All addiction treatment providers in Orange County will have to come clean by disclosing their affiliates – including sober living homes, blood- and urine-testing labs and pharmacies – in a first-of-its kind bid to bring oversight to an industry many say is rife with fraud.
Failing to register honestly and completely will be a misdemeanor carrying fines of up to $1,000 and jail time of up to six months.
It’s possible the registry, believed to be the first of its kind in California, could come to include hundreds of companies. Orange County is a hotbed for rehab operators, and much of Southern California is known in the industry as the “Rehab Riviera.”
The switch to a countywide registry – rather than a list targeting only rehab operators in unincorporated areas of the county, as originally proposed – was embraced by the majority of the County Board of Supervisors on Tuesday, Oct. 30.
“We need to act now,” said Supervisor Lisa Bartlett, referring to issues such as unnecessary surgeries, paying-for-patients and insurance fraud that are common in the loosely regulated rehab industry.
“We can’t wait for state and federal legislation,” Bartlett added. “People’s lives are at risk.”
The law will produce a registry, accessible to the public, that includes the rehab center’s name, business address and state license number. It also will list addresses, details of services provided and accepted methods of payment for each location, as well as the identity of each owner, director, partner and officer. Critically, when applicable, the county registry also will include the identities of each rehab center’s affiliated entities.
That disclosure will allow law enforcement and consumers to know of financial ties between treatment centers and their related businesses. Many center operators use affiliated businesses anonymously as a way to boost profits. Without any registry, it’s hard for regulators and investigators to identify deficient or fraudulent operators.
The registry was proposed by the District Attorney’s office, but will be overseen by the county’s Health Care Agency. The HCA also will absorb costs for the first year, and then figure out how much the registration fee must be in order to cover those costs.
Some officials questioned the timing of the proposal, noting that it comes a week before an election in which District Attorney Tony Rackauckas is being challenged by Orange County Supervisor Todd Spitzer.
“We’re making laws here. This isn’t monkey businesses,” Spitzer said. “If you’re going to go forward with something only half-cooked, with no revenue stream and a legal opinion that any fee for the registry could be interpreted as a tax, the public might want to know.”
Spitzer asked the other supervisors to release a confidential memo on the fee/tax issue from the county’s lawyers, but they declined.
“Colleagues, this is a tax,” Spitzer said. “It’s unequivocally clear…. If you’re going to pass a tax, you should be open and honest about it on the record.”
Decrying what he termed Spitzer’s “smears,” Board Chairman Andrew Do said the county is well-versed in charging fees to cover costs, as it does to run other industry-specific registries that track tattoo parlors and restaurants, among others. Do noted that those fees are nominal, ranging from $25 to $72 a year, and that the’s county health agency won’t be unduly burdened by absorbing those costs for the first year.
If approved after a second reading, slated in coming weeks, the new county ordinance could take effect on July 1. New rehab centers will be required to register within 30 days of opening their doors.
The action comes in the wake of the Southern California News Group’s ongoing probe of fraud and death in the rehab industry.
“We have hundreds, hundreds of these facilities in our county, and frankly, it’s a plague to the county,” Rackauckas said.
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