SB 490: Alcohol and drug programs.
- Session Year: 2025-2026
- House: Senate
- Latest Version Date: 2026-08-30
Current Status:
In Progress
(2026-09-30: In Senate. Consideration of Governor's veto pending.)
Introduced
In Committee
Awaiting First Chamber Vote
Passed First Chamber
In Committee
Awaiting Second Chamber Vote
Passed Second Chamber
Enacted
Existing law provides for the licensure and regulation of adult alcohol or other drug recovery or treatment facilities by the State Department of Public Health and prohibits the operation of one of those facilities without a current valid license. Existing law requires the department, if a facility is alleged to be in violation of that prohibition, to conduct a site visit to investigate the allegation. Existing law requires, if the departments employee or agent finds evidence that the facility is providing services without a license, the employee or agent to take specified actions, including, among others, submitting the findings of the investigation to the department and issuing a written notice to the facility that includes the date by which the facility is required to cease providing services.
Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive health care services, through fee-for-service or managed care delivery systems. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing law establishes the Drug Medi-Cal Treatment Program (Drug Medi-Cal) and authorizes the department to enter into a Drug Medi-Cal contract with each county for the provision of alcohol and drug use services within the county service area.
This bill would require the department, if it determines it has jurisdiction over the allegation, to assign the complaint to an analyst within 10 days of receiving the allegation and, except as specified, complete the investigation within 120 days of assigning the complaint. The bill would require the department, if it receives a complaint that does not fall under its jurisdiction, to notify, to the extent feasible, the complainant that it does not investigate that type of complaint. The bill would require the employee or agent to provide their findings to the department and would require the department to issue the notice described above within 10 days of the employee or agency submitting their findings and to conduct a followup site visit to determine whether the facility has ceased providing services as required. The bill would authorize, in counties that elect to administer the Drug Medi-Cal organized delivery system and that provide optional recovery housing services, the county behavioral health agency to request approval from the department to conduct a site visit of a recovery residence that the county contracts with that is alleged to be operating without a license. The bill would permit the department to approve that request in certain circumstances, including that the department has sufficient evidence to substantiate the allegation.
Existing law requires licensed adult alcohol or other drug recovery or treatment facilities and certified alcohol or other drug programs to disclose to the department whether any of its agents, partners, directors, officers, or owners has a specified interest in a recovery residence and requires the department to take action against an unlicensed facility that is disclosed as a recovery residence.
This bill would require the department, if it takes action against a recovery residence pursuant to that provision, to conduct a site visit of a certified program or licensed facility that has disclosed the specified interest in the recovery residence. The bill would also require, no later than July 15, 2027, and by July 15 each year thereafter, that all programs certified or facilities licensed by the department submit to the department a report of all money transfers between the program or facility and a recovery residence during the previous fiscal year, in order to detect patient brokering, illicit kickbacks, or unethical inducements that harm patients. The bill would require the department to analyze that data and develop guidelines for permissible and impermissible transfers.
Existing law provides for the licensure and regulation of adult alcohol or other drug recovery or treatment facilities by the State Department of Public Health and prohibits the operation of one of those facilities without a current valid license. Existing law requires the department, if a facility is alleged to be in violation of that prohibition, to conduct a site visit to investigate the allegation. Existing law requires, if the departments employee or agent finds evidence that the facility is providing services without a license, the employee or agent to take specified actions, including, among others, submitting the findings of the investigation to the department and issuing a written notice to the facility that includes the date by which the facility is required to cease providing services.
Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive health care services, through fee-for-service or managed care delivery systems. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing law establishes the Drug Medi-Cal Treatment Program (Drug Medi-Cal) and authorizes the department to enter into a Drug Medi-Cal contract with each county for the provision of alcohol and drug use services within the county service area.
This bill would require the department, if it determines it has jurisdiction over the allegation, to assign the complaint to an analyst within 10 days of receiving the allegation and, except as specified, complete the investigation within 120 days of assigning the complaint. The bill would require the department, if it receives a complaint that does not fall under its jurisdiction, to notify, to the extent feasible, the complainant that it does not investigate that type of complaint. The bill would require the employee or agent to provide their findings to the department and would require the department to issue the notice described above within 10 days of the employee or agency submitting their findings to the department and to conduct a followup site visit to determine whether the facility has ceased providing services as required. The bill would authorize, in counties that elect to administer the Drug Medi-Cal organized delivery system and that provide optional recovery housing services, the county behavioral health agency to request approval from the department to conduct a site visit of a recovery residence that the county contracts with that is alleged to be operating without a license. The bill would permit the department to approve that request in certain circumstances, including that the department has sufficient evidence to substantiate the allegation.
Existing law requires licensed adult alcohol or other drug recovery or treatment facilities and certified alcohol or other drug programs to disclose to the department whether any of its agents, partners, directors, officers, or owners has a specified interest in a recovery residence and requires the department to take action against an unlicensed facility that is disclosed as a recovery residence.
This bill would require the department, if it takes action against a recovery residence pursuant to that provision, to conduct a site visit of a certified program or licensed facility that has disclosed the specified interest in the recovery residence. The bill would also require, no later than July 15, 2027, and by July 15 each year thereafter, that all programs certified or facilities licensed by the department submit to the department a report of all money transfers between the program or facility and a recovery residence during the previous fiscal year, in order to detect patient brokering, illicit kickbacks, or unethical inducements that harm patients. The bill would require the department to analyze that data and develop guidelines for permissible and impermissible transfers.
Existing law provides for the licensure and regulation of adult alcohol or other drug recovery or treatment facilities by the State Department of Public Health and prohibits the operation of one of those facilities without a current valid license. Existing law requires the department, if a facility is alleged to be in violation of that prohibition, to conduct a site visit to investigate the allegation. Existing law requires, if the departments employee or agent finds evidence that the facility is providing services without a license, the employee or agent to take specified actions, including, among others, submitting the findings of the investigation to the department and issuing a written notice to the facility that includes the date by which the facility is required to cease providing services.
Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive health care services, through fee-for-service or managed care delivery systems. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing law establishes the Drug Medi-Cal Treatment Program (Drug Medi-Cal) and authorizes the department to enter into a Drug Medi-Cal contract with each county for the provision of alcohol and drug use services within the county service area.
This bill would require the department, if it determines it has jurisdiction over the allegation, to initiate that investigation assign the complaint to an analyst within 10 days of receiving the allegation and, except as specified, complete the investigation within 60 days of initiating the investigation. 120 days of assigning the complaint. The bill would require the department, if it receives a complaint that does not fall under its jurisdiction, to notify notify, to the extent feasible, the complainant that it does not investigate that type of complaint. The bill would require the employee or agent to provide the notice described above within 10 days of the employee or agency submitting their findings to the department and to conduct a followup site visit to determine whether the facility has ceased providing services as required. The bill would authorize, in counties that elect to administer the Drug Medi-Cal organized delivery system and that provide optional recovery housing services, the county behavioral health agency to request approval from the department to conduct a site visit of a recovery residence that the county contracts with that is alleged to be operating without a license. The bill would permit the department to approve that request in certain circumstances, including that the department has sufficient evidence to substantiate the allegation.
Existing law requires licensed adult alcohol or other drug recovery or treatment facilities and certified alcohol or other drug programs to disclose to the department whether any of its agents, partners, directors, officers, or owners has a specified interest in a recovery residence and requires the department to take action against an unlicensed facility that is disclosed as a recovery residence.
This bill would require the department, if it takes action against a recovery residence pursuant to that provision, to conduct a site visit of a certified program or licensed facility that has disclosed the specified interest in the recovery residence. The bill would also require, no later than July 15, 2026, 2027, and by July 15 each year thereafter, that all programs certified or facilities licensed by the department submit to the department a report of all money transfers between the program or facility and a recovery residence during the previous fiscal year, in order to detect patient brokering, illicit kickbacks, or unethical inducements that harm patients. The bill would require the department to analyze that data and develop guidelines for permissible and impermissible transfers.
Existing law provides for the licensure and regulation of adult alcohol or other drug recovery or treatment facilities by the State Department of Public Health and prohibits the operation of one of those facilities without a current valid license. Existing law requires the department, if a facility is alleged to be in violation of that prohibition, to conduct a site visit to investigate the allegation. Existing law requires, if the departments employee or agent finds evidence that the facility is providing services without a license, the employee or agent to take specified actions, including, among others, submitting the findings of the investigation to the department and issuing a written notice to the facility that includes the date by which the facility is required to cease providing services.
Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive health care services, through fee-for-service or managed care delivery systems. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing law establishes the Drug Medi-Cal Treatment Program (Drug Medi-Cal) and authorizes the department to enter into a Drug Medi-Cal contract with each county for the provision of alcohol and drug use services within the county service area.
This bill would require the department, if it determines it has jurisdiction over the allegation, to initiate that investigation within 10 days of receiving the allegation and, except as specified, complete the investigation within 60 days of initiating the investigation. The bill would require the department, if it receives a complaint that does not fall under its jurisdiction, to notify the complainant that it does not investigate that type of complaint. The bill would require the employee or agent to provide the notice described above within 10 days of the employee or agency submitting their findings to the department and to conduct a followup site visit to determine whether the facility has ceased providing services as required. The bill would authorize, in counties that elect to administer the Drug Medi-Cal organized delivery system and that provide optional recovery housing services, the county behavioral health agency to request approval from the department to conduct a site visit of a recovery residence that is alleged to be operating without a license. The bill would permit the department to approve that request in certain circumstances, including that the department has sufficient evidence to substantiate the allegation.
Existing law requires licensed adult alcohol or other drug recovery or treatment facilities and certified alcohol or other drug programs to disclose to the department whether any of its agents, partners, directors, officers, or owners has a specified interest in a recovery residence and requires the department to take action against an unlicensed facility that is disclosed as a recovery residence.
This bill would require the department, if it takes action against a recovery residence pursuant to that provision, to conduct a site visit of a certified program or licensed facility that has disclosed the specified interest in the recovery residence. The bill would also require, no later than July 15, 2026, and by July 15 each year thereafter, that all programs certified or facilities licensed by the department submit to the department a report of all money transfers between the program or facility and a recovery residence during the previous fiscal year, in order to detect patient brokering, illicit kickbacks, or unethical inducements that harm patients. The bill would require the department to analyze that data and develop guidelines for permissible and impermissible transfers.
Existing law allows a person who is factually innocent and was convicted of a crime, in specified circumstances, to present a claim to the California Victim Compensation Board or move the court for a finding that they are entitled to approval of a claim for compensation for the injury sustained by the person through the erroneous conviction and imprisonment or incarceration. Existing law allows the district attorney or Attorney General to object to this claim and attempt to prove, by clear and convincing evidence, that the person committed the acts constituting the offense. Existing law prohibits the district attorney or Attorney General from relying on specified facts to prove that objection, including, among other things, the fact the state still maintains the claimant is guilty of the crime for which they were wrongfully convicted. Existing law also prohibits the district attorney or Attorney General from relying solely on the trial record to establish that the petitioner is not entitled to compensation.This bill would remove that prohibition and instead authorize the district attorney or Attorney General to rely solely on the trial record if they conclude, in good faith, that the trial record demonstrates guilt by clear and convincing evidence even after consideration of any exculpatory evidence presented by the claimant.Existing law requires the court to grant a motion for a finding that the person is entitled to approval of a claim for compensation unless the district attorney objects within 15 days. Existing law requires the California Victim Compensation Board to approve payment to the claimant unless the Attorney General objects within 45 days. Existing law authorizes the district attorney and the Attorney General to request a single extension of those time periods upon a showing of good cause.This bill would extend the time period for the district attorney to object to 45 days and authorize the district attorney, upon a separate showing of good cause, to request a single, subsequent 15-day extension of time to make their objection. The bill would also authorize the Attorney General, upon a separate showing of good cause, to request a single, subsequent 45-day extension of time to make their objection.The bill would additionally prohibit compensation for an erroneous conviction from being paid to a person serving a sentence for a serious or violent felony. The bill would also require that if a claimant has an outstanding restitution order, that order be paid from the claimants compensation before the claimant is paid.Existing law allows a person who is factually innocent and was convicted of a crime, in specified circumstances, to present a claim to the California Victim Compensation Board or move the court for a finding that they are entitled to approval of a claim for compensation for the injury sustained by the person through the erroneous conviction and imprisonment or incarceration. Existing law allows the district attorney or Attorney General to object to this claim and attempt to prove, by clear and convincing evidence, that the person committed the acts constituting the offense. Existing law prohibits the district attorney or Attorney General from relying on specified facts to prove that objection, including, among other things, the fact the state still maintains the claimant is guilty of the crime for which they were wrongfully convicted. Existing law also prohibits the district attorney or Attorney General from relying solely on the trial record to establish that the petitioner is not entitled to compensation.
This bill would remove the that prohibition on relying solely on the trial record. and instead authorize the district attorney or Attorney General to rely solely on the trial record if they conclude, in good faith, that the trial record demonstrates guilt by clear and convincing evidence even after consideration of any exculpatory evidence presented by the claimant.
Existing law requires the court to grant a motion for a finding that the person is entitled to approval of a claim for compensation unless the district attorney objects within 15 days. Existing law requires the California Victim Compensation Board to approve payment to the claimant unless the Attorney General objects within 45 days. Existing law authorizes the district attorney and the Attorney General to request a single extension of those time periods upon a showing of good cause.
This bill would extend the time period for both of those objections to 120 days. the district attorney to object to 45 days and authorize the district attorney, upon a separate showing of good cause, to request a single, subsequent 15-day extension of time to make their objection. The bill would also authorize the Attorney General, upon a separate showing of good cause, to request a single, subsequent 45-day extension of time to make their objection.
The bill would additionally prohibit compensation for an erroneous conviction from being paid to a person serving a sentence for a serious or violent felony. The bill would also require that if a claimant has an outstanding restitution order, that order be paid from the claimants compensation before the claimant is paid.
Existing law allows a person who is factually innocent and was convicted of a crime, in specified circumstances, to present a claim to the California Victim Compensation Board or move the court for a finding that they are entitled to approval of a claim for compensation for the injury sustained by the person through the erroneous conviction and imprisonment or incarceration. Existing law allows the district attorney or Attorney General to object to this claim and attempt to prove, by clear and convincing evidence, that the person committed the acts constituting the offense. Existing law prohibits the district attorney or Attorney General from relying on specified facts to prove that objection, including, among other things, the fact the state still maintains the claimant is guilty of the crime for which they were wrongfully convicted. Existing law also prohibits the district attorney or Attorney General from relying solely on the trial record to establish that the petitioner is not entitled to compensation.
This bill would remove the prohibition on relying solely on the trial record.
Existing law requires the court to grant a motion for a finding that the person is entitled to approval of a claim for compensation unless the district attorney objects within 15 days. Existing law requires the California Victim Compensation Board to approve payment to the claimant unless the Attorney General objects within 45 days.
This bill would extend the time period for both of those objections to 120 days.
The bill would additionally prohibit compensation for an erroneous conviction from being paid to a person serving a sentence for a serious or violent felony. The bill would also require that if a claimant has an outstanding restitution order, that order be paid from the claimants compensation before the claimant is paid.
(a)A program certified by the department pursuant to Chapter 7.1 (commencing with Section 11832) or a facility licensed by the department pursuant to Chapter 7.5 (commencing with Section 11834.01) shall disclose to the department if any of its agents, partners, directors, officers, or owners, including a sole proprietor and member, has either of the following:
(1)Ownership or control of, or financial interest in, a recovery residence.
(2)Any contractual relationship with an entity that regularly provides professional services or substance use disorder treatment or recovery services to clients of programs certified or facilities licensed by the department, if the entity is not part of the program certified or facility licensed by the department.
(b)All programs certified or facilities licensed by the department shall make the disclosures pursuant to subdivision (a) upon initial licensure or certification, upon renewal of licensure or certification, and upon a licensed facility or certified program acquiring or starting a relationship that meets the description in paragraph (1) or (2) of subdivision (a).
(c)The department may suspend or revoke the certification of a program or license of a facility for failing to disclose the information required in subdivision (a).
(d)(1)The department shall take action pursuant to Section 11834.31 against an unlicensed facility that is disclosed as a recovery residence pursuant to paragraph (1) of subdivision (a). This subdivision does not require an investigation of a recovery residence that is not alleged to be operating in violation of Section 11834.30.
(2)If the department takes action against a recovery residence, as described in paragraph (1), the department shall conduct a site visit of a certified program or licensed facility that has disclosed an interest in the recovery residence pursuant to subdivision (a).
(e)The department may refer a substantiated complaint against a recovery residence to other enforcement entities as appropriate under state or federal law, including the Department of Insurance, the Department of Managed Health Care, the Attorney General, and the United States Attorney General.
(f)(1)No later than July 15, 2027, and by July 15 of each year thereafter, all programs certified or facilities licensed by the department shall submit to the department a report of all money transfers between the program or facility and a recovery residence during the previous fiscal year, in order to detect patient brokering, illicit kickbacks, or unethical inducements that harm patients.
(2)The department shall analyze transfer data for compliance trends, irregularities, or fraud indicators.
(3)The department shall develop guidelines for permissible and impermissible transfers.
(g)For the purposes of this section, recovery residence means a residential dwelling that provides primary housing for individuals who seek a cooperative living arrangement that supports personal recovery from a substance use disorder and that does not require licensure by the department or does not provide licensable services, pursuant to Chapter 7.5 (commencing with Section 11834.01). A recovery residence may include, but is not limited to, residential dwellings commonly referred to as sober living homes, sober living environments, or unlicensed alcohol and drug free residences.
SEC. 2.Section 11834.31 of the Health and Safety Code, as amended by Section 32 of Chapter 27 of the Statutes of 2026, is amended to read:11834.31.(a)(1)If a facility is alleged to be in violation of Section 11834.30, the department shall investigate the allegation.
(2)In conducting the investigation, the department shall do both of the following:
(A)(i)If the department determines that it has jurisdiction over the allegation, assign the complaint to an analyst within 10 days of receiving the allegation and conduct a site visit as part of the subsequent investigation.
(ii)If the department receives a complaint that does not fall under its jurisdiction, the department shall, to the extent feasible, notify the complainant in writing, including, but not limited to, through electronic means, that it does not investigate that type of complaint.
(B)Complete the investigation within 120 days of assigning the complaint, unless the department requires either of the following:
(i)Assistance from other state agencies to complete the investigation, as determined by the department.
(ii)Additional resources to complete the investigation, as determined by the department.
(3)If the department is not able to complete an investigation within 120 days, the department shall notify the person that submitted the allegation in writing, including, but not limited to, through electronic means, of the reason for the delay.
(b)If the departments employee or agent finds evidence that the facility is providing the services specified in subdivision (a) of Section 11834.26 without a license, the employee or agent shall submit their findings to the department. The department shall take the following actions:
(1)Issue a written notice to the facility stating that the facility is operating in violation of Section 11834.30. The notice shall be provided to the facility within 10 days of the employee or agency submitting their findings to the department pursuant to this subdivision and shall include all of the following:
(A)The date by which the facility shall cease providing services.
(B)Notice that the department will assess against the facility a civil penalty of two thousand dollars ($2,000) per day for every day the facility continues to provide services beyond the date specified in the notice.
(C)Notice that the case will be referred for civil proceedings pursuant to Section 11834.32 in the event the facility continues to provide services beyond the date specified in the notice.
(D)Notice that the department shall conduct a followup site visit to determine whether the facility ceased providing services as of the date specified in subparagraph (A), unless the department has received sufficient evidence, as determined by the department, that the facility has ceased providing services.
(2)Inform the facility of the licensing requirements of this chapter.
(3)Conduct a followup site visit to determine whether the facility has ceased providing services as required by subparagraph (A) of paragraph (2).
(c)A person or entity found to be in violation of Section 11834.30 shall be prohibited from applying for initial licensure for a period of five years from the date of the notice specified in subdivision (b).
(d)(1)In a county that elects to administer the Drug Medi-Cal organized delivery system, pursuant to Section 14184.401 of the Welfare and Institutions Code, and provides optional recovery housing services, the county behavioral health agency may request approval from the department to conduct a site visit of a recovery residence that the county contracts with that is alleged to be in violation of Section 11834.30. The department may approve that request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits specified in subdivision (a).
(2)In conducting the site visit, the county behavioral health agency shall adhere to the provisions set forth in this section.
(3)For the purpose of this subdivision, recovery residence has the same meaning as in Section 11833.05.
(a)A program certified by the department pursuant to Chapter 7.1 (commencing with Section 11832) or a facility licensed by the department pursuant to Chapter 7.5 (commencing with Section 11834.01) shall disclose to the department if any of its agents, partners, directors, officers, or owners, including a sole proprietor and member, has either of the following:
(1)Ownership or control of, or financial interest in, a recovery residence.
(2)Any contractual relationship with an entity that regularly provides professional services or substance use disorder treatment or recovery services to clients of programs certified or facilities licensed by the department, if the entity is not part of the program certified or facility licensed by the department.
(b)All programs certified or facilities licensed by the department shall make the disclosures pursuant to subdivision (a) upon initial licensure or certification, upon renewal of licensure or certification, and upon a licensed facility or certified program acquiring or starting a relationship that meets the description in paragraph (1) or (2) of subdivision (a).
(c)The department may suspend or revoke the certification of a program or license of a facility for failing to disclose the information required in subdivision (a).
(d)(1)The department shall take action pursuant to Section 11834.31 against an unlicensed facility that is disclosed as a recovery residence pursuant to paragraph (1) of subdivision (a). This subdivision does not require an investigation of a recovery residence that is not alleged to be operating in violation of Section 11834.30.
(2)If the department takes action against a recovery residence, as described in paragraph (1), the department shall conduct a site visit of a certified program or licensed facility that has disclosed an interest in the recovery residence pursuant to subdivision (a).
(e)The department may refer a substantiated complaint against a recovery residence to other enforcement entities as appropriate under state or federal law, including the Department of Insurance, the Department of Managed Health Care, the Attorney General, and the United States Attorney General.
(f)(1)No later than July 15, 2027, and by July 15 of each year thereafter, all programs certified or facilities licensed by the department shall submit to the department a report of all money transfers between the program or facility and a recovery residence during the previous fiscal year, in order to detect patient brokering, illicit kickbacks, or unethical inducements that harm patients.
(2)The department shall analyze transfer data for compliance trends, irregularities, or fraud indicators.
(3)The department shall develop guidelines for permissible and impermissible transfers.
(g)For the purposes of this section, recovery residence means a residential dwelling that provides primary housing for individuals who seek a cooperative living arrangement that supports personal recovery from a substance use disorder and that does not require licensure by the department or does not provide licensable services, pursuant to Chapter 7.5 (commencing with Section 11834.01). A recovery residence may include, but is not limited to, residential dwellings commonly referred to as sober living homes, sober living environments, or unlicensed alcohol and drug free residences.
SEC. 2.Section 11834.31 of the Health and Safety Code, as amended by Section 32 of Chapter 27 of the Statutes of 2026, is amended to read:11834.31.(a)(1)If a facility is alleged to be in violation of Section 11834.30, the department shall investigate the allegation.
(2)In conducting the investigation, the department shall do both of the following:
(A)(i)If the department determines that it has jurisdiction over the allegation, assign the complaint to an analyst within 10 days of receiving the allegation and conduct a site visit as part of the subsequent investigation.
(ii)If the department receives a complaint that does not fall under its jurisdiction, the department shall, to the extent feasible, notify the complainant in writing, including, but not limited to, through electronic means, that it does not investigate that type of complaint.
(B)Complete the investigation within 120 days of assigning the complaint, unless the department requires either of the following:
(i)Assistance from other state agencies to complete the investigation, as determined by the department.
(ii)Additional resources to complete the investigation, as determined by the department.
(3)If the department is not able to complete an investigation within 120 days, the department shall notify the person that submitted the allegation in writing, including, but not limited to, through electronic means, of the reason for the delay.
(b)If the departments employee or agent finds evidence that the facility is providing the services specified in subdivision (a) of Section 11834.26 without a license, the employee or agent shall submit their findings to the department. The department shall take the following actions:
(1)Submit the findings of the investigation to the department.(2)Upon departmental authorization, issue(1)Issue a written notice to the facility stating that the facility is operating in violation of Section 11834.30. The notice shall be provided to the facility within 10 days of the employee or agency submitting their findings to the department pursuant to paragraph (1) this subdivision and shall include all of the following:
(A)The date by which the facility shall cease providing services.
(B)Notice that the department will assess against the facility a civil penalty of two thousand dollars ($2,000) per day for every day the facility continues to provide services beyond the date specified in the notice.
(C)Notice that the case will be referred for civil proceedings pursuant to Section 11834.32 in the event the facility continues to provide services beyond the date specified in the notice.
(D)Notice that the department shall conduct a followup site visit to determine whether the facility ceased providing services as of the date specified in subparagraph (A), unless the department has received sufficient evidence, as determined by the department, that the facility has ceased providing services.
(3)(2)Inform the facility of the licensing requirements of this chapter.
(4)(3)Conduct a followup site visit to determine whether the facility has ceased providing services as required by subparagraph (A) of paragraph (2).
(c)A person or entity found to be in violation of Section 11834.30 shall be prohibited from applying for initial licensure for a period of five years from the date of the notice specified in subdivision (b).
(d)(1)In a county that elects to administer the Drug Medi-Cal organized delivery system, pursuant to Section 14184.401 of the Welfare and Institutions Code, and provides optional recovery housing services, the county behavioral health agency may request approval from the department to conduct a site visit of a recovery residence that the county contracts with that is alleged to be in violation of Section 11834.30. The department may approve that request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits specified in subdivision (a).
(2)In conducting the site visit, the county behavioral health agency shall adhere to the provisions set forth in this section.
(3)For the purpose of this subdivision, recovery residence has the same meaning as in Section 11833.05.
(a)A program certified by the department pursuant to Chapter 7.1 (commencing with Section 11832) or a facility licensed by the department pursuant to Chapter 7.5 (commencing with Section 11834.01) shall disclose to the department if any of its agents, partners, directors, officers, or owners, including a sole proprietor and member, has either of the following:
(1)Ownership or control of, or financial interest in, a recovery residence.
(2)Any contractual relationship with an entity that regularly provides professional services or substance use disorder treatment or recovery services to clients of programs certified or facilities licensed by the department, if the entity is not part of the program certified or facility licensed by the department.
(b)All programs certified or facilities licensed by the department shall make the disclosures pursuant to subdivision (a) upon initial licensure or certification, upon renewal of licensure or certification, and upon a licensed facility or certified program acquiring or starting a relationship that meets the description in paragraph (1) or (2) of subdivision (a).
(c)The department may suspend or revoke the certification of a program or license of a facility for failing to disclose the information required in subdivision (a).
(d)(1)The department shall take action pursuant to Section 11834.31 against an unlicensed facility that is disclosed as a recovery residence pursuant to paragraph (1) of subdivision (a). This subdivision does not require an investigation of a recovery residence that is not alleged to be operating in violation of Section 11834.30.
(2)If the department takes action against a recovery residence, as described in paragraph (1), the department shall conduct a site visit of a certified program or licensed facility that has disclosed an interest in the recovery residence pursuant to subdivision (a).
(e)The department may refer a substantiated complaint against a recovery residence to other enforcement entities as appropriate under state or federal law, including the Department of Insurance, the Department of Managed Health Care, the Attorney General, and the United States Attorney General.
(f)(1)No later than July 15, 2026, 2027, and by July 15 of each year thereafter, all programs certified or facilities licensed by the department shall submit to the department a report of all money transfers between the program or facility and a recovery residence during the previous fiscal year, in order to detect patient brokering, illicit kickbacks, or unethical inducements that harm patients.
(2)The department shall analyze transfer data for compliance trends, irregularities, or fraud indicators.
(3)The department shall develop guidelines for permissible and impermissible transfers.
(g)For the purposes of this section, recovery residence means a residential dwelling that provides primary housing for individuals who seek a cooperative living arrangement that supports personal recovery from a substance use disorder and that does not require licensure by the department or does not provide licensable services, pursuant to Chapter 7.5 (commencing with Section 11834.01). A recovery residence may include, but is not limited to, residential dwellings commonly referred to as sober living homes, sober living environments, or unlicensed alcohol and drug free residences.
