Remily Teodoro worries about how she’s going to pay college bills for her two oldest children.

Until last week she relied on the income from her unlicensed aging-in-place business at her Kalihi home to help cover expenses for her daughter, Jessa Rel, 19, a sophomore at the University of California at San Diego, and her son, Jerome, 18, a sophomore at the University of Hawaii.

But Teodoro closed the business after getting a letter Oct. 20 from the Attorney General’s Office accusing her of running an illegal care home.

Her attorney says his client was complying with the law. Yet the letter specified that Teodoro faced fines of $1,000 daily and possible criminal penalties if she didn’t get a license.

“This is my bread and butter, and two of my kids are in college,” Teodoro told the Honolulu Star- Advertiser. “I’m so stressed already.”

Teodoro, who used to run a licensed care home, is believed to be the first AIP operator to get such a letter, signaling a possible escalation of the state’s efforts to crack down on the new but controversial model of providing home-based elder care in the islands.

Proponents of the model estimate that more than 100 AIP homes — and possibly more than 200 — have opened in the past several years, attracted by the prospect of not having to wait potentially years for the state to issue a care home license and not having to deal with state oversight.

They say the AIP facilities are not care homes, which need a state license, but rental properties. Their elder tenants sign rental agreements for lodging and separate contracts for home health care.

But the state says any residential facility that provides care to nonrelatives for a fee requires a Department of Health license, citing a couple of laws (HRS Sec. 11-100.1-2 and Sec. 321-15.1).

Teodoro’s case might help sort out who is right.

One of the first

Teodoro said she opened her AIP home in 2014 because she could wait no longer for the state to approve her pending application for a care home license. Teo­doro said she had been waiting about three years when she heard about a new model of providing care that its proponents indicated could be done without a license. She decided to try it.

Teodoro, who was trained as a nurse in the Philippines, became one of the first AIP operators in Hawaii.

Almost from the get-go, though, her business has drawn the attention of state regulators.

Shortly after she opened her doors, an investigator from the Health Department arrived, saying Teodoro was operating an unlicensed care home. She said she was threatened with fines, but her lawyer talked to the agency and no action was taken against her.

That wasn’t the end of it.

Teodoro estimated that she was visited close to a dozen times by investigators from the departments of health, human services and the attorney general over the past three years, including as recently as May.

Andrew Smith, Teodoro’s attorney, said about a half-dozen of his AIP clients, all law-abiding citizens, have had surprise visits from state investigators and were told they were breaking the law.

“It’s extremely intrusive and very frightening,” Smith said. “It scares the heck out of these folks.”

Yet none of them received any written information explaining why their businesses allegedly were illegal — until Teodoro’s letter arrived, according to Smith, who is preparing a response to the state but declined to comment on it, saying that would be premature.

The cumulative effects of the investigations and the threats of fines and criminal penalties led Teodoro to close her business, Smith said.

“Remily’s action was based on exhaustion and just her inability to continue fighting these battles,” her attorney said.

Teodoro said she made accommodations to move her clients to another facility.

‘Red flag’ for DOH

Health Department data show the agency conducted 10 investigations of unlicensed care homes in 2015, 10 in 2016 and 11 through mid-October of this year, with six of those still pending. The department could not say how many of those involved AIP homes.

None of the probes resulted in the forced shutdown of the businesses, though some might have voluntarily closed.

The investigations of Teodoro and other AIP homes came amid a growing controversy in the care industry.

As more AIP homes opened and remained operating, licensed care home operators complained to the state about what they considered unfair, illegal competition.

They were baffled that the state hadn’t shut down any AIP homes over the past few years, according to Ramon Sumibcay, a licensed care home owner and president of the Alliance of Residential Care Administrators.

“What in the world is going on here?” he said. “I just don’t understand.”

The Oct. 20 letter signed by Angela Tokuda, a deputy attorney general, was sent to Teodoro just days after the Star-Advertiser asked the AG’s office about the case, particularly in light of the criticism leveled by licensed care home operators.

Asked about the timing, Joshua Wisch, a spokesman for the AG’s office, said in an email that the letter already was in the works before the Star-Advertiser’s inquiry.

Maile Harada, a nurse who has been instrumental in getting the AIP model established in Hawaii, described the letter as another way for state officials to try to intimidate AIP operators. “It’s just their ploy to make the community feel like they’re doing their job,” Harada said.

Wisch would not even confirm a probe of Teodoro’s business. He also would not say whether similar letters have been sent out to other people, citing the office’s policy of refraining from discussing investigations.

Generally speaking, Wisch said his office pursues allegations of unlicensed care homes and determines what actions, if any, are warranted.

In a statement to the newspaper, Keith Ridley, chief of the state’s Office of Health Care Assurance, which enforces licensing regulations, again sounded a warning about the AIP model.

“Any time someone claims to offer care of any type without a license, this raises a red flag for the Department of Health,” Ridley said. He noted that Hawaii kupuna already are susceptible to fraud and abuse schemes.

“Unlicensed facilities potentially put more elders and other vulnerable populations at risk,” Ridley wrote. “Licensing allows DOH to better ensure safe environments to protect our kupuna when they receive health care services.”

Aging-in-place proponents say a license does not guarantee good care.

Ridley said previously the department would ask the Legislature in the coming session to pass a measure permitting the state to more easily shut down unlicensed care facilities. The topic has come up at the Kupuna Caucus, a group of legislators and others who discuss possible legislation to support.

Further talks urged

State Rep. Gregg Taka­yama, a co-chairman of the caucus, said AIP homes fall into a gray area of state regulation because they don’t receive state funds.

“I understand the desire for state oversight because there’s a potential for abuse or neglect of aged residents,” Takayama (D, Pearl City- Waimalu-Pacific Palisades) said in an email to the Star-Advertiser. “But AIPs also offer an alternative to nursing homes for elderly who may not need round-the-clock skilled nursing serv­ices. I think we need further discussion of the issue.”

The need for more elder care facilities is expected to grow as Hawaii continues to see dramatic growth in its senior population. In some areas, such as timely inspections, the state already is struggling to keep pace.

The AIP model was partly born out of frustration with the long time it takes the Health Department to issue care home licenses.

Teodoro said her long wait hurt financially, especially with her children preparing for college. That’s what prompted her to try the AIP model.

Dr. Virginia Pressler, director of the Health Department, said her agency realizes the process for obtaining a care-home license can be time-consuming.

“We don’t want that concern to get in the way of protecting our kupuna,” Pressler said in a statement. “We are looking at ways to improve our licensing program to deal with this and other issues in a more efficient and timely manner. It is definitely one of our top priorities.”