BILL NUMBER: AB 1022 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Saldana
FEBRUARY 22, 2007
An act to amend Sections 1569.145 and 1771 of, and to add Section
1793.62 to, the Health and Safety Code, relating to residential care
facilities for the elderly.
LEGISLATIVE COUNSEL'S DIGEST
AB 1022, as introduced, Saldana. Continuing care home service.
Existing law provides for the regulation by the State Department
of Social Services of activities relating to continuing care
contracts that govern care provided to an elderly resident in a
continuing care retirement community for the duration of the resident'
s life or a term in excess of one year. Existing law designates the
contents of a continuing care contract, including the conditions
under which a resident of a continuing care retirement community may
be voluntarily or involuntarily transferred from his or her
designated living unit.
Under existing law, an entity that issues, delivers, or publishes,
or as manager or officer or in any other administrative capacity,
assists in the issuance, delivery, or publication of any printed
matter, oral representation, or advertising material that does not
comply with the requirements of the law relating to continuing care
contracts is guilty of a misdemeanor.
This bill would exempt a continuing care at home program, as
defined, from the licensing provisions applicable to residential care
facilities for the elderly, if certain conditions are met, and would
set forth certain requirements for, and authorized services of, a
continuing care at home program.
By revising the provisions relating to continuing care provides,
this bill would change the definition of an existing crime, thus
imposing a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1569.145 of the Health and Safety Code is
amended to read:
1569.145. This chapter shall not apply to any of the following:
(a) Any health facility, as defined by Section 1250.
(b) Any clinic, as defined by Section 1202.
(c) Any facility conducted by and for the adherents of any
well-recognized church or religious denomination for the purpose of
providing facilities for the care or treatment of the sick who depend
upon prayer or spiritual means for healing in the practice of the
religion of such church or denomination.
(d) Any house, institution, hotel, congregate housing project for
the elderly, or other similar place that is limited to providing one
or more of the following: housing, meals, transportation,
housekeeping, or recreational and social activities; or that have
residents independently accessing supportive services; provided,
however, that no resident thereof requires any element of care and
supervision or protective supervision as determined by the director.
This subdivision shall not include a home or residence that is
described in subdivision (f).
(e) Recovery houses or other similar facilities providing group
living arrangements for persons recovering from alcoholism or drug
addiction where the facility provides no care or supervision.
(f) (1) Any arrangement for the care and supervision of a person
or persons by a family member.
(2) Any arrangement for the care and supervision of a person or
persons from only one family by a close friend, whose friendship
preexisted the contact between the provider and the recipient, and
both of the following are met:
(A) The care and supervision is provided in a home or residence
chosen by the recipient.
(B) The arrangement is not of a business nature and occurs only as
long as the needs of the recipient for care and supervision are
adequately met.
(g) Any housing for elderly or disabled persons, or both, that is
approved and operated pursuant to Section 202 of Public Law 86-372
(12 U.S.C.A. Sec. 1701q), or Section 811 of Public Law 101-625 (42
U.S.C.A. Sec. 8013), or whose mortgage is insured pursuant to Section
236 of Public Law 90-448 (12 U.S.C.A. Sec. 1715z), or that receives
mortgage assistance pursuant to Section 221d (3) of Public Law 87-70
(12 U.S.C.A. Sec. 17151), where supportive services are made
available to residents at their option, as long as the project owner
or operator does not contract for or provide the supportive services.
The project owner or operator may coordinate, or help residents gain
access to, the supportive services, either directly, or through a
service coordinator.
(h) Any similar facility determined by the director.
(i) For purposes of this section, "family member" means any
spouse, by marriage or otherwise, child or stepchild, by natural
birth or by adoption, parent, brother, sister, half-brother,
half-sister, parent-in-law, brother-in-law, sister-in-law, nephew,
niece, aunt, uncle, first cousin, or any person denoted by the prefix
"grand" or "great," or the spouse of any of these persons.
