physician and a notation is made in the resident’s medical
5chart reflecting that the service has been provided to the resident.

6(c) It is unlawful for any person, association, or corporation to
7establish, conduct, or maintain a referral agency or to refer any
8person for remuneration to any residential care facility for the
9elderly for professional services if that facility does not meet the
10licensing standards established in Chapter 3.2 (commencing with
11Section 1560).begin insert The referral agency may satisfy this requirement
12by obtaining and relying onend insert
begin insert the licensing status information for a
13residential care facility for the elderly that is published on the
14Internet Web site of the State Department of Social Services.end insert

15

SEC. 2.  

Section 1401 of the Health and Safety Code is amended
16to read:

17

1401.  

As used in this chapter “referral agency” means a private,
18profit or nonprofit agency that is engaged in the business of
19referring persons for remuneration to any extended care facility,
20skilled nursing home, intermediate care facility, or residential care
21facility for the elderly, or a distinct part of a facility providing
22extended care, skilled nursing home care, or intermediate care.begin delete A
23residential care facility for the elderly is not a referral agency if it
24does either of the following:end delete
begin insert “Referral agency” does not include
25any of the following:end insert

begin insert

26(a) A licensed residential care facility for the elderly that does
27either of the following:

end insert
begin delete

28(a)

end delete

29begin insert(1)end insert Provides discounts or other remuneration to residents or
30their families for referring new or prospective clients.

begin delete

31(b)

end delete

32begin insert(2)end insert Provides remuneration to staff for marketing or sales offers.

begin insert

33(b) A resident who refers a new or prospective resident and
34receives a discount or other remuneration from a licensed
35residential care facility for the elderly.

end insert
begin insert

36(c) A licensed residential care facility staff member who receives
37remuneration from the facility for sales or marketing efforts.

end insert
38

SEC. 3.  

Section 1402 is added to the Health and Safety Code,
39to read:

P4    1

1402.  

“Residential care facility for the elderly” has the same
2meaning as set forth in Section 1569.2.

3

SEC. 4.  

Section 1404 of the Health and Safety Code is amended
4to read:

5

1404.  

No licensee under this chapter shall have a direct or
6indirect financial interest in any facility doing business with the
7licensee.

8begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 1408 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is amended
9to read:end insert

10

1408.  

(a)  Upon verification of compliance with this chapter
11and with the approval of the department, the department shall issue
12the license to the applicant.

begin insert

13(b)  For applicants who solely provide referrals to residential
14care facilities for the elderly, the department is not required to
15conduct an on-site licensing inspection as a condition of verifying
16compliance with this chapter.

end insert
begin insert

17(c) As a condition of verifying compliance with this chapter, the
18department may require an applicant to submit a copy or example
19of the disclosure statement required by Section 1409.4.

end insert
begin delete

20(b)

end delete

21begin insert(d)end insert If the applicant is not in compliance with this chapter, the
22department shall deny the applicant a license. Immediately upon
23the denial of any license, the department shall notify the applicant
24in writing. Within 20 days of receipt of the department’s notice,
25the applicant may present his or her written petition for a hearing
26to the department. The proceedings shall be conducted in
27accordance with Section 100171.

28

begin deleteSEC. 5.end delete
29begin insertSEC. 6.end insert  

Section 1409.4 is added to the Health and Safety Code,
30to read:

31

1409.4.  

(a) begin deletePrior to any referral, end deletebegin insertBefore referring a person to
32any facility, end insert
a licensee shall providebegin delete each person receiving services
33from the licenseeend delete
begin insert the personend insert with a disclosure statement containing
34all of the following:

35(1) Whether the licensee has an agreement or contract with the
36facility to which the person is being referred.

37(2) That a commission or fee will be received by the licensee
38from the facility as a result of the referral, if applicable.

P5    1(3) Any gift or exchange of monetary value between the facility
2and the licensee that is in addition to, or in lieu of, a commission
3or fee.

