Date of Hearing: April 23, 2019

Counsel: David Billingsley

ASSEMBLY COMMITTEE ON PUBLIC SAFETY

Reginald Byron Jones-Sawyer, Sr., Chair

ABPCA Bill Id:AB 615

Author:(Brough) – As Amended Ver:March 13, 2019

SUMMARY:

Provides that a licensed alcoholism or drug abuse recovery facility, and other individuals connected to the facility, as specified, who pays for client referrals, is guilty of a crime, punishable as a felony. Specifically, this bill:

1. Makes it a crime, punishable as a felony, if a licensed alcoholism or drug abuse recovery facility, and other individuals connected to the program, as specified, willfully gives or receives money or anything of value for the referral of a person who is seeking recovery and treatment services.
   
2. Makes it a crime, punishable as a felony, if a licensed alcoholism or drug abuse recovery facility, and other individual connected to the program as specified, who willfully violates any rule or order established by Department of Health Care Services (DHCS) to implement the prohibition on giving or receiving something of value for patient referrals.
   
3. Provides that a person convicted for the conduct described above, is punishable by a fine of up to $10,000 or imprisoned in county jail for 16 months, two, or three years, or by both fine and imprisonment.
   
4. States that a person shall not be imprisoned for the violation of any rule or order, as described by this bill, unless it is proven that this person had knowledge of the rule or order.

EXISTING LAW:

1. Specifies the following persons, programs, or entities shall not give or receive remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services:
   
   1. An alcoholism or drug abuse recovery and treatment facility licensed under this part;
      
   2. An owner, partner, officer, or director, or shareholder who holds an interest of at least 10 percent in an alcoholism or drug abuse recovery and treatment facility licensed under this part;
      
   3. A person employed by, or working for, an alcoholism or drug abuse recovery and treatment facility licensed under this part, including, but not limited to, registered and certified counselors and licensed professionals providing counseling services;
      
   4. An alcohol or other drug program certified by the department in accordance with the alcohol or other drug certification standards, as specified;
      
   5. An owner, partner, officer, or director, or shareholder who holds an interest of at least 10 percent in an alcohol or other drug program certified by the department in accordance with the alcohol or other drug certification standards, as specified; or
      
   6. A person employed by, or working for, an alcohol or other drug program certified by the department in accordance with the alcohol or other drug certification standards, as specified, including, but not limited to, registered and certified counselors and licensed professionals providing counseling services. (Health and Saf. Code, § 11831.6, subd. (a)(1)-(6).)
      
2. The Department of Health Care Services (DHCS) may investigate allegations that a person gave or received money for the referral of a person who is seeking substance abuse services. (Health and Saf. Code, § 11831.7, subd. (a).)
   
3. DHCS may, upon finding a violation of the conduct described above, or any regulation adopted pursuant to that section, do any of the following:
   
   1. Assess a penalty upon an alcoholism or drug abuse recovery and treatment facility licensed, as specifed;
      
   2. Suspend or revoke the license of an alcoholism or drug abuse recovery and treatment facility licensed, as specified, or deny an application for licensure, extension of the licensing period, or modification to a license;
      
   3. Assess a penalty upon an alcohol or other drug program certified by the department in accordance with the alcohol or other drug certification standards, as specified;
      
   4. Suspend or revoke the certification of an alcohol or other drug program certified by the department in accordance with the alcohol or other drug certification standards, as specified;
      
   5. Suspend or revoke the registration or certification of a counselor. (Health and Saf. Code, § 11831.7, subd. (a)(1)-(5).)
      
