BILL ANALYSIS                                                                                                                                                                                                    



                                                                     SB 648


                                                                    Page  1





          Date of Hearing:  June 28, 2016 


                           ASSEMBLY COMMITTEE ON JUDICIARY


                                  Mark Stone, Chair


          SB  
          648 (Mendoza) - As Amended June 22, 2016


                              As Proposed to be Amended


          SENATE VOTE:  27-12


          SUBJECT:  HEALTH AND CARE FACILITIES: REFERRAL AGENCIES


          KEY ISSUE:  IN ORDER TO PROTECT THE PUBLIC AND ENHANCE THE  
          PROFESSIONALISM OF agencIES THAT REFER SENIORS TO RESIDENTIAL  
          CARE FACILITIES FOR THE ELDERLY, SHOULD SUCH COMPANIES BE  
          SUBJECT TO A LICENSING REQUIREMENT, AND A NUMBER OF ETHICAL AND  
          REGULATORY RESTRICTIONS?


                                      SYNOPSIS


          There are approximately 8,000 Assisted Living, Board and Care,  
          and Continuing Care Retirement homes that are licensed as RCFEs  
          in California.  These residences are designed to provide  
          home-like housing options to residents who need some help with  
          activities of daily living, such as cooking, bathing, or getting  
          dressed, but otherwise do not need continuous, 24-hour  
          assistance or nursing care.  Seniors and their families often  








                                                                     SB 648


                                                                    Page  2





          rely upon businesses that refer consumers to these facilities  
          when seeking an appropriate RCFE.  The author of this bill  
          correctly points out that elder care referral agencies are  
          mostly unregulated, in spite of the fact that they can be deeply  
          involved in the decision making of a senior or their family when  
          determining care options.  Consumers rely heavily on the advice  
          and recommendations of referral agencies, according to the  
          author and sponsors, especially since seniors and their families  
          typically seek the assistance of a referral agency following a  
          decline in independence or a significant health event, often a  
          stressful and traumatic time.  Given the significance of these  
          health and life decisions, the author reasonably concludes that  
          California should ensure that referral agencies are at least  
          meeting minimal standards, which is what this bill seeks to  
          accomplish.


          As currently in print, this bill has five main provisions: 1) A  
          licensing requirement for "referral agencies"; 2) Restrictions  
          on disclosure by a referral agency of personal information about  
          a person seeking a referral to an RCFE from the agency; 3)  
          Disclosure requirements about the referral agency; 4) A  
          requirement for the referral agency to obtain authorization from  
          a person seeking a referral to allow the referral agency to  
          share the referred person's personal information before sharing  
          it; 5) A provision making an employee of a referral agency a  
          mandated reporter of elder or dependent abuse.  As proposed to  
          be amended, the bill would also have the following three  
          additional consumer protections: 6) anti-kickback provision  
          (prohibiting referral agencies and other licensed professionals  
          from providing or accepting money or other consideration in  
          exchange for referring a consumer to an RCFE or a referral  
          agency; 7) A requirement that a referral agency, at the time it  
          applies for a license, to declare that the licensee will either  
          conduct a suitability determination of each person who seeks a  
          referral from the licensee and is referred to a facility or  
          facilities, or disclose to persons seeking referrals that it  
          does not conduct such suitability determinations; and 8) A  
          requirement that a referral agency, at the time it applies for a  








                                                                     SB 648


                                                                    Page  3





          license, certify that it trains its employees about a variety of  
          subjects, but allows the referral agency to determine how much  
          training is necessary in those subjects.  The author's proposed  
          amendments are reflected in the analysis below.  The bill,  
          recently heard and approved by the Aging and Long Term Care  
          Committee (by a vote of 4-1, with 2 abstentions), is supported  
          by consumer and senior advocates.  It is opposed (unless  
          amended) by 6Beds, a coalition of small RCFE owners and  
          operators.  