SEC. 2.Section 11834.31 of the Health and Safety Code is amended to read:11834.31.(a)(1)If a facility is alleged to be in violation of Section 11834.30, the department shall investigate the allegation.(2)In conducting the investigation, the department shall do both of the following:(A)(i)If the department determines that it has jurisdiction over the allegation, initiate an investigation of the allegation within 10 days of receiving the allegation and conduct a site visit as part of the investigation.(ii)If the department receives a complaint that does not fall under its jurisdiction, the department shall notify the complainant in writing, including, but not limited to, through electronic means, that it does not investigate that type of complaint.(B)Complete the investigation within 60 days of the initiation of the investigation, unless the department requires either of the following:(i)Assistance from local or other state agencies to complete the investigation.(ii)Significant additional resources to complete the investigation, as determined by the department.(3)If the department is not able to complete an investigation within 60 days, the department shall notify the person that submitted the allegation in writing, including, but not limited to, through electronic means, of the reason for the delay.(b)If the departments employee or agent finds evidence that the facility is providing alcohol or other drug recovery, treatment, or detoxification services without a license, the employee or agent shall take the following actions:(1)Submit the findings of the investigation to the department.(2)Upon departmental authorization, issue a written notice to the facility stating that the facility is operating in violation of Section 11834.30. The notice shall be provided to the facility within 10 days of the employee or agency submitting their findings to the department pursuant to paragraph (1) and shall include all of the following:(A)The date by which the facility shall cease providing services.(B)Notice that the department will assess against the facility a civil penalty of two thousand dollars ($2,000) per day for every day the facility continues to provide services beyond the date specified in the notice.(C)Notice that the case will be referred for civil proceedings pursuant to Section 11834.32 in the event the facility continues to provide services beyond the date specified in the notice.(3)Inform the facility of the licensing requirements of this chapter.(4)Conduct a followup site visit to determine whether the facility has ceased providing services as required by subparagraph (A) of paragraph (2).(c)A person or entity found to be in violation of Section 11834.30 shall be prohibited from applying for initial licensure for a period of five years from the date of the notice specified in subdivision (b).(d)(1)In a county that elects to administer the Drug Medi-Cal organized delivery system, pursuant to Section 14184.401 of the Welfare and Institutions Code, and provides optional recovery housing services, the county behavioral health agency may request approval from the department to conduct a site visit of a recovery residence that is alleged to be in violation of Section 11834.30. The department may approve that request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits specified in subdivision (a).(2)In conducting the site visit, the county behavioral health agency shall adhere to the provisions set forth in this section.(3)For the purpose of this subdivision, recovery residence has the same meaning as in Section 11833.05.SEC. 2.Section 11834.31 of the Health and Safety Code, as amended by Section 32 of Chapter 27 of the Statutes of 2026, is amended to read:11834.31.If a facility is alleged to be in violation of Section 11834.30, the department shall conduct a site visit to investigate the allegation. If the departments employee or agent finds evidence that the facility is providing the services specified in subdivision (a) of Section 11834.26 without a license, the employee or agent shall take the following actions:11834.31.(a)(1)If a facility is alleged to be in violation of Section 11834.30, the department shall investigate the allegation.
(2)In conducting the investigation, the department shall do both of the following:
(A)(i)If the department determines that it has jurisdiction over the allegation, assign the complaint to an analyst within 10 days of receiving the allegation and conduct a site visit as part of the subsequent investigation.
(ii)If the department receives a complaint that does not fall under its jurisdiction, the department shall, to the extent feasible, notify the complainant in writing, including, but not limited to, through electronic means, that it does not investigate that type of complaint.
(B)Complete the investigation within 120 days of assigning the complaint, unless the department requires either of the following:
(i)Assistance from other state agencies to complete the investigation, as determined by the department.
(ii)Additional resources to complete the investigation, as determined by the department.
(3)If the department is not able to complete an investigation within 120 days, the department shall notify the person that submitted the allegation in writing, including, but not limited to, through electronic means, of the reason for the delay.
(b)If the departments employee or agent finds evidence that the facility is providing the services specified in subdivision (a) of Section 11834.26 without a license, the employee or agent shall take the following actions:
(a)(1)Submit the findings of the investigation to the department.
(b)(2)Upon departmental authorization, issue a written notice to the facility stating that the facility is operating in violation of Section 11834.30. The notice shall be provided to the facility within 10 days of the employee or agency submitting their findings to the department pursuant to paragraph (1) and shall include all of the following:
(1)(A)The date by which the facility shall cease providing services.
(2)(B)Notice that the department will assess against the facility a civil penalty of two thousand dollars ($2,000) per day for every day the facility continues to provide services beyond the date specified in the notice.
(3)(C)Notice that the case will be referred for civil proceedings pursuant to Section 11834.32 in the event the facility continues to provide services beyond the date specified in the notice.
(c)(3)Inform the facility of the licensing requirements of this chapter.
(4)Conduct a followup site visit to determine whether the facility has ceased providing services as required by subparagraph (A) of paragraph (2).
(d)(c)A person or entity found to be in violation of Section 11834.30 shall be prohibited from applying for initial licensure for a period of five years from the date of the notice specified in subdivision (b).
(d)(1)In a county that elects to administer the Drug Medi-Cal organized delivery system, pursuant to Section 14184.401 of the Welfare and Institutions Code, and provides optional recovery housing services, the county behavioral health agency may request approval from the department to conduct a site visit of a recovery residence that the county contracts with that is alleged to be in violation of Section 11834.30. The department may approve that request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits specified in subdivision (a).
(2)In conducting the site visit, the county behavioral health agency shall adhere to the provisions set forth in this section.
(3)For the purpose of this subdivision, recovery residence has the same meaning as in Section 11833.05.
(a)A program certified by the department pursuant to Chapter 7.1 (commencing with Section 11832) or a facility licensed by the department pursuant to Chapter 7.5 (commencing with Section 11834.01) shall disclose to the department if any of its agents, partners, directors, officers, or owners, including a sole proprietor and member, has either of the following:
(1)Ownership or control of, or financial interest in, a recovery residence.
(2)Any contractual relationship with an entity that regularly provides professional services or substance use disorder treatment or recovery services to clients of programs certified or facilities licensed by the department, if the entity is not part of the program certified or facility licensed by the department.
(b)All programs certified or facilities licensed by the department shall make the disclosures pursuant to subdivision (a) upon initial licensure or certification, upon renewal of licensure or certification, and upon a licensed facility or certified program acquiring or starting a relationship that meets the description in paragraph (1) or (2) of subdivision (a).
(c)The department may suspend or revoke the certification of a program or license of a facility for failing to disclose the information required in subdivision (a).
(d)(1)The department shall take action pursuant to Section 11834.31 against an unlicensed facility that is disclosed as a recovery residence pursuant to paragraph (1) of subdivision (a). This subdivision does not require an investigation of a recovery residence that is not alleged to be operating in violation of Section 11834.30.
(2)If the department takes action against a recovery residence, as described in paragraph (1), the department shall conduct a site visit of a certified program or licensed facility that has disclosed an interest in the recovery residence pursuant to subdivision (a).
(e)The department may refer a substantiated complaint against a recovery residence to other enforcement entities as appropriate under state or federal law, including the Department of Insurance, the Department of Managed Health Care, the Attorney General, and the United States Attorney General.
(f)(1)No later than July 15, 2026, and by July 15 of each year thereafter, all programs certified or facilities licensed by the department shall submit to the department a report of all money transfers between the program or facility and a recovery residence during the previous fiscal year, in order to detect patient brokering, illicit kickbacks, or unethical inducements that harm patients.
(2)The department shall analyze transfer data for compliance trends, irregularities, or fraud indicators.
(3)The department shall develop guidelines for permissible and impermissible transfers.
(f)(g)For the purposes of this section, recovery residence means a residential dwelling that provides primary housing for individuals who seek a cooperative living arrangement that supports personal recovery from a substance use disorder and that does not require licensure by the department or does not provide licensable services, pursuant to Chapter 7.5 (commencing with Section 11834.01). A recovery residence may include, but is not limited to, residential dwellings commonly referred to as sober living homes, sober living environments, or unlicensed alcohol and drug free residences.
SEC. 2.Section 11834.31 of the Health and Safety Code is amended to read:11834.31.If a facility is alleged to be in violation of Section 11834.30, the department shall conduct a site visit to investigate the allegation. If11834.31.(a)(1)If a facility is alleged to be in violation of Section 11834.30, the department shall investigate the allegation.
(2)In conducting the investigation, the department shall do both of the following:
(A)(i)If the department determines that it has jurisdiction over the allegation, initiate an investigation of the allegation within 10 days of receiving the allegation and conduct a site visit as part of the investigation.
(ii)If the department receives a complaint that does not fall under its jurisdiction, the department shall notify the complainant in writing, including, but not limited to, through electronic means, that it does not investigate that type of complaint.
(B)Complete the investigation within 60 days of the initiation of the investigation, unless the department requires either of the following:
(i)Assistance from local or other state agencies to complete the investigation.
(ii)Significant additional resources to complete the investigation, as determined by the department.
(3)If the department is not able to complete an investigation within 60 days, the department shall notify the person that submitted the allegation in writing, including, but not limited to, through electronic means, of the reason for the delay.
(b)If the departments employee or agent finds evidence that the facility is providing alcohol or other drug recovery, treatment, or detoxification services without a license, the employee or agent shall take the following actions:
(a)(1)Submit the findings of the investigation to the department.
(b)(2)Upon departmental authorization, issue a written notice to the facility stating that the facility is operating in violation of Section 11834.30. The notice shall be provided to the facility within 10 days of the employee or agency submitting their findings to the department pursuant to paragraph (1) and shall include all of the following:
(1)(A)The date by which the facility shall cease providing services.
(2)(B)Notice that the department will assess against the facility a civil penalty of two thousand dollars ($2,000) per day for every day the facility continues to provide services beyond the date specified in the notice.
(3)(C)Notice that the case will be referred for civil proceedings pursuant to Section 11834.32 in the event the facility continues to provide services beyond the date specified in the notice.
(c)(3)Inform the facility of the licensing requirements of this chapter.
(4)Conduct a followup site visit to determine whether the facility has ceased providing services as required by subparagraph (A) of paragraph (2).
(d)(c)A person or entity found to be in violation of Section 11834.30 shall be prohibited from applying for initial licensure for a period of five years from the date of the notice specified in subdivision (b).
(d)(1)In a county that elects to administer the Drug Medi-Cal organized delivery system, pursuant to Section 14184.401 of the Welfare and Institutions Code, and provides optional recovery housing services, the county behavioral health agency may request approval from the department to conduct a site visit of a recovery residence that is alleged to be in violation of Section 11834.30. The department may approve that request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits specified in subdivision (a).
(2)In conducting the site visit, the county behavioral health agency shall adhere to the provisions set forth in this section.
(3)For the purpose of this subdivision, recovery residence has the same meaning as in Section 11833.05.
All matter omitted in this version of the bill appears in the bill as introduced|amended in the Senate, March 26, 2025. (JR11)(a)In a contested or uncontested proceeding, if the court has granted a writ of habeas corpus or when the court vacates a judgment pursuant to Section 1473.6 and if the court has found that the person is factually innocent, under any standard for factual innocence applicable in those proceedings, that finding shall be binding on the California Victim Compensation Board for a claim presented to the board, and upon application by the person, the board shall, without a hearing, approve payment to the claimant, pursuant to Section 4904, if sufficient funds are available, upon appropriation by the Legislature.
(b)In a contested or uncontested proceeding, if the court has granted a writ of habeas corpus or vacated a judgment pursuant to Section 1473.6 or paragraph (2) of subdivision (a) of Section 1473.7, the person may move for a finding of factual innocence by a preponderance of the evidence that the crime with which they were charged was either not committed at all or, if committed, was not committed by the petitioner.
(c)If the court makes a finding that the petitioner has proven their factual innocence by a preponderance of the evidence pursuant to subdivision (b), upon application by the person, the board shall, without a hearing, approve payment to the claimant, pursuant to Section 4904, if sufficient funds are available, upon appropriation by the Legislature.
(d)(1)In a contested or uncontested proceeding, if the court has granted a writ of habeas corpus pursuant to common law, the California Constitution, the United States Constitution, or paragraphs (1) to (4), inclusive, of subdivision (b) of Section 1473, or vacated a judgment pursuant to Section 1473.6 or paragraph (2) of subdivision (a) of Section 1473.7, and the charges were subsequently dismissed, or the person was acquitted of the charges on a retrial, the petitioner may move the court for a finding that they are entitled to approval of a claim for compensation pursuant to Chapter 5 (commencing with Section 4900) of Title 6 of Part 3. The court shall grant the motion unless the district attorney objects in writing within 120 45 days from when the person files the motion and can establish by clear and convincing evidence that the person committed the acts constituting the offense and is therefore not entitled to compensation. The district attorney shall bear the burden of proving by clear and convincing evidence that the person committed the acts constituting the offense. The district attorney may request a single an initial 30-day extension of time time, and a single subsequent 15-day extension of time, each upon a separate showing of good cause. An extension of time beyond this period may be given if agreed upon by stipulation between both parties.
(2)If the district attorney does not object, or if the district attorney fails to establish by clear and convincing evidence that the person committed the acts constituting the offense as described in paragraph (1), the court shall grant the motion and the board shall, upon application by the person, without a hearing, approve payment to the claimant, pursuant to Section 4904, if sufficient funds are available, upon appropriation by the Legislature.
(3)If the motion is granted pursuant to a stipulation of the district attorney, and upon application by the person, the board shall, without a hearing, approve payment to the claimant, pursuant to Section 4904, if sufficient funds are available, upon appropriation by the Legislature.
(e)A conviction reversed and dismissed is no longer valid, thus the district attorney may not rely on the fact that the state still maintains that the claimant is guilty of the crime for which they were wrongfully convicted, that the state defended the conviction against the petitioner through court litigation, or that there was a conviction to establish that the petitioner is not entitled to compensation. The district attorney may rely solely on the trial record to establish that the claimant is not entitled to compensation if the district attorney concludes, in good faith, that the trial record demonstrates guilt by clear and convincing evidence even after consideration of any exculpatory evidence presented by the claimant.
(f)A presumption does not exist in any other proceeding for failure to make a motion or obtain a favorable ruling pursuant to subdivisions (a) and (b). No res judicata or collateral estoppel finding in any other proceeding shall be made for failure to make a motion or obtain a favorable ruling pursuant to subdivision (a) or (b) of this section.
(g)If a federal court, after granting a writ of habeas corpus, pursuant to a nonstatutory motion or request, finds a petitioner factually innocent by no less than a preponderance of the evidence that the crime with which they were charged was either not committed at all or, if committed, was not committed by the petitioner, upon application of the person, the board shall, without a hearing, approve payment to the claimant, pursuant to Section 4904, if sufficient funds are available, upon appropriation by the Legislature.
(h)For the purposes of this section, unless otherwise stated, court is defined as a state or federal court.
SEC. 2.Section 4902 of the Penal Code is amended to read:4902.(a)If the provisions of Section 851.865 or 1485.55 apply in any claim, the California Victim Compensation Board shall, within 90 days of the filing of the claim, calculate the compensation for the claimant pursuant to Section 4904 and approve payment to the claimant if sufficient funds are available, upon appropriation by the Legislature. As to any claim to which Section 851.865 or 1485.55 does not apply, the Attorney General shall respond to the claim within 60 days or request an extension of time, upon a showing of good cause.
(b)Upon receipt of a response from the Attorney General, the board shall fix a time and place for the hearing of the claim, and shall mail notice thereof to the claimant and to the Attorney General at least 15 days prior to the time fixed for the hearing. The board shall use reasonable diligence in setting the date for the hearing and shall attempt to set the date for the hearing at the earliest date convenient for the parties and the board.
(c)If the time period for response elapses without a request for extension or a response from the Attorney General pursuant to subdivision (a), the board shall fix a time and place for the hearing of the claim, mail notice thereof to the claimant at least 15 days prior to the time fixed for the hearing, and make a decision based on the claimants verified claim and any evidence presented by the claimant.
(d)If subdivision (b) of Section 4900 applies in any claim, the California Victim Compensation Board shall calculate the compensation for the claimant pursuant to Section 4904 and approve payment to the claimant if sufficient funds are available, upon appropriation by the Legislature, unless the Attorney General objects in writing, within 120 45 days from when the claimant files the claim, with clear and convincing evidence that the claimant is not entitled to compensation. The Attorney General may request a single an initial 45-day extension of time, and a single subsequent 45-day extension of time, each upon a separate showing of good cause. An extension of time beyond this period may be given if agreed upon by stipulation between both parties. Time needed to obtain and review juvenile records may establish good cause for additional 45-day extensions upon a showing that through the exercise of due diligence the Attorney Generals office is unable to obtain sufficient documents for the review. If the Attorney General declines to object within the allotted period of time, then the board shall approve payment pursuant to Section 4904 within 90 days thereafter. Upon receipt of the objection, the board shall fix a time and place for the hearing of the claim, and shall mail notice thereof to the claimant and to the Attorney General at least 15 days prior to the fixed time for the hearing. At a hearing, the Attorney General shall bear the burden of proving by clear and convincing evidence that the claimant committed the acts constituting the offense. If the Attorney General fails to meet this burden, the board shall approve payment to the claimant, calculated pursuant to Section 4904, if sufficient funds are available upon appropriation by the Legislature.
SEC. 3.Section 4903 of the Penal Code is amended to read:4903.(a)Except as provided in Sections 851.865 and 1485.55, and in subdivision (b) of Section 4900, the board shall fix a time and place for the hearing of the claim. At the hearing the claimant shall introduce evidence in support of the claim, and the Attorney General may introduce evidence in opposition thereto. The claimant shall prove the facts set forth in the statement constituting the claim, including the fact that the crime with which they were charged was either not committed at all, or, if committed, was not committed by the claimant, and the injury sustained by them through their erroneous conviction and incarceration.
(b)For claims falling within subdivision (b) of Section 4900 in which the Attorney General objects to the claim pursuant to subdivision (d) of Section 4902, the board shall fix a time and place for the hearing of the claim. At the hearing, the Attorney General shall bear the burden of proving by clear and convincing evidence that the claimant committed the acts constituting the offense. The claimant may introduce evidence in support of the claim.
(c)In a hearing before the board, the factual findings and credibility determinations establishing the courts basis for writ of habeas corpus, a motion to vacate pursuant to Section 1473.6 or paragraph (2) of subdivision (a) of Section 1473.7, or an application for a certificate of factual innocence as described in Section 1485.5 shall be binding on the Attorney General, the factfinder, and the board.
(d)A conviction reversed and dismissed is no longer valid, thus the Attorney General may not rely on the fact that the state still maintains that the claimant is guilty of the crime for which they were wrongfully convicted, that the state defended the conviction against the claimant through court litigation, or that there was a conviction to establish that the claimant is not entitled to compensation. The Attorney General may rely solely on the trial record to establish that the claimant is not entitled to compensation if the Attorney General concludes, in good faith, that the trial record demonstrates guilt by clear and convincing evidence even after consideration of any exculpatory evidence presented by the claimant.
(e)The board shall deny payment of any claim if the board finds by a preponderance of the evidence that a claimant pled guilty with the specific intent to protect another from prosecution for the underlying conviction for which the claimant is seeking compensation.
(f)A presumption does not exist in any other proceeding if the claim for compensation is denied pursuant to this section. No res judicata or collateral estoppel finding shall be made in any other proceeding if the claim for compensation is denied pursuant to this section.
SEC. 4.Section 4904 of the Penal Code, as amended by Section 5 of Chapter 702 of the Statutes of 2023, is amended to read:4904.(a)If the evidence shows that the crime with which the claimant was charged was either not committed at all, or, if committed, was not committed by the claimant, or for claims pursuant to subdivision (b) of Section 4900, the Attorney Generals office has not met their burden of proving by clear and convincing evidence that the claimant committed the acts constituting the offense, and the California Victim Compensation Board has found that the claimant has sustained injury through their erroneous conviction and imprisonment, the California Victim Compensation Board shall approve payment for the purpose of indemnifying the claimant for the injury if sufficient funds are available, upon appropriation by the Legislature. The amount of the payment shall be a sum equivalent to one hundred forty dollars ($140) per day of incarceration served, and shall include any time spent in custody, including in a county jail, that is considered to be part of the term of incarceration. Notwithstanding any other provision in this section, the California Victim Compensation Board, prior to approving payment, may request from both parties additional documents or arguments as needed to calculate compensation. That payment shall not be treated as gross income to the recipient under the Revenue and Taxation Code.
(b)Notwithstanding any other provision in this chapter, compensation shall not be paid to a claimant who is serving a sentence for a violent felony listed in subdivision (c) of Section 667.5, or a serious felony listed in subdivision (c) of Section 1192.7. If the claimant has an outstanding restitution order pursuant to subdivision (f) of Section 1202.4 for any other offense, that order shall be paid from the claimants compensation before the claimant is paid.
(a)In a contested or uncontested proceeding, if the court has granted a writ of habeas corpus or when the court vacates a judgment pursuant to Section 1473.6 and if the court has found that the person is factually innocent, under any standard for factual innocence applicable in those proceedings, that finding shall be binding on the California Victim Compensation Board for a claim presented to the board, and upon application by the person, the board shall, without a hearing, approve payment to the claimant, pursuant to Section 4904, if sufficient funds are available, upon appropriation by the Legislature.
(b)In a contested or uncontested proceeding, if the court has granted a writ of habeas corpus or vacated a judgment pursuant to Section 1473.6 or paragraph (2) of subdivision (a) of Section 1473.7, the person may move for a finding of factual innocence by a preponderance of the evidence that the crime with which they were charged was either not committed at all or, if committed, was not committed by the petitioner.
(c)If the court makes a finding that the petitioner has proven their factual innocence by a preponderance of the evidence pursuant to subdivision (b), upon application by the person, the board shall, without a hearing, approve payment to the claimant, pursuant to Section 4904, if sufficient funds are available, upon appropriation by the Legislature.
(d)(1)In a contested or uncontested proceeding, if the court has granted a writ of habeas corpus pursuant to common law, the California Constitution, the United States Constitution, or paragraphs (1) to (4), inclusive, of subdivision (b) of Section 1473, or vacated a judgment pursuant to Section 1473.6 or paragraph (2) of subdivision (a) of Section 1473.7, and the charges were subsequently dismissed, or the person was acquitted of the charges on a retrial, the petitioner may move the court for a finding that they are entitled to approval of a claim for compensation pursuant to Chapter 5 (commencing with Section 4900) of Title 6 of Part 3. The court shall grant the motion unless the district attorney objects in writing within 15 120 days from when the person files the motion and can establish by clear and convincing evidence that the person committed the acts constituting the offense and is therefore not entitled to compensation. The district attorney shall bear the burden of proving by clear and convincing evidence that the person committed the acts constituting the offense. The district attorney may request a single 30-day extension of time upon a showing of good cause. An extension of time beyond this period may be given if agreed upon by stipulation between both parties.
(2)If the district attorney does not object, or if the district attorney fails to establish by clear and convincing evidence that the person committed the acts constituting the offense as described in paragraph (1), the court shall grant the motion and the board shall, upon application by the person, without a hearing, approve payment to the claimant, pursuant to Section 4904, if sufficient funds are available, upon appropriation by the Legislature.
(3)If the motion is granted pursuant to a stipulation of the district attorney, and upon application by the person, the board shall, without a hearing, approve payment to the claimant, pursuant to Section 4904, if sufficient funds are available, upon appropriation by the Legislature.
(e)A conviction reversed and dismissed is no longer valid, thus the district attorney may not rely on the fact that the state still maintains that the claimant is guilty of the crime for which they were wrongfully convicted, that the state defended the conviction against the petitioner through court litigation, or that there was a conviction to establish that the petitioner is not entitled to compensation. The district attorney may also not rely solely on the trial record to establish that the petitioner is not entitled to compensation.
(f)A presumption does not exist in any other proceeding for failure to make a motion or obtain a favorable ruling pursuant to subdivisions (a) and (b). No res judicata or collateral estoppel finding in any other proceeding shall be made for failure to make a motion or obtain a favorable ruling pursuant to subdivision (a) or (b) of this section.
(g)If a federal court, after granting a writ of habeas corpus, pursuant to a nonstatutory motion or request, finds a petitioner factually innocent by no less than a preponderance of the evidence that the crime with which they were charged was either not committed at all or, if committed, was not committed by the petitioner, upon application of the person, the board shall, without a hearing, approve payment to the claimant, pursuant to Section 4904, if sufficient funds are available, upon appropriation by the Legislature.
(h)For the purposes of this section, unless otherwise stated, court is defined as a state or federal court.
SEC. 2.Section 4902 of the Penal Code is amended to read:4902.(a)If the provisions of Section 851.865 or 1485.55 apply in any claim, the California Victim Compensation Board shall, within 90 days of the filing of the claim, calculate the compensation for the claimant pursuant to Section 4904 and approve payment to the claimant if sufficient funds are available, upon appropriation by the Legislature. As to any claim to which Section 851.865 or 1485.55 does not apply, the Attorney General shall respond to the claim within 60 days or request an extension of time, upon a showing of good cause.
(b)Upon receipt of a response from the Attorney General, the board shall fix a time and place for the hearing of the claim, and shall mail notice thereof to the claimant and to the Attorney General at least 15 days prior to the time fixed for the hearing. The board shall use reasonable diligence in setting the date for the hearing and shall attempt to set the date for the hearing at the earliest date convenient for the parties and the board.
(c)If the time period for response elapses without a request for extension or a response from the Attorney General pursuant to subdivision (a), the board shall fix a time and place for the hearing of the claim, mail notice thereof to the claimant at least 15 days prior to the time fixed for the hearing, and make a decision based on the claimants verified claim and any evidence presented by the claimant.
(d)If subdivision (b) of Section 4900 applies in any claim, the California Victim Compensation Board shall calculate the compensation for the claimant pursuant to Section 4904 and approve payment to the claimant if sufficient funds are available, upon appropriation by the Legislature, unless the Attorney General objects in writing, within 45 120 days from when the claimant files the claim, with clear and convincing evidence that the claimant is not entitled to compensation. The Attorney General may request a single 45-day extension of time, upon a showing of good cause. An extension of time beyond this period may be given if agreed upon by stipulation between both parties. Time needed to obtain and review juvenile records may establish good cause for additional 45-day extensions upon a showing that through the exercise of due diligence the Attorney Generals office is unable to obtain sufficient documents for the review. If the Attorney General declines to object within the allotted period of time, then the board shall approve payment pursuant to Section 4904 within 90 days thereafter. Upon receipt of the objection, the board shall fix a time and place for the hearing of the claim, and shall mail notice thereof to the claimant and to the Attorney General at least 15 days prior to the fixed time for the hearing. At a hearing, the Attorney General shall bear the burden of proving by clear and convincing evidence that the claimant committed the acts constituting the offense. If the Attorney General fails to meet this burden, the board shall approve payment to the claimant, calculated pursuant to Section 4904, if sufficient funds are available upon appropriation by the Legislature.
SEC. 3.Section 4903 of the Penal Code is amended to read:4903.(a)Except as provided in Sections 851.865 and 1485.55, and in subdivision (b) of Section 4900, the board shall fix a time and place for the hearing of the claim. At the hearing the claimant shall introduce evidence in support of the claim, and the Attorney General may introduce evidence in opposition thereto. The claimant shall prove the facts set forth in the statement constituting the claim, including the fact that the crime with which they were charged was either not committed at all, or, if committed, was not committed by the claimant, and the injury sustained by them through their erroneous conviction and incarceration.
(b)For claims falling within subdivision (b) of Section 4900 in which the Attorney General objects to the claim pursuant to subdivision (d) of Section 4902, the board shall fix a time and place for the hearing of the claim. At the hearing, the Attorney General shall bear the burden of proving by clear and convincing evidence that the claimant committed the acts constituting the offense. The claimant may introduce evidence in support of the claim.
(c)In a hearing before the board, the factual findings and credibility determinations establishing the courts basis for writ of habeas corpus, a motion to vacate pursuant to Section 1473.6 or paragraph (2) of subdivision (a) of Section 1473.7, or an application for a certificate of factual innocence as described in Section 1485.5 shall be binding on the Attorney General, the factfinder, and the board.
(d)A conviction reversed and dismissed is no longer valid, thus the Attorney General may not rely on the fact that the state still maintains that the claimant is guilty of the crime for which they were wrongfully convicted, that the state defended the conviction against the claimant through court litigation, or that there was a conviction to establish that the claimant is not entitled to compensation. The Attorney General may also not rely solely on the trial record to establish that the claimant is not entitled to compensation.
(e)The board shall deny payment of any claim if the board finds by a preponderance of the evidence that a claimant pled guilty with the specific intent to protect another from prosecution for the underlying conviction for which the claimant is seeking compensation.
(f)A presumption does not exist in any other proceeding if the claim for compensation is denied pursuant to this section. No res judicata or collateral estoppel finding shall be made in any other proceeding if the claim for compensation is denied pursuant to this section.
SEC. 4.Section 4904 of the Penal Code, as amended by Section 5 of Chapter 702 of the Statutes of 2023, is amended to read:4904.(a)If the evidence shows that the crime with which the claimant was charged was either not committed at all, or, if committed, was not committed by the claimant, or for claims pursuant to subdivision (b) of Section 4900, the Attorney Generals office has not met their burden of proving by clear and convincing evidence that the claimant committed the acts constituting the offense, and the California Victim Compensation Board has found that the claimant has sustained injury through their erroneous conviction and imprisonment, the California Victim Compensation Board shall approve payment for the purpose of indemnifying the claimant for the injury if sufficient funds are available, upon appropriation by the Legislature. The amount of the payment shall be a sum equivalent to one hundred forty dollars ($140) per day of incarceration served, and shall include any time spent in custody, including in a county jail, that is considered to be part of the term of incarceration. Notwithstanding any other provision in this section, the California Victim Compensation Board, prior to approving payment, may request from both parties additional documents or arguments as needed to calculate compensation. That payment shall not be treated as gross income to the recipient under the Revenue and Taxation Code.