4. States that DHCS may investigate allegations against a licensed professional providing counseling services at an alcoholism or drug abuse recovery and treatment program licensed, certified, or funded under this part, and recommend disciplinary actions, including, but not limited to, termination of employment at a program and suspension and revocation of licensure by the respective licensing board. (Health and Saf. Code, § 11831.7, subd. (b)
   
5. Specifies that the offer, delivery, receipt, or acceptance by physician or other specified health care licensee, of any rebate, refund, commission, or other consideration, as compensation or inducement for referring patients, clients, or customers to any person, irrespective of any membership, proprietary interest, or coownership in or with any person to whom these patients, clients, or customers are referred is unlawful. (Bus. and Prof. Code, § 650, subd. (a).)
   
6. States that the conduct described above is punishable upon a first conviction by imprisonment in a county jail for not more than one year, or by imprisonment in county jail up to three years, or by a fine not exceeding $50,000, or by both that imprisonment and fine. A second or subsequent conviction is punishable by imprisonment up to three years in county jail, or by that imprisonment and a fine of $50,000. (Bus. and Prof. Code, § 650, subd. (h).)
   
7. Makes it a crime to offer or payment of "any remuneration, including, but not restricted to, any kickback, bribe, or rebate . . . to refer any individual to a person for the furnishing or arranging for furnishing of any service," or "[t]o purchase, lease, order or arrange for or recommend the purchasing, leasing or ordering of any goods, facility, service or merchandise," for which payment may be made by Medi-Cal is punishable upon a first conviction by imprisonment in a county jail for not longer than one year or imprisonment up to three years in the county jail, or by a fine not exceeding $10,000, or by both that imprisonment and fine. A second or subsequent conviction shall be punishable by imprisonment up to three years in the county jail. (Welf. and Inst. Code, § 14107.2, subd. (a)(1).)
   
8. Establishes DHCS to license adult alcoholism or drug abuse recovery or treatment facilities. Permits new licenses to be issued for a period of two years, and requires DHCS to conduct onsite program visits for compliance at least once during the two year licensing period. (Health and Saf. Code, § 11834.01.)
9. Defines “alcoholism or drug abuse recovery or treatment facility” as any premise, place, or building that provides 24-hour residential nonmedical services to adults who are recovering from problems related to alcohol, drug, or alcohol and drug misuse or abuse, and who need alcohol, drug, or alcohol and drug recovery treatment or detoxification services. (Health and Saf. Code, § 11834.02, subd. (a).)
10. States that in addition to the penalties of suspension or revocation of a license issued, as specified, DHCS may also levy a civil penalty for violation of laws or regulations concerning substance abuse treatment facilities. (Health and Saf. Code, § 11834.34, subd. (a).)
    
11. Specifies that the amount of the civil penalty, as determined by the department, shall not be less than $250 or more than $500 per day for each violation, except where the nature or seriousness of the violation or the frequency of the violation warrants a higher penalty or an immediate civil penalty assessment, or both, as determined by the department. In no event shall a civil penalty assessment exceed one thousand dollars $1,000 per day. (Health and Saf. Code, § 11834.34, subd. (a)(1).)
    
12. Provides that a licensee that is cited for repeating the same violation within 24 months of the first violation is subject to an immediate civil penalty of $500 and $750 for each day the violation continues until the deficiency is corrected. (Health and Saf. Code, § 11834.34, subd. (a)(2).)
    
13. Allows a licensee that commits repeat violations, as specified, to be subject to an immediate civil penalty of $500 and $1,000 for each day the violation continues until the deficiency is corrected.
    

FISCAL EFFECT: Unknown:

COMMENTS:

1. Author’s Statement: According to the Author, “The opioid epidemic is a nationwide scourge that claimed approximately 1,925 lives in California in 2016. Drug and opioid overdoes are currently in the top 20 causes of death statewide. Patient brokers see this epidemic as an opportunity to take advantage of a vulnerable population. Across California, these brokers walk the streets to find people with addiction problems to lure them to treatment centers and sober living homes in exchange for bribes.
   
