California Attorney General Rob Bonta has conditionally approved the proposed affiliations between Chapters Health System, Inc., a Florida-based nonprofit hospice provider, and two California nonprofit hospice organizations. The move marks the first time the Attorney General’s Office has reviewed transactions involving nonprofit hospice providers in the state, as most hospice providers in California are for-profit entities.
Chapters Health System, Inc. is seeking to expand its operations through the creation of “Chapters West Region,” which would include a network of nonprofit hospices across California, Nevada, and Oregon. In California, the organization plans to affiliate with East Bay Integrated Care, Inc. (doing business as Hospice East Bay) and Hospice of Santa Cruz County. Both have provided hospice and palliative care services in their communities for over 40 years.
Under state law, any transaction that involves the sale or transfer of control and governance of a nonprofit health facility requires approval from the Attorney General’s Office. The proposed agreements would make Chapters Health System, Inc. the sole corporate member of both Hospice East Bay and Hospice of Santa Cruz County but do not involve any sale or transfer of assets. Each entity will keep its own governing body, maintain its nonprofit status, and retain irrevocable use of its assets and revenues.
Attorney General Bonta said: “The hospice industry has increasingly attracted scrutiny, in part because of the potential for fraud and abuse. Earlier this month, I launched a new initiative aimed at addressing that very problem, and now, I am announcing that my office is, for the first time, conditionally approving transactions involving nonprofit hospice care providers. The conditions we have developed are the result of a thorough review and serve the public interest by ensuring continued access to services for terminally ill patients and their loved ones. At the California Department of Justice, we remain committed to prioritizing oversight of the hospice industry.”
The conditional approval includes several requirements that will be in effect for five years:
– Both hospices must continue providing nonprofit hospice care under their current licenses and maintain certification by The Centers for Medicare & Medicaid Services.
– Employment offers must be extended to staff in good standing; existing employment agreements must be honored; staffing levels necessary for licensure must be maintained.
– Patient triage and referral systems must operate effectively to avoid delays in care.
– Quality advisory committees will be established at each location to provide recommendations on patient care; annual summaries will be submitted to the Attorney General.
– Specialty services at Hospice East Bay not covered by traditional Medicare—such as veterans’ programs or children’s grief support—should continue where possible.
– Annual reports on compliance with these conditions are required; information necessary for monitoring compliance must be provided.
– The Attorney General reserves rights regarding enforcement actions.
The Healthcare Rights and Access Section (HRA) within the California Department of Justice oversees such reviews as part of efforts to protect healthcare affordability and quality throughout California. HRA attorneys monitor issues related to healthcare transactions involving nonprofits as well as consumer rights concerns within healthcare markets.
A copy of the conditional approval letter can be found here.
