Back in 2012, a blistering study titled “Rogue Rehabs: State failed to police drug and alcohol homes, with deadly results” took no prisoners. It was done by the California Senate Office of Oversight and Outcomes and the department overseeing addiction treatment was dismantled in its wake — and DHCS was born. To, like, fix things. Perhaps it’s time to examine how well that’s worked out?

The State Auditor released a long-awaited study on how California regulates its (fraud-prone) addiction treatment industry. It confirmed that there are serious issues, and that Orange County in particular and Southern California in general are the epicenters, and that there are steps lawmakers can and should take to make things better.

While the audit didn’t mention the many federal prosecutions for body brokering and insurance fraud currently underway in O.C. and L.A., it did back up some general assertions. Key Findings of the State Auditor:

– – There were approximately 500 small facilities in California in 2023, and we identified groupings of such facilities in specific geographic areas throughout the State. For example, we found several small facilities with the same owner located next door to or across the street from each other in residential neighborhoods in Orange County and in San Diego County.
– – State law mandates that small facilities must be considered a residential use of property for purposes of any zoning ordinance. Because local authorities may use zoning requirements to regulate facilities serving more than six residents (large facilities) more strictly than small facilities, some facility operators may avoid certain zoning regulations by intentionally grouping small facilities in the same geographic area instead of establishing one large facility.
– – Although required to assign a complaint to an investigator within 10 days, Health Care Services frequently does not assign complaints on time. The audit found that it took Health Care Services an average of 183 days to assign the complaints when it did not meet its 10-day required time frame.
– – The department’s internal guidelines generally identify that investigative reports must be submitted by the analyst to a supervisor within 30 to 60 days. However, the audit found that it took Health Care Services analysts nearly one year on average to submit investigative reports for low – and medium – priority complaints.
– – Health Care Services completed high – priority investigations, such as those relating to resident deaths, within an average of less than three months but still did not meet its guidelines.
– – Health Care Services did not always conduct site visits when investigating unlicensed facilities and did not always follow up after completing investigations of unlicensed facilities that were unlawfully advertising or providing services to ensure that they ceased doing so.

For Sen. Tom Umberg, D-Santa Ana, the audit confirms what he and other lawmakers have been saying for years: DHCS is seriously under-sourced, takes forever to investigate complaints, can’t do frequent-enough inspections or enforce the laws.

The Auditor had recommendations to improve oversight. “Legislature could potentially change state law if these facility concentrations are not consistent with the law’s intent, which we believe was to integrate residents of these facilities into the communities and to provide for sufficient numbers and types of treatment services to meet local needs.”

The auditor also recommended that DHCS fill its vacant positions, improve the timeliness of inspections and complaint investigations, do additional site visits and follow up with unlicensed facilities to ensure they stop providing or advertising services beyond their reach.

“We have a road map here,” said Assemblymember Diane Dixon, R-Newport Beach, who requested the audit more than a year ago. “It confirms key concerns that are now validated by third-party analysis: Investigations take too long, sometimes don’t even happen, and there can be infrequent follow-up. It will help us shape legislation based on these facts.”

Dixon quickly assembled lawmakers after the report to push the governor and Department of Health Care Services (DHCS) Director Michelle Baass for greater accountability and an increase in the number of inspectors. “We’re coming together for solutions,” she said. “We want people to get well.”

In its response, Baass said the department is already implementing many of the auditor’s recommendations and “is committed to robust oversight of residential treatment facilities to ensure Californians receive safe and high-quality care.” According to the Audit Report “Health Care Services agreed with our findings and, in some cases, has already begun implementing the recommendations that we directed to it.”