   “Current law allows the Department of Health Care Services to assess penalties and suspend or revoke a licenses or certification as a result of patient brokering. Since statute does not define the penalties for this act, AB 615 would increase penalties by making patient brokering a crime. Other large states that deal with patient brokering have similar or harsher penalties. If California wants to deter this practice from happening in the future, we need to increase the penalties for patient brokering instead of it being a slap on the wrist.”
2. Background: Treatment facilities provide 24- hour non-medical care and specialize in providing services to chemically dependent adults who do not require treatment in an acute-care medical facility on an inpatient, intensive outpatient, outpatient, and partial hospitalization basis. These facilities range in size from six-bed facilities in residential neighborhoods to centers that accommodate more than 100 beds. The basic services provided by facilities include group, individual and educational sessions, alcoholism or drug abuse, recovery and treatment planning. Detoxification services are also provided and are defined by the DHCS as services to support and assist an individual in the alcohol and/or drug withdrawal process and to explore plans for continued treatment. These services can be provided by a variety of health care providers such as alcohol and drug counselors, mental health therapists, social workers, psychologists, nurses, and physicians.
3. Treatment Facility Licensing and Certification: DHCS has sole authority to license facilities that have seven or more treatment beds and provide 24-hour residential nonmedical services to eligible adults who are recovering from problems related to alcohol or other drug misuse or abuse. Licensure is required when at least one of the following services is provided: detoxification; group sessions; individual sessions; educational sessions; or, alcoholism or other drug abuse recovery or treatment planning. Additionally, facilities may be subject to other types of permits, clearances, business taxes, or local fees that may be required by the cities or counties in which the facilities are located. Many facilities licensed by DHCS are also certified by DHCS. Certification by DHCS identifies those facilities which exceed minimum levels of service quality and are in substantial compliance with State program standards, specifically the Alcohol and/or Other Drug Certification Standards. DHCS does not license alcohol and drug residential treatment programs with six or less beds, known as "sober living homes"(SLHs).
4. The Legislature Addressed Payment by Substance Abuse Programs for Patient Referrals in 2018 with SB 1228 (Lara): SB 1228 (Lara), Chapter 792, Statutes of 2018, prohibited a licensed alcohol and drug abuse recovery and treatment facility, and certified counselors and licensed professionals, from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services, as specified. SB 1128 provided DHCS the authority to punish such violations with monetary penalties and license suspension or revocations.
   

SB 1228 allows DHCS, upon finding a violation for giving kick-backs for patient referrals to substance abuse treatment programs, to do any of the following:

• 1. Assess a penalty upon an alcoholism or drug abuse recovery and treatment facility licensed or certified, as specified;
     
  2. Suspend or revoke the license of an alcoholism or drug abuse recovery and treatment facility licensed as specified, or deny an application for licensure, extension of the licensing period, or modification to a license; and,
     
  3. Suspend or revoke the registration or certification of a counselor. (Health and Saf. Code, § 11831.7, subd. (a)(1)-(5).)
     

This bill would allow a felony charge, punishable by up to three years in county jail and up to $10,000, to engage in the same conduct that this Legislature addressed last year by passing SB 1228.

1. This Bill Would Make it a Crime to Violate Any Rule or Order DHCS Creates Regarding Patient Brokering by Substance Abuse Treatment Facilities: Regulatory agencies are authorized to establish rules and regulations regarding their subject area if that authority has been properly delegated to the agency by the Legislature. This bill would delegate to DHCS the authority to enact rules and regulations that would be enforceable with criminal charges. This bill would make a violation of any rule or order implementing the existing law that prohibits kick backs for patient referrals for substance abuse treatment, a crime.

Creating crimes for violations of rules and orders propagated by DHCS raises the question as to whether the Legislature would improperly be delegating its authority to establish laws governing criminal liability.  The doctrine of nondelegation is the theory that one branch of government must not authorize another entity to exercise the power or function which it is constitutionally authorized to exercise itself. “ . . . the purpose of the doctrine that legislative power cannot be delegated is to assure that ‘truly fundamental issues [will] be resolved by the Legislature" and that a "grant of authority [is] . . . accompanied by safeguards adequate to prevent its abuse.’" (Kugler v. Yocum, 69 Cal. 2d 371, 376–77.)

