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Despite an increased effort by state officials to crack down on unlicensed care homes over the past six years, more than 100 of these facilities continue to operate in the shadows, providing around-the-clock supervision to primarily elderly clients.

Since Act 148, which gives state officials more tools to investigate care homes, became law in 2018, the Office of Health Care Assurance has issued an average of six “notices of violation and order” per year. The notices require homes to close and pay fines of up to $1,000 for every day they operated without a license. 

Prior to 2018, a found the agency hadn’t issued a termination notice or fine in 10 years.

But even with the increased enforcement and risk of severe penalties, many operators choose to remain unlicensed, often because they see the licensing process as too lengthy and complicated, said Justin Lam, acting chief of OHCA. Many operators, too, just prefer to stay out of the watchful eye of the Department of Health, which requires homes to meet city and county zoning codes and all workers to pass background checks.  

OHCA investigators are currently looking into 131 unlicensed care home facilities around the state, and Lam said he estimates there are significantly more in operation.

“It’s kind of a cat and mouse game,” he said. “Every time we come up with a new strategy or method of investigation, they come up with another way to circumvent the law.” 

Avoiding Regulation

State officials recently issued a $117,000 fine and cease-and-desist order to Emmy’s Care Home in Mililani for operating without a license. The operator, Emalyn Esteban, was previously shut down on July 31, 2022, but opened back up again without a license on Jan. 29. 

A number listed for the home was disconnected. Arthur Roeca, an attorney who represented Esteban in 2022, declined to comment for this story. 

Lam said every time one of these cease-and-desist orders is issued, an additional 10 to 20 unlicensed homes close or change locations to avoid enforcement. But many continue to hide from regulators. 

“To be able to set up an illegitimate business, you can set it up right away versus we require a lot of things,” he said. “Before we’ll even accept an application, we make sure that the facility has a zoning clearance, that they’re approved by city and county zoning (to) operate a care home. And we also get a building inspector’s report to makes sure that everything is up to code.”

Adult residential care homes offer living assistance and personal care to clients who do not require the same level of medical attention they would get at a nursing home. Care home employees generally provide assistance with the activities of daily living, such as preparing meals, bathing, moving around and taking medication. Expanded adult residential care homes, though, can take in a limited number of residents who need higher levels of care, as long as a registered nurse case manager is contracted to provide oversight and additional caregiver training. 

Lam said his office has sped up its licensure process by increasing the number of staff reviewing applications, simplifying the required steps and including frequently asked questions on applications to reduce errors. The process used to take around a year but now takes three to six months, he said. 

Still, not all home operators want to comply. Some providers avoid the licensing process so they can skirt state regulations limiting the number of residents they can house, Lam said. Unlicensed homes have been found with additional bedrooms that were never permitted by the city, Lam said, and some have been reported to be caring for as many as 20 residents without oversight.

State regulation limits Type I care homes to five residents. Type II homes, which are required to have a registered nurse on staff and a commercial kitchen, can house six or more.

Some homes also avoid the licensing process so they can house more people who pay out of pocket or with private insurance, said John McDermott, the state’s long-term care ombudsman. Community care foster homes, which are non-institutional family homes that can take in one to three individuals, are allowed to house only one private-paying person and the rest must be Medicaid recipients, he said. 

But the other side of the issue is Hawaii’s aging population and limited availability of beds in long-term care facilities. 

There are 12,942 long-term care beds in the state across a number of categories, including community care foster homes, nursing homes, adult residential care homes and assisted living facilities. Just over 500 long-term care beds were vacant last month, according to OHCA, which relies on facilities to self report. 

But many beds can’t be filled because of staffing shortages, and some long-term care homes have stopped taking in new patients because of across the state, McDermott said.

Lam said, though, that patients should not opt for unlicensed care homes if they’re struggling to find a bed. It’s a common misperception that unlicensed homes are cheaper than licensed ones and provide the same quality.

“There’s no checks and balances to ensure the individual caring for your loved one isn’t a felon, or has a conviction of caregiver neglect (and) abuse,” he said. “The department wants all of these homes to apply for licensure and be licensed so that we can ensure the health, welfare and safety of the public and especially our kupuna.”

More Progress Needed 

A published in November found OHCA had made significant progress since its 2018 audit but still needed to improve in some areas. 

For example, auditors found OHCA had begun conducting annual unannounced checks on licensed facilities to ensure compliance, but at times renewed facilities’ licenses before ensuring deficiencies had been corrected. The unannounced checks often occurred after the license had already been renewed, according to the audit. 

Lam said if deficiencies are found at a facility, his office will only renew its license once a plan of correction is reviewed and approved. Some of the plans address long-term issues that can’t be corrected before the license renewal deadline, so officials will renew the license and then follow up with an unannounced visit to ensure the facility is following through with its plan, he said. 

Another area auditors said needed improvement was OHCA’s data collection system. The 2018 audit found it was in “disarray” with misfiled paperwork, missing annual inspection reports and documents containing typos and incorrect dates. In November, auditors said OHCA had partially implemented recommendations to create a digital management information system. 

Lam said the system is being completed in phases. So far, staff scheduling and facility data has been fully digitized, including information on when inspections occur, how many residents each facility houses and licensee invoicing and billing. The Legislature recently approved $750,000 for OHCA to complete the information system project, which will eventually allow licensees to submit compliance documents through OHCA’s website and make them available to the public. 

Lam said the passage of was one of the biggest factors to help improve enforcement of unlicensed care homes because it gave investigators the right to enter a facility when conducting an investigation and made it a misdemeanor to obstruct an investigator’s access. 

“With that law we were able to enter the property, get our evidence and issue a notice of violation and order after that,” he said.  “Before that act was signed into law, we didn’t have entry rights, so we would hit a dead end.”    

, signed into law last year, also raised the cap on fines for unlicensed care homes to $1,000 per day, up from $100 per day, for the first violation.   

McDermott said he wants to see state officials focus more on investigating who is referring patients to these unlicensed homes. Many people are referred by trusted doctors or nurses and may never even know the home is unlicensed, he said. 

Act 148 does allow the state to fine anyone who knowingly refers a patient to an unlicensed care home, but McDermott said he thinks the penalty should be stronger. 

“The first doctor who loses his license to practice medicine, this all shuts down, this all stops,” he said. “It would send a very loud message to everybody, ‘Oh my god, they really are serious about this’.” 

Lam said his office is investigating referral sources but has not yet penalized anyone for making referrals. 

“Those investigations are ongoing,” he said.

He asked members of the public to always check that a facility is licensed before placing a loved one there. OHCA has a and on its website, and facilities are required to post their Department of Health licenses in public view at their sites, he said.

“It’s going to just take continued vigilance on our part, continued reporting from the public and support from the Legislature to be able to give us the tools that we need to bring these people down,” he said.

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