🔒Homecare providers say new state laws jeopardize their business model

Leaders of Connecticut’s largest homecare businesses say the recently concluded legislative session leaves them feeling targeted by their own state government.

It began in May, when lawmakers cemented enough votes for a minimum-wage increase and a paid family medical leave program.

The third blow felt more personal — a provision in the state budget effectively banning non-compete contracts specifically in the homecare industry.

It’s a policy move some lawmakers and officials have pursued since 2017, partially as a reaction to a series of non-compete contract lawsuits filed by the state’s largest homecare provider, though the ban could affect many others.

“It was an extremely tumultuous session for us,” said Julianne Roth, president of West Hartford-based Companions for Living LLC and chair of the Association of Connecticut Homecare Agencies.

Homecare companies (often referred to as “agencies,”) say the new laws could jeopardize their business model or lead to price hikes for clients, who are often elderly or disabled residents wanting to remain at home as long as possible, but in need of assistance with personal hygiene, cooking and household chores (homecare companies don’t provide medical care).

It’s a problem given Connecticut’s aging population and an ongoing workforce shortage in the industry, which employs more than 28,000 people here.

The median annual cost in Connecticut for a full-time “homemaker” (a core type of homecare service) was $45,760 in 2015, according to Genworth Financial.

Nationally, insurance only covers 13 percent of homecare spending, according to the Home Care Association of America, which means price increases would likely hit many clients directly.

“Families can’t afford it,” said Robert Scandura, CEO of a Wethersfield-based Right at Home franchise, who worries that potential rate hikes will spur some families to hire untrained, unvetted help, which he said could lead to fraud or elder abuse.

“It absolutely concerns me,” he added. “It’s going to pass the buck along. It hurts our elderly people.”

The new state policies come on top of a federal rule change four years ago that allowed more homecare workers to qualify for overtime pay, which increased prices for live-in companions nearly 13 percent, state data show.

Homecare agencies say the non-compete ban, in particular, represents a significant hurdle and an industry coalition scrambled to lobby against it. However, Gov. Ned Lamont supports the non-compete provision, his office said.

Homecare providers say they are being singled out as an industry.

“Why not do it to real estate, technology, why not do it to any other company that provided training and invested money in its workers?” Scandura asked.

The ban is seen as relatively unique, too.

“As far as I know, it’s the only industry-specific ban on non-compete and non-solicitation anywhere in the country,” said Jay Kiley, owner of Synergy Home Care in Fairfield.

Competition covenants

Homecare executives said the non-compete provision was snuck into the budget bill.

But the language harkens back to a 2017 dispute between the largest homecare provider in the state and the overseer of the state Medicaid program, the Department of Social Services.

At the time, DSS ordered providers to start using a visit-tracking system meant to reduce overbilling and fraud. Farmington-based Companions & Homemakers (C&H) refused, citing privacy concerns over sharing additional employee data.

As a result, DSS pulled C&H’s Medicaid contract, putting it at risk of losing 1,400 clients. The two sides reached a deal not long after, but amid the hubbub, C&H sued approximately 30 caregivers who had switched to other employers while keeping former C&H clients.

C&H CEO Linda Grigerek said the suits, which sought injunctions, were a defensive response.

“In 2017, 1,400 of our clients were contacted by a DSS contractor and told they would be losing their agency and possibly their current caregiver in 30 days,” said Grigerek, adding agencies like hers play a crucial role in recruiting, training and then matching caregivers to needy residents. “By invoking the 30 non-solicitation agreements, Companions was able to tell the state they could not take away 40 percent of a private company’s business in 30 days. And by fighting [the recent budget provision] we are again trying to prevent this from happening to any other agency, caregiver or client.”

The lawsuits clearly bothered DSS, whose commissioner at the time, Roderick Bremby, advocated for a non-compete ban for the industry. Deputy Commissioner Kathleen Brennan had a similar message earlier this year for lawmakers.

“As a matter of public policy, the health and safety of frail elders or persons with disabilities should not be disrupted by homemaker-companion or home-health agencies that seek to protect their business interests at the cost of those they serve,” Brennan testified.

Many other homecare companies have competitive restrictions in their employee and client contracts.

They’re often targeted at discouraging clients from offering to directly hire caregivers, and blocking caregivers from soliciting or working for former clients during a period of time after leaving their job, sometimes six months.

“As an industry, we don’t have an issue with our caregivers working for multiple agencies or clients,” Roth said. “Where we have a problem is the piece of this that prohibits non-solicitation agreements.”