(j) A person shall not be exempted from this chapter's licensure
requirements if he or she has been appointed as conservator of the
person, estate of the person, or both, if the person is receiving
care and supervision from the conservator as regulated by this
chapter, unless the conservator is otherwise exempted under other
provisions of this section.
(k) Continuing care at home programs as defined in paragraph (10)
of subdivision (c) of Section 1771.
SEC. 2. Section 1771 of the Health and Safety Code is amended to
read:
1771. Unless the context otherwise requires, the definitions in
this section govern the interpretation of this chapter.
(a) (1) "Affiliate" means any person, corporation, limited
liability company, business trust, trust, partnership, unincorporated
association, or other legal entity that directly or indirectly
controls, is controlled by, or is under common control with, a
provider or applicant.
(2) "Affinity group" means a grouping of entities sharing a common
interest, philosophy, or connection (e.g., military officers,
religion).
(3) "Annual report" means the report each provider is required to
file annually with the department, as described in Section 1790.
(4) "Applicant" means any entity, or combination of entities, that
submits and has pending an application to the department for a
permit to accept deposits and a certificate of authority.
(5) "Assisted living services" includes, but is not limited to,
assistance with personal activities of daily living, including
dressing, feeding, toileting, bathing, grooming, mobility, and
associated tasks, to help provide for and maintain physical and
psychosocial comfort.
(6) "Assisted living unit" means the living area or unit within a
continuing care retirement community that is specifically designed to
provide ongoing assisted living services.
(7) "Audited financial statement" means financial statements
prepared in accordance with generally accepted accounting principles
including the opinion of an independent certified public accountant,
and notes to the financial statements considered customary or
necessary to provide full disclosure and complete information
regarding the provider's financial statements, financial condition,
and operation.
(b) (reserved)
(c) (1) "Cancel" means to destroy the force and effect of an
agreement or continuing care contract.
(2) "Cancellation period" means the 90-day period, beginning when
the resident physically moves into the continuing care retirement
community, during which the resident may cancel the continuing care
contract, as provided in Section 1788.2.
(3) "Care" means nursing, medical, or other health related
services, protection or supervision, assistance with the personal
activities of daily living, or any combination of those services.
(4) "Cash equivalent" means certificates of deposit and United
States treasury securities with a maturity of five years or less.
(5) "Certificate" or "certificate of authority" means the
certificate issued by the department, properly executed and bearing
the State Seal, authorizing a specified provider to enter into one or
more continuing care contracts at a single specified continuing care
retirement community.
(6) "Condition" means a restriction, specific action, or other
requirement imposed by the department for the initial or continuing
validity of a permit to accept deposits, a provisional certificate of
authority, or a certificate of authority. A condition may limit the
circumstances under which the provider may enter into any new deposit
agreement or contract, or may be imposed as a condition precedent to
the issuance of a permit to accept deposits, a provisional
certificate of authority, or a certificate of authority.
(7) "Consideration" means some right, interest, profit, or benefit
paid, transferred, promised, or provided by one party to another as
an inducement to contract. Consideration includes some forbearance,
detriment, loss, or responsibility, that is given, suffered, or
undertaken by a party as an inducement to another party to contract.
(8) "Continuing care contract" means a contract that includes a
continuing care promise made, in exchange for an entrance fee, the
payment of periodic charges, or both types of payments. A continuing
care contract may consist of one agreement or a series of agreements
and other writings incorporated by reference.
(9) "Continuing care advisory committee" means an advisory panel
appointed pursuant to Section 1777.
(10) "Continuing care at home" means a program offered by a
provider or a multilevel retirement community that meets the
exemption from the life care contract provisions pursuant to
subdivision (b) of Section 1771.3, that furnishes one or more
services to an elderly person in the elderly person's own private
residence, including, but not limited to, meals, housekeeping,
laundry, home maintenance, grounds maintenance, companionship, social
activities, recreational activities, and referrals to other care
providers.