          SUMMARY:  Licenses and regulates agencies that refer consumers  
          to residential care facilities for the elderly (RCFEs).   
          Specifically, this bill:  


          1)Makes it 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, without first having obtained a  
            written license from the State Public Health Officer. 


          2)Requires any person, partnership, firm, corporation, or  
            association desiring to obtain a license to refer persons to  
            RCFEs to file with the State Department of Public Health (DPH)  
            an application on forms furnished by the department and shall  
            file with the State Department of Social Services (DSS) an  
            application on forms furnished by DSS.


          3)Requires a referral agency, before referring a person to a  
            facility, to provide the person with a disclosure statement  
            containing specific information, including the following:


             a)   Whether the licensee has an agreement or contract with  
               the facility to which the person is being referred.









                                                                     SB 648


                                                                    Page  4






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


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


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


             e)   The licensee's contact information, including address  
               and telephone number, and the licensee's privacy policy.  
               The privacy policy may be provided as an Internet Web site  
               link consistent with provisions set forth in Section 22575  
               of the Business and Professions Code.


          4)Requires a referral agency, contemporaneous to referring a  
            person to a facility, to the agency to disclose the following:


             a)   The date of the licensee's most recent tour or visit to  
               the facility and verification that the facility is licensed  
               and in good standing, and a hyperlink to, or copy of, the  
               most recent evaluation report for a residential care  
               facility for the elderly to which the person is being  
               referred, prepared pursuant to Section 1569.33 and  
               published by the State Department of Social Services, if an  
               evaluation report has been prepared in the previous 24  
               months.










                                                                     SB 648


                                                                    Page  5





             b)   Information regarding the type of facility and the  
               services offered by the facility.


             c)   The following statements, written on the disclosure  
               form, or read aloud, verbatim:


               i)     "State law does not require that we determine  
                 whether the facility or facilities to which we refer you  
                 is appropriate for you, or can offer the services you  
                 need for your care.  Unless we tell you otherwise, we  
                 have not made such a determination about whether a  
                 facility is appropriate for you."


               ii)    "State law does not require that we determine  
                 whether the facility or facilities to which we refer you  
                 has an opening.  Unless we tell you otherwise, we have  
                 not determined whether a facility has an opening."


          1)Requires the disclosures to be signed or otherwise  
            acknowledged by the person being referred, or his or her  
            conservator, guardian, authorized family member, or agent  
            under a power of attorney, stating that the disclosure  
            statement required by this section was received. The  
            acknowledgment shall be executed in a number of ways,  
            including the following:


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


             b)   An electronic signature.









                                                                     SB 648


                                                                    Page  6








             c)   A telephonic, oral acknowledgment of the person being  
               referred, or his or her conservator, guardian, authorized  
               family member, or agent under power of attorney, which  
               shall be recorded, with that person's consent, consistent  
               with other provisions of existing law.  


          2)Makes it unlawful for any medical professional or employee of  
            any government agency, hospital or other healthcare  
            institution, including but not limited to, physicians, nurses,  
            social workers, discharge planners, therapists, and geriatric  
            care managers to offer, provide, or accept any payment,  
            rebate, refund, commission, preference, discount, whether in  
            the form of money or other consideration, as compensation or  
            inducement for referring patients, clients or customers to any  
            licensee.




          3)Requires a referral agency, at the time it applies for a  
            license to declare that the licensee will either conduct a  
            suitability determination of each person who seeks a referral  
            from the licensee and is referred to a facility or facilities,  
            or disclose to persons seeking referrals that it does not  
            conduct such suitability determinations.




          4)Requires a referral agency to certify that it trains its  
            employees about a variety of subjects, but allows the referral  
            agency to determine how much training is necessary in those  
            subjects.  










                                                                     SB 648


                                                                    Page  7





          5)Provides that it is unlawful for a licensee 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.


          6)Clarifies that for purposes of compliance with the provisions  
            of this bill, a referral agency is not required to have a  
            physical place of business within the state.


          7)Makes owners, operators, and employees of a referring agency  
            mandated reporters of elder or dependent abuse.


