BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 897|
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                              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 

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           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.

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          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 

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            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 

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          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

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          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 

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          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

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