BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 897| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 897 Author: Leno (D) et al. Amended: 8/31/11 Vote: 21 SENATE HUMAN SERVICES COMMITTEE : 7-0, 4/12/11 AYES: Liu, Emmerson, Berryhill, Hancock, Strickland, Wright, Yee SENATE APPROPRIATIONS COMMITTEE : 9-0, 5/23/11 AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley, Price, Runner, Steinberg SENATE FLOOR : 38-0, 5/31/11 AYES: Alquist, Anderson, Blakeslee, Calderon, Cannella, Corbett, Correa, De León, DeSaulnier, Dutton, Evans, Fuller, Gaines, Hancock, Harman, Hernandez, Huff, Kehoe, La Malfa, Leno, Lieu, Liu, Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio, Runner, Simitian, Steinberg, Strickland, Vargas, Walters, Wolk, Wright, Wyland, Yee NO VOTE RECORDED: Berryhill, Emmerson ASSEMBLY FLOOR : 71-5, 9/6/11 - See last page for vote SUBJECT : Residential care facilities for the elderly SOURCE : Bet Tzedek Legal Services California Advocates for Nursing Home Reform California Senior Legislature CONTINUED SB 897 Page 2 DIGEST : This bill requires licensees of residential care facilities for the elderly to notify the State Long-Term Care Ombudsman, residents and potential residents, and the Department of Social Services of specified events indicating financial distress. Assembly Amendments (1) delete provisions specifying events that require the licensee of a residential care facility for the elderly to notify the State Long-Term Care Ombudsman (LTC Ombudsman, and add the following to the list of events that require the licensee of an Residential Care Facility for the Elderly(RCFE) to notify the Department of Social Services (DSS), the LTC Ombudsman, and facility residents and applicants for potential residence, and if applicable, their legal representative; and require DSS, upon receipt of the notification, to initiate a compliance plan, noncompliance conference, or other appropriate actions: (1) the licensee receives a written notice of default of payment of rent pursuant to statutory unlawful detainer procedures, and (2) a utility company has sent a notice of intent to terminate electricity, gas, or water service on the property within not more than 15 days of the notice. ANALYSIS : Existing law : 1. Under the Residential Care Facilities for the Elderly Act (Act), provides for the licensure of RCFEs by DSS, Community Care Licensing Division (CCL). 2. Provides that any person who violates the Act, or who willfully or repeatedly violates any rule or regulation adopted under the Act, is guilty of a misdemeanor, with a fine not to exceed one thousand dollars ($1,000), by imprisonment in the county jail for up to a year, or by both the fine and imprisonment. 3. 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 to $50 per day, but no greater than $150 per day) for violations of RCFE statutes. CONTINUED SB 897 Page 3 4. 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. This bill: 1.Requires an RCFE licensee to notify, in writing, the LTC 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. A notice of default, trustee's sale, or any other indication of foreclosure is issued on the property. B. An unlawful detainer action is initiated against the licensee. C. The licensee files for bankruptcy. D. The licensee receives a written notice of default of payment pursuant to statutory unlawful detainer procedures. E. A utility company has sent a notice of intent to terminate electricity, gas, or water service on the property within not more than 15 days of the notice. 2.Requires DSS to initiate a compliance plan, noncompliance conference, or other appropriate action upon receiving the notice. 3.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 CONTINUED SB 897 Page 4 transfer trauma or other harm to his or her health and safety. 4.Clarifies that suspension or revocation proceedings related to the provisions of this bill are to be conducted pursuant to due process procedures applicable to suspension or revocation actions under existing law. 5.Exempts RCFE licensees that have obtained a certificate of authority to offer continuing care contracts from the requirements above. Background Residential care facilities for the elderly . RCFEs are assisted living facilities for persons 60 years of age and over and persons under 60 with compatible needs. RCFEs, which may also be known as retirement homes or board and care homes, provide varying levels and intensities of care and supervision, protective supervision, or personal care, based upon residents' needs. As of March 2011, there were 7,662 licensed facilities in the state with a total capacity of 170,061 residents. According to DSS data from 2007, approximately three-quarters of RCFEs are licensed for six or fewer residents; the remaining RCFEs have an average licensed capacity of approximately 60 residents. RCFE foreclosures . According to the Community Care Licensing division of DSS, 41 RCFEs were in foreclosure or had been foreclosed between January 2009 and March 2010, out of 65 foreclosures of all CCL-licensed facility types. The California Advocates for Nursing Home Reform, a co-sponsor of the bill, states that of these, about half resulted in the building shutting down. According