October 2018

What the New Law Does and How Substance Abuse Treatment Facilities Are Impacted

Senate Bill 1228, also known as the Substance Use Disorder Patient Protection Act, was passed with overwhelming bipartisan support and signed into law by Governor Brown last week. The law prohibits licensed or certified alcoholism or drug abuse recovery and treatment facilities, their employees and other workers from giving or receiving remuneration or anything of value for the referral of a person seeking alcoholism or drug abuse recovery and treatment services. The law and its prohibitions also applies to all owners, partners, officers, directors or shareholders who hold an interest of at least 10 percent in such a licensed or certified treatment facility.

This new law authorizes the California Department of Health Care Services (DHCS) to investigate and impose sanctions and financial penalties for violations, which would constitute criminal misdemeanors. DHCS may also revoke or suspend the license of substance use disorder treatment facilities and the registration or certification of counselors found to have violated the law. Further, other professionals found to be in violation may face DHCS-recommended disciplinary action, including termination of employment at a program and suspension and revocation of licensure by the respective licensing board.

DHCS is authorized to enforce and implement the new law through issuance of provider bulletins, written guidelines and similar instructions until regulations are adopted.

What Licensed/Certified Substance Abuse Treatment Facilities Should Do Now

  • Review marketing practices and policies, along with compensation arrangements with employees and independent contractors to ensure they comply with this new law.
  • Revise employee compensation plans and independent contractor agreements to remove incentives for engaging in practices that may violate this law and include provisions requiring compliance with this and other applicable laws and professional standards.
  • Consider training for appropriate personnel, as well applicable owners, partners, officers, directors or shareholders to help ensure organization-wide compliance with the new law.

For additional information, please contact one of the authors of this e-alert or your Polsinelli attorney.