State fines former elder care provider $325,000

In what is believed to be the first case of its kind, the state Department of Health has fined the former operator of an unlicensed care home $325,000.

The fine comes as the Health Department pushes a bill at the Legislature that will give regulators broader powers to crack down on such facilities.

The fine against Remily Teodoro is considered the first involving a so-called aging-in-place, or AIP, facility.

AIP facilities are a type of unlicensed elder care operation that is growing in numbers in Hawaii but has attracted the wrath of licensed providers, state regulators and others who view the unlicensed facilities as illegal.

Aging-in-place owners dispute that.

Teodoro, one of the first to open an AIP facility in Hawaii, closed it in October after getting a letter from the state Attorney General’s Office accusing her of running an illegal care home. The letter said she was facing fines of $1,000 daily and possible criminal penalties if she didn’t get a license.

Proponents of the AIP model, which calls for a rental agreement for housing and a separate one for care services, say the state is being heavy-handed by unfairly targeting Teodoro while pushing for a law that would give regulators greater powers than police to enter a private home.

The debate over these facilities’ legality has moved to the Legislature, where AIP critics Thursday blamed three recent deaths of elder residents on the unlicensed homes.

State Rep. John Mizuno, chairman of the House Human Services Committee and a sponsor of the care bill, HB 1911, said at a Thursday hearing that the three Medicaid patients were forced to move from a licensed facility because the operator was converting to an unlicensed one.

Licensed homes sometimes convert to unlicensed to take advantage of the lack of state oversight and the ability to charge higher prices to private-pay clients, licensed caregivers say.

Citing information from the care industry, Mizuno said the three died from transfer trauma. “We want to make sure no one else dies,” he said before his committee approved the bill, sending it to its next committee.

Maile Harada, a nurse and case manager who has been instrumental in the growth of the AIP model in Hawaii, called the death claims inaccurate hype pushed by supporters of the bill.

“It’s an outlandish claim, totally unfounded,” Harada said.

Those who testified before Mizuno’s committee all supported the bill, saying it was needed to give regulators more powers to rein in what they described as a rogue industry not subject to any oversight meant to protect seniors.

Several said AIP operators make grand promises, charge high rates and force residents to move out if they run out of money.

“They promise the sun and the moon,” said Elsa Talavera, chief executive of All Island Case Management Corp.

Harada, however, said the AIP model is not about money, but focused on helping Hawaii meet the mushrooming need for elder care options. “Our passion is for the elderly,” she said.

One challenge the Health Department has faced in investigating the unlicensed operations is gaining access to the property. Owners in some instances refused access, citing their private-­property rights.

The bill would permit regulators to enter private property to investigate complaints about unlicensed facilities. Refusing entry would be a misdemeanor.

Andrew Smith, an attorney who has AIP clients, said allowing DOH regulators to enter a private home without a search warrant would be unprecedented, giving them greater powers than police.”That’s very disturbing,” he said.

One of Smith’s clients is Teodoro.

Smith said he requested a hearing to challenge the fine and the state’s findings but was denied on a technicality.

He said he and Harada have tried to work with the state to discuss concerns about Teodoro and the AIP model, but the state has been unresponsive.

While everyone who provided oral testimony Thursday supported the bill, the written testimony was more mixed.

Critics of the unlicensed facilities mostly cited the lack of state oversight, saying the operations are not subject to inspections, criminal background checks and other consumer protections.

But supporters spoke of their positive experiences.

Terry Nakamura wrote that his mother-in-law, Lily Nakamura, has received excellent care at an AIP home, her health has improved and she is off some of her diabetic and blood pressure medications.

“She is always happy and is comfortable and well cared for,” he said, adding that the proposed legislation “would threaten this safe, secure, nurturing environment.”