to DSS, RCFEs do not report any annual financial information to CCL. Other sources indicate a much more widespread problem with foreclosures. An investigation undertaken by the New York Times, published in April 2010, suggested that almost 16 percent of the Bay Area's 1,600 properties licensed as small residential care homes had been at some stage of foreclosure since June 2006 (although small residential care homes may not correspond with the RCFE CONTINUED SB 897 Page 5 classification), and that perhaps as many as 100 homes had been under foreclosure within a six-month period. Additionally, the San Mateo County ombudsman office reported dealing with 16 foreclosure or bankruptcy cases within a 16 month period, prior to June 2010. Notably, last May (2010), the Press-Enterprise reported that a 102-bed assisted living and respite care home in Hemet (Parkside Gardens) was forced to close immediately following a staff walk-out after the facility could not make payroll, although DSS had been working with the facility managers for more than six months after the report of a financial default. According to the federal Administration on Aging's National Ombudsman Reporting System, California reported a six-fold increase in the number of complaints received for "insufficient funds to operate" between 2006 and 2008, increasing from 3 to 20 complaints. It is worth noting, however, that a high number of complaints in this category were noted for prior years (17 in 2003 and 25 in 2004). FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Assembly Appropriations Committee, costs associated with the increased notification requirements will be minor and absorbable within DSS resources, and 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 savings to the state. SUPPORT : (Verified 9/6/11) Bet Tzedek Legal Services (co-source) California Advocates for Nursing Home Reform (co-source) California Senior Legislature (co-source) AARP Alzheimer's Association California Alliance for Retired Americans California Commission on the Status of Women California Commission on Aging Congress of California Seniors CONTINUED SB 897 Page 6 Ombudsman Services of Northern California Ombudsman Services of San Mateo County The Arc United Cerebral Palsy CA OPPOSITION : (Verified 9/6/11) Department of Finance (prior version) ARGUMENTS IN SUPPORT : California Advocates for Nursing Home Reform (CANHR), a co-sponsor of the measure, writes that reports of RCFE properties in foreclosure or bankruptcy have surged. CANHR believes that the notification provided for in the bill will ensure that residents will be better able to plan for a possible move and avoid dangerous last-minute evictions. AARP writes that evaluating long-term care options and making good decisions is difficult enough under normal circumstances, but trying to make good decisions on short notice is problematic. AARP believes this bill provides DSS and residents an early warning of financial distress so that DSS may take appropriate action and that residents can consider whether to reevaluate their continued residence. Bet Tzedek Legal Services, another co-sponsor, writes "that the foreclosure crisis is severely impacting housing for California's RCFE residents, and that, increasingly, RCFE owners are losing their homes and residents are being forced to move with little or no notice. Bet Tzedek points out that such resident are more vulnerable to emotional and physical trauma and placement in facilities that cannot meet their care. Bet Tzedek writes that notice to RCFE residents will enable them to assert legal challenges to involuntary relocations and give them additional time to prepare for possible transfer to a new facility." ARGUMENTS IN OPPOSITION : The Department of Finance opposes this bill and writes, "This bill would result in estimated costs of $41,000 ($25,000 General Fund) in fiscal year 2011-12 and $68,000 ($41,000 General Fund) in 2012-13 and annually thereafter due to an increase in DSS workload. The DSS estimates it would need 1.0 permanent Licensing Program Analyst position to perform mandatory complaint CONTINUED SB 897 Page 7 visits initiated by the Ombudsman, initiate administrative actions against licensees of RCFEs in specific instances of financial distress, and assess and collect civil penalties. This workload would be unabsorbable without redirecting existing resources from other high priority licensing activities. It is unknown how much revenue would be generated from the collection of civil penalties, but the DSS does not anticipate it to be significant given that licensees experiencing foreclosure will not have the financial resources to pay additional civil penalties." ASSEMBLY FLOOR : 71-5, 9/6/11 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, Galgiani, Gatto, Gordon, Hagman, Harkey, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, Miller, Mitchell, Monning, Nestande, Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino, Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski, Williams, Yamada, John A. Pérez NOES: Donnelly, Beth Gaines, Grove, Halderman, Morrell NO VOTE RECORDED: Garrick, Gorell, Hall, Mendoza CTW:do 9/7/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED