‘People Are Dying as We Wait’: Bid to Tighten California Nursing Home Oversight Sputters

An effort to fix problems with the oversight of California’s nursing homes has stalled, sparking fears that the bill is doomed — and prompting elder-care advocates to warn that even a delay jeopardizes residents’ safety.

“I’m incredibly frustrated,” said Democratic Assemblymember Al Muratsuchi of Los Angeles, author of Assembly Bill 1502. “The pandemic has clearly exposed the horrible conditions of so many of our nursing homes.

“People are dying as we wait. ... We cannot sit around with a broken state oversight system while our most vulnerable residents continue to live in these nursing homes.”

A recent CalMatters investigation spotlighted an opaque licensing process for California’s nursing homes, plagued by indecision, delays and misleading information. For instance, the investigation found that the California Department of Public Health has allowed the state’s largest nursing home owner, Shlomo Rechnitz, to operate facilities for years through a web of companies while license applications for his facilities languish in “pending” status.

That story “blew the lid off of my thinking,” said Assemblymember Jim Wood, a Santa Rosa Democrat who chairs the Assembly Health Committee — and helps decide which health legislation in that house will live or die. “I didn’t realize to the extent that it was happening.”

Nonetheless, his committee declined to hear the bill, which would forbid the use of management agreements to “circumvent state licensure requirements” and would require owners and operators to get approval from CDPH before acquiring, operating or managing a nursing home. Instead, the committee turned Muratsuchi’s proposal into a two-year bill that won’t be heard before next January.

Advocates had expected the bill to face opposition from the nursing home industry, which has deep ties to influential players at the Capitol. The CEO of the nursing home industry group, Craig Cornett, was a top aide to two former state Senate leaders and four former Assembly speakers before joining the California Association of Health Facilities in 2017. He’s known for having masterful knowledge of the state government bureaucracy and is included on a list of the most influential people around the Capitol.

Cornett’s industry group employs a lobbying firm that counts Assembly Speaker Anthony Rendon’s cousin, Edward Rendon, as one of its lobbyists. Edward Rendon is also a partner at a consulting firm called Spiker Rendon that was paid $45,000 last year by Cornett's organization, according to its lobbying reports.

The California Association of Health Facilities has donated more than $1.6 million to California campaigns in the past decade, according to filings with the California secretary of state.

And Rockport Healthcare Services, the administrative services company for many nursing homes, employs the lobbying firm of Jason Kinney, whose French Laundry birthday bash last November was attended by Gov. Gavin Newsom.

The Newsom administration also hasn’t taken a position on the bill, although that is not unusual at this stage.

Wood insists that delaying Muratsuchi’s bill will not lead to its death, saying he is deeply committed to solving the state’s nursing home licensing problems “once and for all.”

Dr. Mark Ghaly, secretary of California Health and Human Services Agency, which oversees CDPH, declined to answer questions for this story or for CalMatters’ investigation into the department’s licensing practices. Newsom also declined to be interviewed for either story.

However, the governor recently agreed to donate $10,000 to charity after an investigation by LAist showed that he had received a political contribution in that amount from ReNew Health Consulting Services, which is affiliated with a troubled nursing home chain. LAist, affiliated with KPCC in Los Angeles, and CalMatters are part of a collaboration of California’s nonprofit newsrooms to investigate the state’s supervision of nursing homes.

Wood’s communications director, Cathy Mudge, told CalMatters this week that the Newsom administration had not pressured his committee to stall the bill.

Wood said he is so committed to fixing these issues that he plans to take the uncharacteristic step of putting his name on it as a joint author next year. He has long been an ally of nursing home oversight, calling for a May 2018 audit that said licensing lapses by CDPH increased the probability that residents might not receive adequate care. He has also authored previous bills to protect nursing home residents and improve transparency in the licensing process.

“I don’t want you to walk away with the impression that I’m stalling this, because I’m not,” Wood said. “I just want it to be right and I want it to be meaningful and I want to use this process to change the way we put this industry together.”

