BILL ANALYSIS Ó SB 897 Page 1 SENATE THIRD READING SB 897 (Leno) As Amended May 17, 2011 Majority vote SENATE VOTE :38-0 HUMAN SERVICES 6-0 APPROPRIATIONS 15-1 ----------------------------------------------------------------- |Ayes:|Beall, Jones, Ammiano, |Ayes:|Fuentes, Harkey, | | |Grove, Hall, Portantino | |Blumenfield, Bradford, | | | | |Charles Calderon, Campos, | | | | |Davis, Dickinson, Hall, | | | | |Hill, Lara, Nielsen, | | | | |Norby, Solorio, Wagner | | | | | | |-----+--------------------------+-----+--------------------------| | | |Nays:|Donnelly | | | | | | ----------------------------------------------------------------- SUMMARY : Requires licensees of residential care facilities for the elderly (RCFEs) to notify the State Long-Term Care Ombudsman and, in some instances, residents and potential residents, and the Department of Social Services (DSS) of specified events indicating financial distress. Specifically, this bill : 1)Requires an RCFE licensee to notify, in writing or as specified, the State Long-Term Care Ombudsman of the following events within two business days of the event or knowledge of the event: a) Failure to make one or more mortgage, lease, or rental payments on the property within 30 days of the due date; b) A provider of electricity, gas, or water services has sent notice of intent to terminate a utility on the property; or, SB 897 Page 2 c) A financial institution refuses to honor a check or other instrument issued by the licensee to its employees for a regular payroll due to insufficient funds. 2)Requires an RCFE licensee to notify, in writing, the State Long-Term Care Ombudsman; DSS; all residents and, if applicable, their legal representatives; all applicants for potential residency and, if applicable, their legal representatives, prior to admission, of the following within two business days of the event or knowledge of the event: a) Notice of default, trustee's sale, or any other indication of foreclosure issued on the property; b) An unlawful detainer action initiated against the licensee; or, c) Bankruptcy filing by the licensee. 3)Requires DSS to initiate a compliance plan, noncompliance conference, or other appropriate action upon receiving notice as specified in paragraph 2) above. 4)Authorizes civil penalties in the amount of $100 per day for failure to provide the notifications required above, not to exceed $2,000, and allows DSS to suspend or revoke a license or permanently revoke a licensee's ability to operate, or act as an administrator of, a facility anywhere in the state, if a resident is relocated without the notification required by the section and suffers transfer trauma or other harm to his or her health and safety. 5)Clarifies that suspension or revocation proceedings related to the provisions of this bill are to be conducted pursuant to SB 897 Page 3 due process procedures applicable to suspension or revocation actions under existing law. 6)Exempts RCFE licensees that have obtained a certificate of authority to offer continuing care contracts from the requirements above. EXISTING LAW : 1)Under the Residential Care Facilities for the Elderly Act, provides for the licensure of residential care facilities for the elderly (RCFEs) by DSS, Community Care Licensing Division (CCLD). 2)Provides broad authority for the director of DSS to take enforcement action, including, but not limited to, actions to suspend or revoke a license and to impose civil penalties (generally between $25 and $50 per day, but no greater than $150 per day) for violations of RCFE statutes. 3)Provides for a state long-term care ombudsman office (including approved organizations) within the Department of Aging to investigate and seek to resolve complaints and concerns communicated by, or on behalf of, patients, residents, or clients of any long-term care facility. 4)Establishes due process appeal procedures for proceedings related to suspension or revocation of an RCFE license. FISCAL EFFECT : According to the Assembly Appropriations Committee: 1)Costs associated with the increased notification requirements would be minor and absorbable within DSS resources. 2)To the extent this advanced notification prevents Adult Protective Services from needing to find emergency placements for residents, and the Attorney General from becoming involved in litigation surrounding the closure, it could result in SB 897 Page 4 savings to the state. COMMENTS : RCFEs are licensed assisted living facilities for persons 60 years of age and over and persons under 60 with compatible needs. According to the author, this bill "will protect the elderly residents living in RCFEs from the emotional, physical and unexpected upheaval that results from abrupt foreclosure of RCFEs." As of June 1, 2011, there were 7,673 RCFEs in California with a total capacity of 170,724 residents. Approximately 75%, are located in single-family dwelling units, operated by a lone individual or family with a mortgage on the property, and have six or fewer residents. "In recent years," the author notes, "1 in 8 homes have been foreclosed in California; RCFEs in foreclosure or bankruptcy have also surged, leaving vulnerable residents subject to loss of their home and needed care." The author further says that: Under current law, RCFEs are not required to provide notice to the residents or to ÝCCLD] when these homes are in foreclosure or suffering from severe financial distress. In some foreclosure cases, residents had no idea they were losing their home until sheriffs forcibly removed them. Without timely notice, RCFE residents are effectively deprived of their legal recourse. They are rendered much more vulnerable to transfer trauma and placements in homes that are not able to meet their needs. Without timely notice, family, guardians and friends of the residents are subject to hardships as they struggle to find a safe, secure and compatible living arrangement for the loved one. ? ÝThis bill] will require RCFE operators give notice to all residents and their legal representatives of any foreclosure proceedings when they are initiated. This will allow residents to prepare for a possible transfer to a new home with appropriate levels of care. ÝThis bill] will also require RCFE operators to notify CCLD and the state Ombudsman of events indicating financial distress that would threaten the housing SB 897 Page 5 security of the residents such as foreclosure proceedings, a missed mortgage payment, or threatened utility shut-off. Such notice would enable CCLD to monitor the facility and ensure the residents are protected. ÝThis bill] will ensure vulnerable RCFE residents and their loved ones are notified when their home is being threatened. With such notification, they will be able to carefully plan for a possible move and avoid dangerous last-minute evictions. This bill requires that RCFE operators give notice to residents (and, when applicable, to their families) whenever their homes are subject to foreclosure, bankruptcy, or unlawful detainer. This advance notice will give residents an opportunity to investigate the stability of their placement and to explore other housing options. This bill also requires RCFE operators to give notice to CCLD and the State Office of the Long-Term Care Ombudsman when a facility is in foreclosure, bankruptcy, or suffers other specified indicators of severe financial distress. Under this bill, CCLD's response in most instances is discretionary; although, early reports of financial troubles will enable CCLD to counsel facilities through their crisis or to minimize transfer trauma to residents of the closing facility. In the case of foreclosure, bankruptcy, or unlawful detainer, on the other hand, this bill requires CCLD to take appropriate action. At its discretion, CCLD may initiate a compliance plan, noncompliance conference, or other appropriate administrative action. Prior bill : SB 1329 (Leno) of 2010 was substantially similar to this bill. SB 1329 was passed by the Legislature in the last Session, but was vetoed by Governor Schwarzenegger. The veto message stated: While I appreciate the author's continued effort to improve protections for residential care facilities, this bill would represent a new unfunded workload and redirect scarce resources that are currently dedicated to immediate health and safety issues. This bill differs from SB 1329 in several respects: SB 897 Page 6 1)This bill includes notification to the State Office of the Long-Term Care Ombudsman. 2)SB 1329 would have authorized suspension or revocation proceedings if relocation occurs without adequate notification or a resident suffers transfer trauma or other harm to his or her health or safety; this bill requires both lack of notification and transfer trauma or other harm to the resident's health or safety. 3)This bill clarifies licensees' due process appeal rights in the event that DSS takes action to suspend or revoke a facility's license. 4)The civil penalty provided for under this bill is discretionary; the civil penalty under SB 1329 was mandatory. Analysis Prepared by : Eric Gelber / HUM. S. / (916) 319-2089 FN: 0001703