(b)(1)This section shall become inoperative on July 1, 2024, only if General Fund moneys over the multiyear forecasts beginning in the 202425 fiscal year are available to support ongoing augmentations and actions, and if an appropriation is made to backfill the Restitution Fund to support the actions in this section. If those conditions are met, this section is repealed January 1, 2025.(2)The amendments made by the act adding this subdivision shall become operative on January 1, 2023.(b)Notwithstanding any other provision in this chapter, compensation shall not be paid to a claimant who is serving a sentence for a violent felony listed in subdivision (c) of Section 667.5, or a serious felony listed in subdivision (c) of Section 1192.7. If the claimant has an outstanding restitution order pursuant to subdivision (f) of Section 1202.4 for any other offense, that order shall be paid from the claimants compensation before the claimant is paid.
|
Date
|
Status
|
|---|---|
| Sep 30, 2026 | In Senate. Consideration of Governor's veto pending. |
| Sep 30, 2026 | Vetoed by the Governor. |
| Sep 2, 2026 | Enrolled and presented to the Governor at 3 p.m. |
| Aug 27, 2026 | Assembly amendments concurred in. (Ayes 40. Noes 0.) Ordered to engrossing and enrolling. |
| Aug 27, 2026 | Assembly amendments concurred in. (Ayes 40. Noes 0. Page 5995.) Ordered to engrossing and enrolling. |
| Aug 25, 2026 | In Senate. Concurrence in Assembly amendments pending. |
| Aug 25, 2026 | Read third time. Passed. (Ayes 77. Noes 0. Page 6525.) Ordered to the Senate. |
| Aug 25, 2026 | Read third time. Passed. Ordered to the Senate. |
| Aug 21, 2026 | Ordered to third reading. |
| Aug 21, 2026 | Assembly Rule 69(b)(1) suspended. |
| Aug 21, 2026 | Assembly Rule 69(b)(1) suspended. (Ayes 55. Noes 17. Page 6296.) |
| Aug 21, 2026 | Read third time and amended. |
| Aug 13, 2026 | Read second time. Ordered to third reading. |
| Aug 13, 2026 | From committee: Do pass. (Ayes 15. Noes 0.) (August 13). |
| Aug 13, 2026 | Assembly Rule 63 suspended. |
| Aug 5, 2026 | August 5 set for first hearing. Placed on suspense file. |
| Jul 2, 2026 | Read second time and amended. Re-referred to Com. on APPR. |
| Jul 1, 2026 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 16. Noes 0.) (June 30). |
| Jun 18, 2026 | Pursuant to Assembly Rule 51. |
| Jun 18, 2026 | Referred to Com. on HEALTH. |
| Jun 18, 2026 | Re-referred to Com. on HEALTH pursuant to Assembly Rule 51. |
| Jan 26, 2026 | In Assembly. Read first time. Held at Desk. |
| Jan 26, 2026 | Read third time. Passed. (Ayes 39. Noes 0. Page 3283.) Ordered to the Assembly. |
| Jan 22, 2026 | Read second time. Ordered to third reading. |
| Jan 22, 2026 | From committee: Do pass. (Ayes 7. Noes 0. Page 3269.) (January 22). |
| Jan 21, 2026 | Set for hearing January 22. |
| Jan 20, 2026 | January 20 hearing: Placed on APPR. suspense file. |
| Jan 15, 2026 | Set for hearing January 20. |
| Jan 15, 2026 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 9. Noes 0. Page 3224.) (January 14). Re-referred to Com. on APPR. |
| Jan 6, 2026 | Set for hearing January 14. |
| Jan 5, 2026 | Withdrawn from committee. |
| Jan 5, 2026 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on PUB. S. |
| Jan 5, 2026 | Re-referred to Com. on HEALTH. |
| Jan 5, 2026 | Re-referred to Com. on RLS. |
| Apr 3, 2025 | April 8 set for second hearing canceled at the request of author. |
| Mar 27, 2025 | Set for hearing April 8. |
| Mar 26, 2025 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on PUB. S. |
| Mar 21, 2025 | March 25 set for first hearing canceled at the request of author. |
| Mar 7, 2025 | Set for hearing March 25. |
| Feb 26, 2025 | Referred to Com. on PUB. S. |
| Feb 20, 2025 | From printer. May be acted upon on or after March 22. |
| Feb 19, 2025 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 27, 2026 | Unfinished Business SB490 Umberg et al. Concurrence | Senate Floor |
Passed |
|
| Aug 25, 2026 | SB 490 Umberg Senate Third Reading By Patel | Assembly Floor |
Passed |
|
| Aug 13, 2026 | Do pass. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jun 30, 2026 | Do pass as amended and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Health |
Passed |
|
| Jan 26, 2026 | Senate 3rd Reading SB490 Umberg | Senate Floor |
Passed |
|
| Jan 22, 2026 | Do pass | Senate Standing Committee on Appropriations |
Passed |
|
| Jan 20, 2026 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Jan 14, 2026 | Do pass, but first be re-referred to the Committee on [Appropriations] | Senate Standing Committee on Health |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Association of California Cities – Orange County | ** Support | |
| Association Of California Life & Health Insurance Companies | ** Support | |
| California Association Of Health Plans | ** Support | |
| California Behavioral Health Association | ** Against | |
| California Behavioral Health Planning Council | ** Against | |
| City Of Beverly Hills | ** Support | |
| City of Brea | ** Support | |
| City of Buena Park | ** Support | |
| city of carlsbad | ** Support | |
| City of Carlsbard | ** Support | |
| City Of Garden Grove | ** Support | |
| City of Irvine | ** Support | |
| City Of La Mesa | ** Support | |
| City Of Lake Forest | ** Support | |
| City of Los Alamitos | ** Support | |
| City Of Mission Viejo | ** Support | |
| City of Newport Beach | ** Support | |
| city of paramount | ** Support | |
| City Of Placentia | ** Support | |
| City of Rocklin | ** Support | |
| City of Stanton | ** Support | |
| City of Thousand Oaks | ** Support | |
| City of Vacaville | ** Support | |
| County Behavioral Health Directors Association | ** Against | |
| League Of California Cities | ** Support |
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-4171 | SB 490 |
UNFINISHED BUSINESS
Bill No: SB 490
Author: Umberg (D), et al.
Amended: 8/21/26
Vote: 21
SENATE HEALTH COMMITTEE: 9-0, 1/14/26
AYES: Menjivar, Valladares, Durazo, Gonzalez, Padilla, Richardson, Rubio, Weber Pierson, Wiener
NO VOTE RECORDED: Grove, Limón
SENATE APPROPRIATIONS COMMITTEE: 7-0, 1/22/26
AYES: Caballero, Seyarto, Cabaldon, Dahle, Grayson, Richardson, Wahab
SENATE FLOOR: 39-0, 1/26/26
AYES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Reyes, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener
NO VOTE RECORDED: Gonzalez
ASSEMBLY FLOOR: 77-0, 8/25/26 - See last page for vote
SUBJECT: Alcohol and drug programs
SOURCE: League of California Cities
DIGEST:
This bill (1) requires the Department of Health Care Services (DHCS) to take specified action when it determines an entity is providing residential alcohol or other drug recovery or treatment services without a proper license, including conducting site visits, as well as initiating and completing investigations within specified timeframes; and, (2) permits county behavioral health agencies that administer the Drug Medi-Cal organized delivery system to request DHCS approval to conduct site visits to specified recovery residences (RRs).
Assembly Amendments
extend the timeframe by which DHCS must complete an investigation; specify that county behavioral health agencies are permitted to visit RRs with which they contract; and, extend the date by which entities licensed or certified by DHCS must report money transfers between them and an RR.
ANALYSIS:
Existing law:
- Grants sole authority in the state to DHCS to certify alcohol or other drug (AOD) programs and to license adult residential alcohol or other drug recovery or treatment facilities (RTFs). [Health and Safety Code (HSC) §11832, 11834.01]
- Requires DHCS to conduct onsite program compliance visits for AOD programs and RTFs at least once during the certification or licensure period. Permits DHCS to conduct announced or unannounced site visits to review for compliance. [HSC §11832.12, 11834.01]
- Requires all programs certified, or RTFs licensed by DHCS, to disclose if any of its agents, partners, directors, officers, or owners, including a sole proprietor and member, has either of the following:
- Ownership or control of, or financial interest in, a recovery residence/sober living homes (RR/SLHs); or,
- Any contractual relationship with an entity that regularly provides professional services or substance use disorder (SUD) treatment or recovery services to clients of programs certified or facilities licensed by DHCS, if the entity is not part of the program certified or facility licensed. [HSC §11833.05(a)]
- Permits DHCS to suspend or revoke an AOD program certification or RTF license for failing to disclose the information required in 3) above of existing law. [HSC 11833.05(c)]
- Prohibits a person, firm, partnership, association, corporation, or local governmental entity from operating, establishing, managing, conducting, or maintaining an RTF to provide recovery, treatment, or detoxification services within this state without first obtaining a current valid license from DHCS. [HSC §11834.30]
- Requires a laboratory or certified outpatient treatment program that leases, manages, or owns housing units that are offered to individuals who concurrently utilize laboratory or outpatient services to maintain separate contracts for the housing. Requires a RTF to only offer an individual discounted housing following discharge from the facility if certain conditions are met, such as the RTF and the individual enter into a written contract for housing that is separate from the contract for treatment; if the individual also pursues outpatient treatment; or, the offer for housing is not dependent upon the individual’s agreement to attend outpatient treatment at a program that is owned or operated by the RTF. [HSC §11831.65]
- Requires DHCS to conduct a site visit to investigate an allegation of an entity operating without a valid RTF license. Requires DHCS to take the following actions if evidence substantiates that the entity is providing RTF services without a license:
- Submit the findings of the investigation;
- Issue a written notice to the entity stating that it is operating in violation DHCS’s licensing law and inform them of the date by which it ceases providing services and notice that DHCS will assess a civil penalty of $2,000 per day for every day they continue to provide services beyond the date specified in the notice;
- Notice that the case will be referred for civil proceedings in the event the entity continues to provide services beyond the date specified in the notice; and,
- Inform the entity of the licensing requirements. [HSC §11834.31]
- Prohibits an entity found to be in violation of DHCS’s licensing law from applying for initial RTF licensure for a period of five years from the date of the notice specified. [HSC §11834.31]
- Permits DHCS’s Director to suspend or revoke certification or licensure, including other AOD program certifications or RTF licenses held by the same person or entity, or to deny an application for certification or licensure; extension of the certification or license; or, modification to certification or a license, upon specified violations and circumstances. [HSC §11832.14, 11834.36]
- Requires DHCS to continue to implement the Drug Medi-Cal organized delivery system (DMC-ODS) program previously authorized under the California Medi-Cal 2020 Demonstration pilot. Requires election by counties to participate in the DMC-ODS to be considered voluntary. [Welfare and Institutions Code (WIC) §14184.401]
This bill:
- Requires DHCS, if it takes action against an RR/SLH for providing treatment services without a valid license, to conduct a site visit of a certified AOD program or licensed RTF that has disclosed an interest in that RR/SLH.
- Requires all AOD programs and RTFs, no later than July 15, 2027, and every July 15 thereafter, to report to DHCS all money transfers between them and their affiliated RR/SLHs. Requires DHCS to analyze transfer data for compliance trends, irregularities, or fraud indicators, and to develop guidelines for permissible and impermissible transfers.
- Requires DHCS, if a facility is alleged to be operating as an RTF without a valid license, to conduct a site visit as follows:
- Initiate an investigation of the allegation, if DHCS has jurisdiction, within 10 days of receiving the allegation and to conduct a site visit;
- Notify the complainant in writing, to the extent feasible, if DHCS does not have jurisdiction, that it does not investigate those types of complaints;
- Complete the investigation within 120 days of the initiation of the investigation, unless DHCS requires assistance from other state agencies, or additional resources to complete the investigation, as DHCS determines; and,
- Notify the complainant in writing, including through electronic means, of the reason for the delay if DHCS is unable to complete the investigation within 120 days.
- Expands the required actions for DHCS to take, when it conducts a site visit to investigate allegations of operating without a valid RTF license, to provide the entity the notice within 10 days of the DHCS employee submitting their findings, and to conduct a follow-up site visit to determine whether the entity has ceased providing services by the date DHCS specified.
- Permits county behavioral health agencies, if they elect to administer the DMC-ODS and provide optional recovery housing services, to request approval from DHCS to conduct a site visit of a RR/SLH, with which it contracts, that is alleged to be in violation of licensing law. Permits DHCS to approve the request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits imposed by this bill.
Comments
According to the author of this bill:
The proliferation of RR/SLHs and SUD treatment facilities, particularly in Southern California’s "Rehab Riviera," has raised concerns regarding the quality of care and regulatory oversight. These concerns were confirmed by a recent State Auditor’s report, which found that DHCS does not always provide timely or thorough oversight, risking the health and safety of people in recovery. This bill will ameliorate these perpetuated issues by establishing timelines for DHCS to investigate allegations of licensed treatment being offered at unlicensed RR/SLHs. If DHCS cannot meet the timelines, SB 490 would authorize cities and counties to request approval to conduct site visits and enforce compliance with existing state licensing requirements.
Background
California State Auditor (CSA) report. Issued in October 2024, the CSA Drug and Alcohol Treatment Facilities report stated complaints to DHCS may arise from various sources, including RTF residents, neighbors, staff members, or government agencies. According to internal guidelines, DHCS prioritizes death investigations over investigations into all other types of complaints. The CSA stated, in fact, DHCS aims to assign death investigations to a staff member on the day it receives the report of a death. In the course of a death investigation, it directs its staff to perform a complete review of the facility where the death occurred to determine whether the resident’s death was related to deficiencies in the facility’s operation. DHCS also receives and investigates complaints about facilities that operate without a license—for which generally DHCS does not have oversight. If an investigation finds, however, that an unlicensed facility is providing or advertising services that require a license, DHCS notifies the facility that it has been violating the law. If it obtains sufficient evidence the facility has not stopped providing the services in question, DHCS is authorized in current law to bring a civil action against the facility. For a licensed RTF, if during a complaint investigation or compliance inspection, DHCS finds a facility poses serious risks to the health and safety of residents, it may initiate a license suspension or revocation. Current law authorizes DHCS to immediately suspend a license when these concerns are present. A suspension stays in effect until DHCS makes a final determination, which may include revocation, following a hearing and a proposed decision by an Administrative Law Judge.
The CSA made a series of recommendations to help DHCS improve its complaints processes—mostly through administrative means:
- Provide management with information about the timeliness of compliance inspections;
- Implement a mechanism in its licensing database that notifies staff of the dates for upcoming compliance inspections for their caseload so they can plan accordingly;
- Fill its vacant positions;
- Update its policies and staff training by April 2025 to ensure it assigns complaints to analysts for investigation within 10 days, as currently required by its regulations;
- Implement guidelines by October 2025 that specify the length of time analysts should take to complete key steps in the investigation process for different types of investigations;
- Conduct site visits beginning December 2024 in all instances in which there is an allegation that an unlicensed facility is advertising or providing treatment services without a license; and,
- Develop and implement, by April 2025, a follow-up procedure, such as performing another site visit, to confirm unlicensed facilities have ceased providing services unlawfully.
DHCS complaints investigations. DHCS informally outlined its process for RTF investigations that generally mirrors the timelines stated by the author of this bill and in the CSA report. If DHCS establishes jurisdiction, the complaint is logged, assigned a complaint number, and a high-, medium-, or low-level designation. When DHCS receives a complaint that does not fall under its jurisdiction, a letter is sent to the complainant informing them of this fact. DHCS regulations define deficiencies, determined during the investigation, in the following way:
- A Class A deficiency is any presenting an imminent danger to any resident of a RTF. “Imminent danger” means that the more likely consequence of the deficiency is death or physical injury that would render a part of the body functionally useless or temporarily or permanently reduced in capacity, or inhibit any function of the body to such a degree as to shorten life or to reduce physical or mental capacity;
- A Class B deficiency is any relating to the operation or maintenance of the RTF that has a direct or immediate relationship to the physical health, mental health, or safety of RTF residents; and,
- A Class C deficiency is any relating to the operation or maintenance of the RTF that DHCS determines has only a minimal relationship to the health or safety of residents.
An investigation report is issued, outlining whether an allegation was substantiated, and if any additional findings were discovered. If any deficiencies are identified and substantiated, RTFs may be subject to a corrective action plan or verification of correction and civil penalties for failure to respond timely to a Notice of Deficiency. Deficiencies can also result in suspension or revocation of the RTF’s license. If no deficiencies are found, the complaint report is issued with allegations marked as “not substantiated.”
DHCS further noted that allegations of an entity unlawfully providing treatment services is assigned a high priority. They follow the same process for these allegations as they do for other high priority complaints against the facilities under their purview. However, when it comes to conducting a site visit, the facility can technically deny them access. In these situations, DHCS requires the assistance from the California Department of Justice in obtaining an investigation warrant but only if they have enough evidence to support the allegation. If DHCS determines the facility is in violation, they issue the notices authorized in existing law regarding the violations, penalties that can be assessed, and a date by which the facility is required to cease providing treatment services. If the facility continues to operate beyond the date, DHCS goes to the Superior Court to get an injunction.
Group Home Technical Advisory (GHTA). The California Department of Housing and Community Development (HCD) Division of Housing Policy Development issued the GHTA in December 2022 and states that group homes are an especially important type of housing for persons with disabilities. By supporting their residents’ individualized needs while providing flexible and affordable housing options, group homes help persons with disabilities live in deinstitutionalized settings that facilitate their integration into local communities. HCD further states in recent years, some local governments have amended their zoning ordinances to add new regulations for group homes, particularly for SLH/RRs. These amendments have raised concerns that local governments are not complying with their affirmative obligations under state planning and zoning laws to promote more inclusive communities and affirmatively further fair housing (AFFH). These amendments have also generated disputes and confusion over whether local governments are violating fair housing laws by discriminating against persons with disabilities or other protected characteristics. Among other concerns, local land use policies and practices can block new group homes from opening, force existing ones to close, and impose costs, legal fees, and administrative burdens that make it difficult for group homes to operate. These concerns arise in the context of a shortage of adequate housing for persons with disabilities, which is a particularly acute problem within California’s broader housing crisis. HCD states that with concerns, disputes, and confusion continuing to grow, the GHTA provides guidance on how state planning, zoning, and fair housing laws apply when local governments attempt to regulate group homes through land use policies and practices. It is designed to help local governments comply with their obligations under these state laws, including, for example, the Planning and Zoning Law; Housing Element Law; AFFH provisions; Anti-Discrimination in Land Use Law; and the Fair Employment and Housing Act, collectively “state housing laws.” Taken from the GHTA, local governments can comply with state housing laws regarding group homes, including the following:
- Discriminatory Purpose or Effect. Ensure that the policy or practice does not discriminate on the basis of disability or other characteristics protected by state law. Apply the GHTA’s analysis on how to determine if a policy or practice has a discriminatory purpose or effect and how to implement flexible reasonable accommodation procedures that promptly and efficiently resolve accommodation requests in compliance with state housing laws and regulations. (pp. 12-20);
- Supportive and Transitional Housing. Comply with the specific protections for group homes that fall within the definitions of supportive or transitional housing (pp. 20-22);
- State and Federal Law Distinctions. Confirm that a policy or practice complies with state housing laws even if it complies with federal law, because California law provides broader and different protections than federal law (pp. 22-23);
- Definition of Single-Family Residence. Avoid restrictive definitions of single housekeeping units or single-family homes that impermissibly constrain group homes from locating in single-family zones. This includes, for example, avoiding definitions that equate group homes with boardinghouses, require all residents to share a common deed or lease, overly scrutinize residents’ living arrangements, or automatically exclude group homes that are owned by for-profit businesses or pay staff to help manage a home’s operations (pp. 24-25);
- Group Homes that Do Not Provide Licensable Services. Allow group homes that operate as single-family residences and that do not provide licensable services to locate in single-family neighborhoods, subject only to the generally applicable, nondiscriminatory health, safety, and zoning laws that apply to all single-family residences (pp. 25-26) (emphasis added); and,
- Other Requirements for Group Home Operators and Residents. Avoid the other examples of special requirements for operators and residents discussed that can overly constrain group homes, conflict with the duty to affirmatively support this housing, and discriminate on the basis of disability and other protected characteristics. Examples discussed include, among other things, parking requirements, restrictions on residents or staff, neighborhood notice requirements, and local law enforcement registration requirements (pp. 30-33).
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Assembly Appropriations Committee:
- DHCS estimates costs of $1.2 million in fiscal year (FY) 2027-28, and $1.1 million in FY 2028-29 and ongoing (Residential Outpatient Program Licensing Fund); and,
- DHCS notes it would need to increase licensing fees to implement the bill. DHCS was authorized to increase licensing fees up to 20% annually through FY 2026-27, to reach a cumulative fee increase of 75%. Additionally, DHCS states that no sooner than July 1, 2027, DHCS is authorized to increase licensing fees up to 5% annually and if DHCS proposes to increase fees beyond 5%, the increase would need to be approved by the Legislature. To support the additional staffing needed to implement this bill, DHCS states it would need to increase licensing fees by an additional 5% in FY 2027-28. DHCS states that, if the Legislature does not approve an increase in fees, DHCS will be unable to implement the requirements of this bill.
SUPPORT: (Verified 8/25/26)
League of California Cities (source)
Association of California Cities – Orange County
Association of California Life & Health Insurance Companies
California Association of Health Plans
City of Beverly Hills
City of Buena Park
City of Brea
City of Carlsbard
City of Garden Grove
City of Irvine
City of La Mesa
City of Lake Forest
City of Los Alamitos
City of Mission Viejo
City of Paramount
City of Placentia
City of Rocklin
City of Stanton
City of Thousand Oaks
City of Vacaville
OPPOSITION: (Verified 8/25/26)
California Behavioral Health Association
California Behavioral Health Planning Council
County Behavioral Health Directors Association
ARGUMENTS IN SUPPORT: The League of California Cities (Cal Cities), as sponsor, argues a recent state audit revealed DHCS has not consistently investigated allegations of unlicensed facilities providing or advertising treatment services. DHCS has often failed to conduct site visits and follow-ups to ensure illegal operations have stopped. In one example highlighted in the audit, DHCS substantiated an allegation that an unlicensed facility was unlawfully providing services but there was no indication DHCS followed up to verify the facility’s claims it ceased operations, nor did it conduct a site visit to confirm compliance. Cal Cities argues the auditor recommended that DHCS improve the timeliness of inspections and complaint investigations; conduct more site visits; and establish follow-up procedures to ensure unlicensed facilities cease unlawful operations. Cal Cities states this bill empowers local governments to partner with the state to conduct site inspections and enforce licensing laws. This collaboration allows the state to leverage local capacity to respond swiftly to violations, ensure compliance, and better protect public health and safety.
ARGUMENTS IN OPPOSITION: The County Behavioral Health Directors Association (CBHDA) states that as part of their core functions they provide an array of Medi-Cal SUD treatment services, including supportive RR/SLHs, which are non-medical housing settings designed to support recovery and foster community, as a component of the SUD continuum of care. CBHDA argues this bill stems from continued negative stigma around RR/SLHs, and at its core contains a fundamental framing issue as it relates to RR/SLHs and SUD treatment. CBHDA further argues while DHCS is already tasked with these investigations, the timelines proposed in this bill would lead to DHCS potentially exceeding its bandwidth and then delegating this function to counties, which would include conducting investigations into private entities that counties do not contract with, nor have jurisdiction over. Delegating this responsibility to counties represents a significant liability risk, and a potential unfunded workload increase for county behavioral health agencies. The California Behavioral Health Association states their concern about this bill’s framing risks further stigmatizing RRs that do not provide licensable services, citing state housing guidance recognizing the importance of group homes and RRs as housing options for persons with disabilities and notes that homes not providing licensable services must be allowed to operate subject to generally applicable nondiscriminatory laws. Any policy response to bad actors should be narrowly tailored to unlawful treatment activity and financial misconduct, not structured in a way that sweeps in lawful RR arrangements or creates new barriers for RRs. The California Behavioral Health Planning Council states that the outlined mandates in the bill are outside the purview of county behavioral health departments considering counties do not have authority, oversight, or code enforcement jurisdiction over unlicensed facilities. This would require counties to provide training to designated teams without sufficient funding or guidance.
ASSEMBLY FLOOR: 77-0, 8/25/26
AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, DeMaio, Dixon, Ellis, Flora, Fong, Gabriel, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Johnson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas
NO VOTE RECORDED: Elhawary, McKinnor
Prepared by: Reyes Diaz / HEALTH / (916) 651-4111
11/5/26 15:15:45
**** END ****
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-4171 | SB 490 |
VETO
Bill No: SB 490
Author: Umberg (D), et al.
Enrolled: 8/30/26
Vote: 21
SENATE HEALTH COMMITTEE: 9-0, 1/14/26
AYES: Menjivar, Valladares, Durazo, Gonzalez, Padilla, Richardson, Rubio, Weber Pierson, Wiener
NO VOTE RECORDED: Grove, Limón
SENATE APPROPRIATIONS COMMITTEE: 7-0, 1/22/26
AYES: Caballero, Seyarto, Cabaldon, Dahle, Grayson, Richardson, Wahab
SENATE FLOOR: 39-0, 1/26/26
AYES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Reyes, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener
NO VOTE RECORDED: Gonzalez
SENATE FLOOR: 40-0, 8/27/26
AYES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Reyes, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener
ASSEMBLY FLOOR: 77-0, 8/25/26 - See last page for vote
SUBJECT: Alcohol and drug programs
SOURCE: League of California Cities
DIGEST:
This bill (1) requires the Department of Health Care Services (DHCS) to take specified action when it determines an entity is providing residential alcohol or other drug recovery or treatment services without a proper license, including conducting site visits, as well as initiating and completing investigations within specified timeframes; and, (2) permits county behavioral health agencies that administer the Drug Medi-Cal organized delivery system to request DHCS approval to conduct site visits to specified recovery residences (RRs).
ANALYSIS:
Existing law:
- Grants sole authority in the state to DHCS to certify alcohol or other drug (AOD) programs and to license adult residential alcohol or other drug recovery or treatment facilities (RTFs). [Health and Safety Code (HSC) §11832, 11834.01]
- Requires DHCS to conduct onsite program compliance visits for AOD programs and RTFs at least once during the certification or licensure period. Permits DHCS to conduct announced or unannounced site visits to review for compliance. [HSC §11832.12, 11834.01]
- Requires all programs certified, or RTFs licensed by DHCS, to disclose if any of its agents, partners, directors, officers, or owners, including a sole proprietor and member, has either of the following:
- Ownership or control of, or financial interest in, a recovery residence/sober living homes (RR/SLHs); or,
- Any contractual relationship with an entity that regularly provides professional services or substance use disorder (SUD) treatment or recovery services to clients of programs certified or facilities licensed by DHCS, if the entity is not part of the program certified or facility licensed. [HSC §11833.05(a)]
- Permits DHCS to suspend or revoke an AOD program certification or RTF license for failing to disclose the information required in 3) above of existing law. [HSC 11833.05(c)]
- Prohibits a person, firm, partnership, association, corporation, or local governmental entity from operating, establishing, managing, conducting, or maintaining an RTF to provide recovery, treatment, or detoxification services within this state without first obtaining a current valid license from DHCS. [HSC §11834.30]
- Requires a laboratory or certified outpatient treatment program that leases, manages, or owns housing units that are offered to individuals who concurrently utilize laboratory or outpatient services to maintain separate contracts for the housing. Requires a RTF to only offer an individual discounted housing following discharge from the facility if certain conditions are met, such as the RTF and the individual enter into a written contract for housing that is separate from the contract for treatment; if the individual also pursues outpatient treatment; or, the offer for housing is not dependent upon the individual’s agreement to attend outpatient treatment at a program that is owned or operated by the RTF. [HSC §11831.65]
- Requires DHCS to conduct a site visit to investigate an allegation of an entity operating without a valid RTF license. Requires DHCS to take the following actions if evidence substantiates that the entity is providing RTF services without a license:
- Submit the findings of the investigation;
- Issue a written notice to the entity stating that it is operating in violation DHCS’s licensing law and inform them of the date by which it ceases providing services and notice that DHCS will assess a civil penalty of $2,000 per day for every day they continue to provide services beyond the date specified in the notice;
- Notice that the case will be referred for civil proceedings in the event the entity continues to provide services beyond the date specified in the notice; and,
- Inform the entity of the licensing requirements. [HSC §11834.31]
- Prohibits an entity found to be in violation of DHCS’s licensing law from applying for initial RTF licensure for a period of five years from the date of the notice specified. [HSC §11834.31]
- Permits DHCS’s Director to suspend or revoke certification or licensure, including other AOD program certifications or RTF licenses held by the same person or entity, or to deny an application for certification or licensure; extension of the certification or license; or, modification to certification or a license, upon specified violations and circumstances. [HSC §11832.14, 11834.36]
- Requires DHCS to continue to implement the Drug Medi-Cal organized delivery system (DMC-ODS) program previously authorized under the California Medi-Cal 2020 Demonstration pilot. Requires election by counties to participate in the DMC-ODS to be considered voluntary. [Welfare and Institutions Code (WIC) §14184.401]
This bill:
- Requires DHCS, if it takes action against an RR/SLH for providing treatment services without a valid license, to conduct a site visit of a certified AOD program or licensed RTF that has disclosed an interest in that RR/SLH.
- Requires all AOD programs and RTFs, no later than July 15, 2027, and every July 15 thereafter, to report to DHCS all money transfers between them and their affiliated RR/SLHs. Requires DHCS to analyze transfer data for compliance trends, irregularities, or fraud indicators, and to develop guidelines for permissible and impermissible transfers.