Before the bill is heard in January, Wood said he believes staff and outside consultants will need to invest a huge amount of time to gather data and communicate with various state agencies about complex issues. He also wants to work to get CDPH and the Newsom administration on board as “active partners.” He said he worries about the department’s bandwidth during the pandemic, and said his committee has also been inundated with 165 health-related bills.

The state’s licensing and oversight problem “really falls on the backs of CDPH for the most part,” he said.

“My hope is that, in the interim, as we move forward and do our work on this, that we get feedback from CDPH, that we get cooperation from them on how we can make this process work better,” he said. “I hope we’re not going to see a situation where they circle the wagons and lock the doors and really don’t work with us.”

“We need more time,” he said. “I hate that, quite frankly. I really do.”

Top officials at the department, including its director, Dr. Tomás Aragón, have refused CalMatters’ requests to be interviewed about the licensing situation. In an email Thursday, an unnamed spokesperson said the department does not comment on proposed legislation.

The spokesperson told CalMatters the department had initiated a regulatory package related to the change-of-ownership licensing process, but that the effort has been “placed on a temporary hold due to staff redirections associated with COVID response.”

Proponents of the bill say it is strong as it is, and that it can help resolve urgent problems.

“I don’t think the problem’s complicated,” said Tony Chicotel, a staff attorney for California Advocates for Nursing Home Reform, which sponsored Muratsuchi’s bill. “People are running facilities without licenses. That shouldn’t happen for years and years and years. It shouldn’t happen for another year.”

“We should all agree that’s not good and work out something to attend to it now. I think we owe that to the residents who have suffered so horribly this year,” he said.

Chicotel said he worries, from past experience, that the bill’s chance of becoming law “was diminished when it was postponed.” He also believes it buys CDPH more time to not take action on the issue.

“They’re pretty comfortable doing nothing, but now they have an excuse,” he said. “You blink and another year’s gone by.”

Chicotel said past bills to improve nursing home oversight have often been vetoed or significantly watered down. This includes a 2019 bill authored by Democratic Assemblymember Wendy Carrillo of Los Angeles, that initially proposed to streamline ownership reviews.

Chicotel said his organization initially supported the bill, but vigorously opposed it after it was amended to allow new owners to receive provisional licenses by default if CDPH missed a deadline.

“It went from a bill that could have been great to a bill that would have been devastatingly bad,” he said.

The bill ended up passing with proposed alterations to the change-of-ownership licensing process removed.

Chicotel said something similar happened in 2015 with a measure that would have prevented nursing home operators from acquiring more facilities under certain circumstances. Chicotel’s group initially sponsored the bill, but ended up opposing it after amendments were made. So did its author, Democratic Assemblymember Kevin McCarty of Sacramento, who pulled the bill.

Another hurdle to changing the law: opposition from the nursing home industry.

In a previous interview with CalMatters, Deborah Pacyna, a spokesperson for the California Association of Health Facilities, which represents most of the state’s 1,100 nursing homes, described the state’s change-of-ownership licensing process as “broken.” The organization had not yet officially weighed in on Muratsuchi’s bill, but she said it probably would have opposed the bill unless it was amended.

She said a recent California Court of Appeal ruling determined that state approval of unlicensed interim nursing home managers to operate nursing homes does not violate state or federal law.

“It just shows to us that if the trial lawyers can’t win in court, they’re going to go to the Legislature,” she said.

She commended Wood’s decision to wait a year before attempting to alter the state’s licensing system.

“We really appreciate the reasoned approach, looking at all this from a big picture standpoint, instead of just striking out,” she said.

Wood anticipates pushback on licensing reform from “players in this industry who don’t want the scrutiny and don’t want their business models upset.”

“This bill is about government oversight and fixing our own house,” he said. “But I guarantee you that this will be a challenge.”

CalMatters political reporter Laurel Rosenhall contributed to this story.