Sunshine Residential Homes Lawsuit and Pay-to-Play Allegations

The Sunshine Residential Homes lawsuit is a wrongful death case filed by Richard Blodgett against the State of Arizona and Sunshine Residential Homes Inc. over the December 2022 death of his nine-year-old son, Jakob, a Type 1 diabetic who died 18 days after being placed in one of the company’s Arizona group homes.¹ The suit runs alongside a separate and still-unfolding controversy: criminal, county, and legislative investigations into whether Sunshine’s political donations to Governor Katie Hobbs bought the company a lucrative rate increase from the Arizona Department of Child Safety. As of mid-2026, the lawsuit remains pending and none of the investigations have concluded.

Who Sunshine Residential Homes Is

Sunshine Residential Homes Inc. was founded in 1996 by social worker Simon Kottoor to provide emergency placements for abused, abandoned, and neglected children in Arizona’s child welfare system.² The for-profit company operates roughly 28 group homes and about 300 beds under contract with DCS. In the 2022 budget year alone, DCS paid the company $14.2 million to house children.³

How Jakob Blodgett Died

Jakob Blodgett entered Arizona’s foster care system on December 9, 2022, and was placed at a Sunshine Residential group home.⁴ Staff there had received only informal training on diabetes care, according to investigative reports, and employees said they were not told how frequently to check the boy’s blood sugar. When Jakob refused his nighttime insulin, staff allowed it. The company’s operations manager told investigators it was Sunshine’s policy not to “force medicate” children.⁵

On December 19, a facility employee reported Jakob had refused insulin the night before. Within a day or two he was hospitalized with diabetic ketoacidosis, vomiting, and brain swelling.¹⁴

What the Wrongful Death Lawsuit Alleges

Richard Blodgett filed the wrongful death suit on December 19, 2023, naming the State of Arizona and Sunshine Residential Homes as defendants.¹ The complaint alleges that DCS and the group home lacked the training, education, and ability to provide Jakob with adequate medical supervision, and that this exposed him to an unreasonable risk of harm.⁶

The suit also faults the state for not placing Jakob with a relative equipped to manage his diabetes. According to the complaint, DCS did not contact the boy’s grandmother, Cheryl Doenges, until Jakob was already brain dead.¹ The case remains in litigation. Both DCS and Sunshine Residential have declined to comment on the pending suit.⁶

The Criminal Investigation Into Jakob’s Death

The Maricopa County Sheriff’s Office opened a criminal investigation into the circumstances of the death, releasing documents, audio, and body camera footage as part of its work. That investigation remains open, and no decision has been made on whether to recommend criminal charges to the Maricopa County Attorney’s Office.⁵

The Pay-to-Play Allegations Against Sunshine and Governor Hobbs

Running parallel to the lawsuit is a political controversy about how Sunshine came to be paid so much more than its competitors. The company had no recorded political donation history in the decade before 2022.⁷⁸⁹ In August 2023 it gave another $100,000 to the state Democratic Party. Including personal contributions from CEO Simon Kottoor and his wife, Elizabeth, the 2022–2024 total reached approximately $420,000. Kottoor also served on the governor’s inauguration committee, and Hobbs personally asked him to become a gold-level inauguration sponsor.¹⁰

Sunshine applied for a DCS rate increase in December 2022. That request was denied in February 2023.⁸ Kottoor reapplied in May 2023, arguing the business was operating at a loss and warning he could shift beds to higher-paying federal contracts to house migrant children.³ This time the state approved an increase from $140 to $195 per bed per day, roughly 39 percent. A subsequent contract pushed the rate to $234 per bed per day, well above the $169 average for other group home operators.¹¹ The increase has been estimated as worth roughly $4 million a year to the company.¹²

According to reporting, Sunshine was the only group home operator out of roughly a dozen applicants to receive a rate increase during the Hobbs administration.⁷ Internal DCS communications reportedly indicated an intent to keep the increase quiet from competitors and acknowledged Sunshine’s political ties to the governor.¹³ Former DCS Director David Lujan said he was unaware of the company’s internal financial records when he approved the increase, and DCS had not historically required financial statement reviews of group home contractors.³

Three Investigations, No Conclusions Yet

Reporting by The Arizona Republic in 2024 triggered a cascade of probes.

Attorney General Kris Mayes

In June 2024, Arizona Attorney General Kris Mayes opened what her office has described as a criminal investigation into the link between the donations and the rate increase.¹⁴ On June 7, 2024, Mayes issued a criminal referral and wrote to Maricopa County Attorney Rachel Mitchell and Auditor General Scott Perry, telling Mitchell that a parallel county investigation could “jeopardize the integrity” of the AG’s probe.¹⁵ On April 24, 2026, Mayes publicly confirmed that investigators had asked to interview Governor Hobbs, saying the step was necessary to keep the probe “thorough and complete.”¹² Hobbs’ spokesperson Christian Slater declined to say whether the governor would sit for an interview.¹⁶ Mayes indicated the investigation could wrap up in summer 2026.

