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California to audit its regulation of addiction treatment facilities

July 6, 2023

California’s low-level regulation of addiction treatment and rehabilitation facilities that make it almost impossible to properly track them is under scrutiny as the state auditor’s office embarks on an audit of the Department of Health Care Services.

The audit, requested by Assemblymember Diane Dixon, R-Newport Beach, will “determine if DHCS is properly licensing, regulating and enforcing state laws” regarding residential facilities that provide nonmedical recovery, treatment and detoxification service.

“It is regrettable how much these facilities are taking advantage of vulnerable people — people who actually need help,” Dixon said. “Unfortunately, these facilities advertise treatment for alcohol or drug abuse recovery or treatment services and more often than not provide limited care. We need more accountability on who is licensed and if the treatment programs provided are effective.”

The audit requests information on how DHCS is licensing and enforcing laws on facilities that provide “24-hour nonmedical, residential, alcoholism or drug abuse recovery or treatment services to adults,” according to Dixon’s office.

In 2021, a man from Gratitude Lodge, a detox house in Newport Beach, forced his way into a house in the corner of Santa Ana Heights where he was shot and killed by an occupant of the home. The man, 23-year-old Henry Richard Lehr, had been exhibiting signs of paranoid delirium — screaming about wanting to leave, being chased and wanting to go home.

The Southern California News Group has spent years probing deaths, sexual assaults, drug use and illegal paying-for-patients in California’s loosely regulated problem-prone addiction treatment industry, dubbed the Rehab Riviera. More than half of California’s state-licensed and/or certified addiction treatment facilities are in just four counties — Orange, Los Angeles, Riverside and San Bernardino — and these are expressly non-medical facilities that are often poorly equipped to address serious medical issues, such as the one that led to Lehr’s death.

They are also most often located in tract homes in residential neighborhoods, where neighbors have long complained they are too densely concentrated and institutionalize neighborhoods.

Beyond licensed facilities, the Rehab Riviera is home to many more sober living homes, which is where recovering users go after formal treatment. Sober homes are unlicensed and unregulated groups of people just trying to live substance-free lives together but have led to major legal battles in Newport Beach and Costa Mesa.

After wrestling with conflict from sober homes and addiction recovery facilities in residential neighborhoods for more than a decade, Orange County cities have failed to work together and adopt local laws setting standards for these facilities, a new grand jury report says. The county is host to the highest concentration of rehabs per capita in the entire state.

The grand jury also found that most sober living homes are not required by law to be licensed by the state and there are no widely adopted methods to track or monitor any aspect of these facilities, including their location, number of residents, on-site management and ownership.

“Many of the homes in question are privately owned, unlicensed, unsupervised and a challenge to monitor and regulate,” the report states.

Several cities, including Costa Mesa, Newport Beach and Anaheim, have in place ordinances that regulate sober living homes. In Costa Mesa, no convicted sex offenders, violent felons or drug dealers can run sober homes. Supervision of clients 24/7 is required, sober homes must be at least 650 feet apart, residents must be actively participating in “legitimate” recovery programs and transportation must be provided when residents leave.

This audit, however, seeks DHCS records, which are only for licensed addiction treatment facilities. Dixon said the Joint Legislative Audit Committee expects data from the state auditor’s office in about six months.

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The bipartisan request was signed by Orange County legislators, including Assemblymembers Laurie Davies, R-Laguna Niguel; Cottie Petrie-Norris, D-Irvine; Kate Sanchez, R-Rancho Santa Margarita; and Tri Ta, R-Westminster, as well as Sens. Dave Min, D-Irvine; Josh Newman, D-Fullerton; and Janet Nguyen, R-Huntington Beach.

“The requested audit, when completed, will ensure that California’s Department of Health Care Services is properly regulating facilities and fully complying with all relevant laws and regulations in order to fully and effectively protect not only the residents of these facilities but the community at large,” said Newman.

The request was unanimously approved by the Joint Legislative Audit Committee, which includes Sen. Kelly Seyarto, R-Murrieta; Assemblymember Avelino Valencia, D-Anaheim; and Sen. Catherine Blakespear, D-Encinitas, who serves as the committee’s vice chair.

“These licensed recovery and treatment facilities, while necessary, change the fabric of our neighborhoods. My district is saturated with them,” said Valencia, who represents Anaheim, Orange and Santa Ana in north Orange County. “The audit will bring much-needed transparency on the Department of Health Care Services’ licensing and regulatory processes of these facilities.”

Dixon said: “The report from the audit will help provide direction for the legislature on how to address these problems and close any loopholes in regulation and enforcement. People need to be rehabilitated.”

Separately, in Orange County, the grand jury has recommended cities and the County of Orange “collaborate in their efforts to create ordinances for the regulation of group homes, including the development of model ordinances.”

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