- Requires DHCS, if a facility is alleged to be operating as an RTF without a valid license, to conduct a site visit as follows:
- Initiate an investigation of the allegation, if DHCS has jurisdiction, within 10 days of receiving the allegation and to conduct a site visit;
- Notify the complainant in writing, to the extent feasible, if DHCS does not have jurisdiction, that it does not investigate those types of complaints;
- Complete the investigation within 120 days of the initiation of the investigation, unless DHCS requires assistance from other state agencies, or additional resources to complete the investigation, as DHCS determines; and,
- Notify the complainant in writing, including through electronic means, of the reason for the delay if DHCS is unable to complete the investigation within 120 days.
- Expands the required actions for DHCS to take, when it conducts a site visit to investigate allegations of operating without a valid RTF license, to provide the entity the notice within 10 days of the DHCS employee submitting their findings, and to conduct a follow-up site visit to determine whether the entity has ceased providing services by the date DHCS specified.
- Permits county behavioral health agencies, if they elect to administer the DMC-ODS and provide optional recovery housing services, to request approval from DHCS to conduct a site visit of a RR/SLH, with which it contracts, that is alleged to be in violation of licensing law. Permits DHCS to approve the request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits imposed by this bill.
Comments
According to the author of this bill:
The proliferation of RR/SLHs and SUD treatment facilities, particularly in Southern California’s "Rehab Riviera," has raised concerns regarding the quality of care and regulatory oversight. These concerns were confirmed by a recent State Auditor’s report, which found that DHCS does not always provide timely or thorough oversight, risking the health and safety of people in recovery. This bill will ameliorate these perpetuated issues by establishing timelines for DHCS to investigate allegations of licensed treatment being offered at unlicensed RR/SLHs. If DHCS cannot meet the timelines, SB 490 would authorize cities and counties to request approval to conduct site visits and enforce compliance with existing state licensing requirements.
Background
California State Auditor (CSA) report. Issued in October 2024, the CSA Drug and Alcohol Treatment Facilities report stated complaints to DHCS may arise from various sources, including RTF residents, neighbors, staff members, or government agencies. According to internal guidelines, DHCS prioritizes death investigations over investigations into all other types of complaints. The CSA stated, in fact, DHCS aims to assign death investigations to a staff member on the day it receives the report of a death. In the course of a death investigation, it directs its staff to perform a complete review of the facility where the death occurred to determine whether the resident’s death was related to deficiencies in the facility’s operation. DHCS also receives and investigates complaints about facilities that operate without a license—for which generally DHCS does not have oversight. If an investigation finds, however, that an unlicensed facility is providing or advertising services that require a license, DHCS notifies the facility that it has been violating the law. If it obtains sufficient evidence the facility has not stopped providing the services in question, DHCS is authorized in current law to bring a civil action against the facility. For a licensed RTF, if during a complaint investigation or compliance inspection, DHCS finds a facility poses serious risks to the health and safety of residents, it may initiate a license suspension or revocation. Current law authorizes DHCS to immediately suspend a license when these concerns are present. A suspension stays in effect until DHCS makes a final determination, which may include revocation, following a hearing and a proposed decision by an Administrative Law Judge.
The CSA made a series of recommendations to help DHCS improve its complaints processes—mostly through administrative means:
- Provide management with information about the timeliness of compliance inspections;
- Implement a mechanism in its licensing database that notifies staff of the dates for upcoming compliance inspections for their caseload so they can plan accordingly;
- Fill its vacant positions;
- Update its policies and staff training by April 2025 to ensure it assigns complaints to analysts for investigation within 10 days, as currently required by its regulations;
- Implement guidelines by October 2025 that specify the length of time analysts should take to complete key steps in the investigation process for different types of investigations;
- Conduct site visits beginning December 2024 in all instances in which there is an allegation that an unlicensed facility is advertising or providing treatment services without a license; and,
- Develop and implement, by April 2025, a follow-up procedure, such as performing another site visit, to confirm unlicensed facilities have ceased providing services unlawfully.
DHCS complaints investigations. DHCS informally outlined its process for RTF investigations that generally mirrors the timelines stated by the author of this bill and in the CSA report. If DHCS establishes jurisdiction, the complaint is logged, assigned a complaint number, and a high-, medium-, or low-level designation. When DHCS receives a complaint that does not fall under its jurisdiction, a letter is sent to the complainant informing them of this fact. DHCS regulations define deficiencies, determined during the investigation, in the following way:
- A Class A deficiency is any presenting an imminent danger to any resident of a RTF. “Imminent danger” means that the more likely consequence of the deficiency is death or physical injury that would render a part of the body functionally useless or temporarily or permanently reduced in capacity, or inhibit any function of the body to such a degree as to shorten life or to reduce physical or mental capacity;
- A Class B deficiency is any relating to the operation or maintenance of the RTF that has a direct or immediate relationship to the physical health, mental health, or safety of RTF residents; and,
- A Class C deficiency is any relating to the operation or maintenance of the RTF that DHCS determines has only a minimal relationship to the health or safety of residents.
An investigation report is issued, outlining whether an allegation was substantiated, and if any additional findings were discovered. If any deficiencies are identified and substantiated, RTFs may be subject to a corrective action plan or verification of correction and civil penalties for failure to respond timely to a Notice of Deficiency. Deficiencies can also result in suspension or revocation of the RTF’s license. If no deficiencies are found, the complaint report is issued with allegations marked as “not substantiated.”
DHCS further noted that allegations of an entity unlawfully providing treatment services is assigned a high priority. They follow the same process for these allegations as they do for other high priority complaints against the facilities under their purview. However, when it comes to conducting a site visit, the facility can technically deny them access. In these situations, DHCS requires the assistance from the California Department of Justice in obtaining an investigation warrant but only if they have enough evidence to support the allegation. If DHCS determines the facility is in violation, they issue the notices authorized in existing law regarding the violations, penalties that can be assessed, and a date by which the facility is required to cease providing treatment services. If the facility continues to operate beyond the date, DHCS goes to the Superior Court to get an injunction.
Group Home Technical Advisory (GHTA). The California Department of Housing and Community Development (HCD) Division of Housing Policy Development issued the GHTA in December 2022 and states that group homes are an especially important type of housing for persons with disabilities. By supporting their residents’ individualized needs while providing flexible and affordable housing options, group homes help persons with disabilities live in deinstitutionalized settings that facilitate their integration into local communities. HCD further states in recent years, some local governments have amended their zoning ordinances to add new regulations for group homes, particularly for SLH/RRs. These amendments have raised concerns that local governments are not complying with their affirmative obligations under state planning and zoning laws to promote more inclusive communities and affirmatively further fair housing (AFFH). These amendments have also generated disputes and confusion over whether local governments are violating fair housing laws by discriminating against persons with disabilities or other protected characteristics. Among other concerns, local land use policies and practices can block new group homes from opening, force existing ones to close, and impose costs, legal fees, and administrative burdens that make it difficult for group homes to operate. These concerns arise in the context of a shortage of adequate housing for persons with disabilities, which is a particularly acute problem within California’s broader housing crisis. HCD states that with concerns, disputes, and confusion continuing to grow, the GHTA provides guidance on how state planning, zoning, and fair housing laws apply when local governments attempt to regulate group homes through land use policies and practices. It is designed to help local governments comply with their obligations under these state laws, including, for example, the Planning and Zoning Law; Housing Element Law; AFFH provisions; Anti-Discrimination in Land Use Law; and the Fair Employment and Housing Act, collectively “state housing laws.” Taken from the GHTA, local governments can comply with state housing laws regarding group homes, including the following:
- Discriminatory Purpose or Effect. Ensure that the policy or practice does not discriminate on the basis of disability or other characteristics protected by state law. Apply the GHTA’s analysis on how to determine if a policy or practice has a discriminatory purpose or effect and how to implement flexible reasonable accommodation procedures that promptly and efficiently resolve accommodation requests in compliance with state housing laws and regulations. (pp. 12-20);
- Supportive and Transitional Housing. Comply with the specific protections for group homes that fall within the definitions of supportive or transitional housing (pp. 20-22);
- State and Federal Law Distinctions. Confirm that a policy or practice complies with state housing laws even if it complies with federal law, because California law provides broader and different protections than federal law (pp. 22-23);
- Definition of Single-Family Residence. Avoid restrictive definitions of single housekeeping units or single-family homes that impermissibly constrain group homes from locating in single-family zones. This includes, for example, avoiding definitions that equate group homes with boardinghouses, require all residents to share a common deed or lease, overly scrutinize residents’ living arrangements, or automatically exclude group homes that are owned by for-profit businesses or pay staff to help manage a home’s operations (pp. 24-25);
- Group Homes that Do Not Provide Licensable Services. Allow group homes that operate as single-family residences and that do not provide licensable services to locate in single-family neighborhoods, subject only to the generally applicable, nondiscriminatory health, safety, and zoning laws that apply to all single-family residences (pp. 25-26) (emphasis added); and,
Other Requirements for Group Home Operators and Residents. Avoid the other examples of special requirements for operators and residents discussed that can overly constrain group homes, conflict with the duty to affirmatively support this housing, and discriminate on the basis of disability and other protected characteristics. Examples discussed include, among other things, parking requirements, restrictions on residents or staff, neighborhood notice requirements, and local law enforcement registration requirements (pp. 30-33).
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Assembly Appropriations Committee:
- DHCS estimates costs of $1.2 million in fiscal year (FY) 2027-28, and $1.1 million in FY 2028-29 and ongoing (Residential Outpatient Program Licensing Fund); and,
- DHCS notes it would need to increase licensing fees to implement the bill. DHCS was authorized to increase licensing fees up to 20% annually through FY 2026-27, to reach a cumulative fee increase of 75%. Additionally, DHCS states that no sooner than July 1, 2027, DHCS is authorized to increase licensing fees up to 5% annually and if DHCS proposes to increase fees beyond 5%, the increase would need to be approved by the Legislature. To support the additional staffing needed to implement this bill, DHCS states it would need to increase licensing fees by an additional 5% in FY 2027-28. DHCS states that, if the Legislature does not approve an increase in fees, DHCS will be unable to implement the requirements of this bill.
SUPPORT: (Verified 10/1/26)
League of California Cities (source)
Association of California Cities – Orange County
Association of California Life & Health Insurance Companies
California Association of Health Plans
City of Beverly Hills
City of Buena Park
City of Brea
City of Carlsbard
City of Garden Grove
City of Irvine
City of La Mesa
City of Lake Forest
City of Los Alamitos
City of Mission Viejo
City of Paramount
City of Placentia
City of Rocklin
City of Stanton
City of Thousand Oaks
City of Vacaville
OPPOSITION: (Verified 10/1/26)
California Behavioral Health Association
California Behavioral Health Planning Council
County Behavioral Health Directors Association
ARGUMENTS IN SUPPORT: The League of California Cities (Cal Cities), as sponsor, argues a recent state audit revealed DHCS has not consistently investigated allegations of unlicensed facilities providing or advertising treatment services. DHCS has often failed to conduct site visits and follow-ups to ensure illegal operations have stopped. In one example highlighted in the audit, DHCS substantiated an allegation that an unlicensed facility was unlawfully providing services but there was no indication DHCS followed up to verify the facility’s claims it ceased operations, nor did it conduct a site visit to confirm compliance. Cal Cities argues the auditor recommended that DHCS improve the timeliness of inspections and complaint investigations; conduct more site visits; and establish follow-up procedures to ensure unlicensed facilities cease unlawful operations. Cal Cities states this bill empowers local governments to partner with the state to conduct site inspections and enforce licensing laws. This collaboration allows the state to leverage local capacity to respond swiftly to violations, ensure compliance, and better protect public health and safety.
ARGUMENTS IN OPPOSITION: The County Behavioral Health Directors Association (CBHDA) states that as part of their core functions they provide an array of Medi-Cal SUD treatment services, including supportive RR/SLHs, which are non-medical housing settings designed to support recovery and foster community, as a component of the SUD continuum of care. CBHDA argues this bill stems from continued negative stigma around RR/SLHs, and at its core contains a fundamental framing issue as it relates to RR/SLHs and SUD treatment. CBHDA further argues while DHCS is already tasked with these investigations, the timelines proposed in this bill would lead to DHCS potentially exceeding its bandwidth and then delegating this function to counties, which would include conducting investigations into private entities that counties do not contract with, nor have jurisdiction over. Delegating this responsibility to counties represents a significant liability risk, and a potential unfunded workload increase for county behavioral health agencies. The California Behavioral Health Association states their concern about this bill’s framing risks further stigmatizing RRs that do not provide licensable services, citing state housing guidance recognizing the importance of group homes and RRs as housing options for persons with disabilities and notes that homes not providing licensable services must be allowed to operate subject to generally applicable nondiscriminatory laws. Any policy response to bad actors should be narrowly tailored to unlawful treatment activity and financial misconduct, not structured in a way that sweeps in lawful RR arrangements or creates new barriers for RRs. The California Behavioral Health Planning Council states that the outlined mandates in the bill are outside the purview of county behavioral health departments considering counties do not have authority, oversight, or code enforcement jurisdiction over unlicensed facilities. This would require counties to provide training to designated teams without sufficient funding or guidance.
GOVERNOR'S VETO MESSAGE:
“This bill would impose several new requirements on the Department of Health Care Services related to oversight of licensed alcohol and other drug (AOD) facilities, investigations of unlicensed AOD facilities, and reporting obligations concerning recovery residences.
I share the author's goal to improve the oversight of facilities serving those
seeking treatment for alcohol or drug addiction. However, this bill goes beyond DHCS's regulatory responsibilities regarding the financial disclosures and money transfers for businesses it does not license or oversee. Additionally, the notification requirements in the bill would limit the flexibility needed to manage complex investigations. Finally, authorizing county involvement in unlicensed facility investigations would weaken the structure of the current statewide regulatory system, raising concerns about jurisdiction, confidentiality, training, and enforcement consistency.”
ASSEMBLY FLOOR: 77-0, 8/25/26
AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, DeMaio, Dixon, Ellis, Flora, Fong, Gabriel, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Johnson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas
NO VOTE RECORDED: Elhawary, McKinnor
Prepared by: Reyes Diaz / HEALTH / (916) 651-4111
10/14/26 11:55:01
**** END ****
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-4171 | SB 490 |
VETO
Bill No: SB 490
Author: Umberg (D)
Amended: 8/21/26
Vote: 21
SENATE HEALTH COMMITTEE: 9-0, 1/14/26
AYES: Menjivar, Valladares, Durazo, Gonzalez, Padilla, Richardson, Rubio, Weber Pierson, Wiener
NO VOTE RECORDED: Grove, Limón
SENATE APPROPRIATIONS COMMITTEE: 7-0, 1/22/26
AYES: Caballero, Seyarto, Cabaldon, Dahle, Grayson, Richardson, Wahab
SENATE FLOOR: 39-0, 1/26/26
AYES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Reyes, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener
NO VOTE RECORDED: Gonzalez
SENATE FLOOR: 40-0, 8/27/26
AYES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Reyes, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener
ASSEMBLY FLOOR: 77-0, 8/25/26 - See last page for vote
SUBJECT: Alcohol and drug programs
SOURCE: League of California Cities
DIGEST:
This bill (1) requires the Department of Health Care Services (DHCS) to take specified action when it determines an entity is providing residential alcohol or other drug recovery or treatment services without a proper license, including conducting site visits, as well as initiating and completing investigations within specified timeframes; and, (2) permits county behavioral health agencies that administer the Drug Medi-Cal organized delivery system to request DHCS approval to conduct site visits to specified recovery residences (RRs).
ANALYSIS:
Existing law:
- Grants sole authority in the state to DHCS to certify alcohol or other drug (AOD) programs and to license adult residential alcohol or other drug recovery or treatment facilities (RTFs). [Health and Safety Code (HSC) §11832, 11834.01]
- Requires DHCS to conduct onsite program compliance visits for AOD programs and RTFs at least once during the certification or licensure period. Permits DHCS to conduct announced or unannounced site visits to review for compliance. [HSC §11832.12, 11834.01]
- Requires all programs certified, or RTFs licensed by DHCS, to disclose if any of its agents, partners, directors, officers, or owners, including a sole proprietor and member, has either of the following:
- Ownership or control of, or financial interest in, a recovery residence/sober living homes (RR/SLHs); or,
- Any contractual relationship with an entity that regularly provides professional services or substance use disorder (SUD) treatment or recovery services to clients of programs certified or facilities licensed by DHCS, if the entity is not part of the program certified or facility licensed. [HSC §11833.05(a)]
- Permits DHCS to suspend or revoke an AOD program certification or RTF license for failing to disclose the information required in 3) above of existing law. [HSC 11833.05(c)]
- Prohibits a person, firm, partnership, association, corporation, or local governmental entity from operating, establishing, managing, conducting, or maintaining an RTF to provide recovery, treatment, or detoxification services within this state without first obtaining a current valid license from DHCS. [HSC §11834.30]
- Requires a laboratory or certified outpatient treatment program that leases, manages, or owns housing units that are offered to individuals who concurrently utilize laboratory or outpatient services to maintain separate contracts for the housing. Requires a RTF to only offer an individual discounted housing following discharge from the facility if certain conditions are met, such as the RTF and the individual enter into a written contract for housing that is separate from the contract for treatment; if the individual also pursues outpatient treatment; or, the offer for housing is not dependent upon the individual’s agreement to attend outpatient treatment at a program that is owned or operated by the RTF. [HSC §11831.65]
- Requires DHCS to conduct a site visit to investigate an allegation of an entity operating without a valid RTF license. Requires DHCS to take the following actions if evidence substantiates that the entity is providing RTF services without a license:
- Submit the findings of the investigation;
- Issue a written notice to the entity stating that it is operating in violation DHCS’s licensing law and inform them of the date by which it ceases providing services and notice that DHCS will assess a civil penalty of $2,000 per day for every day they continue to provide services beyond the date specified in the notice;
- Notice that the case will be referred for civil proceedings in the event the entity continues to provide services beyond the date specified in the notice; and,
- Inform the entity of the licensing requirements. [HSC §11834.31]
- Prohibits an entity found to be in violation of DHCS’s licensing law from applying for initial RTF licensure for a period of five years from the date of the notice specified. [HSC §11834.31]
- Permits DHCS’s Director to suspend or revoke certification or licensure, including other AOD program certifications or RTF licenses held by the same person or entity, or to deny an application for certification or licensure; extension of the certification or license; or, modification to certification or a license, upon specified violations and circumstances. [HSC §11832.14, 11834.36]
- Requires DHCS to continue to implement the Drug Medi-Cal organized delivery system (DMC-ODS) program previously authorized under the California Medi-Cal 2020 Demonstration pilot. Requires election by counties to participate in the DMC-ODS to be considered voluntary. [Welfare and Institutions Code (WIC) §14184.401]
This bill:
- Requires DHCS, if it takes action against an RR/SLH for providing treatment services without a valid license, to conduct a site visit of a certified AOD program or licensed RTF that has disclosed an interest in that RR/SLH.
- Requires all AOD programs and RTFs, no later than July 15, 2027, and every July 15 thereafter, to report to DHCS all money transfers between them and their affiliated RR/SLHs. Requires DHCS to analyze transfer data for compliance trends, irregularities, or fraud indicators, and to develop guidelines for permissible and impermissible transfers.
- Requires DHCS, if a facility is alleged to be operating as an RTF without a valid license, to conduct a site visit as follows:
- Initiate an investigation of the allegation, if DHCS has jurisdiction, within 10 days of receiving the allegation and to conduct a site visit;
- Notify the complainant in writing, to the extent feasible, if DHCS does not have jurisdiction, that it does not investigate those types of complaints;
- Complete the investigation within 120 days of the initiation of the investigation, unless DHCS requires assistance from other state agencies, or additional resources to complete the investigation, as DHCS determines; and,
- Notify the complainant in writing, including through electronic means, of the reason for the delay if DHCS is unable to complete the investigation within 120 days.
- Expands the required actions for DHCS to take, when it conducts a site visit to investigate allegations of operating without a valid RTF license, to provide the entity the notice within 10 days of the DHCS employee submitting their findings, and to conduct a follow-up site visit to determine whether the entity has ceased providing services by the date DHCS specified.
- Permits county behavioral health agencies, if they elect to administer the DMC-ODS and provide optional recovery housing services, to request approval from DHCS to conduct a site visit of a RR/SLH, with which it contracts, that is alleged to be in violation of licensing law. Permits DHCS to approve the request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits imposed by this bill.
Comments
According to the author of this bill:
The proliferation of RR/SLHs and SUD treatment facilities, particularly in Southern California’s "Rehab Riviera," has raised concerns regarding the quality of care and regulatory oversight. These concerns were confirmed by a recent State Auditor’s report, which found that DHCS does not always provide timely or thorough oversight, risking the health and safety of people in recovery. This bill will ameliorate these perpetuated issues by establishing timelines for DHCS to investigate allegations of licensed treatment being offered at unlicensed RR/SLHs. If DHCS cannot meet the timelines, SB 490 would authorize cities and counties to request approval to conduct site visits and enforce compliance with existing state licensing requirements.
Background
California State Auditor (CSA) report. Issued in October 2024, the CSA Drug and Alcohol Treatment Facilities report stated complaints to DHCS may arise from various sources, including RTF residents, neighbors, staff members, or government agencies. According to internal guidelines, DHCS prioritizes death investigations over investigations into all other types of complaints. The CSA stated, in fact, DHCS aims to assign death investigations to a staff member on the day it receives the report of a death. In the course of a death investigation, it directs its staff to perform a complete review of the facility where the death occurred to determine whether the resident’s death was related to deficiencies in the facility’s operation. DHCS also receives and investigates complaints about facilities that operate without a license—for which generally DHCS does not have oversight. If an investigation finds, however, that an unlicensed facility is providing or advertising services that require a license, DHCS notifies the facility that it has been violating the law. If it obtains sufficient evidence the facility has not stopped providing the services in question, DHCS is authorized in current law to bring a civil action against the facility. For a licensed RTF, if during a complaint investigation or compliance inspection, DHCS finds a facility poses serious risks to the health and safety of residents, it may initiate a license suspension or revocation. Current law authorizes DHCS to immediately suspend a license when these concerns are present. A suspension stays in effect until DHCS makes a final determination, which may include revocation, following a hearing and a proposed decision by an Administrative Law Judge.
The CSA made a series of recommendations to help DHCS improve its complaints processes—mostly through administrative means:
- Provide management with information about the timeliness of compliance inspections;
- Implement a mechanism in its licensing database that notifies staff of the dates for upcoming compliance inspections for their caseload so they can plan accordingly;
- Fill its vacant positions;
- Update its policies and staff training by April 2025 to ensure it assigns complaints to analysts for investigation within 10 days, as currently required by its regulations;
- Implement guidelines by October 2025 that specify the length of time analysts should take to complete key steps in the investigation process for different types of investigations;
- Conduct site visits beginning December 2024 in all instances in which there is an allegation that an unlicensed facility is advertising or providing treatment services without a license; and,
- Develop and implement, by April 2025, a follow-up procedure, such as performing another site visit, to confirm unlicensed facilities have ceased providing services unlawfully.
DHCS complaints investigations. DHCS informally outlined its process for RTF investigations that generally mirrors the timelines stated by the author of this bill and in the CSA report. If DHCS establishes jurisdiction, the complaint is logged, assigned a complaint number, and a high-, medium-, or low-level designation. When DHCS receives a complaint that does not fall under its jurisdiction, a letter is sent to the complainant informing them of this fact. DHCS regulations define deficiencies, determined during the investigation, in the following way:
- A Class A deficiency is any presenting an imminent danger to any resident of a RTF. “Imminent danger” means that the more likely consequence of the deficiency is death or physical injury that would render a part of the body functionally useless or temporarily or permanently reduced in capacity, or inhibit any function of the body to such a degree as to shorten life or to reduce physical or mental capacity;
- A Class B deficiency is any relating to the operation or maintenance of the RTF that has a direct or immediate relationship to the physical health, mental health, or safety of RTF residents; and,
- A Class C deficiency is any relating to the operation or maintenance of the RTF that DHCS determines has only a minimal relationship to the health or safety of residents.
An investigation report is issued, outlining whether an allegation was substantiated, and if any additional findings were discovered. If any deficiencies are identified and substantiated, RTFs may be subject to a corrective action plan or verification of correction and civil penalties for failure to respond timely to a Notice of Deficiency. Deficiencies can also result in suspension or revocation of the RTF’s license. If no deficiencies are found, the complaint report is issued with allegations marked as “not substantiated.”
DHCS further noted that allegations of an entity unlawfully providing treatment services is assigned a high priority. They follow the same process for these allegations as they do for other high priority complaints against the facilities under their purview. However, when it comes to conducting a site visit, the facility can technically deny them access. In these situations, DHCS requires the assistance from the California Department of Justice in obtaining an investigation warrant but only if they have enough evidence to support the allegation. If DHCS determines the facility is in violation, they issue the notices authorized in existing law regarding the violations, penalties that can be assessed, and a date by which the facility is required to cease providing treatment services. If the facility continues to operate beyond the date, DHCS goes to the Superior Court to get an injunction.
Group Home Technical Advisory (GHTA). The California Department of Housing and Community Development (HCD) Division of Housing Policy Development issued the GHTA in December 2022 and states that group homes are an especially important type of housing for persons with disabilities. By supporting their residents’ individualized needs while providing flexible and affordable housing options, group homes help persons with disabilities live in deinstitutionalized settings that facilitate their integration into local communities. HCD further states in recent years, some local governments have amended their zoning ordinances to add new regulations for group homes, particularly for SLH/RRs. These amendments have raised concerns that local governments are not complying with their affirmative obligations under state planning and zoning laws to promote more inclusive communities and affirmatively further fair housing (AFFH). These amendments have also generated disputes and confusion over whether local governments are violating fair housing laws by discriminating against persons with disabilities or other protected characteristics. Among other concerns, local land use policies and practices can block new group homes from opening, force existing ones to close, and impose costs, legal fees, and administrative burdens that make it difficult for group homes to operate. These concerns arise in the context of a shortage of adequate housing for persons with disabilities, which is a particularly acute problem within California’s broader housing crisis. HCD states that with concerns, disputes, and confusion continuing to grow, the GHTA provides guidance on how state planning, zoning, and fair housing laws apply when local governments attempt to regulate group homes through land use policies and practices. It is designed to help local governments comply with their obligations under these state laws, including, for example, the Planning and Zoning Law; Housing Element Law; AFFH provisions; Anti-Discrimination in Land Use Law; and the Fair Employment and Housing Act, collectively “state housing laws.” Taken from the GHTA, local governments can comply with state housing laws regarding group homes, including the following:
- Discriminatory Purpose or Effect. Ensure that the policy or practice does not discriminate on the basis of disability or other characteristics protected by state law. Apply the GHTA’s analysis on how to determine if a policy or practice has a discriminatory purpose or effect and how to implement flexible reasonable accommodation procedures that promptly and efficiently resolve accommodation requests in compliance with state housing laws and regulations. (pp. 12-20);
- Supportive and Transitional Housing. Comply with the specific protections for group homes that fall within the definitions of supportive or transitional housing (pp. 20-22);
- State and Federal Law Distinctions. Confirm that a policy or practice complies with state housing laws even if it complies with federal law, because California law provides broader and different protections than federal law (pp. 22-23);
- Definition of Single-Family Residence. Avoid restrictive definitions of single housekeeping units or single-family homes that impermissibly constrain group homes from locating in single-family zones. This includes, for example, avoiding definitions that equate group homes with boardinghouses, require all residents to share a common deed or lease, overly scrutinize residents’ living arrangements, or automatically exclude group homes that are owned by for-profit businesses or pay staff to help manage a home’s operations (pp. 24-25);
- Group Homes that Do Not Provide Licensable Services. Allow group homes that operate as single-family residences and that do not provide licensable services to locate in single-family neighborhoods, subject only to the generally applicable, nondiscriminatory health, safety, and zoning laws that apply to all single-family residences (pp. 25-26) (emphasis added); and,
Other Requirements for Group Home Operators and Residents. Avoid the other examples of special requirements for operators and residents discussed that can overly constrain group homes, conflict with the duty to affirmatively support this housing, and discriminate on the basis of disability and other protected characteristics. Examples discussed include, among other things, parking requirements, restrictions on residents or staff, neighborhood notice requirements, and local law enforcement registration requirements (pp. 30-33).
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Assembly Appropriations Committee:
- DHCS estimates costs of $1.2 million in fiscal year (FY) 2027-28, and $1.1 million in FY 2028-29 and ongoing (Residential Outpatient Program Licensing Fund); and,
- DHCS notes it would need to increase licensing fees to implement the bill. DHCS was authorized to increase licensing fees up to 20% annually through FY 2026-27, to reach a cumulative fee increase of 75%. Additionally, DHCS states that no sooner than July 1, 2027, DHCS is authorized to increase licensing fees up to 5% annually and if DHCS proposes to increase fees beyond 5%, the increase would need to be approved by the Legislature. To support the additional staffing needed to implement this bill, DHCS states it would need to increase licensing fees by an additional 5% in FY 2027-28. DHCS states that, if the Legislature does not approve an increase in fees, DHCS will be unable to implement the requirements of this bill.
