SB 490

Introduced by Senator Umberg
(Coauthors: Assembly Members Patel and Schiavo)
 An act to amend Sections 11833.05 and 11834.31 of the Health and Safety Code, relating to public health.
public health
Alcohol and drug programs.
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 department’s 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.
The people of the State of California do enact as follows:
SECTION 1.
Section 11833.05 of the
Health and Safety Code
 is amended to read:
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 department’s 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.