Congressman Tony Mendoza

SACRAMENTO, Calif. /California Newswire/ — Senate Bill 648, authored by Calif. Senator Tony Mendoza, was approved this week by the Senate Health Committee. The bill will protect seniors and their families from elder care referral agencies that engage in unscrupulous business practices by strengthening their licensing and financial disclosure requirements. The bill now goes to the Senate Judiciary Committee for consideration.

As the population of aging adults who need specialized medical care and support services has grown in the last several years, there has been an explosion of for-profit businesses that offer referral assistance to seniors and their families to find suitable long term care housing options in extended care, skilled nursing home or intermediate care facilities and residential care facilities.

While these agencies provide a valuable service, current licensing requirements leave room for abuse. For example, some referral agencies advertise their services as free of charge to the consumer. However, they often contract with care facilities and receive commissions, incentives and bonuses for each senior or family placement. These financial incentives are largely undisclosed to the senior or families being placed, and may lead to a placement that is not helpful and may even be harmful to the patient.

“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 Tony Mendoza.

“Seniors and their families who use these services have a right to know what financial relationships may be influencing the referral to a specific nursing home or long term care facility,” said Senator Mendoza. “My bill requires a more transparent process so that seniors will be able to make a more informed decision about what long term care options are available.”

“A decision to find long-term care quickly creates an environment that makes families and seniors more susceptible to pressure, misinformation and unscrupulous business practices,” said Senator Mendoza. “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 needs.”

In spite of their proliferation, 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 financial disclosure requirement and to ensure that seniors are not being referred to facilities that have lost their license to operate in California.

“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,” said Senator Mendoza.

SB 648 will:

Require a referral agency to disclose any financial interest shared with a care facility, including all fees, commissions received, and other financial benefits resulting from the placement.

Require disclosure of how often a referral agency has inspected a facility; and, a notice advising clients as to where complaints can be directed.

Require the referral agency to protect the medical privacy of seniors by prohibiting the sharing of a client’s personal information.

Require the referral agency to maintain liability insurance, and prohibits the referral agency from holding any power of attorney or property of a client.

Add “residential care facility for the elderly” to the definition of referral agency for licensing purposes.

In 2011, the state of Washington became the first state in the nation 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 also referred patients to facilities with known histories of poor care and neglect, a practice that SB 648 will address.

“The Consumer Federation of California is sponsoring this bill to 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 facility, whether from fees, commissions or other considerations. They have a right to know that a recommendation is based on first-hand observation of a facility over time – actual visits, not public relations or glossy brochures. And they have a right to know what qualifies a placement agency to advise them on such a life-changing decision. Our elders ought to be able to count on these agencies to have their clients’ best interests at heart, not their own profits,” said Richard Holober, Executive Director of the Consumer Federation of California (CFC). Since 1960, CFC has been active in safeguarding the rights of the elderly and all Californians.

Senator Tony Mendoza, a Los Angeles native and former elementary school teacher in East Los Angeles, represents the 32nd Senate District encompassing portions of Los Angeles and Orange Counties. For more information about Senator Mendoza visit his website