SUPPORT: (Verified 10/1/26)
League of California Cities (source)
Association of California Cities – Orange County
Association of California Life & Health Insurance Companies
California Association of Health Plans
City of Beverly Hills
City of Buena Park
City of Brea
City of Carlsbard
City of Garden Grove
City of Irvine
City of La Mesa
City of Lake Forest
City of Los Alamitos
City of Mission Viejo
City of Paramount
City of Placentia
City of Rocklin
City of Stanton
City of Thousand Oaks
City of Vacaville
OPPOSITION: (Verified 10/1/26)
California Behavioral Health Association
California Behavioral Health Planning Council
County Behavioral Health Directors Association
ARGUMENTS IN SUPPORT: The League of California Cities (Cal Cities), as sponsor, argues a recent state audit revealed DHCS has not consistently investigated allegations of unlicensed facilities providing or advertising treatment services. DHCS has often failed to conduct site visits and follow-ups to ensure illegal operations have stopped. In one example highlighted in the audit, DHCS substantiated an allegation that an unlicensed facility was unlawfully providing services but there was no indication DHCS followed up to verify the facility’s claims it ceased operations, nor did it conduct a site visit to confirm compliance. Cal Cities argues the auditor recommended that DHCS improve the timeliness of inspections and complaint investigations; conduct more site visits; and establish follow-up procedures to ensure unlicensed facilities cease unlawful operations. Cal Cities states this bill empowers local governments to partner with the state to conduct site inspections and enforce licensing laws. This collaboration allows the state to leverage local capacity to respond swiftly to violations, ensure compliance, and better protect public health and safety.
ARGUMENTS IN OPPOSITION: The County Behavioral Health Directors Association (CBHDA) states that as part of their core functions they provide an array of Medi-Cal SUD treatment services, including supportive RR/SLHs, which are non-medical housing settings designed to support recovery and foster community, as a component of the SUD continuum of care. CBHDA argues this bill stems from continued negative stigma around RR/SLHs, and at its core contains a fundamental framing issue as it relates to RR/SLHs and SUD treatment. CBHDA further argues while DHCS is already tasked with these investigations, the timelines proposed in this bill would lead to DHCS potentially exceeding its bandwidth and then delegating this function to counties, which would include conducting investigations into private entities that counties do not contract with, nor have jurisdiction over. Delegating this responsibility to counties represents a significant liability risk, and a potential unfunded workload increase for county behavioral health agencies. The California Behavioral Health Association states their concern about this bill’s framing risks further stigmatizing RRs that do not provide licensable services, citing state housing guidance recognizing the importance of group homes and RRs as housing options for persons with disabilities and notes that homes not providing licensable services must be allowed to operate subject to generally applicable nondiscriminatory laws. Any policy response to bad actors should be narrowly tailored to unlawful treatment activity and financial misconduct, not structured in a way that sweeps in lawful RR arrangements or creates new barriers for RRs. The California Behavioral Health Planning Council states that the outlined mandates in the bill are outside the purview of county behavioral health departments considering counties do not have authority, oversight, or code enforcement jurisdiction over unlicensed facilities. This would require counties to provide training to designated teams without sufficient funding or guidance.
GOVERNOR'S VETO MESSAGE:
Governor Newsom vetoed this bill based, in part, on several new requirements it would impose on DHCS related to oversight of licensed RTFs, investigations of unlicensed entities, and reporting obligations concerning RRs. The Governor further stated while he shares the author’s goal to improve oversight of facilities serving those seeking treatment, this bill goes beyond DHCS’s regulatory responsibilities regarding financial disclosures for businesses it does not license or oversee. The Governor additionally stated that notification requirements in this bill limit the flexibility to manage complex investigations. Lastly, the Governor stated that permitting county involvement in unlicensed facility investigations would weaken the current statewide regulatory system, raising concerns about jurisdiction, confidentiality, training, and enforcement consistency.
ASSEMBLY FLOOR: 77-0, 8/25/26
AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, DeMaio, Dixon, Ellis, Flora, Fong, Gabriel, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Johnson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas
NO VOTE RECORDED: Elhawary, McKinnor
Prepared by: Reyes Diaz / HEALTH / (916) 651-4111
10/6/26 14:53:55
**** END ****
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-4171 | SB 490 |
UNFINISHED BUSINESS
Bill No: SB 490
Author: Umberg (D), et al.
Amended: 8/21/26
Vote: 21
SENATE HEALTH COMMITTEE: 9-0, 1/14/26
AYES: Menjivar, Valladares, Durazo, Gonzalez, Padilla, Richardson, Rubio, Weber Pierson, Wiener
NO VOTE RECORDED: Grove, Limón
SENATE APPROPRIATIONS COMMITTEE: 7-0, 1/22/26
AYES: Caballero, Seyarto, Cabaldon, Dahle, Grayson, Richardson, Wahab
SENATE FLOOR: 39-0, 1/26/26
AYES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Reyes, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener
NO VOTE RECORDED: Gonzalez
ASSEMBLY FLOOR: Passed, 8/25/26
SUBJECT: Alcohol and drug programs
SOURCE: League of California Cities
DIGEST:
This bill (1) requires the Department of Health Care Services (DHCS) to take specified action when it determines an entity is providing residential alcohol or other drug recovery or treatment services without a proper license, including conducting site visits, as well as initiating and completing investigations within specified timeframes; and, (2) permits county behavioral health agencies that administer the Drug Medi-Cal organized delivery system to request DHCS approval to conduct site visits to specified recovery residences (RRs).
Assembly Amendments
extend the timeframe by which DHCS must complete an investigation; specify that county behavioral health agencies are permitted to visit RRs with which they contract; and, extend the date by which entities licensed or certified by DHCS must report money transfers between them and an RR.
ANALYSIS:
Existing law:
- Grants sole authority in the state to DHCS to certify alcohol or other drug (AOD) programs and to license adult residential alcohol or other drug recovery or treatment facilities (RTFs). [Health and Safety Code (HSC) §11832, 11834.01]
- Requires DHCS to conduct onsite program compliance visits for AOD programs and RTFs at least once during the certification or licensure period. Permits DHCS to conduct announced or unannounced site visits to review for compliance. [HSC §11832.12, 11834.01]
- Requires all programs certified, or RTFs licensed by DHCS, to disclose if any of its agents, partners, directors, officers, or owners, including a sole proprietor and member, has either of the following:
- Ownership or control of, or financial interest in, a recovery residence/sober living homes (RR/SLHs); or,
- Any contractual relationship with an entity that regularly provides professional services or substance use disorder (SUD) treatment or recovery services to clients of programs certified or facilities licensed by DHCS, if the entity is not part of the program certified or facility licensed. [HSC §11833.05(a)]
- Permits DHCS to suspend or revoke an AOD program certification or RTF license for failing to disclose the information required in 3) above of existing law. [HSC 11833.05(c)]
- Prohibits a person, firm, partnership, association, corporation, or local governmental entity from operating, establishing, managing, conducting, or maintaining an RTF to provide recovery, treatment, or detoxification services within this state without first obtaining a current valid license from DHCS. [HSC §11834.30]
- Requires a laboratory or certified outpatient treatment program that leases, manages, or owns housing units that are offered to individuals who concurrently utilize laboratory or outpatient services to maintain separate contracts for the housing. Requires a RTF to only offer an individual discounted housing following discharge from the facility if certain conditions are met, such as the RTF and the individual enter into a written contract for housing that is separate from the contract for treatment; if the individual also pursues outpatient treatment; or, the offer for housing is not dependent upon the individual’s agreement to attend outpatient treatment at a program that is owned or operated by the RTF. [HSC §11831.65]
- Requires DHCS to conduct a site visit to investigate an allegation of an entity operating without a valid RTF license. Requires DHCS to take the following actions if evidence substantiates that the entity is providing RTF services without a license:
- Submit the findings of the investigation;
- Issue a written notice to the entity stating that it is operating in violation DHCS’s licensing law and inform them of the date by which it ceases providing services and notice that DHCS will assess a civil penalty of $2,000 per day for every day they continue to provide services beyond the date specified in the notice;
- Notice that the case will be referred for civil proceedings in the event the entity continues to provide services beyond the date specified in the notice; and,
- Inform the entity of the licensing requirements. [HSC §11834.31]
- Prohibits an entity found to be in violation of DHCS’s licensing law from applying for initial RTF licensure for a period of five years from the date of the notice specified. [HSC §11834.31]
- Permits DHCS’s Director to suspend or revoke certification or licensure, including other AOD program certifications or RTF licenses held by the same person or entity, or to deny an application for certification or licensure; extension of the certification or license; or, modification to certification or a license, upon specified violations and circumstances. [HSC §11832.14, 11834.36]
- Requires DHCS to continue to implement the Drug Medi-Cal organized delivery system (DMC-ODS) program previously authorized under the California Medi-Cal 2020 Demonstration pilot. Requires election by counties to participate in the DMC-ODS to be considered voluntary. [Welfare and Institutions Code (WIC) §14184.401]
This bill:
- Requires DHCS, if it takes action against an RR/SLH for providing treatment services without a valid license, to conduct a site visit of a certified AOD program or licensed RTF that has disclosed an interest in that RR/SLH.
- Requires all AOD programs and RTFs, no later than July 15, 2027, and every July 15 thereafter, to report to DHCS all money transfers between them and their affiliated RR/SLHs. Requires DHCS to analyze transfer data for compliance trends, irregularities, or fraud indicators, and to develop guidelines for permissible and impermissible transfers.
- Requires DHCS, if a facility is alleged to be operating as an RTF without a valid license, to conduct a site visit as follows:
- Initiate an investigation of the allegation, if DHCS has jurisdiction, within 10 days of receiving the allegation and to conduct a site visit;
- Notify the complainant in writing, to the extent feasible, if DHCS does not have jurisdiction, that it does not investigate those types of complaints;
- Complete the investigation within 120 days of the initiation of the investigation, unless DHCS requires assistance from other state agencies, or additional resources to complete the investigation, as DHCS determines; and,
- Notify the complainant in writing, including through electronic means, of the reason for the delay if DHCS is unable to complete the investigation within 120 days.
- Expands the required actions for DHCS to take, when it conducts a site visit to investigate allegations of operating without a valid RTF license, to provide the entity the notice within 10 days of the DHCS employee submitting their findings, and to conduct a follow-up site visit to determine whether the entity has ceased providing services by the date DHCS specified.
- Permits county behavioral health agencies, if they elect to administer the DMC-ODS and provide optional recovery housing services, to request approval from DHCS to conduct a site visit of a RR/SLH, with which it contracts, that is alleged to be in violation of licensing law. Permits DHCS to approve the request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits imposed by this bill.
Comments
According to the author of this bill:
The proliferation of RR/SLHs and SUD treatment facilities, particularly in Southern California’s "Rehab Riviera," has raised concerns regarding the quality of care and regulatory oversight. These concerns were confirmed by a recent State Auditor’s report, which found that DHCS does not always provide timely or thorough oversight, risking the health and safety of people in recovery. This bill will ameliorate these perpetuated issues by establishing timelines for DHCS to investigate allegations of licensed treatment being offered at unlicensed RR/SLHs. If DHCS cannot meet the timelines, SB 490 would authorize cities and counties to request approval to conduct site visits and enforce compliance with existing state licensing requirements.
Background
California State Auditor (CSA) report. Issued in October 2024, the CSA Drug and Alcohol Treatment Facilities report stated complaints to DHCS may arise from various sources, including RTF residents, neighbors, staff members, or government agencies. According to internal guidelines, DHCS prioritizes death investigations over investigations into all other types of complaints. The CSA stated, in fact, DHCS aims to assign death investigations to a staff member on the day it receives the report of a death. In the course of a death investigation, it directs its staff to perform a complete review of the facility where the death occurred to determine whether the resident’s death was related to deficiencies in the facility’s operation. DHCS also receives and investigates complaints about facilities that operate without a license—for which generally DHCS does not have oversight. If an investigation finds, however, that an unlicensed facility is providing or advertising services that require a license, DHCS notifies the facility that it has been violating the law. If it obtains sufficient evidence the facility has not stopped providing the services in question, DHCS is authorized in current law to bring a civil action against the facility. For a licensed RTF, if during a complaint investigation or compliance inspection, DHCS finds a facility poses serious risks to the health and safety of residents, it may initiate a license suspension or revocation. Current law authorizes DHCS to immediately suspend a license when these concerns are present. A suspension stays in effect until DHCS makes a final determination, which may include revocation, following a hearing and a proposed decision by an Administrative Law Judge.
The CSA made a series of recommendations to help DHCS improve its complaints processes—mostly through administrative means:
- Provide management with information about the timeliness of compliance inspections;
- Implement a mechanism in its licensing database that notifies staff of the dates for upcoming compliance inspections for their caseload so they can plan accordingly;
- Fill its vacant positions;
- Update its policies and staff training by April 2025 to ensure it assigns complaints to analysts for investigation within 10 days, as currently required by its regulations;
- Implement guidelines by October 2025 that specify the length of time analysts should take to complete key steps in the investigation process for different types of investigations;
- Conduct site visits beginning December 2024 in all instances in which there is an allegation that an unlicensed facility is advertising or providing treatment services without a license; and,
- Develop and implement, by April 2025, a follow-up procedure, such as performing another site visit, to confirm unlicensed facilities have ceased providing services unlawfully.
DHCS complaints investigations. DHCS informally outlined its process for RTF investigations that generally mirrors the timelines stated by the author of this bill and in the CSA report. If DHCS establishes jurisdiction, the complaint is logged, assigned a complaint number, and a high-, medium-, or low-level designation. When DHCS receives a complaint that does not fall under its jurisdiction, a letter is sent to the complainant informing them of this fact. DHCS regulations define deficiencies, determined during the investigation, in the following way:
- A Class A deficiency is any presenting an imminent danger to any resident of a RTF. “Imminent danger” means that the more likely consequence of the deficiency is death or physical injury that would render a part of the body functionally useless or temporarily or permanently reduced in capacity, or inhibit any function of the body to such a degree as to shorten life or to reduce physical or mental capacity;
- A Class B deficiency is any relating to the operation or maintenance of the RTF that has a direct or immediate relationship to the physical health, mental health, or safety of RTF residents; and,
- A Class C deficiency is any relating to the operation or maintenance of the RTF that DHCS determines has only a minimal relationship to the health or safety of residents.
An investigation report is issued, outlining whether an allegation was substantiated, and if any additional findings were discovered. If any deficiencies are identified and substantiated, RTFs may be subject to a corrective action plan or verification of correction and civil penalties for failure to respond timely to a Notice of Deficiency. Deficiencies can also result in suspension or revocation of the RTF’s license. If no deficiencies are found, the complaint report is issued with allegations marked as “not substantiated.”
DHCS further noted that allegations of an entity unlawfully providing treatment services is assigned a high priority. They follow the same process for these allegations as they do for other high priority complaints against the facilities under their purview. However, when it comes to conducting a site visit, the facility can technically deny them access. In these situations, DHCS requires the assistance from the California Department of Justice in obtaining an investigation warrant but only if they have enough evidence to support the allegation. If DHCS determines the facility is in violation, they issue the notices authorized in existing law regarding the violations, penalties that can be assessed, and a date by which the facility is required to cease providing treatment services. If the facility continues to operate beyond the date, DHCS goes to the Superior Court to get an injunction.
Group Home Technical Advisory (GHTA). The California Department of Housing and Community Development (HCD) Division of Housing Policy Development issued the GHTA in December 2022 and states that group homes are an especially important type of housing for persons with disabilities. By supporting their residents’ individualized needs while providing flexible and affordable housing options, group homes help persons with disabilities live in deinstitutionalized settings that facilitate their integration into local communities. HCD further states in recent years, some local governments have amended their zoning ordinances to add new regulations for group homes, particularly for SLH/RRs. These amendments have raised concerns that local governments are not complying with their affirmative obligations under state planning and zoning laws to promote more inclusive communities and affirmatively further fair housing (AFFH). These amendments have also generated disputes and confusion over whether local governments are violating fair housing laws by discriminating against persons with disabilities or other protected characteristics. Among other concerns, local land use policies and practices can block new group homes from opening, force existing ones to close, and impose costs, legal fees, and administrative burdens that make it difficult for group homes to operate. These concerns arise in the context of a shortage of adequate housing for persons with disabilities, which is a particularly acute problem within California’s broader housing crisis. HCD states that with concerns, disputes, and confusion continuing to grow, the GHTA provides guidance on how state planning, zoning, and fair housing laws apply when local governments attempt to regulate group homes through land use policies and practices. It is designed to help local governments comply with their obligations under these state laws, including, for example, the Planning and Zoning Law; Housing Element Law; AFFH provisions; Anti-Discrimination in Land Use Law; and the Fair Employment and Housing Act, collectively “state housing laws.” Taken from the GHTA, local governments can comply with state housing laws regarding group homes, including the following:
- Discriminatory Purpose or Effect. Ensure that the policy or practice does not discriminate on the basis of disability or other characteristics protected by state law. Apply the GHTA’s analysis on how to determine if a policy or practice has a discriminatory purpose or effect and how to implement flexible reasonable accommodation procedures that promptly and efficiently resolve accommodation requests in compliance with state housing laws and regulations. (pp. 12-20);
- Supportive and Transitional Housing. Comply with the specific protections for group homes that fall within the definitions of supportive or transitional housing (pp. 20-22);
- State and Federal Law Distinctions. Confirm that a policy or practice complies with state housing laws even if it complies with federal law, because California law provides broader and different protections than federal law (pp. 22-23);
- Definition of Single-Family Residence. Avoid restrictive definitions of single housekeeping units or single-family homes that impermissibly constrain group homes from locating in single-family zones. This includes, for example, avoiding definitions that equate group homes with boardinghouses, require all residents to share a common deed or lease, overly scrutinize residents’ living arrangements, or automatically exclude group homes that are owned by for-profit businesses or pay staff to help manage a home’s operations (pp. 24-25);
- Group Homes that Do Not Provide Licensable Services. Allow group homes that operate as single-family residences and that do not provide licensable services to locate in single-family neighborhoods, subject only to the generally applicable, nondiscriminatory health, safety, and zoning laws that apply to all single-family residences (pp. 25-26) (emphasis added); and,
- Other Requirements for Group Home Operators and Residents. Avoid the other examples of special requirements for operators and residents discussed that can overly constrain group homes, conflict with the duty to affirmatively support this housing, and discriminate on the basis of disability and other protected characteristics. Examples discussed include, among other things, parking requirements, restrictions on residents or staff, neighborhood notice requirements, and local law enforcement registration requirements (pp. 30-33).
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Assembly Appropriations Committee:
- DHCS estimates costs of $1.2 million in fiscal year (FY) 2027-28, and $1.1 million in FY 2028-29 and ongoing (Residential Outpatient Program Licensing Fund); and,
- DHCS notes it would need to increase licensing fees to implement the bill. DHCS was authorized to increase licensing fees up to 20% annually through FY 2026-27, to reach a cumulative fee increase of 75%. Additionally, DHCS states that no sooner than July 1, 2027, DHCS is authorized to increase licensing fees up to 5% annually and if DHCS proposes to increase fees beyond 5%, the increase would need to be approved by the Legislature. To support the additional staffing needed to implement this bill, DHCS states it would need to increase licensing fees by an additional 5% in FY 2027-28. DHCS states that, if the Legislature does not approve an increase in fees, DHCS will be unable to implement the requirements of this bill.
SUPPORT: (Verified 8/25/26)
League of California Cities (source)
Association of California Cities – Orange County
Association of California Life & Health Insurance Companies
California Association of Health Plans
City of Beverly Hills
City of Buena Park
City of Brea
City of Carlsbard
City of Garden Grove
City of Irvine
City of La Mesa
City of Lake Forest
City of Los Alamitos
City of Mission Viejo
City of Paramount
City of Placentia
City of Rocklin
City of Stanton
City of Thousand Oaks
City of Vacaville
OPPOSITION: (Verified 8/25/26)
California Behavioral Health Association
California Behavioral Health Planning Council
County Behavioral Health Directors Association
ARGUMENTS IN SUPPORT: The League of California Cities (Cal Cities), as sponsor, argues a recent state audit revealed DHCS has not consistently investigated allegations of unlicensed facilities providing or advertising treatment services. DHCS has often failed to conduct site visits and follow-ups to ensure illegal operations have stopped. In one example highlighted in the audit, DHCS substantiated an allegation that an unlicensed facility was unlawfully providing services but there was no indication DHCS followed up to verify the facility’s claims it ceased operations, nor did it conduct a site visit to confirm compliance. Cal Cities argues the auditor recommended that DHCS improve the timeliness of inspections and complaint investigations; conduct more site visits; and establish follow-up procedures to ensure unlicensed facilities cease unlawful operations. Cal Cities states this bill empowers local governments to partner with the state to conduct site inspections and enforce licensing laws. This collaboration allows the state to leverage local capacity to respond swiftly to violations, ensure compliance, and better protect public health and safety.
ARGUMENTS IN OPPOSITION: The County Behavioral Health Directors Association (CBHDA) states that as part of their core functions they provide an array of Medi-Cal SUD treatment services, including supportive RR/SLHs, which are non-medical housing settings designed to support recovery and foster community, as a component of the SUD continuum of care. CBHDA argues this bill stems from continued negative stigma around RR/SLHs, and at its core contains a fundamental framing issue as it relates to RR/SLHs and SUD treatment. CBHDA further argues while DHCS is already tasked with these investigations, the timelines proposed in this bill would lead to DHCS potentially exceeding its bandwidth and then delegating this function to counties, which would include conducting investigations into private entities that counties do not contract with, nor have jurisdiction over. Delegating this responsibility to counties represents a significant liability risk, and a potential unfunded workload increase for county behavioral health agencies. The California Behavioral Health Association states their concern about this bill’s framing risks further stigmatizing RRs that do not provide licensable services, citing state housing guidance recognizing the importance of group homes and RRs as housing options for persons with disabilities and notes that homes not providing licensable services must be allowed to operate subject to generally applicable nondiscriminatory laws. Any policy response to bad actors should be narrowly tailored to unlawful treatment activity and financial misconduct, not structured in a way that sweeps in lawful RR arrangements or creates new barriers for RRs. The California Behavioral Health Planning Council states that the outlined mandates in the bill are outside the purview of county behavioral health departments considering counties do not have authority, oversight, or code enforcement jurisdiction over unlicensed facilities. This would require counties to provide training to designated teams without sufficient funding or guidance.
Prepared by: Reyes Diaz / HEALTH / (916) 651-4111
8/25/26 18:35:47
**** END ****
SENATE THIRD READING
STR Bill Id:SB 490
Author:(Umberg)
As Amended Ver:August 21, 2026
Majority vote
SUMMARY
Requires licensed alcohol and other drug (AOD) recovery or treatment facilities (RTF) and certified AOD programs to annually report to the State Department of Health Care Services (DHCS) any money transfers they have between a recovery residence (RR). Requires DHCS to conduct a site visit for any licensed or certified facility or program affiliated with an RR that DHCS takes action against for providing services the RR is not licensed to provide, and sets specific statutory timelines for the investigation of the RR by DHCS. Authorizes DHCS to permit a county participating in the Drug Medi-Cal Organized Delivery System (DMC-ODS) to conduct a site visit of an RR which the county contracts with and has a pending allegation that DHCS can substantiate, but is not able to conclude the investigation in the specified time frame, upon the request of the county. Adds to the notice required to be provided by DHCS to a facility providing services without a license that DHCS will conduct a follow-up site visit to determine whether the facility ceased providing services as of the date specified in the notice, unless DHCS has received sufficient evidence that the facility has ceased providing services.
Major Provisions
COMMENTS
Prevalence of Substance Use Disorder (SUD) in California. A 2024 publication from Health Management Associates and the California Health Care Foundation titled, "Substance Use Disorder in California — a Focused Landscape Analysis" reported that approximately 9% of Californians ages 12 years and older met the criteria for SUD in 2022. According to the report, the prevalence of SUD among individuals 12 years of age and older increased to 8.8% in 2022 from 8.1% in 2015. While the health care system is moving toward acknowledging SUD as a chronic illness, only 6% of Americans and 10% of Californians ages 12 and older with an SUD received treatment for their condition in 2021. More than 19,335 Californians ages 12 years and older died from the effects of alcohol from 2020 to 2021, and the total annual number of alcohol-related deaths increased by approximately 18% in the state from 2020 to 2021. Overdose deaths from both opioids and psychostimulants (such as amphetamines), are soaring. This issue, compounded by the increased availability of fentanyl, has resulted in a 10-fold increase in fentanyl related deaths between 2015 and 2019. According to the Overdose Prevention Initiative, 7,847 opioid-related overdose deaths occurred in California in 2023, and preliminary data shows 5,030 opioid-related overdose deaths in 2025.
Alcohol and Drug Treatment Facility Licensing. DHCS has sole authority to license RTFs in the state. 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.
As part of their licensing function, DHCS conducts reviews of RTF operations every two years, or as necessary. DHCS's Substance Use Disorder Compliance Division checks for compliance with statute and regulations (Title 9, Chapter 5, California Code of Regulations) to ensure the health and safety of RTF residents and investigates all complaints related to RTFs, including deaths, complaints against staff, and allegations of operating without a license. DHCS has the authority to suspend or revoke a license for conduct in the operation of an RTF that is contrary to the health, morals, welfare, or safety of either an individual in, or receiving services from, the facility, or to the people of the State of California.
AOD Program Certification. Prior to January 1, 2025, programs were permitted to seek certification from DHCS. Under AB 118 (Committee on Budget), Chapter 42, Statutes of 2023, certification is now a requirement for many AOD programs, with exceptions for various licensed facility types, schools, jails, and prisons. Programs were required to apply for certification no later than January 1, 2024. As of March 2025, DHCS reported that it certified 1,055 outpatient facilities and 989 licensed facilities, for a total of 2,044 certified facilities. If DHCS finds evidence that a program is providing treatment, recovery, detoxification, or medication-assisted treatment services without a certification, DHCS must issue a written notice to the program stating that it is operating in violation of the law, and any person or entity found to be operating without certification may be subject to an assessment of civil penalties of two thousand ($2,000) dollars per day and will be barred from applying for initial certification for a period of five years from the date of the violation notice.
RRs. An RR is a residence for people in recovery from SUDs. It may serve as support for individuals undergoing treatment but it does not provide treatment or care, whether medical or nonmedical. The state licensing requirements that govern treatment and care facilities do not currently include RRs. An RR may be completely self-governed or have formal onsite management. When there is onsite management, the manager's duties relate to the administration of the house rather than the tenants or their recovery. The tenants of an RR pay rent and abide by house rules, which include maintenance of sobriety and participation in a self-help program. In 2016, the California Research Bureau estimated that there were at least 12,000 sober living beds, like those offered in RRs, in the state to serve an eligible population of between 25,000 and 35,000 individuals. A 2021 article "Estimating the Number of Substance Use Disorder Recovery Homes in the United States" estimates there are 2,432 recovery homes in California. If an RR is providing any licensable services then it must obtain a valid RTF license from DHCS, and DHCS can investigate RRs alleged to be providing services without a license.
According to the Author
This bill would establish timelines for DHCS to investigate allegations of licensed treatment at unlicensed sober living homes. If DHCS cannot meet the timelines, this bill would authorize counties to request approval to conduct site visits and enforce compliance with existing state licensing requirements.
Arguments in Support
The League of California Cities (CalCities) supports this bill stating that DHCS has often failed to conduct site visits and follow-ups to ensure illegal operations have stopped. CalCities notes that, in one example highlighted in the state audit, DHCS substantiated an allegation that an unlicensed facility was unlawfully providing services. However, the audit found no indication that DHCS followed up to verify the facility's claim that it had ceased operations, nor did it conduct a site visit to confirm compliance. CalCities argues that by setting clear timelines and expectations for investigations and follow-up, this bill improves accountability and outcomes using existing infrastructure and resources. CalCities concludes this bill empowers local governments to partner with the state to conduct site inspections and enforce licensing laws and that this collaboration allows the state to leverage local capacity to respond swiftly to violations, ensure compliance, and better protect public health and safety.
Arguments in Opposition
The California Behavioral Health Association (CBHA) opposes this bill stating that they are concerned counties would be drawn into investigations involving private entities they may not contract with and do not regulate, despite DHCS retaining sole state authority overall alcohol and drug programs certification and residential treatment licensure. This approach risks blurring lines of authority, creating inconsistent enforcement, and diverting county behavioral health resources away from direct services deliver, network management, and core Medi-Cal responsibilities. They are also concerned that this bill's framing risks further stigmatizing recovery residences that do not provide licensable services.
FISCAL COMMENTS
According to the Assembly Appropriations Committee:
- DHCS estimates costs of $1.2 million in fiscal year (FY) 2027-28, and $1.1 million in FY 2028-29 and ongoing (Residential Outpatient Program Licensing Fund).
- DHCS notes it would need to increase licensing fees to implement the bill. DHCS was authorized to increase licensing fees up to 20% annually through FY 2026-27, to reach a cumulative fee increase of 75%. Additionally, DHCS states that no sooner than July 1, 2027, DHCS is authorized to increase licensing fees up to 5% annually and if DHCS proposes to increase fees beyond 5%, the increase would need to be approved by the Legislature. To support the additional staffing needed to implement this bill, DHCS states it would need to increase licensing fees by an additional 5% in FY 2027-28. DHCS states that, if the Legislature does not approve an increase in fees, DHCS will be unable to implement the requirements of this bill.