This Legislature has already delegated regulatory authority to DHCS to implement the prohibition on patient brokering by substance abuse treatment programs. A delegation for the agency to establish civil regulations is appropriate within the Legislative guidelines provided to DHCS. If this bill is passed, this Legislature would essentially be directing that DHCS make criminal law surrounding patient brokering for substance abuse treatment programs, because any rule or order established by DHCS regarding patient broker would carry criminal penalties if they were violated. Does the Legislature have the ability to extend the power of a regulatory agency to include the ability to establish regulations that are criminal in nature? If the Legislature has this ability, should it extend this power to a regulatory agency?

Creating crimes based on orders and regulations issued by DHCS also raises concerns about providing proper notice that such conduct is criminal. This bill does include language that requires an individual not be imprisoned for a conviction for a criminal offense based a violation of a rule or order unless it is proven that this person had knowledge of the rule or order. Such language does slightly soften the impact of a criminal conviction when a defendant in unaware of regulations promulgated by DHCS regarding patient brokering. However, it doesn’t prevent the individual from being convicted of a felony and suffering all the other consequences such a conviction carries.

1. Argument in Support: According to the Orange County Board of Supervisors, “California has more than 2,000 licensed facilities and man more unregulated recovery homes according to the State Department of Health Care Services. Of these facilities 15% are located in Orange County. A comprehensive investigation by the Southern California News Group found that the state’s difficulty in regulating the industry makes it too easy for almost anyone to open a treatment center and charge health insurers for hundreds of thousands of dollars per client, without any requirements to ensure qualified people are providing safe care and treatment.
   
   “On January 1, 2019, state law went into effect, SB 1228, that would prohibit patient brokering. State law provides the Department of Health Care Services with the authority to investigate allegations of patient brokering and upon finding a violation of these requirements, authorizes the department to take specified actions against the alcoholism or drug abuse recovery or treatment facility, including suspending or revoking the facility license. AB 615 would increase these penalties and seeks to protect those who are seeking treatment and are often at their most vulnerable.”
2. Argument in Opposition: According to the American Civil Liberties Union of California, “AB 615 needlessly creates new criminal penalties for actions already subject to severe consequences. Just last year, the enactment of AB 1228 (Lara) made it unlawful for certain persons, programs or entities to give or receive remuneration or anything of value for a referral of a person to an alcoholism or drug abuse recovery treatment program – to give or receive kickbacks or bribes for referring someone to a particular program. Violations of this prohibition can be punished by assessment of a penalty, suspension or revocation of a program or facility’s license, or suspension or revocation of a counselor’s license. (Health and Safety Code §11831.7.) The Department of Health Care Services can also investigate allegations against a licensed professional and recommend disciplinary actions including termination of employment. (Id.)
   
   “The law creating these penalties has been in effect for less than four months, not enough time to assess whether the penalties will be effective in deterring this behavior. Yet AB 615 proposes new criminal penalties, which will place an additional burden on our already overtaxed criminal justice system, without giving the existing law time to work.”
   
   
   
3. Related Legislation:
   1. AB 704 (Patterson) would require a person who has frequent contact with clients of an RTF to be subject to a criminal record review. AB 704 is pending in the Assembly Appropriations Committee.
   2. AB 919 (Petrie-Norris) would establish an enforcement program within DHCS to focus on the oversight duties related to patient brokering activities conducted by an RTF or an AOD program licensed or certified by the DHCS. AB 919 is pending in the Assembly Health Committee.
   3. SB 589 (Bates) would prohibit an operator of a licensed RTF, a certified AOD, a recovery residence, or a third party that provides any form of advertising or marketing services to any of those entities, from engaging in various acts, including making a false or misleading statement about the entity’s products, goods, services, or geographical locations. Authorizes the department to investigate allegations of a violation of these provisions and to sanctions available, as specified. SB 589 is pending in the Senate Health Committee.
4. Previous Legislation:
   
   1. SB 1228 (Lara), Chapter 792, Statutes of 2018, prohibits a licensed alcohol and other drug abuse recovery and treatment facility, and certified counselors and licensed professionals, from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services, as specified.
      
