BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 897
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          SENATE THIRD READING
          SB 897 (Leno)
          As Amended  May 17, 2011
          Majority vote

           SENATE VOTE  :38-0  
           
           HUMAN SERVICES      6-0         APPROPRIATIONS      15-1        
          
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          |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,









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             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 








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            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 








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            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 








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               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:








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          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 

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