VOTES
SENATE FLOOR: 39-0-1
YES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Reyes, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener
ABS, ABST OR NV: Gonzalez
ASM HEALTH: 16-0-0
YES: Bonta, Sanchez, Addis, Aguiar-Curry, Ahrens, Caloza, Carrillo, Jeff Gonzalez, Mark González, Johnson, Patel, Patterson, Celeste Rodriguez, Schiavo, Sharp-Collins, Stefani
ASM APPROPRIATIONS: 15-0-0
YES: Wicks, Hoover, Arambula, Calderon, Caloza, Dixon, Fong, Mark González, Krell, Pacheco, Pellerin, Sharp-Collins, Solache, Ta, Tangipa
UPDATED
VERSION: August 21, 2026
CONSULTANT: Logan Hess / HEALTH / (916) 319-2097 FN: 0003964
SENATE THIRD READING
STR Bill Id:SB 490
Author:(Umberg)
As Amended Ver: August 21, 2026
Majority vote
SUMMARY
Requires licensed alcohol and other drug (AOD) recovery or treatment facilities (RTF) and certified AOD programs to annually report to the State Department of Health Care Services (DHCS) any money transfers they have between a recovery residence (RR). Requires DHCS to conduct a site visit for any licensed or certified facility or program affiliated with an RR that DHCS takes action against for providing services the RR is not licensed to provide, and sets specific statutory timelines for the investigation of the RR by DHCS. Authorizes DHCS to permit a county participating in the Drug Medi-Cal Organized Delivery System (DMC-ODS) to conduct a site visit of an RR which the county contracts with and has a pending allegation that DHCS can substantiate, but is not able to conclude the investigation in the specified time frame, upon the request of the county. Adds to the notice required to be provided by DHCS to a facility providing services without a license that DHCS will conduct a follow-up site visit to determine whether the facility ceased providing services as of the date specified in the notice, unless DHCS has received sufficient evidence that the facility has ceased providing services.
Major Provisions
COMMENTS
Prevalence of Substance Use Disorder (SUD) in California. A 2024 publication from Health Management Associates and the California Health Care Foundation titled, "Substance Use Disorder in California — a Focused Landscape Analysis" reported that approximately 9% of Californians ages 12 years and older met the criteria for SUD in 2022. According to the report, the prevalence of SUD among individuals 12 years of age and older increased to 8.8% in 2022 from 8.1% in 2015. While the health care system is moving toward acknowledging SUD as a chronic illness, only 6% of Americans and 10% of Californians ages 12 and older with an SUD received treatment for their condition in 2021. More than 19,335 Californians ages 12 years and older died from the effects of alcohol from 2020 to 2021, and the total annual number of alcohol-related deaths increased by approximately 18% in the state from 2020 to 2021. Overdose deaths from both opioids and psychostimulants (such as amphetamines), are soaring. This issue, compounded by the increased availability of fentanyl, has resulted in a 10-fold increase in fentanyl related deaths between 2015 and 2019. According to the Overdose Prevention Initiative, 7,847 opioid-related overdose deaths occurred in California in 2023, and preliminary data shows 5,030 opioid-related overdose deaths in 2025.
Alcohol and Drug Treatment Facility Licensing. DHCS has sole authority to license RTFs in the state. 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.
As part of their licensing function, DHCS conducts reviews of RTF operations every two years, or as necessary. DHCS's Substance Use Disorder Compliance Division checks for compliance with statute and regulations (Title 9, Chapter 5, California Code of Regulations) to ensure the health and safety of RTF residents and investigates all complaints related to RTFs, including deaths, complaints against staff, and allegations of operating without a license. DHCS has the authority to suspend or revoke a license for conduct in the operation of an RTF that is contrary to the health, morals, welfare, or safety of either an individual in, or receiving services from, the facility, or to the people of the State of California.
AOD Program Certification. Prior to January 1, 2025, programs were permitted to seek certification from DHCS. Under AB 118 (Committee on Budget), Chapter 42, Statutes of 2023, certification is now a requirement for many AOD programs, with exceptions for various licensed facility types, schools, jails, and prisons. Programs were required to apply for certification no later than January 1, 2024. As of March 2025, DHCS reported that it certified 1,055 outpatient facilities and 989 licensed facilities, for a total of 2,044 certified facilities. If DHCS finds evidence that a program is providing treatment, recovery, detoxification, or medication-assisted treatment services without a certification, DHCS must issue a written notice to the program stating that it is operating in violation of the law, and any person or entity found to be operating without certification may be subject to an assessment of civil penalties of two thousand ($2,000) dollars per day and will be barred from applying for initial certification for a period of five years from the date of the violation notice.
RRs. An RR is a residence for people in recovery from SUDs. It may serve as support for individuals undergoing treatment but it does not provide treatment or care, whether medical or nonmedical. The state licensing requirements that govern treatment and care facilities do not currently include RRs. An RR may be completely self-governed or have formal onsite management. When there is onsite management, the manager's duties relate to the administration of the house rather than the tenants or their recovery. The tenants of an RR pay rent and abide by house rules, which include maintenance of sobriety and participation in a self-help program. In 2016, the California Research Bureau estimated that there were at least 12,000 sober living beds, like those offered in RRs, in the state to serve an eligible population of between 25,000 and 35,000 individuals. A 2021 article "Estimating the Number of Substance Use Disorder Recovery Homes in the United States" estimates there are 2,432 recovery homes in California. If an RR is providing any licensable services then it must obtain a valid RTF license from DHCS, and DHCS can investigate RRs alleged to be providing services without a license.
According to the Author
This bill would establish timelines for DHCS to investigate allegations of licensed treatment at unlicensed sober living homes. If DHCS cannot meet the timelines, this bill would authorize counties to request approval to conduct site visits and enforce compliance with existing state licensing requirements.
Arguments in Support
The League of California Cities (CalCities) supports this bill stating that DHCS has often failed to conduct site visits and follow-ups to ensure illegal operations have stopped. CalCities notes that, in one example highlighted in the state audit, DHCS substantiated an allegation that an unlicensed facility was unlawfully providing services. However, the audit found no indication that DHCS followed up to verify the facility's claim that it had ceased operations, nor did it conduct a site visit to confirm compliance. CalCities argues that by setting clear timelines and expectations for investigations and follow-up, this bill improves accountability and outcomes using existing infrastructure and resources. CalCities concludes this bill empowers local governments to partner with the state to conduct site inspections and enforce licensing laws and that this collaboration allows the state to leverage local capacity to respond swiftly to violations, ensure compliance, and better protect public health and safety.
Arguments in Opposition
The California Behavioral Health Association (CBHA) opposes this bill stating that they are concerned counties would be drawn into investigations involving private entities they may not contract with and do not regulate, despite DHCS retaining sole state authority overall alcohol and drug programs certification and residential treatment licensure. This approach risks blurring lines of authority, creating inconsistent enforcement, and diverting county behavioral health resources away from direct services deliver, network management, and core Medi-Cal responsibilities. They are also concerned that this bill's framing risks further stigmatizing recovery residences that do not provide licensable services.
FISCAL COMMENTS
According to the Assembly Appropriations Committee:
- DHCS estimates costs of $1.2 million in fiscal year (FY) 2027-28, and $1.1 million in FY 2028-29 and ongoing (Residential Outpatient Program Licensing Fund).
- DHCS notes it would need to increase licensing fees to implement the bill. DHCS was authorized to increase licensing fees up to 20% annually through FY 2026-27, to reach a cumulative fee increase of 75%. Additionally, DHCS states that no sooner than July 1, 2027, DHCS is authorized to increase licensing fees up to 5% annually and if DHCS proposes to increase fees beyond 5%, the increase would need to be approved by the Legislature. To support the additional staffing needed to implement this bill, DHCS states it would need to increase licensing fees by an additional 5% in FY 2027-28. DHCS states that, if the Legislature does not approve an increase in fees, DHCS will be unable to implement the requirements of this bill.
VOTES
SENATE FLOOR: 39-0-1
YES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Reyes, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener
ABS, ABST OR NV: Gonzalez
ASM HEALTH: 16-0-0
YES: Bonta, Sanchez, Addis, Aguiar-Curry, Ahrens, Caloza, Carrillo, Jeff Gonzalez, Mark González, Johnson, Patel, Patterson, Celeste Rodriguez, Schiavo, Sharp-Collins, Stefani
ASM APPROPRIATIONS: 15-0-0
YES: Wicks, Hoover, Arambula, Calderon, Caloza, Dixon, Fong, Mark González, Krell, Pacheco, Pellerin, Sharp-Collins, Solache, Ta, Tangipa
UPDATED
VERSION: August 21, 2026
CONSULTANT: Logan Hess / HEALTH / (916) 319-2097 FN: 0003964'
SENATE THIRD READING
STR Bill Id:SB 490
Author:(Umberg)
As Amended Ver:July 2, 2026
Majority vote
SUMMARY
Requires licensed alcohol and other drug (AOD) recovery or treatment facilities (RTF) and certified AOD programs to annually report to the State Department of Health Care Services (DHCS) any money transfers they have between a recovery residence (RR). Requires DHCS to conduct a site visit for any licensed or certified facility or program affiliated with an RR that DHCS takes action against for providing services the RR is not licensed to provide, and sets specific statutory timelines for the investigation of the RR by DHCS. Authorizes DHCS to permit a county participating in the Drug Medi-Cal Organized Delivery System (DMC-ODS) to conduct a site visit of an RR which the county contracts with and has a pending allegation that DHCS can substantiate, but is not able to conclude the investigation in the specified time frame, upon the request of the county.
Major Provisions
COMMENTS
Prevalence of Substance Use Disorder (SUD) in California. A 2024 publication from Health Management Associates and the California Health Care Foundation titled, "Substance Use Disorder in California — a Focused Landscape Analysis" reported that approximately 9% of Californians ages 12 years and older met the criteria for SUD in 2022. According to the report, the prevalence of SUD among individuals 12 years of age and older increased to 8.8% in 2022 from 8.1% in 2015. While the health care system is moving toward acknowledging SUD as a chronic illness, only 6% of Americans and 10% of Californians ages 12 and older with an SUD received treatment for their condition in 2021. More than 19,335 Californians ages 12 years and older died from the effects of alcohol from 2020 to 2021, and the total annual number of alcohol-related deaths increased by approximately 18% in the state from 2020 to 2021. Overdose deaths from both opioids and psychostimulants (such as amphetamines), are soaring. This issue, compounded by the increased availability of fentanyl, has resulted in a 10-fold increase in fentanyl related deaths between 2015 and 2019. According to the Overdose Prevention Initiative, 7,847 opioid-related overdose deaths occurred in California in 2023, and preliminary data shows 5,030 opioid-related overdose deaths in 2025.
Alcohol and Drug Treatment Facility Licensing. DHCS has sole authority to license RTFs in the state. 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.
As part of their licensing function, DHCS conducts reviews of RTF operations every two years, or as necessary. DHCS's Substance Use Disorder Compliance Division checks for compliance with statute and regulations (Title 9, Chapter 5, California Code of Regulations) to ensure the health and safety of RTF residents and investigates all complaints related to RTFs, including deaths, complaints against staff, and allegations of operating without a license. DHCS has the authority to suspend or revoke a license for conduct in the operation of an RTF that is contrary to the health, morals, welfare, or safety of either an individual in, or receiving services from, the facility, or to the people of the State of California.
AOD Program Certification. Prior to January 1, 2025, programs were permitted to seek certification from DHCS. Under AB 118 (Committee on Budget), Chapter 42, Statutes of 2023, certification is now a requirement for many AOD programs, with exceptions for various licensed facility types, schools, jails, and prisons. Programs were required to apply for certification no later than January 1, 2024. As of March 2025, DHCS reported that it certified 1,055 outpatient facilities and 989 licensed facilities, for a total of 2,044 certified facilities. If DHCS finds evidence that a program is providing treatment, recovery, detoxification, or medication-assisted treatment services without a certification, DHCS must issue a written notice to the program stating that it is operating in violation of the law, and any person or entity found to be operating without certification may be subject to an assessment of civil penalties of two thousand ($2,000) dollars per day and will be barred from applying for initial certification for a period of five years from the date of the violation notice.
RRs. An RR is a residence for people in recovery from SUDs. It may serve as support for individuals undergoing treatment but it does not provide treatment or care, whether medical or nonmedical. The state licensing requirements that govern treatment and care facilities do not currently include RRs. An RR may be completely self-governed or have formal onsite management. When there is onsite management, the manager's duties relate to the administration of the house rather than the tenants or their recovery. The tenants of an RR pay rent and abide by house rules, which include maintenance of sobriety and participation in a self-help program. In 2016, the California Research Bureau estimated that there were at least 12,000 sober living beds, like those offered in RRs, in the state to serve an eligible population of between 25,000 and 35,000 individuals. A 2021 article "Estimating the Number of Substance Use Disorder Recovery Homes in the United States" estimates there are 2,432 recovery homes in California. If an RR is providing any licensable services then it must obtain a valid RTF license from DHCS, and DHCS can investigate RRs alleged to be providing services without a license.
According to the Author
This bill would establish timelines for DHCS to investigate allegations of licensed treatment at unlicensed sober living homes. If DHCS cannot meet the timelines, this bill would authorize counties to request approval to conduct site visits and enforce compliance with existing state licensing requirements.
Arguments in Support
The League of California Cities (CalCities) supports this bill stating that DHCS has often failed to conduct site visits and follow-ups to ensure illegal operations have stopped. CalCities notes that, in one example highlighted in the state audit, DHCS substantiated an allegation that an unlicensed facility was unlawfully providing services. However, the audit found no indication that DHCS followed up to verify the facility's claim that it had ceased operations, nor did it conduct a site visit to confirm compliance. CalCities argues that by setting clear timelines and expectations for investigations and follow-up, this bill improves accountability and outcomes using existing infrastructure and resources. CalCities concludes this bill empowers local governments to partner with the state to conduct site inspections and enforce licensing laws and that this collaboration allows the state to leverage local capacity to respond swiftly to violations, ensure compliance, and better protect public health and safety.
Arguments in Opposition
The California Behavioral Health Association (CBHA) opposes this bill stating that they are concerned counties would be drawn into investigations involving private entities they may not contract with and do not regulate, despite DHCS retaining sole state authority overall alcohol and drug programs certification and residential treatment licensure. This approach risks blurring lines of authority, creating inconsistent enforcement, and diverting county behavioral health resources away from direct services deliver, network management, and core Medi-Cal responsibilities. They are also concerned that this bill's framing risks further stigmatizing recovery residences that do not provide licensable services.
FISCAL COMMENTS
According to the Assembly Appropriations Committee:
- DHCS estimates costs of $1.2 million in fiscal year (FY) 2027-28, and $1.1 million in FY 2028-29 and ongoing (Residential Outpatient Program Licensing Fund).
- DHCS notes it would need to increase licensing fees to implement the bill. DHCS was authorized to increase licensing fees up to 20% annually through FY 2026-27, to reach a cumulative fee increase of 75%. Additionally, DHCS states that no sooner than July 1, 2027, DHCS is authorized to increase licensing fees up to 5% annually and if DHCS proposes to increase fees beyond 5%, the increase would need to be approved by the Legislature. To support the additional staffing needed to implement this bill, DHCS states it would need to increase licensing fees by an additional 5% in FY 2027-28. DHCS states that, if the Legislature does not approve an increase in fees, DHCS will be unable to implement the requirements of this bill.
VOTES
SENATE FLOOR: 39-0-1
YES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Reyes, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener
ABS, ABST OR NV: Gonzalez
ASM HEALTH: 16-0-0
YES: Bonta, Sanchez, Addis, Aguiar-Curry, Ahrens, Caloza, Carrillo, Jeff Gonzalez, Mark González, Johnson, Patel, Patterson, Celeste Rodriguez, Schiavo, Sharp-Collins, Stefani
ASM APPROPRIATIONS: 15-0-0
YES: Wicks, Hoover, Arambula, Calderon, Caloza, Dixon, Fong, Mark González, Krell, Pacheco, Pellerin, Sharp-Collins, Solache, Ta, Tangipa
UPDATED
VERSION: July 2, 2026
CONSULTANT: Logan Hess / HEALTH / (916) 319-2097 FN: 0003622
Date of Hearing: August 5, 2026
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Buffy Wicks, Chair
SBPCA Bill Id:SB 490
Author:(Umberg) – As Amended Ver:July 2, 2026
Policy Committee: | Health | Vote: | 16 - 0 |
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Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill establishes timelines and notice requirements for Department of Health Care Services (DHCS) investigations of recovery residences, requires a certified alcohol and other drug (AOD) program and a licensed recovery or treatment facility (RTF) report to DHCS any money transfers between the AOD program or RTF and a recovery residence, and authorizes DHCS, under specified circumstances, to allow a county participating in the Drug Medi-Cal Organized Delivery System (DMC-ODS) to conduct a site visit of a recovery residence that is allegedly operating as an RTF.
Specifically, this bill:
- Requires DHCS, if it takes action against a recovery residence for operating without a license, conduct a site visit of a certified AOD program or licensed RTF that has disclosed a financial or contractual interest in that recovery residence.
- Requires, by July 15 of every year beginning in 2027, every certified AOD program or licensed RTF submit to DHCS a report of all money transfers between the program or facility and a recovery residence during the previous fiscal year.
- Requires DHCS analyze the data reported pursuant to item 2, above, for compliance trends, irregularities, or fraud indicators.
- Requires DHCS develop guidelines for permissible and impermissible money transfers.
- Requires DHCS, within 10 days of receiving an allegation of a facility acting as an RTF without a license, assign a complaint to an analyst if it has jurisdiction over the allegation; if DHCS does not have jurisdiction, requires DHCS notify the complainant, in writing, that it does not investigate that type of complaint.
- Requires DHCS complete an investigation pursuant to item 5, above, within 120 days of initiation of the investigation unless DHCS requires assistance from other state agencies or significant additional resources to complete the investigation.
- Requires DHCS notify, in writing, the person who submitted the allegation of the reason for the delay if DHCS is not able to complete the investigation within 120 days.
- Requires the DHCS investigator provide the notice containing licensing requirements and a date by which the subject must cease providing services to the subject of the investigation within 10 days of the submission of the findings of the investigation to DHCS.
- Requires DHCS conduct a follow-up site visit to determine whether the facility has ceased providing services by the date specified in the notice.
- Authorizes the county behavioral health agency, in a county that elects to administer the DMC-ODS and provides optional recovery housing services, to request approval from DHCS to conduct a site visit of a recovery residence that the county contracts with and is alleged to be providing services without a license; and allows DHCS to approve that request if DHCS has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits specified in items 5 and 6, above.
FISCAL EFFECT:
Based on the Department of Finance’s analysis of a similar bill, costs to DHCS of approximately $2.5 million in 2026-27 and ongoing for 16 positions to support investigations and oversee the new complaint process (Residential and Outpatient Program Licensing Fund).
COMMENTS:
- Purpose. This bill is sponsored by the League of California Cities. According to the author:
[This bill] would establish timelines for DHCS to investigate allegations of licensed treatment at unlicensed sober living homes. If DHCS cannot meet the timelines, [this bill] would authorize counties to request approval to conduct site visits and enforce compliance with existing state licensing requirements.
- Background. AOD RTFs. DHCS has sole authority to license RTFs in the state. 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. DHCS conducts reviews of RTF operations every two years, or as necessary. DHCS reported it had licensed 989 RTFs by March 2025.
Certified AOD Programs. Under AB 118 (Committee on Budget), Chapter 42, Statutes of 2023, beginning January 1, 2025, AOD programs must be certified, with exceptions for various licensed facility types, schools, jails, and prisons. AOD programs had to apply for certification no later than January 1, 2024. DHCS reported it had certified 1,055 outpatient AOD facilities by March 2025.
RRs. An RR is a residence for people in recovery from substance use disorders. An RR may serve as support for individuals undergoing treatment, but it does not provide medical or nonmedical treatment or care, and the state does not license or certify RRs. The tenants of an RR pay rent and abide by house rules, which include maintenance of sobriety and participation in a self-help program. In 2016, the California Research Bureau estimated there were at least 12,000 sober living beds, like those offered in RRs, to serve an eligible population of 25,000 to 35,000 individuals in the state.
State Audit. In October 2024, the California State Auditor (CSA) released a report on AOD facilities. The CSA reported that DHCS did not always conduct site visits when investigating unlicensed facilities and did not always follow up after completing investigations of unlicensed facilities to ensure they ceased unlawfully advertising or providing services, and DHCS frequently did not complete investigations within its target timelines. According to the CSA website, DHCS will create and implement new protocols and processes and provide trainings to ensure supervisors are closely tracking the programs in need of inspections within their two-year windows, among other reforms. - Opposition. The County Behavioral Health Directors Association (CBHDA) states this bill stems from continued negative stigma around supportive recovery residences. CBHDA contends the timelines proposed in this bill would lead to DHCS potentially exceeding its bandwidth. CBHDA is also concerned that delegating DHCS’s investigative responsibility to counties represents a significant liability risk.
The California Behavioral Health Planning Council (CBHPC) also argues the compressed timelines could limit DHCS’ capacity to thoroughly complete investigations within the specified timeframes and potentially shift this responsibility to the county where the alleged unlicensed facility is located. CBHPC state this bill lacks funding provisions and inadequate guidelines regarding county reimbursement for work performed under the bill. Furthermore, counties do not have authority, oversight, or code enforcement jurisdiction over unlicensed facilities.
- Prior and Related Legislation. AB 2574 (Valencia), Chapter 410, Statutes of 2024, requires a licensed RTF and certified AOD program to disclose to DHCS if any of its agents, partners, directors, officers, or owners own or have a financial interest in an RR, and, if the entity is not a part of a certified program or a licensed facility, whether it has contractual relationships with entities that provide recovery services to clients of certified programs or licensed RTFs.
SB 35 (Umberg), of the current legislative session, was nearly identical to this bill and was held in this committee.
SB 329 (Blakespear), of the current legislative session, requires DHCS to meet specified timeframes for assigning complaints against, and completing investigations for, licensed adult RTFs. SB 329 is pending in this committee.
Analysis Prepared by: Allegra Kim / APPR. / (916) 319-2081
Date of Hearing: June 30, 2026
ASSEMBLY COMMITTEE ON HEALTH
Mia Bonta, Chair
SBPCA Bill Id:SB 490
Author:(Umberg) – As Amended Ver:January 5, 2026
SENATE VOTE: 39-0
SUBJECT: Alcohol and drug programs.
SUMMARY: Requires licensed alcohol and other drug (AOD) recovery or treatment facilities (RTF) and certified AOD programs to annually report to the State Department of Health Care Services (DHCS) any money transfers they have between a recovery residence (RR). Requires DHCS to conduct a site visit for any licensed or certified facility or program affiliated with an RR that DHCS takes action against for providing services the RR is not licensed to provide, and sets specific statutory timelines for the investigation of the RR by DHCS. Authorizes DHCS to permit a county participating in the Drug Medi-Cal Organized Delivery System (DMC-ODS) to conduct a site visit of an RR with a pending allegation that DHCS can substantiate, but is not able to conclude the investigation in the specified time frame, upon the request of the county. Specifically, this bill:
- Requires DHCS to initiate an investigation within 10 days of receiving an allegation of a facility acting as an RTF without licensure if it has jurisdiction over the allegation, and if DHCS receives a complaint that does not fall under its jurisdiction, requires DHCS to notify the complainant, in writing, that it does not investigate that type of complaint.
- Requires DHCS to complete the investigation within 60 days of initiation of the investigation unless DHCS requires assistance from local or other state agencies to complete the investigation or significant additional resources to complete the investigation, as determined by DHCS.
- Requires DHCS to notify the person that submitted the allegation in writing, including, but not limited to, through electronic means, of the reason for the delay if DHCS is not able to complete the investigation within 60 days.
- Requires that the notice that is currently provided to the subject of the investigation containing licensing requirements and a date by which the subject must cease providing services be provided within 10 days of the submission of the findings of the investigation to DHCS by the investigator.
- Requires DHCS to conduct a follow-up site visit to determine whether the facility has ceased providing services by the date specified in the notice.
- Authorizes the county behavioral health agency, in a county that elects to administer DMC-ODS and provides optional recovery housing services, to request approval from DHCS to conduct a site visit of an RR that is alleged to be providing services without a license. Permits DHCS to approve that request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits specified in 2) and 3) above.
- Requires DHCS to conduct a site visit of a certified AOD program or licensed RTF that has disclosed an interest in a recovery residence that DHCS has taken action against for providing unlicensed services.
- Requires all programs certified, or RTFs licensed, by DHCS to submit a report of all money transfers between the program or RTF and an RR during the previous fiscal year, no later than July 15, 2026, and annually thereafter, in order to detect patient brokering, illicit kickbacks, or unethical inducements that harm patients.
- Requires DHCS to analyze transfer data for compliance trends, irregularities, or fraud indicators and develop guidelines for permissible and impermissible transfers.
EXISTING LAW:
- Grants sole authority in the state to DHCS to certify AOD programs and to license RTFs. [Health and Safety Code (HSC) §§ 11832 and 11834.01]
- Requires DHCS to conduct onsite program compliance visits for AOD programs and RTFs at least once during the certification or licensure period. Permits DHCS to conduct announced or unannounced site visits to review for compliance. [HSC §§ 11832.12 and 11834.01]
- Requires all programs certified or RTFs licensed by DHCS to disclose if any of its agents, partners, directors, officers, or owners, including a sole proprietor and member, has either ownership or control of, or financial interest in, an RR or any contractual relationship with an entity that regularly provides professional services or substance use disorder (SUD) treatment or recovery services to clients of programs certified or facilities licensed by DHCS, if the entity is not part of the program certified or facility licensed. [HSC §11833.05(a)]
- Requires DHCS to adopt the American Society of Addiction Medicine (ASAM) treatment criteria, or an equivalent evidence-based standard, as the minimum standard of care for licensed RTFs and requires a licensee to maintain those standards with respect to the level of care to be provided by the licensee. [HSC § 11834.015]
- Defines “RTF” to mean a premises, place, or building that provides residential nonmedical services to adults who are recovering from problems related to alcohol, drug, or alcohol and drug misuse or addiction, and who need alcohol, drug, or alcohol and drug recovery, treatment, or detoxification services. [HSC § 11834.02]
- Requires that initial licenses for a new RTF to be provisional for one year, permits DHCS to revoke the provisional license for good cause, and prohibits a licensee from reapplying for an initial license for five years following a revocation of a provisional license. Defines “good cause” to mean failure to operate in compliance with the statutes and regulations relating to treatment facilities. [HSC § 11834.09(d)]
- Requires, if a facility intends to provide incidental medical services, 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. Defines “incidental medical services” as services that follow the community standard of practice and are not required to be performed in a licensed clinic or licensed health facility, and includes obtaining medical histories, monitoring health status, testing associated with detoxification from alcohol or drugs, and overseeing patient self-administered medications. [HSC §§ 11834.025 and 11834.026]
- Authorizes DHCS to assess civil penalties on facilities that provide alcohol or drug use recovery, treatment, or detoxification services without a license. [HSC § 11834.15]
- Prohibits a person, firm, partnership, association, corporation, or local governmental entity from operating, establishing, managing, conducting, or maintaining an RTF or AOD program without first obtaining a current valid license or certification. [HSC §§ 11832.7 and 11834.30]
- Requires DHCS to conduct a site visit to investigate an allegation of a facility operating without a license or certification and, if evidence is found supporting this allegation, requires the employee or agent to submit the findings to DHCS and, with DHCS authorization, send notice to the facility containing a date to cease providing services, the civil penalty that will be assessed for any days services are provided beyond that date, and that the case will be referred for civil proceedings if services continue. Requires the employee or agent to also inform the facility of state licensing and certification requirements. [HSC §§ 11823.18 and 11834.31]
- Requires DHCS, when it receives a complaint from a member of the public about a licensed adult alcohol or other drug recovery or treatment facility, or a facility alleged to be providing services without a proper license, to provide notification to the complainant within 10 days of the complaint that it has been received, and, upon closing the complaint, whether DHCS found a violation. [HSC § 11834.33]
- Requires DHCS to charge a fee to all programs for licensure or certification and authorizes DHCS to establish fee scales using different capacity levels, categories based on measures other than program capacity, or any other category or classification that DHCS deems necessary or convenient to maintain an effective and equitable fee structure. Requires licensing and certification fees to be evaluated annually. Authorizes DHCS, no sooner than July 1, 2027, to approve a fee increase, up to and including 5% on an annual basis, as needed to address the costs of licensing and certification activities. Requires DHCS to submit any proposals for new fees or increases in excess of 5% through the finance letter process for approval by the Legislature. Requires DHCS to develop a process for programs and facilities to apply for a hardship fee waiver. [HSC § 11833.02]
- Requires DHCS to continue to implement the DMC-ODS program under California Advancing and Innovating Medi-Cal (CalAIM) as previously required under the Medi-Cal 2020 Demonstration. Authorizes counties to voluntarily participate in DMC-ODS. [Welfare and Institutions Code § 14184.401]
FISCAL EFFECT: According to the Senate Appropriations Committee, unknown ongoing costs, potentially hundreds of thousands to low millions, for state staffing resources for DHCS to complete investigations within the timeframes, analyze data, and develop guidelines (Residential Outpatient Licensing Fund). To the extent the Residential Outpatient Licensing Fund has insufficient funds, DHCS may need to increase licensing fees.
COMMENTS:
- PURPOSE OF THIS BILL. According to the author, this bill would establish timelines for DHCS to investigate allegations of licensed treatment at unlicensed sober living homes. If DHCS cannot meet the timelines, this bill would authorize counties to request approval to conduct site visits and enforce compliance with existing state licensing requirements.
- BACKGROUND.
