Governor Signs Law Banning Patient Brokering in Recovery Treatment Centers

September 26, 2018

Substance Use Disorder Patient Protection Act (Senate Bill 1228) prevents payments for substance use patient referrals

SACRAMENTO, CA – Responding to reports of fraud and abuse of patients in recovery from opioid and other addictions, Governor Brown signed the state’s first bill that outlaws patient brokering in the treatment industry.

Senator Ricardo Lara (D-Bell Gardens) authored the Substance Use Disorder Patient Protection Act, Senate Bill 1228, which passed the Legislature unanimously.

Senate Bill 1228 prevents treatment facilities that are licensed or certified by the state Department of Health Care Services from making or receiving payments in exchange for patient referrals.

“Governor Brown’s signing of SB 1228 puts substance use patients’ medical need over provider profits,” said Senator Ricardo Lara (D-Bell Gardens). “By taking money out of patient referrals, SB 1228 will protect vulnerable Californians from patient brokering that drives fraud and abuse.”

SB 1228 is sponsored by Recovery Reform Now, a national patient advocacy group dedicated to consumer protections and higher standards. 

Ryan Hampton, a recovery advocate for Recovery Reform Now and person in recovery, said: "A ban on patient brokering is now the law of the land in California. This has been a long process. But our community is grateful to have had a partner in Senator Lara throughout this entire journey. Families and people seeking help now have another protection in place. We will continue to fight for more protections next session and beyond. But Governor Brown's signature on SB 1228 today is a great start."

Media reports reveal a rising number of scams involving patient brokering, which is the payment of kickbacks or fees for referrals. Some patients have been recruited with the offer of cash payments or drugs. Patients with acute medical needs have even died after being referred to facilities that cashed in on referrals. Payments for patient referrals undercut ethical providers and encourage practices that are not in patients’ best interest, and California currently prohibits such payments by physicians. 

The Department may investigate allegations and if it finds violations may assess a penalty, suspend or revoke a license or certification, suspend or revoke a certification of a counselor, or recommend discipline against a licensed professional by the respective licensing board.

The prohibition on payments for patient referrals also applies to anThe opioid epidemic claimed nearly 1,900 lives in California in 2017, and drug and opioid overdoses are in the top 20 causes of death statewide. Excessive alcohol use claims approximately 2,100 lives per year.

The Department of Health Care Services licenses or certifies 2,300 in-patient treatment facilities providing 24-hour care and out-patient treatment, detoxification and recovery facilities that provide medical care and counseling to people with substance use disorders.