California Bill Would Mandate Minimum Insurance Coverage at Rehabs

Assemblywoman Cottie Petrie-Norris, D-Laguna Beach, in collaboration with California Insurance Commissioner Ricardo Lara, introduced a bill intended to ensure that licensed drug abuse recovery and treatment facilities and recovery residences that contract with the government have minimum insurance coverage levels, as well as elevating the standards to protect patients from abuse or injury.

The stated reasoning behind the bill is that the COVID-19 pandemic has led to an unprecedented rise in substance use and an increasing number of Californians have begun to search for recovery services.

Assembly Bill 1158 seeks to address the abuses of vulnerable patients, including death and serious injury, by providing additional consumer protections.

“Californians seeking help for alcohol and substance use urgently need additional consumer protections now more than ever during this pandemic,” Lara said in a statement. “Requiring minimum insurance standards and reporting of injuries and deaths means my department’s investigators can swiftly act to protect public health and safety.”

The bill follows media reports about allegedly unscrupulous business practices that exploit patients for profits, including the Orange County Register’s investigative series about Southern California’s “Rehab Riviera,” which highlighted the problems caused by unlicensed recovery residences operating with little to no government regulation or private insurance risk management.

AB 1158 will require a recovery residence, including a sober living home, that contracts with a government entity or an alcohol or drug abuse recovery or treatment facility that is licensed by the government to maintain minimum insurance coverage levels, including liability and workers’ compensation to protect patients and workers on site.

The bill would also reportedly increase the ability for an insurance company to protect the well-being of people in recovery by ensuring a residence or facility’s compliance with health and safety standards, including reporting any incidents of death or injuries requiring hospitalization, back to the insurance company and respective government entity.

The bill is also designed to enhance the ability of state regulatory agencies to work collaboratively to investigate insurance complaints, protect patients, and prevent fraud at these facilities and residences.