BILL ANALYSIS Ó AB 1523 Page 1 Date of Hearing: May 7, 2014 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 1523 (Atkins) - As Amended: April 1, 2014 Policy Committee: Human ServicesVote:6 - 0 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill requires all RCFEs to carry liability insurance. Specifically, this bill: 1)Requires all RCFEs, on or after July 1, 2015, to acquire liability insurance to cover injury to residents and guests in the amount of at least one million dollars ($1,000,000) per occurrence and three million dollars ($3,000,000) in total, or a bond in the amount of three million dollars ($3,000,000). 2)Provides that the liability insurance will cover injuries sustained by acts, omission to act, or neglect of the licensee or his or her employees. FISCAL EFFECT 1)Minor costs to DSS in the range of $32,000 to ensure each facility complies with the requirement. 2)Unknown costs to RCFEs licensees to acquire insurance. COMMENTS 1)Purpose of the bill . The author states, "Because RCFEs are not required to carry liability insurance, many facilities lack even the minimum liability insurance coverage, exposing both them and residents to great financial risk. Currently, the only action residents have to be compensated for damages sustained from elder abuse or neglect is civil litigation. Civil litigation is expensive, and typically, the only way most families can actually seek damages from a licensed AB 1523 Page 2 provider is on a contingency basis. If the licensee does not carry liability insurance, it would be very difficult for the resident, or his/her heirs, to find an attorney willing to litigate a wrongful death or neglect case on contingency. And in the event the case is accepted and successfully litigated, an uninsured facility would have a difficult time paying from their own budget, forcing them to consider claiming bankruptcy. This circumstance benefits no one: the RCFE is out of business and the victim is left with no recourse for compensation." 2)Background . RCFEs, commonly referred to as assisted living facilities, are licensed retirement residential homes and board and care homes that provide personal care and supervision or health related services to persons who are 60 years of age and over, who voluntarily choose to reside in the facility. RCFEs enable older persons to live independently in a home-like environment rather than in nursing home or other institutionalized facility. Services include personal care and protective supervision, including incidental medical services, based upon the needs of the resident. There are 7,589 licensed RCFEs in California with a capacity to serve over 176, 000 residents. Licensed by DSS' Community Care Licensing Division (CCLD), RCFEs range in size from residential homes with six or less beds to more formal residential facilities with 100 beds or more. DSS is required to conduct unannounced licensing inspections of the more than 75,000 licensed community care facilities, including RCFEs, at least once every five years, more often in some circumstances. Neither statute nor regulation requires any RCFE to carry liability insurance as a condition of licensure. 3)RCFE Reform Package . In response to a growing demand for assisted living facilities and a number of highly publicized events at facilities that have raised questions about the adequacy of RCFEs and the state's ability to comply with existing oversight and enforcement requirements, a number of legislative measures are being pursued to strengthen, address shortcomings, resolve legal liabilities and gaps in the provision of services, and ultimately reform the RCFE industry. AB 1523 Page 3 4)Opposition . This bill is opposed by the Community Residential Care Association of California which represents residential care facilities primarily licensed for six beds or less. They argue this bill will create a financial hardship for facilities that accept SSI/SSP reimbursement because they will have no way to recoup the costs from low-income residents and will be forced to stop accepting SSI/SSP recipients or close their doors. Analysis Prepared by : Jennifer Swenson / APPR. / (916) 319-2081