          EXISTING LAW:   


          1)Provides for the licensing and regulation of extended care,  
            skilled nursing home or intermediate care facilities by DPH.   
            (Health and Safety Code (HSC) Section 1250 et seq.)


          2)Provides for the licensing and regulation of RCFEs.  (HSC  
            Section 1569 et seq.)  




          3)Provides for the licensing and regulation of referral agencies  
            of extended care facilities, skilled nursing homes, and  
            intermediate care facilities.  (HSC Section 1400 et seq.)


          4)Defines "referral agency" to mean a private, profit or  
            nonprofit agency which is engaged in the business of referring  
            persons for remuneration to any extended care, skilled nursing  
            home or intermediate care facility or a distinct part of a  
            facility providing extended care, skilled nursing home care,  








                                                                     SB 648


                                                                    Page  8





            or intermediate care.  (HSC Section 1401.)


          5)Prohibits a referral agency from having a direct or indirect  
            financial interest in any medical facility doing business with  
            the licensee.  (HSC Section 1404.)


          6)Creates a presumption against the validity of a donative  
            transfer to a caregiver and the person who drafted the  
            instrument.  (Probate Code Sec 21360 et seq.)


          7)Defines "attorney-in-fact" as "a person granted authority to  
            act for the principal in a power of attorney, regardless of  
            whether the person is known as an attorney-in-fact or agent,  
            or by some other term."  (Probate Code Section 4014 (a).)


          8)Defines "power of attorney" as "a written instrument, however  
            denominated, that is executed by a natural person having the  
            capacity to contract and that grants authority to an  
            attorney-in-fact. A power of attorney may be durable or  
            nondurable."


          FISCAL EFFECT:  As currently in print this bill is keyed fiscal.


          COMMENTS:  This bill licenses and regulates agencies that refer  
          consumers to residential care facilities for the elderly  
          (RCFEs).  According to the author, this bill will provide  
          critical oversight of these agencies: 


               Elder care referral agencies are mostly unregulated, in  
               spite of the fact that they can be deeply involved in the  
               decision making of a senior or their family when  
               determining care options.  Consumers rely heavily on the  








                                                                     SB 648


                                                                    Page  9





               advice and recommendations of referral agencies, especially  
               since seniors and their families typically seek the  
               assistance of a referral agency following a decline in  
               independence or a significant health event, which can be a  
               stressful and traumatic time.  Given the significance of  
               these health and life decisions, California should ensure  
               that referral agencies are at least meeting minimal  
               standards.


          RCFEs - What services they provide.  There are approximately  
          8,000 Assisted Living, Board and Care, and Continuing Care  
          Retirement homes that are licensed as RCFEs in California.   
          These residences are designed to provide home-like housing  
          options to residents who need some help with activities of daily  
          living, such as cooking, bathing, or getting dressed, but  
          otherwise do not need continuous, 24-hour assistance or nursing  
          care.  The RCFE licensure category includes facilities with as  
          few as six beds to those with hundreds of residents, whose needs  
          may vary widely.  More than 90 percent of RCFEs in California  
          are for-profit homes, the majority of which are small  
          facilities.  Most residents pay privately or with long-term care  
          insurance, and fees can range from $1,500 to more than $8,000  
          per month. 





          In recent years, there have been several high-profile incidents  
          and investigative articles that have drawn attention to  
          questions about the adequacy of Department of Social Services  
          (DSS) oversight of RCFEs.  In July 2013, ProPublica and  
          Frontline reporters wrote and produced a series of stories on  
          Emeritus, the nation's largest RCFE provider.  Featured in the  
          stories was a woman who died after receiving poor care at a  
          facility in Auburn, California.  The series documented chronic  
          understaffing and a lack of required assessments and substandard  
          care.  In late October 2013, 19 frail seniors were abandoned at  








                                                                     SB 648


                                                                    Page  10





          Valley Springs Manor in Castro Valley by the licensee and all  
          but two staff after the state began license revocation  
          proceedings for the facility.  DSS inspectors, noting the  
          facility had been abandoned, left the two unpaid service staff  
          to care for the abandoned residents with insufficient food and  
          medication, handing them a $3,800 citation before leaving for  
          the weekend.  The next day sheriff's deputies and paramedics  
          sent the patients to local hospitals.