(10)
(11) "Continuing care promise" means a promise,
expressed or implied, by a provider to provide one or more elements
of care to an elderly resident for the duration of his or her life or
for a term in excess of one year. Any such promise or
representation, whether part of a continuing care contract, other
agreement, or series of agreements, or contained in any
advertisement, brochure, or other material, either written or oral,
is a continuing care promise.
(11)
(12) "Continuing care retirement community" means a
facility located within the State of California where services
promised in a continuing care contract are provided. A distinct phase
of development approved by the department may be considered to be
the continuing care retirement community when a project is being
developed in successive distinct phases over a period of time. When
the services are provided in residents' own homes, the homes into
which the provider takes those services are considered part of the
continuing care retirement community.
(12)
(13) "Control" means directing or causing the direction
of the financial management or the policies of another entity,
including an operator of a continuing care retirement community,
whether by means of the controlling entity's ownership interest,
contract, or any other involvement. A parent entity or sole member of
an entity controls a subsidiary entity provider for a continuing
care retirement community if its officers, directors, or agents
directly participate in the management of the subsidiary entity or in
the initiation or approval of policies that affect the continuing
care retirement community's operations, including, but not limited
to, approving budgets or the administrator for a continuing care
retirement community.
(d) (1) "Department" means the State Department of Social
Services.
(2) "Deposit" means any transfer of consideration, including a
promise to transfer money or property, made by a depositor to any
entity that promises or proposes to promise to provide continuing
care, but is not authorized to enter into a continuing care contract
with the potential depositor.
(3) "Deposit agreement" means any agreement made between any
entity accepting a deposit and a depositor. Deposit agreements for
deposits received by an applicant prior to the department's release
of funds from the deposit escrow account shall be subject to the
requirements described in Section 1780.4.
(4) "Depository" means a bank or institution that is a member of
the Federal Deposit Insurance Corporation or a comparable deposit
insurance program.
(5) "Depositor" means any prospective resident who pays a deposit.
Where any portion of the consideration transferred to an applicant
as a deposit or to a provider as consideration for a continuing care
contract is transferred by a person other than the prospective
resident or a resident, that third-party transferor shall have the
same cancellation or refund rights as the prospective resident or
resident for whose benefit the consideration was transferred.
(6) "Director" means the Director of Social Services.
(e) (1) "Elderly" means an individual who is 60 years of age or
older.
(2) "Entity" means an individual, partnership, corporation,
limited liability company, and any other form for doing business.
Entity includes a person, sole proprietorship, estate, trust,
association, and joint venture.
(3) "Entrance fee" means the sum of any initial, amortized, or
deferred transfer of consideration made or promised to be made by, or
on behalf of, a person entering into a continuing care contract for
the purpose of assuring care or related services pursuant to that
continuing care contract or as full or partial payment for the
promise to provide care for the term of the continuing care contract.
Entrance fee includes the purchase price of a condominium,
cooperative, or other interest sold in connection with a promise of
continuing care. An initial, amortized, or deferred transfer of
consideration that is greater in value than 12 times the monthly care
fee shall be presumed to be an entrance fee.
(4) "Equity" means the value of real property in excess of the
aggregate amount of all liabilities secured by the property.
(5) "Equity interest" means an interest held by a resident in a
continuing care retirement community that consists of either an
ownership interest in any part of the continuing care retirement
community property or a transferable membership that entitles the
holder to reside at the continuing care retirement community.
(6) "Equity project" means a continuing care retirement community
where residents receive an equity interest in the continuing care
retirement community property.
(7) "Equity securities" shall refer generally to large and
midcapitalization corporate stocks that are publicly traded and
readily liquidated for cash, and shall include shares in mutual funds
that hold portfolios consisting predominantly of these stocks and
other qualifying assets, as defined by Section 1792.2. Equity
securities shall also include other similar securities that are
specifically approved by the department.
(8) "Escrow agent" means a bank or institution, including, but not
limited to, a title insurance company, approved by the department to
hold and render accountings for deposits of cash or cash
equivalents.