   2. AB 3162 (Friedman), Chapter 775, Statutes of 2018, requires new single licenses to operate a treatment facility to be provisional for one year, as specified and increases the civil penalties for license suspensions, revocations, and violations, as specified.
   3. SB 902 (Bates), of 2017-2018 Legislative Session, would have required DHCS to conduct a state and federal level criminal history background check for an applicant before issuing a treatment facility license and, subsequent to initial licensure, for any manager, consultant, or employee of a facility, and other related provisions, as specified. SB 902 was held under submission in the Senate Appropriations Committee.
   4. SB 992 (Hernandez), Chapter 784, Statutes of 2018, requires DHCS licensed and certified programs to disclose business relationships, as specified, and makes changes to current licensing law to improve client treatment and provide DHCS more oversight authority over licensed treatment facilities. Requires DHCS to develop a program, after stakeholder input, for the voluntary registration of recovery residences, as specified.
   5. SB 1268 (Bradford), of 2017-2018 Legislative Session, would have prohibited certain persons, programs, or entities, including a licensed treatment facility and persons employed by, or working for, that program, from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services, as specified. SB 1268 was held under submission in the Senate Appropriations Committee.
   6. SB 1290 (Bates), of 2017-2018 Legislative Session, would have made it unlawful for any licensee, operator, manager, consultant, employee, or patient of a licensed treatment facility, or any other person to, among other things, offer or pay a commission, benefit, bonus, rebate, kickback, or bribe, or engage in any split-fee arrangement to induce the referral of a patient or patronage to or from an licensed treatment facility, or to solicit or receive a commission, benefit, bonus, rebate, kickback, or bribe in return for referring a patient or patronage to or from a licensed treatment facility, and other provisions as specified. SB 1290 was held under submission in the Senate Appropriations Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

Advocates for Responsible Treatment
County Behavioral Health Directors Association
Orange County Board of Supervisors
Orange County Sheriff-Coroner

Oppose

American Civil Liberties Union of California

Analysis Prepared by:

David Billingsley / PUB. S. / (916) 319-3744

Date of Hearing: April 2, 2019

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 615

Author:(Brough) – As Amended Ver:March 13, 2019

SUBJECT: Alcoholism or drug abuse recovery and treatment services: referrals.

SUMMARY: Imposes a fine of not more than $10,000 or imprisonment in a county jail for 16 months, or two or three years, or both for the following person(s) who willfully violates the prohibition against giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery treatment services: an owner, partner, officer, or director, or shareholder who holds an interest of at least 10% in a alcoholism or drug abuse recovery or treatment facility (RTF); a person employed by or working for an RTF, including but not limited to registered and certified counselors and licensed professionals providing counseling services; an owner, partner, officer or director or shareholder who holds an interest of at least 10% in an alcohol or other drug (AOD) program certified by the Department of Health Care Services (DHCS); and, a person employed by or working for an AOD program certified by DHCS including but not limited to registered and certified counselors and licensed professionals providing counseling services. Provides that a person cannot be imprisoned for the violation of any rule or order unless proven the person had knowledge of the rule or order.