          Author's statement about referral agencies, the services they  
          provide, and why regulation of such agencies is necessary.   
          According to the author:  





               Seniors and their families have a right to know whether an  
               elder care referral agency is recommending a care facility  
               based on the client's needs or another reason.  When faced  
               with the difficult decision to find long-term care for  
               themselves or their loved ones, consumers must be put on  
               notice to conflicts of interest. SB 648 will make sure that  
               all elder care referral agencies, which perform a useful  
               and important service for consumers, are licensed, and that  
               they disclose any financial interest they may have in a  
               facility they recommend.





               Elder care referral agencies are mostly unregulated, in  
               spite of the fact that they can be deeply involved in the  
               decision making of a senior or their family when  








                                                                     SB 648


                                                                    Page  11





               determining care options.  Consumers rely heavily on the  
               advice and recommendations of referral agencies, especially  
               since seniors and their families typically seek the  
               assistance of a referral agency following a decline in  
               independence or a significant health event, which can be a  
               stressful and traumatic time.  Given the significance of  
               these health and life decisions, California should ensure  
               that referral agencies are at least meeting minimal  
               standards. 





               Referral agencies rely predominantly on commissions or  
               finder's fees paid by care facilities for each patient they  
               refer.  This can create a conflict of interest where  
               referral agencies will only refer patients to facilities  
               where they have existing fee arrangements, as opposed to  
               facilities that best meet the needs of their clients.   
               Consumers will be better equipped to evaluate the care  
               facilities recommended by referral agencies if they know a  
               commission or fee agreement exists. 


          Indeed, abuses by these agencies are well-documented.  According  
          to a 2010 article in the Seattle Times: 





               Placement companies, which rely on commission-only sales  
               people, funnel the aged only to facilities that have agreed  
               to pay thousands of dollars in finders' fees.


               In addition, most placement companies do not screen homes  
               for past violations. As a result, many have referred  








                                                                     SB 648


                                                                    Page  12





               seniors to facilities with documented histories of  
               substandard care, including fatal neglect.





               In 143 cases over the past three years, seniors were  
               victimized after companies placed them in adult family  
               homes, or other long-term- care facilities, that had a  
               record of serious violations, a Times analysis of  
               Department of Social and Health Services documents reveals.  
                 
               (http://www.seattletimes.com/seattle-news/senior-care-placem 
               ent-companies-scramble-to-cash-in/)





          In order to protect consumers from such abuses, this bill  
          proposes a number of changes to existing law to license and  
          regulate agencies that refer consumers to RCFEs.


          


          Summary of the bill's provisions.  As currently in print, this  
          bill has five main provisions: 1) A licensing requirement for  
          "referral agencies"; 2) Restrictions on disclosure by a referral  
          agency of personal information about a person seeking a referral  
          to an RCFE from the agency; 3) Disclosure requirements about the  
          referral agency; 4) A requirement for the referral agency to  
          obtain authorization from a person seeking a referral to allow  
          the referral agency to share the referred person's personal  
          information before sharing it; 5) A provision making an employee  
          of a referral agency a mandated reporter of elder or dependent  
          abuse.  








                                                                     SB 648


                                                                    Page  13










          As proposed to be amended, the bill would also have the  
          following three additional consumer protections: 6)  
          anti-kickback provision (prohibiting referral agencies and other  
          licensed professionals from providing or accepting money or  
          other consideration in exchange for referring a consumer to an  
          RCFE or a referral agency; 7) A requirement that a referral  
          agency, at the time it applies for a license, to declare that  
          the licensee will either conduct a suitability determination of  
          each person who seeks a referral from the licensee and is  
          referred to a facility or facilities, or disclose to persons  
          seeking referrals that it does not conduct such suitability  
          determinations; and 8) A requirement that a referral agency, at  
          the time it applies for a license, certify that it trains its  
          employees about a variety of subjects, but allows the referral  
          agency to determine how much training is necessary in those  
          subjects.