4(4) Any fee charged to the person or persons by the licensee.
5The notice shall include a description of the services being rendered
6for that fee and the licensee’s refund policy.

7(5) The licensee’s contact information, including address and
8telephone number, and the licensee’s privacy policy. The privacy
9policy may be provided as an Internet Web site link consistent
10with provisions set forth in Section 22575 of the Business and
11Professions Code.

12(6) The date of the licensee’s most recent tour or visit to the
13facility and, as appropriate,begin delete a report of any violations as identified
14byend delete
begin insert a hyperlink to, or copy of,end insert the most recent evaluation report for
15a residential care facility for the elderlybegin insert to which the person is
16being referred,end insert
prepared pursuant to Section 1569.33begin insert andend insertbegin insert published
17by the State Department of Social Servicesend insert
.

18(7) Information regarding thebegin insert type of facility and theend insert services
19begin delete the referred facility offers, including, but not limited to, intermittent
20skilled nursing care, memory care, assistance with and distribution
21of medication, and other services, if applicable.end delete
begin insert offered by the
22facility.end insert

23(8) The contact information, including address and phone
24number, of the State Department of Social Services or State
25Department of Public Health, as appropriate, and the contact
26information for filing consumer complaints, including contact
27information for the local long-term care ombudsman.begin insert If the
28disclosure statement is provided electronically, the contact
29information for each department and the local long-term care
30ombudsman may be provided as a hyperlink.end insert

31(b) (1) The disclosure statement shall be dated and shall contain,
32in addition to the requirements of subdivision (a), the name of the
33person being referred.

34(2) If the disclosure is provided in written form, it shall be
35printed in 16-point bold type.

36(3) If the disclosure statement is provided electronically, it shall
37be consistent with provisionsbegin delete regarding electronic records set forth
38in Section 7001 of Title 15 of the United States Code,end delete
begin insert set forth in
39Title 2.5 (commencing with Section 1633.1) of Part 2 of Division
403 of the Civil Code,end insert
and shall be displayed on begin delete the licensee’s Internet
P6    1Web siteend delete
begin insert a secured Web pageend insert in a larger type than the surrounding
2text.

3(c) The licensee shall provide the disclosure statement pursuant
4to subdivision (a) in the same language in which the licensee
5negotiates any referral services with the person receiving services.

6(d) begin deletePrior to any referral, the licensee shall retain a signed
7acknowledgment from end delete
begin insertThe disclosure statement shall be signed
8or otherwise acknowledged byend insert
the person being referred, or his or
9her conservator, guardian, family member, or agent under a power
10of attorney, stating that the disclosure statement required by this
11section was received. Thebegin delete signedend delete acknowledgment shall be
12executed with one of the following:

13(1) The signature of the person being referred, or his or her
14conservator, guardian, family member, or agent under a power of
15attorney on the exact disclosure statement.

16(2) An electronic signature thatbegin insert is consistent with standards set
17forth in Title 2.5 (commencing with Section 1633.1) of Part 2 of
18Division 3 of the Civil Code andend insert
includes the date, time, and
19Internet provider address and displays the exact disclosure
20statement document.

21(3) A faxed confirmation that includes the date, time, and fax
22number and displays the exact disclosure statement document.

23(e) The acknowledgment required by this section shall be
24retained for a period of no less thanbegin delete fourend deletebegin insert threeend insert years.

25(f) If the disclosure statement, or any other referral-related
26document, is provided electronically, the licensee shall provide a
27written copy, inbegin delete aend delete 16-point bold type, to the person being referred,
28or his or her conservator, guardian, family member, or agent under
29power of attorney following any referral. This written copy may
30be provided by fax,begin insert email, or other means of electronic
31communication,end insert
ifbegin delete applicable.end deletebegin insert appropriate.end insert

32(g) Any violation of this section with the intent to directly or
33indirectly mislead the public on the nature of services provided by
34the referral agency will constitute unfair competition which
35includes unlawful, unfair, or fraudulent business acts or practices
36and unfair, deceptive, untrue, or misleading advertising. Any person
37or entity that engages in unfair competition shall be liable for a
38civil penalty not to exceed two thousand five hundred dollars
39($2,500) for each violation.