EXISTING LAW:

1. Establishes DHCS to license adult alcoholism or drug abuse RTF. Requires new licenses to be provisional for one year, and requires DHCS to conduct onsite program visits for compliance at least once during the two year licensing period.
2. Defines an RTF as any premise, place, or building that provides 24-hour residential nonmedical services to adults who are recovering from problems related to alcohol, drug, or alcohol and drug misuse or abuse, and who need alcohol, drug, or alcohol and drug recovery treatment or detoxification services.
3. Establishes requirements for application for licensure of a facility, requires DHCS to terminate licensure if these requirements are not met, and authorizes DHCS to deny a license of applicants that do not demonstrate an ability to comply with specified requirements.
4. Requires, if an applicant intends to provide incidental medical services, such as obtaining medical histories, monitoring health status, testing associated with detoxification from alcohol or drugs, and overseeing patient self-administered medications, evidence of a valid license of a physician and surgeon who will provide or oversee those services, and any other information deemed appropriate by DHCS, as specified.
5. Permits DHCS to issue single licenses to residential facilities and a facility where separate buildings or portions of a residential facility are integral components of a single treatment facility and all of the components of the facility are managed by the same licensee.
6. Authorizes DHCS to assess civil penalties on facilities that provide alcoholism or drug abuse recovery, treatment, or detoxification services without a license.
7. Requires a treatment facility that serves six or fewer persons to be considered a residential use of property whether or not unrelated persons are living together. Requires the residents and operators of the facility to be considered a family for the purposes of any law or zoning ordinance that relates to the residential use of property.
8. Establishes under the Penal Code a category of felony where the term is not specified in the underlying offense, to be punishable by a term of imprisonment in a county jail for 16 months, or two or three years.

FISCAL EFFECT: This bill has not yet been analyzed by a fiscal committee.

COMMENTS:

1. PURPOSE OF THIS BILL. The opioid epidemic is a nationwide scourge that claimed approximately 1,925 lives in California in 2016. Drug and opioid overdose are currently in the top two causes of death statewide. Patient brokers see this epidemic as an opportunity to take advantage of a vulnerable population. Across California, these brokers walk the streets to find people with addiction problems to lure them to treatment centers and sober living homes in exchange for bribes. Current law allows DHCS to assess penalties and suspend or revoke a license or certificate as a result of patient brokering. Since statute does not define the penalties for this act, this bill would increase penalties by making patient brokering a crime. Other large states that deal with patient brokering have similar or harsher penalties. If California wants to deter this practice from happening in the future, we need to increase the penalties for patient brokering instead of it being a slap on the wrist
2. BACKGROUND. Treatment facilities provide 24- hour non-medical care and specialize in providing services to chemically dependent adults who do not require treatment in an acute-care medical facility on an inpatient, intensive outpatient, outpatient, and partial hospitalization basis. These facilities range in size from six-bed facilities in residential neighborhoods to centers that accommodate more than 100 beds. The basic services provided by their facilities include group, individual and educational sessions, alcoholism or drug abuse, recovery and treatment planning. Detoxification services are also provided and are defined by the DHCS as services to support and assist an individual in the AOD withdrawal process and to explore plans for continued treatment. These services can be provided by a variety of health care providers such as alcohol and drug counselors, mental health therapists, social workers, psychologists, nurses, and physicians.
   1. Treatment Facility Licensing and Certification. DHCS has sole authority to license facilities that have seven or more treatment beds and provide 24-hour residential nonmedical services to eligible adults who are recovering from problems related to AOD misuse or abuse. Licensure is required when at least one of the following services is provided: detoxification; group sessions; individual sessions; educational sessions; or, AOD abuse recovery or treatment planning. Additionally, facilities may be subject to other types of permits, clearances, business taxes, or local fees that may be required by the cities or counties in which the facilities are located. Many facilities licensed by DHCS are also certified by DHCS. Certification by DHCS identifies those facilities which exceed minimum levels of service quality and are in substantial compliance with State program standards, specifically the Alcohol and/or Other Drug Certification Standards. DHCS does not license alcohol and drug residential treatment programs with six or less beds, known as "sober living homes".
   2. California Patient Brokering Law. AB 1228 (Lara), Chapter 792, Statutes of 2018, prohibits persons, programs, or entities to give or receive remuneration or anything of value for referral of a person who is seeking alcoholism or drug abuse recovery and treatment services. These include:
      1. An RTF licensed by DHCS;
      2. An owner, partner, officer, or director, or shareholder who holds an interest of at least 10% in an RTF;
      3. A person employed by or working for an RTF, including but not limited to registered and certified counselors and licensed professionals providing counseling services;
      4. An AOD program certified by DHCS;
      5. An owner, partner, officer or director or shareholder who holds an interest of at least 10% in an AOD program certified by DHCS; and,
      6. A person employed by or working for an AOD program certified by DHCS including but not limited to registered and certified counselors and licensed professionals providing counseling services.

