Relating to the regulation of referral agencies for senior living communities.
CriticalImmediate action required
Medium Cost
Effective:2025-09-01
Enforcing Agencies
Texas Attorney General (Implied enforcement of Business & Commerce Code; no specific regulatory agency assigned)
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: September 1, 2025
Compliance Deadline:September 1, 2025 (All operational workflows and insurance policies must be active by this date).
Agency Rulemaking: This statute is self-executing under the Business & Commerce Code. While no specific agency (like HHSC) is tasked with writing rules, the Texas Attorney General will enforce these provisions immediately. Do not wait for further guidance; the statute is the final word.
Immediate Action Plan
1.Legal Review (Now): Audit all existing vendor contracts. Draft amendments to remove perpetual tails and prohibited transfer fees.
2.Insurance Audit (June 2025): Contact brokers to ensure Professional Liability/E&O policies explicitly cover referral agency operations.
3.CRM Update (July 2025): Program your intake software to force the delivery of the "Consumer Disclosure" and the "Notice of Referral" before a lead can be closed.
4.Vendor Verification (August 2025): Confirm your background check provider is nationally accredited. Switch vendors if necessary.
5.Staff Training (August 2025): Train sales teams on the new requirement to verify facility licensure before discussing a property with a client.
Operational Changes Required
Contracts
Immediate Remediation Required. All Master Service Agreements (MSAs) between Agencies and Communities must be amended before September 1, 2025.
Commission Cap: You must cap residual payments at three years post-referral. Perpetual tails are unenforceable.
Transfer Fees: Remove clauses requiring fees for resident transfers within the same corporate brand, unless the agency actively facilitated the move with multiple options.
Exclusivity: Remove any clauses requiring a community to use a referral agency exclusively.
Hiring/Training
Background Checks: You must transition to a "nationally accredited" background check provider for all staff with consumer contact. Standard, non-accredited checks are no longer compliant.
Code of Conduct: Staff must be trained on the statutory code of conduct, specifically the prohibition against referring to unlicensed facilities.
Reporting & Record-Keeping
Consumer Disclosure: You must implement a mandatory "Point of Entry" disclosure (written/electronic) detailing fee responsibility, cancellation rights, and list limitations *before* or *at* the time of referral.
Referral Notice: You must generate a timestamped "Written Notification of Referral" to the Senior Living Community *on or before* the date of admission to validate the fee.
Audit Logs: You must maintain an internal record proving you verified the facility’s license standing with HHSC prior to sending the lead.
Fees & Costs
Insurance Premiums: Referral agencies must purchase and maintain liability insurance for negligent acts or omissions. Budget for potential premium increases if current policies lack specific E&O coverage for referrals.
Tech Integration: Budget for CRM updates to automate the delivery of the required disclosures and referral notices.
Strategic Ambiguities & Considerations
"Nationally Accredited" Vendors: The statute demands accredited background check providers but does not name the accrediting body (e.g., PBSA). Strategy: Ensure your vendor holds a Professional Background Screening Association accreditation to meet the highest likely standard of interpretation.
Audit Frequency: The law requires verifying a facility's license "prior to referral" but does not define the validity window (e.g., is a check from last month valid?). Strategy: Automate a real-time check against the state database at the moment of referral to mitigate negligence liability.
Insurance Limits: The statute requires insurance but sets no minimum dollar threshold. Strategy: Carry standard commercial limits ($1M per occurrence) to prevent claims that your coverage is "illusory" or legally insufficient.
Need Help Understanding Implementation?
Our government affairs experts can walk you through this bill's specific impact on your operations.
Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.
State law currently does not directly regulate agencies that refer persons to senior living communities. The committee substitute to S.B. 1383 would address that issue by creating a chapter in the Business & Commerce Code specifically for referral agencies for senior living communities. Senior living communities would include adult foster care facilities, assisted living facilities, retirement villages, and any other facility that provides shelter, food, social activities, or other personal services specifically for elderly individuals. C.S.S.B. 1383 would establish requirements for referral services, including disclosure requirements. The bill would also codify certain prohibited conduct and duties of referral agencies. The bill would describe the range of compensation arrangements referral agencies and communities may enter and provide that current law relating prohibited compensation of health care providers does not apply to referral agencies as defined by the chapter. Finally, the bill would clarify that the law would not impact other laws regulating senior living communities, nor does it abrogate or lessen any existing defenses or remedies.
As proposed, S.B. 1383 amends current law relating to the regulation of referral agencies for senior living communities.
SECTION 1. Amends Subtitle C, Title 5, Business & Commerce Code, by adding Chapter 121, as follows:
CHAPTER 121. REFERRAL AGENCIES FOR SENIOR LIVING COMMUNITIES
Sec. 121.001.� DEFINITIONS. Defines "referral agency" and "senior living community."
Sec. 121.002.� COMPENSATION. Authorizes a written contract executed between a referral agency and a senior living community to provide for the senior living community to pay compensation to the referral agency, including by providing to the referral agency a lump sum for all referrals made in a specified period, a fee for each referral based on the cost of rent and care the referred consumer receives, or a fixed fee for each referral.
SECTION 2. Amends Section 102.005, Occupations Code, as follows:
Sec. 102.005.� APPLICABILITY TO CERTAIN ENTITIES. Provides that Section 102.001 (Soliciting Patients; Offense) does not apply to certain entities, including a referral agency as defined by Section 121.001, Business & Commerce Code. Makes nonsubstantive changes.
SECTION 3. Effective date: upon passage or September 1, 2025.
Honorable Lois W. Kolkhorst, Chair, Senate Committee on Health & Human Services
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
SB1383 by Middleton (Relating to the regulation of referral agencies for senior living communities.), As Introduced
No significant fiscal implication to the State is anticipated.
The bill would add a referral agency to the list of entities to which the offense of soliciting patients does not apply.
It is assumed that any fiscal impact and any impact on state correctional populations or on the demand for state correctional resources would not be significant.
Local Government Impact
It is assumed that any fiscal impact to units of local government associated with enforcement, prosecution, supervision, or confinement would not be significant.
Source Agencies:
212 Office of Court Administration, Texas Judicial Council, 304 Comptroller of Public Accounts
LBB Staff:
JMc, NPe, AMr, MGol
Related Legislation
Explore more bills from this author and on related topics
SB1383 creates Chapter 121 of the Texas Business & Commerce Code, imposing a strict regulatory framework on "Referral Agencies" and altering their contractual relationships with Senior Living Communities. The law mandates new consumer disclosures, requires liability insurance, and invalidates commission contracts that extend beyond three years or charge prohibited transfer fees. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: September 1, 2025 (All operational workflows and insurance policies must be active by this date).
Q
Who authored SB1383?
SB1383 was authored by Texas Senator Mayes Middleton during the Regular Session.
Q
When was SB1383 signed into law?
SB1383 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce SB1383?
SB1383 is enforced by Texas Attorney General (Implied enforcement of Business & Commerce Code; no specific regulatory agency assigned).
Q
How urgent is compliance with SB1383?
The compliance urgency for SB1383 is rated as "critical". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of SB1383?
The cost impact of SB1383 is estimated as "medium". This may vary based on industry and implementation requirements.
Q
What topics does SB1383 address?
SB1383 addresses topics including aging, nursing homes, consumer protection and assisted living facilities.
Legislative data provided by LegiScanLast updated: November 25, 2025
Need Strategic Guidance on This Bill?
Need help with Government Relations, Lobbying, or compliance? JD Key Consulting has the expertise you're looking for.
