CFC Sponsors Bill To Protect Seniors From Unethical Long-Term Care Referral Agencies

Mendoza’s SB 648 Would Tighten Licensing, Inspection And Financial Disclosure Requirements

Contact: Richard Holober / Brian Taylor

SACRAMENTO – The Consumer Federation of California (CFC) is sponsoring Senate Bill 648 (Mendoza, D-Artesia) to increase disclosure requirements and strengthen oversight of private placement agencies that refer seniors to residential care facilities for the elderly (RCFEs).

When seniors need long-term care following illness, accident or other life-altering changes, options include skilled nursing homes, extended-care facilities and RCFEs, also called assisted living facilities, retirement homes and board and care homes. RCFE services are limited to assistance with daily living such as meals, bathing and grooming, but they’re often the only option available to seniors from families of limited means.

Some placement agencies charge as much as $1,000 for referring clients to long-term care facilities. Others market their services as free to the consumer, but the agencies may collect kickbacks from facilities for their referrals – without disclosing the cozy financial arrangements to their clients. Licensing standards are inconsistent, and the agencies aren’t required to verify conditions in the RCFEs where they place seniors.

“SB 648 will help give the elderly and their families the information they need to make good decisions in difficult times. They have a right to know whether a placement agency is being paid to promote a particular facility, whether through fees, commissions or other considerations. They have a right to know that a recommendation is based on first-hand observation of a facility. And they have a right to know what qualifies a placement agency to advise them on such a life- changing decision,” said CFC Executive Director Richard Holober. “Our elders ought to be able to count on these agencies to have their clients’ best interests at heart, not their own profits. These vulnerable people need services, not salesmanship.”


As the least-regulated long-term care facilities, RCFEs are easy targets for greedy referral agencies seeking to dump seniors in under-supervised environments. More than 7,500 RCFEs operate in California now, and their numbers are expected to grow as the ranks of the elderly swell with aging Baby Boomers.

Many of these facilities deliver conscientious care, but too many provide poor or even nonexistent service, as seen in the owners’ abandonment of 14 sick and elderly patients in a Castro Valley assisted living facility in 2013. The results can be tragic. The deaths of at least 27 seniors in San Diego County RCFEs between 2008 and 2013 were documented in “Deadly Neglect,” a series of reports from the San Diego Union Tribune and the California Healthcare Foundation’s Center for Health Reporting.

This situation invites corruption in unscrupulous referral agencies, and can even lead to collusion between those agencies and unethical assisted-living operators:

  • In San Bernardino, a one-man operation reportedly referred seniors who had just been discharged from a hospital to unlicensed care facilities – part of a larger alleged scheme to temporarily place seniors in high-quality facilities during family visits and then move them to lower-quality, unlicensed facilities after the visitors
  • In San Luis Obispo, there are reports of referral agencies intentionally making bad placements for profit, only to refer seniors to a second or even a third facility – collecting a commission every step of the
  • In San Diego, a referral agency representative allegedly pressured a blind woman in her hospital bed to use the agency’s services and give over power of attorney

SB 648 would provide seniors who seek the services of elder placement referral agencies with basic consumer protections by requiring placement agencies to meet disclosure notice standards regarding the agencies financial interest in the seniors’ placement.

Specifically, SB 648 would:

  • Extend to RCFEs an existing requirement that placement agencies which refer seniors to higher levels of long-term care be licensed
  • Require a referral agency to make a scheduled visit to an RCFE within one month after a client is moved there, and to maintain a detailed review of the agency’s most recent inspection of the facility, along with a record of the frequency of its review of the facility
  • Prohibit a referral agency from holding any property or power of attorney for a client
  • Require specific written notice of any fees charged for referral services and include a description of the services to be rendered
  • Require a referral agency to maintain liability insurance

“I want to ensure that seniors and their families are not taken advantage of by strengthening the licensing and financial disclosure requirements for referral agencies. This will help protect against referral agencies that engage in unscrupulous business practices,” said Senator Mendoza in announcing his introduction of SB 648. “Referral agencies targeting a senior or family member during one of the most difficult times in their life and profiting from it without full disclosure of their financial interest is just wrong. My bill will end this practice.”

# # #

Since 1960, the nonprofit Consumer Federation of California has been a powerful voice for consumer rights.


Tags: , , , , , , , ,