AB 1228, does not establish a violation of this law by an individual to be a crime and therefore punishable by a fine or imprisonment. This bill establishes penalties which may be assessed on the individuals participating in patient brokering.

AB 1228 does authorize DHCS to investigate allegation of violations and to assess a penalty upon an RFT or an AOD; to suspend or revoke the license of an RFT or certificate of an AOD; to deny an application for licensure, extension of the licensing period or modification to the license of an RTF; suspend or revoke the certification of an AOD; suspend or revoke the registration or certification of a counselor; and, investigate allegations against a licensed professional providing counseling services at an RTF and recommend disciplinary action including but not limited to termination of employment at a program and suspension and revocation of licensure by the respective licensing board within the Department of Consumer Affairs.

• 1. Florida Patient Brokering Law. Florida’s patient brokering act was passed in 2018. The law has provisions for conviction of human trafficking and calls for a tiered approach to penalties in connection to patient brokering:
     1. A person convicted of violating the Florida law commits a felony of the third degree if fewer than 10 individuals are involved. A felony of the third degree is punishable by not more than five years imprisonment and a $50,000 fine;
     2. A person convicted of violating the Florida law commits a felony of the second degree if more than 10 but fewer than 20 individuals are involved. A felony of the third degree is punishable by not more than 15 years imprisonment and a $100,000 fine; and,
     3. A person convicted of violating the Florida law commits a felony of the first degree if more than 20 individuals are involved. A felony of the first degree is punishable by up to life imprisonment (in cases of death) and a $500,000 fine.

The first individual convicted under Florida’s law was found guilty on 10 counts of patient brokering on February 13, 2019 in Palm Beach. The 40-year old man faced a maximum of 50 years in prison but was sentenced to 36 months three years.

• 1. Federal Patient Brokering Law. Passed by Congress as part of the Opioid Package (H.R. 6) and signed into law by President Trump in October of 2018, the “Eliminating Kickbacks in Recovery Act of 2018” makes it unlawful to knowingly and willfully solicit or receive any remuneration directly or covertly, in cash or in kind, in return for referring a patient to a recovery home or clinical facility. Further, it is unlawful for a recovery home or clinical treatment facility, or an officer or employee of a recovery home or clinical treatment facility acting in the course of their employment to pay or offer any remunerations in exchange for the person referring an individual to that recovery home or clinical facility or in exchange for that individual using the services of that recovery home or clinical treatment facility. A person who violates this law can be fined not more than $200,000 or imprisoned for not more than 10 years or both.

