State lawmakers are considering further legislative action to tighten rules and stiffen penalties governing Hawaii’s unruly adult care home industry.

Members of a joint House-Senate committee heard testimony at the Capitol on Tuesday from state health regulators, care home operators and case managers who detailed the consumer protection problems still plaguing elderly residents at homes entrusted with their wellbeing.

Much of the testimony centered around a bait-and-switch scheme run by numerous licensed care home operators who have a network of several unlicensed care homes in addition to a certified facility. 

In these ploys the licensed facility serves as a front to attract clients under the guise of legitimacy. But some of these clients then get funneled unwittingly into an illegal care home, operating surreptitiously without any state oversight.

“We have come across seniors that had no knowledge that they were in unlicensed care homes,” said Nicole Coglietta, a kupuna care navigator and co-founder of Care Sift. 

“Some seniors have had to move out urgently because they submitted documents for reimbursement on their (insurance) plan and didn’t find out they were in an unlicensed care home until their reimbursement was denied,” she added.

Those seniors lost several thousand dollars, Coglietta said.

Despite a legislative crackdown on unlicensed care homes in 2018, some families remain confused about the enduring proliferation of illegal homes, especially those that are not up front about their lack of certification. 

“Half of the community is still referring clients to (unlicensed care homes) behind closed doors and those referrals are being hidden, which increases funneling, steering and kickbacks,” Coglietta said.

Not all clients are duped into joining an unlicensed facility unknowingly. Some families agree to assume the risk of sending their kupuna to an unlicensed facility when the cost of care is more economical than the rate at a care home with a valid license.

“It’s definitely about cost and trying to find a more affordable way for their kupuna to live under the guise of care,” said Diane Paloma, CEO of Lunalilo Trust, which operates a residential care home in Hawaii Kai. “When we take on a lot of those costs to implement fire code, wheelchair access, elevators — those ultimately turn into costs that we pass on to our residents.”

In addition to skirting the costs associated with regulation compliance, unlicensed care homes do not pay taxes.

A state audit last year found that many of the adult care homes have been operating without a valid license or with a license issued in haste despite any assurance that outstanding violations had been corrected.

It also charged that the Department of Health’s Office of Health Care Assurance doesn’t enforce its own rules and hasn’t issued a termination notice or even a fine in the last decade.

State lawmakers responded by passing a new law that gave health regulators stronger enforcement tools for cracking down on unlicensed facilities, including a provision that makes it a misdemeanor to interfere with a care home investigation.

Lawmakers also added to the Office of Health Care Assurance’s enforcement toolkit, granting the agency the power to conduct unannounced visits to check on care home compliance.

But some health officials remain concerned about the safety of the facilities vying to house them.

There have been 114 complaints to the OHCA regarding unlicensed care homes since the agency gained new investigative authority last year, according to OHCA Chief Keith Ridley. 

All told, 15 homes are being penalized for violations. There are 74 open complaints, while 40 cases have been closed. 

State investigators were denied entry to 15% of the homes, Ridley said, and so far there have been no efforts to execute search warrants.

Ridley said 27 homes that are the subject of complaints have not been investigated yet.

In the past, a common complaint among unlicensed care home operators is that the licensure process is too drawn out and arduous. To this end, Ridley said his agency has streamlined and quickened that process, reducing its duration to an average of three to six months.

“I think you need to step up a little bit more,” Sen. Roz Baker told Ridley.