BILL ANALYSIS
AB 1457
Page 1
ASSEMBLY THIRD READING
AB 1457 (Davis)
As Amended May 13, 2009
Majority vote
HEALTH 19-0
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|Ayes:|Jones, Fletcher, Adams, |
| |Ammiano, Block, Carter, |
| |Conway, De La Torre, De |
| |Leon, Emmerson, Gaines, |
| |Hall, Hayashi, Hernandez, |
| |Bonnie Lowenthal, Nava, |
| |V. Manuel Perez, Salas, |
| |Audra Strickland |
| | |
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SUMMARY : Requires all contracts for residents of long-term care
facilities (LTCFs) to disclose the name of the facility's owner,
licensee and a single entity responsible for patient care and
operation of the facility as the first attachment to each
contract for admission.
EXISTING LAW :
1)Requires an applicant for licensure to operate a health
facility to file an application with the Department of Public
Health with verified evidence of financial resources
sufficient to operate the facility, names and addresses of the
owner of the building and grounds, and the name of the person
in charge of the facility.
2)Requires skilled nursing and intermediate care facilities to
disclose the name and business address of each general partner
if the applicant is a partnership; or, each director and
officer if the applicant is a corporation; and, each person
having a beneficial ownership interest of 5% or more if the
applicant is a corporation or partnership.
3)Requires the facility to communicate the content of the
admission contract to and obtain the signature of the person
to be admitted.
AB 1457
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FISCAL EFFECT : None
COMMENTS : According to the author, this bill will improve the
quality of care in nursing homes by informing residents of the
ownership and management structure of the LTCF which provides
their care. The bill will require identification of the
responsible owners of each facility, as well as parties
providing management and administrative services, as an
attachment to each contract agreement.
In November of 2007, the U.S. House of Representatives Ways and
Means Subcommittee on Health held hearings on the effect of
private equity investment on the quality of care in nursing
homes, which, according to the New York Times (Times), were
prompted by the purchase of the nation's largest nursing home
chain, HCR Manor Care, for $6.3 billion by the Carlyle Group, a
private equity firm. Testimony before the committee, again
according to the Times, indicated that a number of the privately
purchased nursing home chains have instituted complex corporate
restructuring to avoid liability when residents suffer neglect.
California statute requires submission of extensive information
regarding the ownership and control of skilled nursing
facilities and intermediate care facilities through the
licensure process. State law requires nursing home licensees
and applicants to disclose the ownership structure (for-profit
corporation, partnership, etc.) and contact information for all
principals. The state requires any subsidiary organization to
identify the parent company, and requires any management
agreement to identify its owners and individuals with more than
a 5% interest. The licensee is further required to identify the
owner of record of the real property and the individual in
charge of the facility. Failure to comply with these
requirements is grounds for revocation of the license and all
ownership information is required to be updated upon any change.
The California Advocates for Nursing Home Reform (CANHR), in
support of this bill, notes that publicly available ownership
information, such as that posted in nursing homes or online,
often fails to identify the person or entity that is fully
responsible for the nursing home's operation. This bill
requires disclosure of the ownership on a nursing home's
admission agreement, a document that all residents sign at
AB 1457
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admission. CANHR argues that nursing home residents deserve to
know who owns the facility they live in, and given the recent
trends in nursing home ownership, this disclosure is
increasingly important.
Analysis Prepared by : John Miller / HEALTH / (916) 319-2097
FN: 0000696