1. DOUBLE REFERRAL. This bill is double referred; upon passage in this Committee, this bill will be referred to the Assembly Public Safety Committee.
2. SUPPORT. The Orange County Sheriff’s Department, in support of this bill states nowhere is the opioid problem more evident than in the unlicensed sober living homes that have popped up throughout our communities. While reputable residential treatment centers with excellent patient care do exist, there are hundreds of unlicensed facilities with the sole aim of profiting off the addiction of others. Stiffer penalties for those who engage in this practice within our state is necessary to ensure bad actors are held accountable.
3. SUPPORT IF AMENDED. Advocates for Responsible Treatment (ART) supports this bill with amendments to support felony level penalties and a minimum of a $50,000 fine for a single offence. According to ART, patient brokering is human trafficking with the intent to obtain the revenue stream of that person’ insurance policy and worthy of penalties that reflect such criminal intent, especially when it lures people across state lines. They go on to state that patient brokering has very real lie-or-death consequences for those who are brokered; it creates incentives for everyone around the addict to encourage relapse. In conclusion ART states that as long as California’s laws are more lax than Florida’s, any brokers that might have sent out-of-state addicts to Florida will send them instead to California. Patient brokering is a machine; it is organized crime and should be a first degree felony with a minimum fine of $50,000 for the first offense.
4. RELATED LEGISLATION.
   1. AB 704 (Patterson) requires a person who has frequent contact with clients of an RTF to be subject to a criminal record review. AB 704 is pending in the Assembly Appropriations Committee.
   2. AB 919 (Petrie-Norris) establishes an enforcement program within DHCS to focus on the oversight duties related to patient brokering activities conducted by an RTF or an AOD program licensed or certified by the DHCS. AB 919 is pending in the Assembly Health Committee.
   3. SB 589 (Bates) prohibits an operator of a licensed RTF, a certified AOD, a recovery residence, or a third party that provides any form of advertising or marketing services to any of those entities, from engaging in various acts, including making a false or misleading statement about the entity’s products, goods, services, or geographical locations. Authorizes the department to investigate allegations of a violation of these provisions and to sanctions available, as specified. SB 589 is pending in the Senate Health Committee.
5. PREVIOUS LEGISLATION.
   1. AB 3162 (Friedman), Chapter 775, Statutes of 2018, requires new single licenses to operate a treatment facility to be provisional for one year, as specified and increases the civil penalties for license suspensions, revocations, and violations, as specified.
   2. SB 902 (Bates) of 2018 would have required DHCS to conduct a state and federal level criminal history background check for an applicant before issuing a treatment facility license and, subsequent to initial licensure, for any manager, consultant, or employee of a facility, and other related provisions, as specified. SB 902 was held under submission in the Senate Appropriations Committee.
   3. SB 992 (Hernandez), Chapter 784, Statutes of 2018, requires DHCS licensed and certified programs to disclose business relationships, as specified, and makes changes to current licensing law to improve client treatment and provide DHCS more oversight authority over licensed treatment facilities. Requires DHCS to develop a program, after stakeholder input, for the voluntary registration of recovery residences, as specified.
   4. SB 1228 (Lara), Chapter 792, Statutes of 2018, prohibits a licensed AOD abuse recovery and treatment facility, an alcohol or other drug program certified and registered, and certified counselors and licensed professionals, from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services, as specified.
   5. SB 1268 (Bradford) of 2018 would have prohibited certain persons, programs, or entities, including a licensed treatment facility and persons employed by, or working for, that program, from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services, as specified. SB 1268 was held under submission in the Senate Appropriations Committee.
   6. SB 1290 (Bates) of 2018 would have made it unlawful for any licensee, operator, manager, consultant, employee, or patient of a licensed treatment facility, or any other person to, among other things, offer or pay a commission, benefit, bonus, rebate, kickback, or bribe, or engage in any split-fee arrangement to induce the referral of a patient or patronage to or from an licensed treatment facility, or to solicit or receive a commission, benefit, bonus, rebate, kickback, or bribe in return for referring a patient or patronage to or from a licensed treatment facility, and other provisions as specified. SB 1290 was held under submission in the Senate Appropriations Committee.
   7. AB 2491 (Nestande) of 2014 would have exempted sober living homes from licensure as an AOD abuse recovery or treatment facility and required sober living homes to meet specified requirements, including the active participation of residents in legitimate recovery programs and the maintenance of records of meeting attendance. AB 2491 was held under submission in the Senate Appropriations Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

Advocates for Responsible Treatment

Orange County Sheriff’s Department
Orange; County Of

Opposition

None on file.

Analysis Prepared by: Judith Babcock / HEALTH / (916) 319-2097