(f) "Facility" means any place or accommodation where a provider
provides or will provide a resident with care or related services,
whether or not the place or accommodation is constructed, owned,
leased, rented, or otherwise contracted for by the provider.
(g) (reserved)
(h) (reserved)
(i) (1) "Inactive certificate of authority" means a certificate
that has been terminated under Section 1793.8.
(2) "Investment securities" means any of the following:
(A) Direct obligations of the United States, including obligations
issued or held in book-entry form on the books of the United States
Department of the Treasury or obligations the timely payment of the
principal of, and the interest on, which are fully guaranteed by the
United States.
(B) Obligations, debentures, notes, or other evidences of
indebtedness issued or guaranteed by any of the following:
(i) The Federal Home Loan Bank System.
(ii) The Export-Import Bank of the United States.
(iii) The Federal Financing Bank.
(iv) The Government National Mortgage Association.
(v) The Farmer's Home Administration.
(vi) The Federal Home Loan Mortgage Corporation of the Federal
Housing Administration.
(vii) Any agency, department, or other instrumentality of the
United States if the obligations are rated in one of the two highest
rating categories of each rating agency rating those obligations.
(C) Bonds of the State of California or of any county, city and
county, or city in this state, if rated in one of the two highest
rating categories of each rating agency rating those bonds.
(D) Commercial paper of finance companies and banking institutions
rated in one of the two highest categories of each rating agency
rating those instruments.
(E) Repurchase agreements fully secured by collateral security
described in subparagraph (A) or (B), as evidenced by an opinion of
counsel, if the collateral is held by the provider or a third party
during the term of the repurchase agreement, pursuant to the terms of
the agreement, subject to liens or claims of third parties, and has
a market value, which is determined at least every 14 days, at least
equal to the amount so invested.
(F) Long-term investment agreements, which have maturity dates in
excess of one year, with financial institutions, including, but not
limited to, banks and insurance companies or their affiliates, if the
financial institution's paying ability for debt obligations or
long-term claims or the paying ability of a related guarantor of the
financial institution for these obligations or claims, is rated in
one of the two highest rating categories of each rating agency rating
those instruments, or if the short-term investment agreements are
with the financial institution or the related guarantor of the
financial institution, the long-term or short-term debt obligations,
whichever is applicable, of which are rated in one of the two highest
long-term or short-term rating categories, of each rating agency
rating the bonds of the financial institution or the related
guarantor, provided that if the rating falls below the two highest
rating categories, the investment agreement shall allow the provider
the option to replace the financial institution or the related
guarantor of the financial institution or shall provide for the
investment securities to be fully collateralized by investments
described in subparagraph (A), and, provided further, if so
collateralized, that the provider has a perfected first security lien
on the collateral, as evidenced by an opinion of counsel and the
collateral is held by the provider.
(G) Banker's acceptances or certificates of deposit of, or time
deposits in, any savings and loan association that meets any of the
following criteria:
(i) The debt obligations of the savings and loan association, or
in the case of a principal bank, of the bank holding company, are
rated in one of the two highest rating categories of each rating
agency rating those instruments.
(ii) The certificates of deposit or time deposits are fully
insured by the Federal Deposit Insurance Corporation.
(iii) The certificates of deposit or time deposits are secured at
all times, in the manner and to the extent provided by law, by
collateral security described in subparagraph (A) or (B) with a
market value, valued at least quarterly, of no less than the original
amount of moneys so invested.
(H) Taxable money market government portfolios restricted to
obligations issued or guaranteed as to payment of principal and
interest by the full faith and credit of the United States.
(I) Obligations the interest on which is excluded from gross
income for federal income tax purposes and money market mutual funds
whose portfolios are restricted to these obligations, if the
obligations or mutual funds are rated in one of the two highest
rating categories by each rating agency rating those obligations.
