State officials have launched dozens of investigations into homes that provide care for seniors after receiving reports that the facilities were operating without a license — a misdemeanor offense that can result in stiff fines for the operator. The state Department of Health says more than a dozen unlicensed operators could soon be issued notices of violation.

However, experts in senior care told legislators recently that despite the pressure on unlicensed homes, they continue to proliferate.

The effort to reign in unlicensed adult residential care homes, often referred to as ARCHs, comes after state legislators passed a law last year that authorizes DOH to investigate and enter unlicensed care facilities. Under the law, known as Act 148, health care providers who knowingly refer clients to unlicensed homes can also be fined.

It was estimated that as many as 100 to 200 unlicensed care homes were operating throughout Hawaii a couple of years ago under what was being called an “aging in place model.”

The homes have been circumventing health and safety regulations and annual inspections by DOH, while clients lack the consumer protections afforded to those residing in licensed homes.

DOH has received 114 complaints about unlicensed adult residential care homes, Keith Ridley, chief of DOH’s Office of Health Care Assurance, told lawmakers Tuesday during a briefing before members of the House and Senate at the state Capitol.

The hearing was called by the Senate Committee on Commerce, Consumer Protection and Health and the House Committees on Health and Human Services and Homelessness to receive updates on Act 148.

Department officials say they are poised to issue 13 notices of violation to illegal operators, with more expected.

Of the 114 complaints received by DOH, 74 remain open.

State officials have entered and inspected 52 homes so far and have been denied entry to 17.

Act 148 allows DOH to obtain a search warrant to enter a home, but Ridley said the department has yet to do so.

Legislators heard from licensed care home operators, case managers and long-term care navigators during the two-hour hearing who said that unlicensed homes continue to open and that sometimes seniors and their families are unaware that a home isn’t licensed. Some described a scheme in which an operator with a license funnels clients to unlicensed homes.

Nicole Coglietta, a long-term care navigator for seniors and their families and CEO of CareSift, said families remain confused about unlicensed care homes given how common they are.

We “continue to see new unlicensed care homes opening at a rapid rate,” she said. “It appears that there were more unlicensed care homes that opened in 2019 than licensed care homes. …

“The problem is not whether the unlicensed care homes are good or bad. The problem is that the community is told not to use them, yet there is an abundance of unlicensed care homes. Half of the community is still referring to them, but behind closed doors. And those referrals are being hidden, which increases funneling, steering and kickbacks.”

Coglietta said her company had come across seniors who didn’t know they were in an unlicensed care home.

“Sometimes we have to move urgently because they submitted documents for reimbursement on their long-term care plan and didn’t find out they were in an unlicensed care home until their reimbursement was denied. Those seniors lost several thousand dollars.”

Health insurers don’t cover facilities that are unlicensed.

Lawmakers questioned whether there are enough facilities for seniors in need of care and whether shortages are helping fuel the underground market.

Ridley said that there likely is more demand than supply, but that wasn’t a reason to evade the law.

“It’s a shame that people will say, ‘Well the process takes too long,’ or ‘I’m too anxious and I’ve got a mortgage that I need to pay, and therefore I’m going to skirt the law and bring someone into my home that’s going to pay the mortgage,’” said Ridley.

“That is not really the best objective,” he said, noting that the client is “frail and elderly and otherwise vulnerable.”

Ridley said his agency has managed to reduce the time it takes to receive a license. While it used to take about nine months, he said it now takes about three to six months.