- Prevalence of SUD in California. A 2024 publication from Health Management Associates and the California Health Care Foundation titled, “Substance Use Disorder in California — a Focused Landscape Analysis” reported that approximately 9% of Californians ages 12 years and older met the criteria for SUD in 2022. According to the report, the prevalence of SUD among individuals 12 years of age and older increased to 8.8% in 2022 from 8.1% in 2015. While the health care system is moving toward acknowledging SUD as a chronic illness, only 6% of Americans and 10% of Californians ages 12 and older with an SUD received treatment for their condition in 2021. More than 19,335 Californians ages 12 years and older died from the effects of alcohol from 2020 to 2021, and the total annual number of alcohol-related deaths increased by approximately 18% in the state from 2020 to 2021. Overdose deaths from both opioids and psychostimulants (such as amphetamines), are soaring. This issue, compounded by the increased availability of fentanyl, has resulted in a 10-fold increase in fentanyl related deaths between 2015 and 2019. According to the Overdose Prevention Initiative, 7,847 opioid-related overdose deaths occurred in California in 2023, and preliminary data shows 5,030 opioid-related overdose deaths in 2025.
- Alcohol and Drug Treatment Facility Licensing. DHCS has sole authority to license RTFs in the state. 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.
As part of their licensing function, DHCS conducts reviews of RTF operations every two years, or as necessary. DHCS's Substance Use Disorder Compliance Division checks for compliance with statute and regulations (Title 9, Chapter 5, California Code of Regulations) to ensure the health and safety of RTF residents and investigates all complaints related to RTFs, including deaths, complaints against staff, and allegations of operating without a license. DHCS has the authority to suspend or revoke a license for conduct in the operation of an RTF that is contrary to the health, morals, welfare, or safety of either an individual in, or receiving services from, the facility, or to the people of the State of California.
- AOD Program Certification. Prior to January 1, 2025, programs were permitted to seek certification from DHCS. Under AB 118 (Committee on Budget), Chapter 42, Statutes of 2023, certification is now a requirement for many AOD programs, with exceptions for various licensed facility types, schools, jails, and prisons. Programs were required to apply for certification no later than January 1, 2024. As of March 2025, DHCS reported that it certified 1,055 outpatient facilities and 989 licensed facilities, for a total of 2,044 certified facilities. If DHCS finds evidence that a program is providing treatment, recovery, detoxification, or medication-assisted treatment services without a certification, DHCS must issue a written notice to the program stating that it is operating in violation of the law, and any person or entity found to be operating without certification may be subject to an assessment of civil penalties of two thousand ($2,000) dollars per day and will be barred from applying for initial certification for a period of five years from the date of the violation notice.
- Licensing fees. Existing law authorizes DHCS to increase the licensing and certification fees for AOD programs and facilities. SB 104 (Skinner), Chapter 104, Statutes of 2023, amended the Budget Act of 2023 and directs DHCS to increase those fees by up to 20% each fiscal year (FY) through FY 2026-27 to reach a cumulative fee increase of 75%. In a Behavioral Health Information Notice (BHIN No. 26-004) released in February 2026, DHCS announced that current licensing and certification fees are not sufficient to support current or planned expenses incurred by DHCS for SUD licensing and certification activities, and the fees would be increasing 20%, as directed by the Legislature. Licensure and certification activities include, but are not limited to, review and processing of initial, extension, and supplemental applications; initial and biennial onsite compliance reviews; complaint investigations; administrative support; disseminating information to the public, governmental agencies, and stakeholders; updating and maintaining databases; policy, regulatory, and statutory development; provider training and technical assistance; and appeal processing for revocation or suspension of providers’ licenses and/or certification.
A sample of current fees is provided in the table below. This does not include all fees and does not include the combined residential licensure and certification fee for licensed facilities seeking optional certification by DHCS.
Application Type | FY 2023-24 Fee | FY 2024-25 Fee | FY 2025-26 Fee | FY 2026-27 Fee |
Initial Residential Licensure Application Fee | $3,660 | $4,392 | $5,270 | $6,061 |
Initial Biennial Residential Licensure Fee | $389 (per bed) | $467 (per bed) | $560 (per bed) | $644 (per bed) |
Dependent Children Application Fee (if not requested during initial licensure application) | $1,265 | $1,518 | $1,822 | $2,095 |
Supplemental Application Fee (Per requested amendment) | $1,241 | $1,489 | $1,787 | $2,055 |
Initial Outpatient Certification Application Fee | $3,517 | $4,220 | $5,064 | $5,824 |
Initial Biennial Outpatient Certification Fee | $4,558 | $5,470 | $6,564 | $7,549 |
Supplemental Application Fee (Per requested amendment) | $1,241 | $1,489 | $1,787 | $2,055 |
- RRs. An RR is a residence for people in recovery from SUDs. It may serve as support for individuals undergoing treatment but it does not provide treatment or care, whether medical or nonmedical. The state licensing requirements that govern treatment and care facilities do not currently include RRs. An RR may be completely self-governed or have formal onsite management. When there is onsite management, the manager’s duties relate to the administration of the house rather than the tenants or their recovery. The tenants of an RR pay rent and abide by house rules, which include maintenance of sobriety and participation in a self-help program. In 2016, the California Research Bureau estimated that there were at least 12,000 sober living beds, like those offered in RRs, in the state to serve an eligible population of between 25,000 and 35,000 individuals. A 2021 article “Estimating the Number of Substance Use Disorder Recovery Homes in the United States” estimates there are 2,432 recovery homes in California. If an RR is providing any licensable services then it must obtain a valid RTF license from DHCS, and DHCS can investigate RRs alleged to be providing services without a license.
- DMC-ODS. This bill would allow counties participating in the DMC-ODS waiver to request DHCS allow the county to conduct the site visit of an RR alleged to provide services without a proper license. DMC-ODS is a voluntary "opt-in" program for counties, allowing them to provide a more robust and integrated system of care than what was available under the standard Drug Medi-Cal program. The program provides a continuum of care modeled after the ASAM Criteria for SUD treatment services. As of January 1, 2025, 40 counties participate in DMC-ODS. If counties elect to provide RR as part of DMC-ODS those RRs must not provide services that require licensure by DHCS, all RR residents must be engaged in medically necessary SUD treatment off-site, and the county should develop guidelines for contracted RR providers and provide monitoring and oversight.
- State Audit. In October 2024, the State Auditor released a report assessing the licensing of residential RTFs by DHCS. Key findings from the audit include:
- Southern California contains a greater concentration of treatment facilities serving six or fewer residents (small facilities) than other parts of the state. However, state law allows facilities to be located near each other and have the same legal owners.
- DHCS consistently reviewed the 26 license applications that were assessed, and the application process is generally the same for all facilities. However, of the 26 compliance inspections of operating facilities that were reviewed, DHCS conducted only half of them on time.
- DHCS also took longer than its target of 30 to 60 days to investigate complaints against treatment facilities. For instance, it took more than a year to complete 22 of the 60 investigations reviewed in the audit. Additionally, DHCS did not always follow up on unlicensed facilities that it found were unlawfully advertising or providing services.
Based on these findings, the audit makes several operational recommendations to DHCS, including the following:
- Provide management with information about the timeliness of compliance inspections and implement processes for notifying responsible staff of upcoming compliance inspections.
- Implement guidelines that specify the length of time analysts should take to complete key steps in the investigation process.
- Develop and implement a follow-up procedure when it has substantiated allegations of an unlicensed facility providing services.
In response to the audit, DHCS has made several operational changes. According to the State Auditor’s website, in March 2025 DHCS implemented new protocols and processes and conducted the appropriate trainings to ensure supervisors are closely tracking the programs in need of inspections within their two-year windows. In 2025, DHCS began using a new digital platform to complete onsite inspection reports, which aids DHCS in sending providers reports more quickly, thereby improving the rate at which assignments are completed. In addition, in August 2024, DHCS revised its Complaints Operations Manual to clarify the requirement for case assignment within 10 days and updated the complaint intake process.
- SUPPORT. The League of California Cities (CalCities) supports this bill stating that DHCS has often failed to conduct site visits and follow-ups to ensure illegal operations have stopped. CalCities notes that, in one example highlighted in the state audit, DHCS substantiated an allegation that an unlicensed facility was unlawfully providing services. However, the audit found no indication that DHCS followed up to verify the facility’s claim that it had ceased operations, nor did it conduct a site visit to confirm compliance. CalCities argues that by setting clear timelines and expectations for investigations and follow-up, this bill improves accountability and outcomes using existing infrastructure and resources. CalCities concludes this bill empowers local governments to partner with the state to conduct site inspections and enforce licensing laws and that this collaboration allows the state to leverage local capacity to respond swiftly to violations, ensure compliance, and better protect public health and safety.
The California Association of Health Plans (CAHP) and the Association of California Life and Health Insurance Companies (ACLHIC) support this bill stating that California health plans actively safeguard consumers, providers, and purchasers from suspected fraud, waste, and abuse in the healthcare system. Health plans also work closely with state regulators on this issue. Therefore, CAHP and ACHLIC are supportive of any policy that would strengthen the ability of their members – and state regulators – to quickly address instances of fraud, waste, and abuse while increasing transparency and oversight.
- OPPOSITION. The County Behavioral Health Directors Association (CBHDA) opposes this bill stating that it stems from continued negative stigma around supportive recovery residences, and at its core, contains a fundamental framing issue as it relates to sober living homes and SUD treatment. CBHDA notes that, similar to their concerns with Senate Bill 35 (Umberg, 2025) which was held on the Assembly Appropriations Suspense File last year, there is redundancy in policy requiring DHCS to conduct investigations into sober living homes providing SUD treatment when they are not allowed to. CBHDA argues that, specifically, this issue is rooted in private entities advertising detoxification services or SUD treatment in their facilities, which then leads to unlicensed residential SUD treatment. While DHCS is already tasked with these investigations, the timelines proposed in this bill would lead to DHCS potentially exceeding its bandwidth. This bill proposes to create an option for DHCS to then delegate this function to county behavioral health agencies, which would include requiring counties to conduct investigations into private entities that counties do not contract with, nor have jurisdiction over. Delegating this responsibility to counties represents a significant liability risk, and a potential unfunded workload increase for county behavioral health agencies.
The California Behavioral Health Planning Council (CBHPC) opposes this bill stating that, while it emphasizes the responsibility of DHCS to investigate allegations, the compressed timelines could limit DHCS’ capacity to thoroughly complete investigations within the specified timeframes and potentially shift this responsibility to the counties where the alleged unlicensed facility is located. Given the already strained behavioral health workforce, it would be challenging for counties to dedicate staff to administer these duties and adhere to the tightened timelines without impacting direct services for beneficiaries. CBHPC argues this bill lacks funding provisions and inadequate guidelines regarding county reimbursement for work performed under the bill. Furthermore, the outlined mandates in the bill are outside the purview of county behavioral health departments considering counties do not have authority, oversight, or code enforcement jurisdiction over unlicensed facilities. This would require counties to provide training to designated teams without sufficient funding or guidance.
- RELATED LEGISLATION.
- SB 329 (Blakespear) would require DHCS to meet specified timeframes for assigning complaints against, and completing investigations for, licensed adult residential alcohol or other drug RTFs. SB 329 is pending in the Assembly Appropriations Committee.
- AB 1779 (Davies) would require a licensed AOD RTF, certified AOD program, or laboratory that provides air transportation to provide round-trip transportation, and makes other requirements related to transportation provided to a person seeking recovery or treatment. Would also prohibit programs and RTF from specified practices to induce a person to enter or stay in a treatment or recovery program. AB 1779 is pending in the Senate Health Committee.
- AB 2614 (Dixon) would prohibit any person from offering, paying, soliciting, or receiving a commission, benefit, bonus, or other form of remuneration or from engaging in a split-fee arrangement to induce a referral to a residential treatment facility or in return for acceptance of an individual into a residential treatment facility, as defined. Would make a violation of the prohibition a misdemeanor. AB 2614 was not heard in the Assembly Health Committee.
- PREVIOUS LEGISLATION.
- SB 83 (Umberg), Chapter 402, Statutes of 2025, requires DHCS to post on its website an identification and summary of each violation issued for licensed RTFs and certified AOD programs included on the Probationary Status, Temporary Suspension Order, Revoked and Notice of Operation in Violation of Law Program List.
- SB 35 (Umberg) of 2025 was identical to this bill. SB 35 was held on the Assembly Appropriations Committee suspense file.
- AB 424 (Davies), Chapter 261, Statutes of 2025, requires DHCS, when it receives a complaint from a member of the public about a licensed AOD RTF, or a facility alleged to be providing services without a proper license, to provide specified notification to the person who filed the complaint.
- AB 2574 (Valencia), Chapter 410, Statutes of 2024, requires licensed RTFs and certified AOD programs to disclose to DHCS if any of its agents, partners, directors, officers, or owners own or have a financial interest in an RR and whether it has contractual relationships with entities that provide recovery services to clients of certified programs or licensed facilities if the entity is not a part of a certified program or a licensed facility.
- SB 913 (Umberg) of 2024 would have permitted a city attorney of a city in which the housing units are located, or a county counsel or county behavioral health agency if the housing units are located in the unincorporated area of the county, with the consent or approval from DHCS, to enforce specified “anti-kickback” laws related to, and to conduct an announced or unannounced site visit to, RTFs. SB 913 was held on the Senate Appropriations Committee suspense file.
- AB 2081 (Davies), Chapter 376, Statutes of 2024, requires AOD programs and RTFs to disclose to the public and provide a link to DHCS’s website containing information about the status of certification or licensure and of the AOD program or RTF’s current standing.
- SB 992 (Hernández), Chapter 784, Statues of 2018, among other things, prohibits RTFs from denying admission to individuals solely for having valid medications to aid in their recovery; permits DHCS to take action against an entity with multiple DHCS licenses when of the licensed RTF violates RTF law; and, prohibits an entity from seeking licensure within five years of having a previous license revoked for violating RTF law.
- SB 1228 (Lara), Chapter 792, Statutes of 2018, prohibits specified persons, programs, or entities under DHCS’s purview from giving or receiving remuneration or anything of value for the referral of a person who is seeking recovery and treatment services (known as “patient brokering”).
- POLICY COMMENT. Trailer bill language proposed by the administration (“Aligning Evidence-Based Standards for SUD Treatment”) would also amend HSC § 11834.31. If that language is ultimately adopted by the Legislature and signed by the Governor, it would become existing law and create a chaptering conflict for this bill.
- COMMITTEE AMENDMENTS.
- As currently drafted, this bill requires initial reporting on money transfers no later than July 15, 2026, before this bill would take effect if signed into law. The committee should delay this requirement to July 15, 2027.
- DHCS has outlined a 120-working day timeframe as the length of time analysts should take to complete key steps in the investigative process for low, medium, and high-level complaints, recognizing that additional time to complete an investigation may be approved on a case-by-case basis, including matters requiring assistance from DHCS’ Office of Legal Services and cases requiring action against a program’s licensure (including suspension or revocation). The committee may wish to amend this bill to align with those investigative timelines.
- This bill currently allows counties to request the permission of DHCS to conduct a site visit of a recovery residence that they do not have any jurisdictional or oversight role. The committee way wish to amend this bill to specify that a county can request permission to conduct a site visit as part of a DHCS investigation of a recovery residence that the county has a contract with.
REGISTERED SUPPORT / OPPOSITION:
Support
Association of California Cities - Orange County (ACC-OC)
Association of California Life & Health Insurance Companies
California Association of Health Plans
City of Beverly Hills
City of Carlsbad
City of Irvine
City of LA Mesa
City of Los Alamitos
City of Newport Beach
City of Paramount
City of Placentia
City of Rocklin
City of Thousand Oaks
League of California Cities
Opposition
California Behavioral Health Association
California Behavioral Health Planning Council
County Behavioral Health Directors Association
Analysis Prepared by: Logan Hess / HEALTH / (916) 319-2097
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-4171 | SB 490 |
THIRD READING
Bill No: SB 490
Author: Umberg (D)
Amended: 1/22/26
Vote: 21
SENATE HEALTH COMMITTEE: 9-0, 1/14/26
AYES: Menjivar, Valladares, Durazo, Gonzalez, Padilla, Richardson, Rubio, Weber Pierson, Wiener
NO VOTE RECORDED: Grove, Limón
SENATE APPROPRIATIONS COMMITTEE: 7-0, 1/22/26
AYES: Caballero, Seyarto, Cabaldon, Dahle, Grayson, Richardson, Wahab
SUBJECT: Alcohol and drug programs
SOURCE: League of California Cities
DIGEST:
This bill (1) requires the Department of Health Care Services (DHCS) to take specified action when it determines an entity is providing residential alcohol or other drug recovery or treatment services without a proper license, including conducting site visits, as well as initiating and completing investigations within specified timeframes. (2) Permits county behavioral health agencies that administer the Drug Medi-Cal organized delivery system to request DHCS approval to conduct site visits to specified recovery residences.
ANALYSIS:
Existing law:
- Grants sole authority in the state to DHCS to certify alcohol or other drug (AOD) programs and to license adult residential alcohol or other drug recovery or treatment facilities (RTFs). [Health and Safety Code (HSC) §11832, 11834.01]
- Requires DHCS to conduct onsite program compliance visits for AOD programs and RTFs at least once during the certification or licensure period. Permits DHCS to conduct announced or unannounced site visits to review for compliance. [HSC §11832.12, 11834.01]
- Requires all programs certified, or RTFs licensed by DHCS, to disclose if any of its agents, partners, directors, officers, or owners, including a sole proprietor and member, has either of the following:
- Ownership or control of, or financial interest in, a recovery residence/sober living homes (RR/SLHs); or,
- Any contractual relationship with an entity that regularly provides professional services or substance use disorder (SUD) treatment or recovery services to clients of programs certified or facilities licensed by DHCS, if the entity is not part of the program certified or facility licensed. [HSC §11833.05(a)]
- Permits DHCS to suspend or revoke an AOD program certification or RTF license for failing to disclose the information required in 3) above of existing law. [HSC 11833.05(c)]
- Prohibits a person, firm, partnership, association, corporation, or local governmental entity from operating, establishing, managing, conducting, or maintaining an RTF to provide recovery, treatment, or detoxification services within this state without first obtaining a current valid license from DHCS. [HSC §11834.30]
- Requires a laboratory or certified outpatient treatment program that leases, manages, or owns housing units that are offered to individuals who concurrently utilize laboratory or outpatient services to maintain separate contracts for the housing. Requires a RTF to only offer an individual discounted housing following discharge from the facility if certain conditions are met, such as the RTF and the individual enter into a written contract for housing that is separate from the contract for treatment; if the individual also pursues outpatient treatment; or, the offer for housing is not dependent upon the individual’s agreement to attend outpatient treatment at a program that is owned or operated by the RTF. [HSC §11831.65]
- Requires DHCS to conduct a site visit to investigate an allegation of an entity operating without a valid RTF license. Requires DHCS to take the following actions if evidence substantiates that the entity is providing RTF services without a license:
- Submit the findings of the investigation;
- Issue a written notice to the entity stating that it is operating in violation DHCS’s licensing law and inform them of the date by which it ceases providing services and notice that DHCS will assess a civil penalty of $2,000 per day for every day they continue to provide services beyond the date specified in the notice;
- Notice that the case will be referred for civil proceedings in the event the entity continues to provide services beyond the date specified in the notice; and,
- Inform the entity of the licensing requirements. [HSC §11834.31]
- Prohibits an entity found to be in violation of DHCS’s licensing law from applying for initial RTF licensure for a period of five years from the date of the notice specified. [HSC §11834.31]
- Permits DHCS’s Director to suspend or revoke certification or licensure, including other AOD program certifications or RTF licenses held by the same person or entity, or to deny an application for certification or licensure; extension of the certification or license; or, modification to certification or a license, upon specified violations and circumstances. [HSC §11832.14, 11834.36]
- Requires DHCS to continue to implement the Drug Medi-Cal organized delivery system (DMC-ODS) program previously authorized under the California Medi-Cal 2020 Demonstration pilot. Requires election by counties to participate in the DMC-ODS to be considered voluntary. [Welfare and Institutions Code (WIC) §14184.401]
This bill:
- Requires DHCS, if it takes action against an RR/SLH for providing treatment services without a valid license, to conduct a site visit of a certified AOD program or licensed RTF that has disclosed an interest in that RR/SLH.
- Requires all AOD programs and RTFs, no later than July 15, 2026, and every July 15 thereafter, to report to DHCS all money transfers between them and their affiliated RR/SLHs. Requires DHCS to analyze transfer data for compliance trends, irregularities, or fraud indicators, and to develop guidelines for permissible and impermissible transfers.
- Requires DHCS, if a facility is alleged to be operating as an RTF without a valid license, to conduct a site visit as follows:
- Initiate an investigation of the allegation, if DHCS has jurisdiction, within 10 days of receiving the allegation and to conduct a site visit;
- Notify the complainant in writing, if DHCS does not have jurisdiction, that it does not investigate those types of complaints;
- Complete the investigation within 60 days of the initiation of the investigation, unless DHCS requires assistance from local or other state agencies, or significant additional resources it determines it needs; and,
- Notify the complainant in writing of the delay if DHCS is unable to complete the investigation within 60 days.
- Expands the required actions for DHCS to take, when it conducts a site visit to investigate allegations of operating without a valid RTF license, to provide the entity the notice within 10 days of the DHCS employee submitting their findings, and to conduct a follow-up site visit to determine whether the entity has ceased providing services by the date DHCS specified.
- Permits county behavioral health agencies, if they elect to administer the DMC-ODS and provide optional recovery housing services, to request approval from DHCS to conduct a site visit of a RR/SLH that is alleged to be in violation of licensing law. Permits DHCS to approve the request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits imposed by this bill.
Comments
According to the author of this bill:
The proliferation of RR/SLHs and SUD treatment facilities, particularly in Southern California’s "Rehab Riviera," has raised concerns regarding the quality of care and regulatory oversight. These concerns were confirmed by a recent State Auditor’s report, which found that DHCS does not always provide timely or thorough oversight, risking the health and safety of people in recovery. This bill will ameliorate these perpetuated issues by establishing timelines for DHCS to investigate allegations of licensed treatment being offered at unlicensed RR/SLHs. If DHCS cannot meet the timelines, SB 490 would authorize cities and counties to request approval to conduct site visits and enforce compliance with existing state licensing requirements.
Background
California State Auditor (CSA) report. Issued in October 2024, the CSA Drug and Alcohol Treatment Facilities report stated complaints to DHCS may arise from various sources, including RTF residents, neighbors, staff members, or government agencies. According to internal guidelines, DHCS prioritizes death investigations over investigations into all other types of complaints. The CSA stated, in fact, DHCS aims to assign death investigations to a staff member on the day it receives the report of a death. In the course of a death investigation, it directs its staff to perform a complete review of the facility where the death occurred to determine whether the resident’s death was related to deficiencies in the facility’s operation. DHCS also receives and investigates complaints about facilities that operate without a license—for which generally DHCS does not have oversight. If an investigation finds, however, that an unlicensed facility is providing or advertising services that require a license, DHCS notifies the facility that it has been violating the law. If it obtains sufficient evidence the facility has not stopped providing the services in question, DHCS is authorized in current law to bring a civil action against the facility. For a licensed RTF, if during a complaint investigation or compliance inspection, DHCS finds a facility poses serious risks to the health and safety of residents, it may initiate a license suspension or revocation. Current law authorizes DHCS to immediately suspend a license when these concerns are present. A suspension stays in effect until DHCS makes a final determination, which may include revocation, following a hearing and a proposed decision by an Administrative Law Judge.
The CSA made a series of recommendations to help DHCS improve its complaints processes—mostly through administrative means:
- Provide management with information about the timeliness of compliance inspections;
- Implement a mechanism in its licensing database that notifies staff of the dates for upcoming compliance inspections for their caseload so they can plan accordingly;
- Fill its vacant positions;
- Update its policies and staff training by April 2025 to ensure it assigns complaints to analysts for investigation within 10 days, as currently required by its regulations;
- Implement guidelines by October 2025 that specify the length of time analysts should take to complete key steps in the investigation process for different types of investigations;
- Conduct site visits beginning December 2024 in all instances in which there is an allegation that an unlicensed facility is advertising or providing treatment services without a license; and,
- Develop and implement, by April 2025, a follow-up procedure, such as performing another site visit, to confirm unlicensed facilities have ceased providing services unlawfully.
DHCS complaints investigations. DHCS informally outlined its process for RTF investigations that generally mirrors the timelines stated by the author of this bill and in the CSA report. If DHCS establishes jurisdiction, the complaint is logged, assigned a complaint number, and a high-, medium-, or low-level designation. When DHCS receives a complaint that does not fall under its jurisdiction, a letter is sent to the complainant informing them of this fact. DHCS regulations define deficiencies, determined during the investigation, in the following way:
- A Class A deficiency is any presenting an imminent danger to any resident of a RTF. “Imminent danger” means that the more likely consequence of the deficiency is death or physical injury that would render a part of the body functionally useless or temporarily or permanently reduced in capacity, or inhibit any function of the body to such a degree as to shorten life or to reduce physical or mental capacity;
- A Class B deficiency is any relating to the operation or maintenance of the RTF that has a direct or immediate relationship to the physical health, mental health, or safety of RTF residents; and,
- A Class C deficiency is any relating to the operation or maintenance of the RTF that DHCS determines has only a minimal relationship to the health or safety of residents.
An investigation report is issued, outlining whether an allegation was substantiated, and if any additional findings were discovered. If any deficiencies are identified and substantiated, RTFs may be subject to a corrective action plan or verification of correction and civil penalties for failure to respond timely to a Notice of Deficiency. Deficiencies can also result in suspension or revocation of the RTF’s license. If no deficiencies are found, the complaint report is issued with allegations marked as “not substantiated.”
DHCS further noted that allegations of an entity unlawfully providing treatment services is assigned a high priority. They follow the same process for these allegations as they do for other high priority complaints against the facilities under their purview. However, when it comes to conducting a site visit, the facility can technically deny them access. In these situations, DHCS requires the assistance from the California Department of Justice in obtaining an investigation warrant but only if they have enough evidence to support the allegation. If DHCS determines the facility is in violation, they issue the notices authorized in existing law regarding the violations, penalties that can be assessed, and a date by which the facility is required to cease providing treatment services. If the facility continues to operate beyond the date, DHCS goes to the Superior Court to get an injunction.
Group Home Technical Advisory (GHTA). The California Department of Housing and Community Development (HCD) Division of Housing Policy Development issued the GHTA in December 2022 and states that group homes are an especially important type of housing for persons with disabilities. By supporting their residents’ individualized needs while providing flexible and affordable housing options, group homes help persons with disabilities live in deinstitutionalized settings that facilitate their integration into local communities. HCD further states in recent years, some local governments have amended their zoning ordinances to add new regulations for group homes, particularly for SLH/RRs. These amendments have raised concerns that local governments are not complying with their affirmative obligations under state planning and zoning laws to promote more inclusive communities and affirmatively further fair housing (AFFH). These amendments have also generated disputes and confusion over whether local governments are violating fair housing laws by discriminating against persons with disabilities or other protected characteristics. Among other concerns, local land use policies and practices can block new group homes from opening, force existing ones to close, and impose costs, legal fees, and administrative burdens that make it difficult for group homes to operate. These concerns arise in the context of a shortage of adequate housing for persons with disabilities, which is a particularly acute problem within California’s broader housing crisis. HCD states that with concerns, disputes, and confusion continuing to grow, the GHTA provides guidance on how state planning, zoning, and fair housing laws apply when local governments attempt to regulate group homes through land use policies and practices. It is designed to help local governments comply with their obligations under these state laws, including, for example, the Planning and Zoning Law; Housing Element Law; AFFH provisions; Anti-Discrimination in Land Use Law; and the Fair Employment and Housing Act, collectively “state housing laws.” Taken from the GHTA, local governments can comply with state housing laws regarding group homes, including the following:
- Discriminatory Purpose or Effect. Ensure that the policy or practice does not discriminate on the basis of disability or other characteristics protected by state law. Apply the GHTA’s analysis on how to determine if a policy or practice has a discriminatory purpose or effect and how to implement flexible reasonable accommodation procedures that promptly and efficiently resolve accommodation requests in compliance with state housing laws and regulations. (pp. 12-20);
- Supportive and Transitional Housing. Comply with the specific protections for group homes that fall within the definitions of supportive or transitional housing (pp. 20-22);
- State and Federal Law Distinctions. Confirm that a policy or practice complies with state housing laws even if it complies with federal law, because California law provides broader and different protections than federal law (pp. 22-23);
- Definition of Single-Family Residence. Avoid restrictive definitions of single housekeeping units or single-family homes that impermissibly constrain group homes from locating in single-family zones. This includes, for example, avoiding definitions that equate group homes with boardinghouses, require all residents to share a common deed or lease, overly scrutinize residents’ living arrangements, or automatically exclude group homes that are owned by for-profit businesses or pay staff to help manage a home’s operations (pp. 24-25);
- Group Homes that Do Not Provide Licensable Services. Allow group homes that operate as single-family residences and that do not provide licensable services to locate in single-family neighborhoods, subject only to the generally applicable, nondiscriminatory health, safety, and zoning laws that apply to all single-family residences (pp. 25-26) (emphasis added); and,
- Other Requirements for Group Home Operators and Residents. Avoid the other examples of special requirements for operators and residents discussed that can overly constrain group homes, conflict with the duty to affirmatively support this housing, and discriminate on the basis of disability and other protected characteristics. Examples discussed include, among other things, parking requirements, restrictions on residents or staff, neighborhood notice requirements, and local law enforcement registration requirements (pp. 30-33).