          Penalty for violation of the bill's provisions?  Until its most  
          recent amendments on June 22nd, the bill provided a civil  
          penalty for the violation of its provisions "with the intent to  
          directly or indirectly mislead the public on the nature of  
          services provided by the referral agency."  The bill also  
          provided that such a violation would "constitute unfair  
          competition which includes unlawful, unfair, or fraudulent  
          business acts or practices and unfair, deceptive, untrue, or  
          misleading advertising."  Finally, it provided that any person  
          who violates the provisions in a manner that constitutes unfair  
          competition is "liable for a civil penalty not to exceed two  
          thousand five hundred dollars ($2,500) for each violation."   
          Unfair competition laws are generally subject to enforcement by  








                                                                     SB 648


                                                                    Page  14





          the Attorney General, the district attorney, and other public  
          prosecutors.





          As currently in print, the bill no longer includes the above  
          provision.  As a result, even an intentional violation, is not  
          subject to a civil penalty by any entity other than the  
          licensing department.  The bill provides as follows:





               The licensing department may suspend or revoke a license  
               issued under this chapter for violation of any provisions  
               of this chapter or 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 line of any provisions  
               of this chapter or rules and regulations promulgated  
                                                            hereunder.





          Therefore, enforcement depends upon one of the state agencies  
          that licenses RCFEs - either DSS or DPH - taking regulatory  
          action against a referring agency.  Given the other priorities  
          of these departments, which are arguably far more important in  
          terms of public protection, the Committee may wish to consider  
          whether the enforcement mechanisms for violations of this bill  
          are adequate.











                                                                     SB 648


                                                                    Page  15







          Regarding the new anti-kickback provision, proposed to be added  
          to the bill by the author and described below, the provision  
          does not specify a penalty for violation.  However, there may be  
          some other penalties available to regulators and law  
          enforcement.  The provision is modeled on Section 650 of the  
          Business and Professions Code, which provides stiff penalties  
          (up to 3 years in prison and a $50,000 fine, to medical care  
          professionals who accept "unearned rebates, refunds and  
          discounts.")  To the extent that a medical professional is  
          subject to the prohibition in Business and Professions Code  
          Section 650, a violation of the new anti-kickback provision in  
          this bill by such a professional may also constitute a violation  
          of Section 650 and therefore be subject to the penalties set  
          forth in existing law penalties.  To the extent that a violation  
          is committed by a referral agency (or its employee), the  
          referral agency would be subject to the administration  
          penalties, including loss of licensure, under the bill's new  
          provision described above.  Finally, given the fact that the  
          Attorney General has plenary authority under the California  
          Constitution to enforce the laws of this state as the "chief law  
          officer of the State" with the duty "to see that the laws of the  
          state are uniformly and adequately enforced" (See Cal. Const.,  
          art. V, sec. 13), the Attorney General would be empowered to at  
          least obtain an injunction to stop illegal kick-backs that are  
          prohibited in the bill, as it is proposed to be amended.   
          Nevertheless, the author may wish to consider specifying a  
          penalty for violation of this provision as the bill moves  
          forward.





          Proposed author's amendments improve consumer protection and  
          transparency in the RCFE referral process.  The author proposes  
          a number of additional amendments. Some of them are  
          non-substantive and merely clarifying.  Other proposed  








                                                                     SB 648


                                                                    Page  16





          amendments improve consumer protection and transparency in a  
          number of ways, as described below.  All of these amendments  
          have been approved, at least in concept, by the various  
          stakeholders interested in the bill who are working with the  
          author.  Additional minor changes may be needed in the language  
          of these amendments as the bill moves forward.