P7    1

begin deleteSEC. 6.end delete
2begin insertSEC. 7.end insert  

Section 1409.6 is added to the Health and Safety Code,
3to read:

4

1409.6.  

(a) It is unlawful for a licensee to share any personal
5information, including, but not limited to, the name, address, age,
6gender, or medical information of the person receiving services
7from the licensee, with any unauthorized person or third-party
8affiliate of the licensee, unlessbegin delete expresslyend delete authorized pursuant to
9begin delete subdivisions (b) and (c).end deletebegin insert subdivision (b).end insert

begin delete

10(b) The person being referred, or his or her conservator,
11guardian, family member, or agent under power of attorney may
12expressly authorize the licensee to share his or her name and
13telephone number, or email address, with the facility, or facilities,
14being referred. The express authorization shall be separate from
15the disclosure statement required by this article and shall include
16both of the following:

17(1) Disclosure, in a form consistent with the requirements of
18Section 1409.4, which clearly and conspicuously states the name,
19location, and contact information of the facility, or facilities, that
20will receive the contact information, and the format in which the
21facility will receive the contact information.

22(2) The signature of the person giving authorization, consistent
23with the requirements of subdivision (d) of Section 1409.4.

24(c) The licensee shall only share the name and contact
25information of the individual who has provided express
26authorization, pursuant to subdivision (b).

end delete
begin insert

27(b) Before making a referral to any facility or facilities, the
28person being referred, or his or her conservator, guardian, family
29member, or agent under power of attorney, may authorize the
30licensee to share his or her personal information, as well as the
31name and a description of the care or services needed by the
32individual being referred, with a facility or facilities for purposes
33of the referral. The personal information, or other information
34shared, shall be limited to only that information which is necessary
35to complete the referral process. The authorization shall be
36obtained in either of the following ways:

end insert
begin insert

37(1) As a separate authorization form that clearly discloses that,
38by executing an acknowledgment in the manner described in
39subdivision (d) of Section 1409.4, the individual is consenting to
40the disclosure of his or her personal information to a facility or
P8    1facilities for which they are being referred. This acknowledgment
2shall include the name and location of the facility or facilities that
3will receive the personal information and the format in which the
4personal information will be shared.

end insert
begin insert

5(2) As part of the disclosure statement required by Section
61409.4 if it clearly indicates that the individual is consenting to
7the referral agency’s disclosure of his or her personal information
8to a facility or facilities for which her or she is being referred. The
9authorization shall include the name and location information of
10the facility or facilities that will receive the personal information
11and the format in which the personal information will be shared.

end insert
begin insert

12(c) The licensee shall not share the contact information of an
13individual who has not provided his or her authorization pursuant
14to subdivision (b).

end insert
15

begin deleteSEC. 7.end delete
16begin insertSEC. 8.end insert  

Section 1409.7 is added to the Health and Safety Code,
17to read:

18

1409.7.  

It is unlawful for a licensee to hold any power of
19attorney for a person receiving placement referral services from
20that licensee, or to receive or hold a client’s property in any
21capacity.

22

begin deleteSEC. 8.end delete
23begin insertSEC. 9.end insert  

Section 1409.8 is added to the Health and Safety Code,
24to read:

25

1409.8.  

On and after July 1, 2016, all persons, associations, or
26corporations licensed pursuant to this chapter shall maintain
27liability insurance coverage in an amount of at least one million
28dollars ($1,000,000) perbegin delete referredend deletebegin insert person occurrenceend insertbegin delete personend delete and
29three million dollars ($3,000,000) in the total annual aggregate,
30for negligent acts or omissions by the licensee.



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