(J) Bonds that are not issued by the United States or any federal
agency, but that are listed on a national exchange and that are rated
at least "A" by Moody's Investors Service, or the equivalent rating
by Standard and Poor's Corporation or Fitch Investors Service.
(K) Bonds not listed on a national exchange that are traded on an
over-the-counter basis, and that are rated at least "Aa" by Moody's
Investors Service or "AA" by Standard and Poor's Corporation or Fitch
Investors Service.
(j) (reserved)
(k) (reserved)
( ) "Life care contract" means a continuing care contract that
includes a promise, expressed or implied, by a provider to provide or
pay for routine services at all levels of care, including acute care
and the services of physicians and surgeons, to the extent not
covered by other public or private insurance benefits, to a resident
for the duration of his or her life. Care shall be provided under a
life care contract in a continuing care retirement community having a
comprehensive continuum of care, including a skilled nursing
facility, under the ownership and supervision of the provider on or
adjacent to the premises. No change may be made in the monthly fee
based on level of care. A life care contract shall also include
provisions to subsidize residents who become financially unable to
pay their monthly care fees.
(m) (1) "Monthly care fee" means the fee charged to a resident in
a continuing care contract on a monthly or other periodic basis for
current accommodations and services including care, board, or
lodging. Periodic entrance fee payments or other prepayments shall
not be monthly care fees.
(2) "Monthly fee contract" means a continuing care contract that
requires residents to pay monthly care fees.
(n) "Nonambulatory person" means a person who is unable to leave a
building unassisted under emergency conditions in the manner
described by Section 13131.
(o) (reserved)
(p) (1) "Per capita cost" means a continuing care retirement
community's operating expenses, excluding depreciation, divided by
the average number of residents.
(2) "Periodic charges" means fees paid by a resident on a periodic
basis.
(3) "Permit to accept deposits" means a written authorization by
the department permitting an applicant to enter into deposit
agreements regarding a single specified continuing care retirement
community.
(4) "Prepaid contract" means a continuing care contract in which
the monthly care fee, if any, may not be adjusted to cover the actual
cost of care and services.
(5) "Preferred access" means that residents who have previously
occupied a residential living unit have a right over other persons to
any assisted living or skilled nursing beds that are available at
the community.
(6) "Processing fee" means a payment to cover administrative costs
of processing the application of a depositor or prospective
resident.
(7) "Promise to provide one or more elements of care" means any
expressed or implied representation that one or more elements of care
will be provided or will be available, such as by preferred access.
(8) "Proposes" means a representation that an applicant or
provider will or intends to make a future promise to provide care,
including a promise that is subject to a condition, such as the
construction of a continuing care retirement community or the
acquisition of a certificate of authority.
(9) "Provider" means an entity that provides continuing care,
makes a continuing care promise, or proposes to promise to provide
continuing care. "Provider" also includes any entity that controls an
entity that provides continuing care, makes a continuing care
promise, or proposes to promise to provide continuing care. The
department shall determine whether an entity controls another entity
for purposes of this article. No homeowner's association,
cooperative, or condominium association may be a provider.
(10) "Provisional certificate of authority" means the certificate
issued by the department, properly executed and bearing the State
Seal, under Section 1786. A provisional certificate of authority
shall be limited to the specific continuing care retirement community
and number of units identified in the applicant's application.
(q) (reserved)
(r) (1) "Refund reserve" means the reserve a provider is required
to maintain, as provided in Section 1792.6.
(2) "Refundable contract" means a continuing care contract that
includes a promise, expressed or implied, by the provider to pay an
entrance fee refund or to repurchase the transferor's unit,
membership, stock, or other interest in the continuing care
retirement community when the promise to refund some or all of the
initial entrance fee extends beyond the resident's sixth year of
residency. Providers that enter into refundable contracts shall be
subject to the refund reserve requirements of Section 1792.6. A
continuing care contract that includes a promise to repay all or a
portion of an entrance fee that is conditioned upon reoccupancy or
resale of the unit previously occupied by the resident shall not be
considered a refundable contract for purposes of the refund reserve
requirements of Section 1792.6, provided that this conditional
promise of repayment is not referred to by the applicant or provider
as a "refund."