          Anti-kickback provisions.  As proposed to be amended, the bill  
          includes the following new provision:





               It is unlawful for any medical professional or employee of  
               any government agency, hospital or other healthcare  
               institution, including but not limited to, physicians,  
               nurses, social workers, discharge planners, therapists, and  
               geriatric care managers to offer, provide, or accept any  
               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 any facility.





          This provision is appropriately focused on ending the practice  
          of kick-backs for referrals to specific RCFEs and referral  
          agencies between agencies, facilities, medical professionals,  
          treatment facilities, and others who may be involved in  
          assisting senior consumers make decisions about their care and  
          housing and referrals to agencies or facilities to meet those  
          needs.  Instead, such referral decisions should focus on the  








                                                                     SB 648


                                                                    Page  17





          best interests of the consumer and should not be driven by a  
          desire for personal enrichment in the form of money, gifts,  
          discounts or other consideration.  This provision is intended to  
          remove the conflict of interest when there is a financial motive  
          for such recommendations. 





          Declaration that the referral agency conducts suitability  
          determinations, or provides a specific advisory informing  
          prospective clients that it does not.  As proposed to be  
          amended, the bill would require the referral agency, when  
          applying for a license, to make the following:





               A declaration that the licensee will either conduct a  
               suitability determination of each person who seeks a  
               referral from the licensee and is referred to a facility or  
               facilities, or will comply with the requirements of  
               paragraph (3) of subdivision (b) of Section 1409.4.  For  
               purposes of this subdivision, "a suitability determination"  
               means a determination made by the licensee that the  
               facility offers services to meet the needs of the person  
               seeking a referral.





          The language goes on to describe a number of factors about both  
          the person seeking the referral and the facility to which a  
          referral is made that the referral agency is required to  
          consider, including for example, the level of care needed by the  
          person seeking a referral.  








                                                                     SB 648


                                                                    Page  18










          As proposed to be amended, the bill would not require the  
          referral agency to make these determinations regarding the  
          suitability of proposed placements.  But if an agency chooses  
          not to do so, the agency would be required to disclose that fact  
          to the public.





          Declaration that the referral agency conducts training of its  
          employees.  6 Beds, Inc. argues that all employees of referral  
          agencies who make referrals should be trained on a variety of  
          issues related to seniors, the continuum of care for seniors,  
          and the laws and regulations governing facilities that provide  
          care for seniors and others requiring out of home assistance and  
          housing.  Specifically, they advocate for a requirement that all  
          employees of referral agencies take a 40-hour class certified by  
          either DSS/DPH that is designed for employees who work in  
          facilities, such as RCFEs and assisted living centers.  While it  
          seems reasonable to require employees to have some level of  
          training, it may be excessive to require this amount of training  
          for each employee of a referral agency given that the employees  
          are not providing care for seniors and are just providing  
          information, albeit important information.  As proposed to be  
          amended by the author, the bill would require a referral agency  
          to certify that it trains its employees about a variety of  
          subjects.  However, it would be left to the referral agency to  
          determine how much training is necessary in those subjects.   
          This appears to be a reasonable compromise, requiring at least  
          some amount of training of employees of referral agencies. 











                                                                     SB 648


                                                                    Page  19







          Authorizing third parties to assist seniors in the referral  
          process, including in the acknowledgment of receipt of the  
          disclosure statement and authorization to share personal  
          information with potential RCFEs placements.  6Beds, Inc.  
          expresses concerns that the bill currently requires written  
          acknowledgment of receipt of disclosures and consent to the  
          sharing of personal identifying information by a person seeking  
          a referral.  According to 6Beds, this may not be possible  
          because the person may not be competent and may not have the  
          assistance of an "authorized family member."  6Beds, Inc.  
          proposes to allow oral acknowledgement at the time of disclosure  
          and consent to sharing with the ability to "get those things in  
          writing later," writing, "We expressed concern for the situation  
          where there is no authorized representative or family member,  
          only a social worker, and the individual is not competent."  As  
          proposed to be amended, the bill allows a number of persons to  
          assist the senior and provide consent on his or her behalf.   
          Those persons are not only individuals with formal legal  
          authority, such as an agent with power or attorney and an  
          "attorney in fact," but also persons who are authorized in less  
          formal or official ways, such as an "authorized family member"  
          and an "authorized representative" [of a person seeking a  
          referral who may not have a family member to assist him or her].  
           Given the narrow scope of the authority granted under the bill  
          - only to consent to release of personal information to a  
          potential RCFE placement and to acknowledge receipt of various  
          disclosures - such flexibility seems reasonable, appropriate,  
          and helpful. 





