Senator Mendoza`s Fact Sheet on SB 648

SB 648 (Mendoza)
As Introduced February 27, 2015
REFERRAL AGENCY COMPENSATION & MANDATORY DISCLOSURES
Fact Sheet
SUMMARY
THE PROBLEM
This bill places specific disclosure notifications on
all placement referral agencies and ensures that
seniors and families who use these services have a
right to know what financial relationships may be
driving their referral. These disclosure requirements
will better equip seniors to make informed decisions
about what long-term care options are available to fit
their needs, without being misled by a placement
agencies hidden financial gain.
Referral agencies have become a useful source for
seniors and families seeking assisted living or longterm care housing services. They contract with care
facilities and receive placement commissions from
the facility they refer each senior to, yet these
financial incentives are largely undisclosed to the
senior or families being placed.
BACKGROUND
Finding quality housing and care for senior citizens is
daunting; even under the most ideal circumstances.
For most seniors, following a hospital stay or sudden
decline in independence, this decision can feel
rushed; creating an environment that makes families
and seniors more susceptible to pressure and
misinformation. Unfortunately, the consumer often
does not have the time, resources, or expertise to
make the most informed decision for themselves or
their loved ones.
It is at this juncture that elder placement referral
agencies can be of great help, or great harm. Referral
agencies offer seniors and families assistance in
finding placement in a care facility, often free of
charge. In spite of their ubiquity, these referral
placement agencies are largely unregulated in
California.
Under current law, only certain referral agencies are
required to be licensed and there are no requirements
for ensuring that referrals are made solely to licensed
care facilities. There is a need to address these gaps
in current law in order to ensure that every placement
agency meets some licensing requirements and
seniors are not being referred to facilities that have
lost their license to operate in California.
In 2011, the state of Washington enacted a law
(H.B. 1494) to regulate elder placement referrals in
response to an investigative report conducted by
The Seattle Times. The Times reported that some
referral companies did not disclose the
commissions they collected from facilities,
oftentimes steering seniors to those facilities
regardless of the patient’s needs. Agencies have
also referred patients to facilities with known
histories of poor care and neglect.
Referral agencies market to the most vulnerable
Californians and the lack of statutory and regulatory
oversight provides for ample opportunity to misguide
and harm consumers. Minimum standards for
disclosure are needed to ensure that seniors, and their
families, are making the most informed choices when
it comes to their long-term assisted care.
THIS BILL
This bill would require referral agencies to disclose
any financial interest shared with a care facility,
including all fees, commissions received, and other
financial benefits resulting from the placement;
disclosure of how often a referral agency has
inspected a facility; and, a notice advising clients as
to where complaints can be directed.
This bill enacts provisions to guard the medical
privacy of seniors, requires the referral agency to
Office of Senator Tony Mendoza
SB 648 - Fact Sheet
Page 1
maintain liability insurance, and prohibits the referral
agency from holding any power of attorney or
property of a client.
STATUS
February 27th – Introduced
SUPPORT

Consumer Federation of California (sponsor)
OPPOSITION

None
FOR MORE INFORMATION
Indira McDonald
Office of Senator Tony Mendoza
(916) 651-4032
Morgan Carvajal
Hernandez Strategy Group
(916) 447-9719
Aaron Lewis
Consumer Federation of California
(916) 498-9616
Office of Senator Mark DeSaulnier
SB 341 - Fact Sheet
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