(3) "Resale fee" means a levy by the provider against the proceeds
from the sale of a transferor's equity interest.
(4) "Reservation fee" refers to consideration collected by an
entity that has made a continuing care promise or is proposing to
make this promise and has complied with Section 1771.4.
(5) "Resident" means a person who enters into a continuing care
contract with a provider, or who is designated in a continuing care
contract to be a person being provided or to be provided services,
including care, board, or lodging.
(6) "Residential care facility for the elderly" means a housing
arrangement as defined by Section 1569.2.
(7) "Residential living unit" means a living unit in a continuing
care retirement community that is not used exclusively for assisted
living services or nursing services.
(s) (reserved)
(t) (1) "Termination" means the ending of a continuing care
contract as provided for in the terms of the continuing care
contract.
(2) "Transfer trauma" means death, depression, or regressive
behavior, that is caused by the abrupt and involuntary transfer of an
elderly resident from one home to another and results from a loss of
familiar physical environment, loss of well-known neighbors,
attendants, nurses and medical personnel, the stress of an abrupt
break in the small routines of daily life, or the loss of visits from
friends and relatives who may be unable to reach the new facility.
(3) "Transferor" means a person who transfers, or promises to
transfer, consideration in exchange for care and related services
under a continuing care contract or proposed continuing care
contract, for the benefit of another. A transferor shall have the
same rights to cancel and obtain a refund as the depositor under the
deposit agreement or the resident under a continuing care contract.
SEC. 3. Section 1793.62 is added to the Health and Safety Code, to
read:
1793.62. (a) A provider of a continuing care at home program as
defined in subdivision (k) of Section 1569.145 shall comply with all
of the following:
(1) The provider shall file an abbreviated application, including,
but not limited to, feasibility information, for approval by the
department.
(2) The provider shall hold a certificate of authority issued by
the department authorizing the program to enter into continuing care
contracts.
(3) The provider shall enter into a service agreement, approved by
the department, with each of its clients. The service agreement
shall include, but need not be limited to, provisions setting forth
in all of the following:
(A) A description of the services to be provided.
(B) The fees to be paid by the client, including, but not limited
to, a description of, and the basis for, any potential increase in
those fees.
(C) The grounds for termination of the service agreement, and the
grounds upon which the client may be transferred from the facility.
(D) The
duration of the service agreement.
(4) The provider shall transfer the client to an appropriate
licensed health or care facility if the clients health or care needs
exceed the provider's ability to provide needed services, or exceeds
the provider's authorized scope of services.
(b) A provider of a continuing care at home program as defined in
subdivision (k) of Section 1569.145 may do all of the following:
(1) Furnish one or more services to an elderly person in the
elderly person's own private residence, including, but not limited
to, meals, housekeeping, laundry, home maintenance, grounds
maintenance, companionship, social activities, recreational
activities, and referrals to other care providers.
(2) Furnish, at the provider's discretion, additional services on
the provider's campus, as appropriate. This paragraph does not
authorize provision of services by an unlicensed person or in an
unlicensed setting, if those services are otherwise required by law
to be provided by a licensed person or in a licensed setting.
(3) Furnish any services that would otherwise be deemed to be a
basic service as defined in Section 1569.312, with care and
supervision as defined in Section 1569.2 provided through an
appropriately licensed third-party provider, if applicable.
(4) Establish, at its discretion, within the private residence of
the elderly person, a smoke detection system, a fire alarm, a fire
suppression sprinkler system, a medical alert system, a system for
routine inspections, and other safety features.
(5) Provide or arrange for any of the following services within
the private residence of the elderly person:
(A) Routine remote monitoring.
(B) Occasional assistance with bathing, dressing, or grooming.
(C) Delivery of, and assistance with storage and administration
of, prepackaged medications, for a mentally competent client.
SEC. 4. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.