          Additional amendments to the bill that the author may wish to  
          consider in the future as the bill moves forward.  6Beds, Inc.,  
          which operates small RCFEs (with six-beds or fewer) writes in  
          opposition to the bill, unless it is amended, to point out the  








                                                                     SB 648


                                                                    Page  20





          following additional changes and amendments that should be made  
          to the bill, specifically the following: 




          Mandatory criminal background checks for employees.  6Beds, Inc.  
          supports an amendment to the bill that would require background  
          checks of all employees of referral agencies.  As currently in  
          print, the bill clarifies that for purposes of compliance with  
          the provisions of this bill, a referral agency is not required  
          to have a physical place of business within the        state.   
          Furthermore, many of the provisions are written in a way to  
          acknowledge the business model of many referral agencies to  
          provide services over the telephone and the Internet.  For  
          example, disclosures can be made orally and acknowledgement of  
          such disclosures can be made by electronic signature.  Under  
          these conditions, where the employee of the referral agency does  
          not have direct contact with the senior, the risk of abuse or  
          exploitation of the senior seeking a referral seems minimal.   
          According to some supporters of the bill, many referral agencies  
          now require background checks of employees.  Of course they  
          could continue to do so, even if the bill did not mandate that  
          employers obtain background checks of employees.  Because of the  
          variation in business models, it may not be appropriate to  
          mandate background checks of employees for all RCFE agencies.   


          Requiring a referral agency to provide specific information  
          about the specific facility, including even information about  
          the cost and services provided by the facility, to which the  
          consumer is referred. It seems perfectly reasonable to require a  
          referral agency to provide a minimal amount of information about  
          a facility to which it refers a consumer.  This bill requires  
          the referral agency to disclose "information about the  
          facility," but does not specify what the information is.   
          According to the author, it is not feasible to specify which  
          types of information about a facility must be provided to a  
          person seeking a referral.  However, the provision in the bill,  








                                                                     SB 648


                                                                    Page  21





          as it is proposed to be amended, requiring a referral agency to  
          either certify that it makes suitable referrals (based upon  
          specified factors) unless it informs consumers that it does not  
          do so, should effectively result in consumers receiving more  
          information about the facility or facilities to which they are  
          referred. 





          ARGUMENTS IN SUPPORT:  Writing as the sponsor of the bill, the  
          Consumer Federation of California states the following:





               [G]enerally, referral agency services are offered at no  
               charge to seniors.  Instead, referral agencies receive a  
               commission or finders' fee from the care facility after  
               they have successfully referred a senior for care and  
               housing.  The commission or finders' fee is typically  
               calculated as a percentage of the seniors monthly rent,  
               creating an incentive for the referral agent to place the  
               senior in a specific facility or one where the agency has  
               an exclusive referral contract.  Oftentimes these are more  
               expensive for the senior, even if the senior doesn't need a  
               high level of care or may have difficulty affording it.





          REGISTERED SUPPORT / OPPOSITION:












                                                                     SB 648


                                                                    Page  22





          Support


          Consumer Federation of California (sponsor)


          AARP


          AFSCME


          California Alliance for Retired Americans


          California Chapter National Association of Social Workers


          California Long-Term Care Ombudsman Association


          CALPIRG


          Consumer Attorneys of California 


          Institute on Aging


          Older Women's League of Sacramento Capitol




          Opposition


          6Beds, Inc. (Unless amended)








                                                                     SB 648


                                                                    Page  23









          Analysis Prepared by:Alison Merrilees / JUD. / (916)  
          319-2334