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Senate Appropriations Committee: unknown ongoing costs, potentially hundreds of thousands to low millions, for state staffing resources for DHCS to complete investigations within the timeframes, analyze data, and develop guidelines (Residential Outpatient Licensing Fund). To the extent the Residential Outpatient Licensing Fund has insufficient funds, the DHCS may need to increase licensing fees.
SUPPORT: (Verified 1/23/26)
League of California Cities (source)
City of Buena Park
City of Brea
City of Garden Grove
City of Mission Viejo
City of Stanton
OPPOSITION: (Verified 1/23/26)
County Behavioral Health Directors Association
ARGUMENTS IN SUPPORT: The League of California Cities (Cal Cities), as sponsor, argues a recent state audit revealed DHCS has not consistently investigated allegations of unlicensed facilities providing or advertising treatment services. DHCS has often failed to conduct site visits and follow-ups to ensure illegal operations have stopped. In one example highlighted in the audit, DHCS substantiated an allegation that an unlicensed facility was unlawfully providing services but there was no indication DHCS followed up to verify the facility’s claims it ceased operations, nor did it conduct a site visit to confirm compliance. Cal Cities argues the auditor recommended that DHCS improve the timeliness of inspections and complaint investigations; conduct more site visits; and establish follow-up procedures to ensure unlicensed facilities cease unlawful operations. Cal Cities states this bill empowers local governments to partner with the state to conduct site inspections and enforce licensing laws. This collaboration allows the state to leverage local capacity to respond swiftly to violations, ensure compliance, and better protect public health and safety.
ARGUMENTS IN OPPOSITION: The County Behavioral Health Directors Association (CBHDA) states that as part of their core functions they provide an array of Medi-Cal SUD treatment services, including supportive RR/SLHs, which are non-medical housing settings designed to support recovery and foster community, as a component of the SUD continuum of care. CBHDA argues this bill stems from continued negative stigma around RR/SLHs, and at its core contains a fundamental framing issue as it relates to RR/SLHs and SUD treatment. CBHDA further argues while DHCS is already tasked with these investigations, the timelines proposed in this bill would lead to DHCS potentially exceeding its bandwidth and then delegating this function to counties, which would include conducting investigations into private entities that counties do not contract with, nor have jurisdiction over. Delegating this responsibility to counties represents a significant liability risk, and a potential unfunded workload increase for county behavioral health agencies.
Prepared by: Reyes Diaz / HEALTH / (916) 651-4111
1/23/26 15:39:12
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SENATE COMMITTEE ON
Senator Anna Caballero, Chair
2025 - 2026 Regular Session
SB 490 (Umberg) - Alcohol and drug programs
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: | Consultant: |
Bill Summary:
SB 490 would require the Department of Health Care Services (DHCS) to meet specified timeframes for initiating and completing investigations for adult residential alcohol or other drug recovery or treatment facilities operating without a license in violation of existing law.
Fiscal Impact:
Unknown ongoing costs, potentially hundreds of thousands to low millions, for state staffing resources for DHCS to complete investigations within the timeframes, analyze data, and develop guidelines (Residential Outpatient Licensing Fund). To the extent the Residential Outpatient Licensing Fund has insufficient funds, the DHCS may need to increase licensing fees.
Background:
Adult residential alcohol or other drug recovery or treatment facilities (RTFs) provide residential nonmedical services to adults who are recovering from problems related to alcohol, drug, or alcohol and drug misuse or addiction, and who need alcohol, drug, or alcohol and drug recovery treatment or detoxification services. Current law grants sole authority to DHCS to license RTFs and authorizes the department to initiate a license suspension or revocation for licensing violations. If a facility is operating an RTF without a valid license, current law requires DHCS to conduct a site visit to investigate the allegation. If the department’s employee or agent finds evidence that the facility is providing alcohol or other drug recovery, treatment, or detoxification services without a license, the employee or agent must take the following actions:
- Submit the findings of the investigation to the department.
- Upon departmental authorization, issue a written notice to the facility stating that the facility is operating in violation. The notice must include all of the following:
- The date by which the facility shall cease providing services.
- Notice that the department will assess against the facility a civil penalty of $2,000 per day for every day the facility continues to provide services beyond the date specified in the notice.
- Notice that the case will be referred for civil proceedings pursuant to existing law, in the event the facility continues to provide services beyond the date specified in the notice.
- Inform the facility of the licensing requirements.
In October 2024, the California State Auditor (CSA) released a report, “Drug and Alcohol Treatment Facilities: They Are Sometimes Concentrated in Residential Areas, as Allowed, but State Oversight Is Not Always Timely or Thorough.” Among the report’s findings, the CSA indicated:
“We also found that Health Care Services did not always conduct site visits when investigating unlicensed facilities and did not always follow up after completing investigations of unlicensed facilities that were unlawfully advertising or providing services to ensure that they ceased doing so. In one example, after the department had substantiated an allegation that an unlicensed facility was unlawfully providing services, we found no indication that Health Care Services conducted sufficient follow‑up to verify the facility’s claim that it was not providing services, such as by performing an on‑site visit to ensure it had ceased doing so.”
DHCS also has the sole authority to certify and monitor all outpatient alcohol or other drug programs, also known as substance use disorder treatment programs that offer treatment, recovery, detoxification, or Medication for Addiction Treatment (MAT) services.
Current law requires licensed and certified entities to disclose to DHCS if any of its agents, partners, directors, officers, or owners, including a sole proprietor and member, has either of the following:
- Ownership or control of, or financial interest in, a recovery residence.
- Any contractual relationship with an entity that regularly provides professional services or substance use disorder treatment or recovery services to clients of programs certified or facilities licensed by the department, if the entity is not part of the program certified or facility licensed by the department.
Current law defines “recovery residence” to mean a residential dwelling that provides primary housing for individuals who seek a cooperative living arrangement that supports personal recovery from a substance use disorder and that does not require licensure by the DHCS or does not provide licensable services. A recovery residence may include, but is not limited to, residential dwellings commonly referred to as “sober living homes,” “sober living environments,” or “unlicensed alcohol and drug free residences.”
Proposed Law:
Specific provisions of the bill would:
- Require that if DHCS takes action against a recovery residence for operating without a license in violation of current law, DHCS must conduct a site visit of a certified program or licensed facility that has disclosed an interest in the recovery residence.
- Require that no later than July 15, 2026, and by July 15 of each year thereafter, all programs certified or facilities licensed by DHCS must submit to the department a report of all money transfers between the program or facility and a recovery residence during the previous fiscal year in order to detect patient brokering, illicit kickbacks, or unethical inducements that harm patients; require DHCS to analyze transfer data for compliance trends, irregularities, or fraud indicators; and require DHCS to develop guidelines for permissible and impermissible transfers.
- Require that if an RTF is alleged to be operating without a license in violation of current law, the DHCS must do the following:
- If the department determines that it has jurisdiction over the allegation, initiate an investigation of the allegation within 10 days of receiving the allegation and conduct a site visit as part of the investigation; and if the department receives a complaint that does not fall under its jurisdiction, the department must notify the complainant in writing, including, but not limited to, through electronic means, that it does not investigate that type of complaint.
- Complete the investigation within 60 days of the initiation of the investigation, unless the department requires either of the following:
- Assistance from local or other state agencies to complete the investigation.
- Significant additional resources to complete the investigation, as determined by the department.
- If the department is not able to complete an investigation within 60 days, the department must notify the person that submitted the allegation in writing, including, but not limited to, through electronic means, of the reason for the delay.
- Require that if DHCS’s employee or agent finds evidence that the facility is providing alcohol or other drug recovery, treatment, or detoxification services without a license, the employee or agent must provide the required notice within 10 days of submitting their findings to the department and must conduct a follow-up site visit to determine whether the facility has ceased providing services.
- Provide that in a county that elects to administer the Drug Medi-Cal organized delivery system and provides optional recovery housing services, the county behavioral health agency may request approval from DHCS to conduct a site visit of a recovery residence that is alleged to be operating without a license in violation of current law; and provide that DHCS may approve that request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits specified above.
Related Legislation:
SB 35 (Umberg, 2025) was similar to this bill. The bill was held on the suspense file in the Assembly Appropriations Committee.
-- END --
SENATE COMMITTEE ON HEALTH
Senator Caroline Menjivar, Chair
BILL NO: SB 490
AUTHOR: | Umberg | ||
VERSION: | January 5, 2026 | ||
HEARING DATE: | January 14, 2026 | ||
CONSULTANT: | Reyes Diaz | ||
SUBJECT: Alcohol and drug programs
SUMMARY:
Requires the Department of Health Care Services (DHCS) to take specified action when it determines an entity is providing residential alcohol or other drug recovery or treatment services without a proper license, including conducting site visits, as well as initiating and completing investigations within specified timeframes. Permits county behavioral health agencies that administer the Drug Medi-Cal organized delivery system to request DHCS approval to conduct site visits to specified recovery residences.
Existing law:
- Grants sole authority in the state to the Department of Health Care Services (DHCS) to certify alcohol or other drug (AOD) programs and to license adult residential alcohol or other drug recovery or treatment facilities (RTFs). [Health and Safety Code (HSC) §11832, 11834.01]
- Requires DHCS to conduct onsite program compliance visits for AOD programs and RTFs at least once during the certification or licensure period. Permits DHCS to conduct announced or unannounced site visits to review for compliance. [HSC §11832.12, 11834.01]
- Requires all programs certified, or RTFs licensed by DHCS, to disclose if any of its agents, partners, directors, officers, or owners, including a sole proprietor and member, has either of the following:
- Ownership or control of, or financial interest in, a recovery residence/sober living homes (RR/SLHs); or,
- Any contractual relationship with an entity that regularly provides professional services or substance use disorder (SUD) treatment or recovery services to clients of programs certified or facilities licensed by DHCS, if the entity is not part of the program certified or facility licensed. [HSC §11833.05(a)]
- Permits DHCS to suspend or revoke an AOD program certification or RTF license for failing to disclose the information required in 3) above of existing law. [HSC 11833.05(c)]
- Prohibits a person, firm, partnership, association, corporation, or local governmental entity from operating, establishing, managing, conducting, or maintaining a RTF to provide recovery, treatment, or detoxification services within this state without first obtaining a current valid license from DHCS. [HSC §11834.30]
- Requires a laboratory or certified outpatient treatment program that leases, manages, or owns housing units that are offered to individuals who concurrently utilize laboratory or outpatient services to maintain separate contracts for the housing. Requires a RTF to only offer an individual discounted housing following discharge from the facility if certain conditions are met, such as the RTF and the individual enter into a written contract for housing that is separate from the contract for treatment; if the individual also pursues outpatient treatment; or, the offer for housing is not dependent upon the individual’s agreement to attend outpatient treatment at a program that is owned or operated by the RTF. [HSC §11831.65]
- Requires DHCS to conduct a site visit to investigate an allegation of an entity operating without a valid RTF license. Requires DHCS to take the following actions if evidence substantiates that the entity is providing RTF services without a license:
- Submit the findings of the investigation;
- Issue a written notice to the entity stating that it is operating in violation DHCS’s licensing law and inform them of the date by which it ceases providing services and notice that DHCS will assess a civil penalty of $2,000 per day for every day they continue to provide services beyond the date specified in the notice;
- Notice that the case will be referred for civil proceedings in the event the entity continues to provide services beyond the date specified in the notice; and,
- Inform the entity of the licensing requirements. [HSC §11834.31]
- Prohibits an entity found to be in violation of DHCS’s licensing law from applying for initial RTF licensure for a period of five years from the date of the notice specified. [HSC §11834.31]
- Permits DHCS’s Director to suspend or revoke certification or licensure, including other AOD program certifications or RTF licenses held by the same person or entity, or to deny an application for certification or licensure; extension of the certification or license; or, modification to certification or a license, upon specified violations and circumstances. [HSC §11832.14, 11834.36]
- Requires DHCS to continue to implement the Drug Medi-Cal organized delivery system (DMC-ODS) program previously authorized under the California Medi-Cal 2020 Demonstration pilot. Requires election by counties to participate in the DMC-ODS to be considered voluntary. [WIC §14184.401]
This bill:
- Requires DHCS, if it takes action against a RR/SLH for providing treatment services without a valid license, to conduct a site visit of a certified AOD program or licensed RTF that has disclosed an interest in that RR/SLH.
- Requires all AOD programs and RTFs, no later than July 15, 2026, and every July 15 thereafter, to report to DHCS all money transfers between them and their affiliated RR/SLHs. Requires DHCS to analyze transfer data for compliance trends, irregularities, or fraud indicators, and to develop guidelines for permissible and impermissible transfers.
- Requires DHCS, if a facility is alleged to be operating as an RTF without a valid license, to conduct a site visit as follows:
- Initiate an investigation of the allegation, if DHCS has jurisdiction, within 10 days of receiving the allegation and to conduct a site visit;
- Notify the complainant in writing, if DHCS does not have jurisdiction, that it does not investigate those types of complaints;
- Complete the investigation within 60 days of the initiation of the investigation, unless DHCS requires assistance from local or other state agencies, or significant additional resources it determines it needs; and,
- Notify the complainant in writing of the delay if DHCS is unable to complete the investigation within 60 days.
- Expands the required actions for DHCS to take, when it conducts a site visit to investigate allegations of operating without a valid RTF license, to provide the entity the notice within 10 days of the DHCS employee submitting their findings, and to conduct a follow-up site visit to determine whether the entity has ceased providing services by the date DHCS specified.
- Permits county behavioral health agencies, if they elect to administer the DMC-ODS and provide optional recovery housing services, to request approval from DHCS to conduct a site visit of a RR/SLH that is alleged to be in violation of licensing law. Permits DHCS to approve the request if it has sufficient evidence to substantiate the allegation and it fails to initiate or conclude the investigation in accordance with the time limits imposed by this bill.
FISCAL EFFECT:
This bill has not been analyzed by a fiscal committee.
COMMENTS:
- Author’s statement. According to the author, the proliferation of RR/SLHs and SUD treatment facilities, particularly in Southern California’s "Rehab Riviera," has raised concerns regarding the quality of care and regulatory oversight. These concerns were confirmed by a recent State Auditor’s report, which found that DHCS does not always provide timely or thorough oversight, risking the health and safety of people in recovery. This bill will ameliorate these perpetuated issues by establishing timelines for DHCS to investigate allegations of licensed treatment being offered at unlicensed RR/SLHs. If DHCS cannot meet the timelines, SB 490 would authorize cities and counties to request approval to conduct site visits and enforce compliance with existing state licensing requirements.
- California State Auditor (CSA) report. Issued in October 2024, the CSA Drug and Alcohol Treatment Facilities report stated complaints to DHCS may arise from various sources, including RTF residents, neighbors, staff members, or government agencies. According to internal guidelines, DHCS prioritizes death investigations over investigations into all other types of complaints. The CSA stated, in fact, DHCS aims to assign death investigations to a staff member on the day it receives the report of a death. In the course of a death investigation, it directs its staff to perform a complete review of the facility where the death occurred to determine whether the resident’s death was related to deficiencies in the facility’s operation. DHCS also receives and investigates complaints about facilities that operate without a license—for which generally DHCS does not have oversight. If an investigation finds, however, that an unlicensed facility is providing or advertising services that require a license, DHCS notifies the facility that it has been violating the law. If it obtains sufficient evidence the facility has not stopped providing the services in question, DHCS is authorized in current law to bring a civil action against the facility. For a licensed RTF, if during a complaint investigation or compliance inspection, DHCS finds a facility poses serious risks to the health and safety of residents, it may initiate a license suspension or revocation. Current law authorizes DHCS to immediately suspend a license when these concerns are present. A suspension stays in effect until DHCS makes a final determination, which may include revocation, following a hearing and a proposed decision by an Administrative Law Judge.
The CSA made a series of recommendations to help DHCS improve its complaints processes—mostly through administrative means:
- Provide management with information about the timeliness of compliance inspections;
- Implement a mechanism in its licensing database that notifies staff of the dates for upcoming compliance inspections for their caseload so they can plan accordingly;
- Fill its vacant positions;
- Update its policies and staff training by April 2025 to ensure it assigns complaints to analysts for investigation within 10 days, as currently required by its regulations;
- Implement guidelines by October 2025 that specify the length of time analysts should take to complete key steps in the investigation process for different types of investigations;
- Conduct site visits beginning December 2024 in all instances in which there is an allegation that an unlicensed facility is advertising or providing treatment services without a license; and,
- Develop and implement, by April 2025, a follow-up procedure, such as performing another site visit, to confirm unlicensed facilities have ceased providing services unlawfully.
- DHCS complaint investigations. DHCS informally outlined its process for RTF investigations that generally mirrors the timelines stated by the author of this bill and in the CSA report. If DHCS establishes jurisdiction, the complaint is logged, assigned a complaint number, and a high-, medium-, or low-level designation. When DHCS receives a complaint that does not fall under its jurisdiction, a letter is sent to the complainant informing them of this fact. DHCS regulations define deficiencies, determined during the investigation, in the following way:
- A Class A deficiency is any presenting an imminent danger to any resident of a RTF. “Imminent danger” means that the more likely consequence of the deficiency is death or physical injury that would render a part of the body functionally useless or temporarily or permanently reduced in capacity, or inhibit any function of the body to such a degree as to shorten life or to reduce physical or mental capacity;
- A Class B deficiency is any relating to the operation or maintenance of the RTF that has a direct or immediate relationship to the physical health, mental health, or safety of RTF residents; and,
- A Class C deficiency is any relating to the operation or maintenance of the RTF that DHCS determines has only a minimal relationship to the health or safety of residents.
An investigation report is issued, outlining whether an allegation was substantiated, and if any additional findings were discovered. If any deficiencies are identified and substantiated, RTFs may be subject to a corrective action plan or verification of correction and civil penalties for failure to respond timely to a Notice of Deficiency. Deficiencies can also result in suspension or revocation of the RTF’s license. If no deficiencies are found, the complaint report is issued with allegations marked as “not substantiated.”
DHCS further noted that allegations of an entity unlawfully providing treatment services is assigned a high priority. They follow the same process for these allegations as they do for other high priority complaints against the facilities under their purview. However, when it comes to conducting a site visit, the facility can technically deny them access. In these situations, DHCS requires the assistance from the California Department of Justice in obtaining an investigation warrant but only if they have enough evidence to support the allegation. If DHCS determines the facility is in violation, they issue the notices authorized in existing law regarding the violations, penalties that can be assessed, and a date by which the facility is required to cease providing treatment services. If the facility continues to operate beyond the date, DHCS goes to the Superior Court to get an injunction.
- Recovery residences/SLHs. A 2010 report on the National Institutes of Health (NIH) website, “Sober Living Houses for Alcohol and Drug Dependence: 18-month Outcomes,” states that SLHs are not formal treatment programs and are not obligated to comply with state or local regulations applicable to treatment. However, NIH does not provide a formal definition of an SLH. The report also mentions that it is difficult to determine how many SLHs there are in California because they are outside of the purview of state licensing authorities. The NIH report cites the protection that the federal FHA affords SLHs to be located in residentially zoned areas, personal privacy under the Fourth Amendment, and the right of people with disabilities to live together for a shared purpose, such as mutually assisted recovery and maintenance of an abstinent lifestyle.
According to DHCS’s website, some types of residences do not provide alcohol and other drug services and therefore do not require licensure by DHCS, including cooperative living arrangements with a commitment or requirement to be free from alcohol and other drugs, sometimes referred to as RRs, SLHs, transitional housing, or alcohol- and drug-free housing. DHCS states that while SLHs are not required to be licensed by DHCS, they may be subject to other types of permits, clearances, business taxes, or local fees, which may be required by the cities or counties in which they are located. If an SLH is providing licensable services to adults, then it must obtain a valid RTF license. Licensable services can include, but are not limited to, detoxification services, group sessions, individual sessions, one-on-one counseling, educational sessions, or recovery, treatment, or discharge planning. If an SLH is providing just one of the mentioned services, then it should be classified as an RTF and must obtain a license from DHCS.
DHCS’s Drug Medi-Cal Organized Delivery System waiver allows counties to use recovery SLHs in their continuum of services if they adhere to the following guidelines: do not provide SUD services that would require licensure by DHCS; all residents of an RR are actively engaged in medically necessary recovery support services to be provided off-site; and each county develops guidelines for contracted RR providers and provide monitoring and oversight.
- Housing for the disabled. A joint statement issued in November 2016 by the federal Department of Justice (DOJ) and Department of Housing and Urban Development (HUD), which together are responsible for enforcing the FHA, declared that the term “group home” does not have a specific legal meaning, though land use and zoning officials and the courts have referred to some residences for persons with disabilities as group homes, including homes occupied by persons in recovery from alcohol or substance abuse that are commonly called SLHs. DOJ and HUD contend that persons with disabilities have the same FHA protections whether or not their housing is considered a group home, and that a household where two or more persons with disabilities choose to live together, as a matter of association, may not be subject to requirements or conditions that are not imposed on households consisting of persons without disabilities. DOJ and HUD further state that the provision of services (medical, supervisory, supportive, etc.) is not required for a group home to be protected under the FHA. Group homes can also be opened by individuals or organizations, both for-profit (“commercially operated”) and not-for-profit, and still be protected by the FHA. Further, the FHA does not require a person who resides in an SLH to have participated in or be currently participating in a substance abuse treatment program to be considered a person with a disability. The fact that a resident of a SLH may currently be illegally using a controlled substance does not deprive the other residents of the SLH of the protection of the FHA. The DOJ and HUD statement also says that localities and states must ensure that actions to enforce criminal and other laws against SLHs are not taken to target SLHs and are applied equally, regardless of whether the residents of housing are persons with disabilities.
- Group Home Technical Advisory (GHTA). The California Department of Housing and Community Development (HCD) Division of Housing Policy Development issued the GHTA in December 2022 and states that group homes are an especially important type of housing for persons with disabilities. By supporting their residents’ individualized needs while providing flexible and affordable housing options, group homes help persons with disabilities live in deinstitutionalized settings that facilitate their integration into local communities. HCD further states in recent years, some local governments have amended their zoning ordinances to add new regulations for group homes, particularly for SLH/RRs. These amendments have raised concerns that local governments are not complying with their affirmative obligations under state planning and zoning laws to promote more inclusive communities and affirmatively further fair housing (AFFH). These amendments have also generated disputes and confusion over whether local governments are violating fair housing laws by discriminating against persons with disabilities or other protected characteristics. Among other concerns, local land use policies and practices can block new group homes from opening, force existing ones to close, and impose costs, legal fees, and administrative burdens that make it difficult for group homes to operate. These concerns arise in the context of a shortage of adequate housing for persons with disabilities, which is a particularly acute problem within California’s broader housing crisis. HCD states that with concerns, disputes, and confusion continuing to grow, the GHTA provides guidance on how state planning, zoning, and fair housing laws apply when local governments attempt to regulate group homes through land use policies and practices. It is designed to help local governments comply with their obligations under these state laws, including, for example, the Planning and Zoning Law; Housing Element Law; AFFH provisions; Anti-Discrimination in Land Use Law; and the Fair Employment and Housing Act, collectively “state housing laws.” Taken from the GHTA, local governments can comply with state housing laws regarding group homes, including the following:
- Discriminatory Purpose or Effect. Ensure that the policy or practice does not discriminate on the basis of disability or other characteristics protected by state law. Apply the GHTA’s analysis on how to determine if a policy or practice has a discriminatory purpose or effect and how to implement flexible reasonable accommodation procedures that promptly and efficiently resolve accommodation requests in compliance with state housing laws and regulations. (pp. 12-20);
- Supportive and Transitional Housing. Comply with the specific protections for group homes that fall within the definitions of supportive or transitional housing (pp. 20-22);
- State and Federal Law Distinctions. Confirm that a policy or practice complies with state housing laws even if it complies with federal law, because California law provides broader and different protections than federal law (pp. 22-23);
- Definition of Single-Family Residence. Avoid restrictive definitions of single housekeeping units or single-family homes that impermissibly constrain group homes from locating in single-family zones. This includes, for example, avoiding definitions that equate group homes with boardinghouses, require all residents to share a common deed or lease, overly scrutinize residents’ living arrangements, or automatically exclude group homes that are owned by for-profit businesses or pay staff to help manage a home’s operations (pp. 24-25);
- Group Homes that Do Not Provide Licensable Services. Allow group homes that operate as single-family residences and that do not provide licensable services to locate in single-family neighborhoods, subject only to the generally applicable, nondiscriminatory health, safety, and zoning laws that apply to all single-family residences (pp. 25-26) (emphasis added); and,
- Other Requirements for Group Home Operators and Residents. Avoid the other examples of special requirements for operators and residents discussed that can overly constrain group homes, conflict with the duty to affirmatively support this housing, and discriminate on the basis of disability and other protected characteristics. Examples discussed include, among other things, parking requirements, restrictions on residents or staff, neighborhood notice requirements, and local law enforcement registration requirements (pp. 30-33).
- Related legislation. SB 329 (Blakespear and Umberg) requires DHCS to meet specified timeframes for assigning complaints against, and completing investigations for, licensed RTFs. SB 329 is pending in the Assembly Appropriations Committee.
- Prior legislation. SB 35 (Umberg of 2025) was identical to this bill. SB 35 was held on the Assembly Appropriations Committee suspense file.
SB 83 (Umberg, Chapter 402, Statutes of 2025) requires DHCS to post on its website an identification and summary of each violation issued for licensed RTFs and certified AOD programs included on the Probationary Status, Temporary Suspension Order, Revoked and Notice of Operation in Violation of Law Program List.
AB 424 (Davies, Chapter 261, Statutes of 2025) requires DHCS to provide, within 10 days of the receipt of a complaint from a member of the public against an RTF, or a complaint alleging that a facility is unlawfully operating without a license, notice to the person filing the complaint that the it has been received; provide them notice that the complaint has been closed; and, whether DHCS found the facility to be in violation.
AB 492 (Valencia, Chapter 368, Statutes of 2025) requires DHCS, when it issues an RTF license, to concurrently notify the city or county in which the RTF is located, including the name and mailing address of the licensee and the location of the RTF.
AB 1356 (Dixon, Chapter 189, Statutes of 2025) requires RTFs to submit a subsequent report within 30 days of a resident’s death and the required initial report that contains any relevant information that was not known at the time of the initial incident.
SB 913 (Umberg of 2024) would have permitted a city attorney of a city in which the housing units are located, or a county counsel or county behavioral health agency if the housing units are located in the unincorporated area of the county, with the consent or approval from DHCS, to conduct announced or unannounced site visits and to enforce specified “anti-kickback” laws related to RTFs. SB 913 was held on the Senate Appropriations Committee suspense file.
AB 2081 (Davies, Chapter 376, Statutes of 2024) requires AOD programs and RTFs to disclose to the public and provide a link to DHCS’s website containing information about the status of certification or licensure and of the AOD program or RTF’s current standing.
AB 2574 (Valencia, Chapter 410, Statutes of 2024) requires licensed RTFs and certified AOD programs to disclose to DHCS if any of its agents, partners, directors, officers, or owners own or have a financial interest in an RR and whether it has contractual relationships with entities that provide recovery services to clients of certified programs or licensed facilities if the entity is not a part of a certified program or a licensed facility.
SB 992 (Hernández, Chapter 784, Statues of 2018) among other things, prohibits RTFs from denying admission to individuals solely for having valid medications to aid in their recovery; permits DHCS to take action against an entity with multiple DHCS licenses when of the licensed RTF violates RTF law; and, prohibits an entity from seeking licensure within five years of having a previous license revoked for violating RTF law.
SB 1228 (Lara Chapter 792, Statutes of 2018) prohibits specified persons, programs, or entities under DHCS’s purview from giving or receiving remuneration or anything of value for the referral of a person who is seeking recovery and treatment services (known as “patient brokering”).
- Support. The League of California Cities (Cal Cities), as sponsor, argues a recent state audit revealed DHCS has not consistently investigated allegations of unlicensed facilities providing or advertising treatment services. DHCS has often failed to conduct site visits and follow-ups to ensure illegal operations have stopped. In one example highlighted in the audit, DHCS substantiated an allegation that an unlicensed facility was unlawfully providing services but there was no indication DHCS followed up to verify the facility’s claims it ceased operations, nor did it conduct a site visit to confirm compliance. Cal Cities argues the auditor recommended that DHCS improve the timeliness of inspections and complaint investigations; conduct more site visits; and establish follow-up procedures to ensure unlicensed facilities cease unlawful operations. Cal Cities states this bill empowers local governments to partner with the state to conduct site inspections and enforce licensing laws. This collaboration allows the state to leverage local capacity to respond swiftly to violations, ensure compliance, and better protect public health and safety.
- Opposition. The County Behavioral Health Directors Association (CBHDA) states that as part of their core functions they provide an array of Medi-Cal SUD treatment services, including supportive RR/SLHs, which are non-medical housing settings designed to support recovery and foster community, as a component of the SUD continuum of care. CBHDA argues this bill stems from continued negative stigma around RR/SLHs, and at its core contains a fundamental framing issue as it relates to RR/SLHs and SUD treatment. CBHDA further argues while DHCS is already tasked with these investigations, the timelines proposed in this bill would lead to DHCS potentially exceeding its bandwidth and then delegating this function to counties, which would include conducting investigations into private entities that counties do not contract with, nor have jurisdiction over. Delegating this responsibility to counties represents a significant liability risk, and a potential unfunded workload increase for county behavioral health agencies.
SUPPORT AND OPPOSITION:
Support: League of California Cities (sponsor)
Oppose: County Behavioral Health Directors Association
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Bill Author