Maricopa County Attorney and Auditor General

Despite Mayes’ stand-down request, Mitchell said she intended to investigate and prosecute “if warranted,” responding to requests from State Senator T.J. Shope and State Treasurer Kimberly Yee.¹⁷ Mitchell coordinated with the Auditor General’s Office to review the matter.¹⁵ No criminal charges have been filed, and the county inquiry’s status remains unclear.

The Arizona House Advisory Team

On November 13, 2025, House Speaker Steve Montenegro formed an all-Republican advisory team to conduct a legislative investigation, made up of committee chairs Selina Bliss, David Livingston, Matt Gress, and Quang Nguyen, along with Speaker Pro Tempore Neal Carter.¹³ On February 2, 2026, the team hired Justin Smith of the Missouri-based James Otis Law Group as independent counsel to review records, conduct interviews, and report findings.⁸ The Hobbs administration has called the legislative probe “a shameless publicity stunt” and said it expects to be “cleared of wrongdoing.” The advisory team has issued no formal findings.¹⁸

What Hobbs and Sunshine Say

Hobbs has consistently denied any involvement in the DCS contracting decision, and her office points to DCS leadership as the decision-maker.¹² Hobbs herself has said she expects the investigation to show “that I was not involved in the decision and that DCS acted in the best interest of Arizona’s foster children.”¹⁶ Records confirm, however, that Hobbs and her campaign manager dined with Sunshine leadership while the contract was being finalized.

Sunshine spokesperson Tommy McKone said the company “continues to remain committed in caring for the population they have served for several decades in Arizona” and pledged to cooperate “fully with any inquiry.”¹⁹ McKone declined to address the company’s finances in detail, citing the investigations, but confirmed that $554,000 the company reported as “charitable contributions” in 2022 included political donations.³

Legislative Response

The controversy has driven a push for new transparency rules on state contracting. Senator T.J. Shope reintroduced disclosure legislation as SB 1186 in the 2026 session after Hobbs vetoed an earlier version in 2025, calling it a “political stunt.”²⁰ SB 1186 passed both chambers and, as of June 11, 2026, awaits the governor’s consideration.²¹ The bill would require companies seeking state contracts or grants to disclose political donations and gifts made to the governor, campaign entities, and inaugural funds over the previous five years. It would also bar state agencies from destroying notes created during proposal evaluations and authorize re-solicitation of contracts if such records are improperly destroyed.²²

The Arizona House also advanced a package of child welfare reforms. House Bill 2611, the Youth Safety, Rights and Mental Health Protection Act, would mandate drug testing and expanded training for group home employees, require security monitoring and medical oversight protocols, and guarantee additional rights for children in care.²³ The House Government Committee passed HB 2611 alongside five other child welfare measures on February 19, 2026.²⁴

1
Sacramento Bee. 9-Year-Old Boy With Diabetes Dies in Arizona Foster Care
2
Sunshine Residential Homes. About Us
3
Arizona Republic (azcentral.com). Sunshine Residential Shareholders Payments
4
ABC15 Arizona. 9-Year-Old Boy With Diabetes Died Days After Being Taken Into Arizona’s Foster Care System
5
ABC15 Arizona. MCSO Records Raise New Questions About Death of Child With Diabetes in State Custody
6
ABC15 Arizona. Family of 9-Year-Old Who Died in DCS Custody Files Wrongful Death Suit
7
Arizona PBS (AZPBS). Sunshine Residential Homes Investigation
8
Arizona Capitol Times. Gov. Hobbs Faces Probe Over Alleged Pay-to-Play Scheme With Sunshine Homes
9
Arizona Republic (azcentral.com). Katie Hobbs Donation Sunshine Group Home
10
AZ Free News. Donations to Gov. Katie Hobbs Put Sunshine CEO in Spotlight
11
FOX 10 Phoenix. AZ Governor Katie Hobbs Accused in Alleged Pay-for-Play Scheme Involving Group Home Operator
12
Arizona Republic (azcentral.com). Kris Mayes Wants to Interview Gov. Katie Hobbs in Investigation
13
Arizona Legislature. Speaker Montenegro Press Release
14
Arizona Attorney General’s Office. Attorney General Mayes AGO Communications on Sunshine Residential Homes Investigation
15
Arizona Attorney General’s Office. AG Mayes Letter to County Attorney Mitchell
16
KJZZ. Under Investigation by AG, Hobbs Declines to Say Whether She’s Complied With an Interview
17
ABC15 Arizona. Rachel Mitchell Plans to Launch Additional Investigation Into Alleged Pay-for-Play Scheme With Hobbs Donor
18
KTAR News. AZ House Pay-for-Play Hobbs
19
Arizona Republic (azcentral.com). Hobbs Sunshine Residential Homes Ties; Arizona Attorney General to Launch Criminal Probe
20
KJZZ. Facing Pay-to-Play Allegations, Hobbs Says She’ll Support Disclosure Legislation
21
Arizona Senate Republicans. Arizona Republicans Send Transparency Bill to Governor’s Desk Following Contracting Scandals
22
Arizona Legislature. SB 1186 House Engrossed Summary
23
Arizona Legislature. HB 2611 Summary
24
ABC15 Arizona. Arizona House Committee Advances Bills to Reform Foster Care System