BILL ANALYSIS Ó
AB 1523
Page A
CONCURRENCE IN SENATE AMENDMENTS
AB 1523 (Atkins and Weber)
As Amended June 12, 2014
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |77-0 |(May 15, 2014) |SENATE: |32-0 |(June 26, |
| | | | | |2014) |
-----------------------------------------------------------------
Original Committee Reference: HUM. S.
SUMMARY : Requires all Residential Care Facilities for the
Elderly (RCFE) 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 $1 million per occurrence and $3
million in total or a bond in the amount of $3 million.
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.
The Senate amendments delete the requirement that a RCFE obtain
a bond in the amount of $3 million to cover liability costs.
AS PASSED BY THE ASSEMBLY , this bill:
1)Required 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 $1 million per occurrence and $3
million in total or a bond in the amount of $3 million.
2)Provided 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 : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
AB 1523
Page B
Background: RCFEs, commonly referred to as assisted living
facilities, are licensed retirement residential homes and board
and care homes that accommodate and provide services to meet the
varying, and at times, fluctuating health care needs of
individuals who are 60 years of age and over, and persons under
the age of 60 with compatible needs. Licensed by the Department
of Social Services (DSS) Community Care Licensing Division, they
can range in size from residential homes with six or less beds
to more formal residential facilities with 100 beds or more.
Growing demand: Over the past 30 years, the demand for RCFEs
has grown substantially. Although RCFEs have been generally
available, they experienced explosive growth in the 1990s, more
than doubling the number of beds between 1990 and 2002,<1> and
continued to grow 16% between 2001 and 2010.<2> Nationwide,
states reported 1.2 million beds in licensed RCFEs in 2010.<3>
That same year, the national Centers for Disease Control and
Prevention reported that 40% of RCFE residents needed help with
three or more activities of daily living and three-fourths of
residents had at least two of the 10 most common chronic
conditions.<4> According to DSS, as of March 5, 2014, there are
7,589 licensed RCFEs in California with a capacity to serve
176,317 residents.
Financial Structure: More than 90% of RCFE licenses in
California are held by for-profit providers, the majority of
which have six or fewer beds. Most residents pay privately or
with long-term care insurance since there is very little public
funding available through Medi-Cal, Supplemental Security
Income/State Supplementary Payment (SSI/SSP) or Medicare, and
fees can range from $1,500 to more than $8,000 per month. Very
few beds are available to seniors who use their entire SSI/SSP
checks to pay rent. In 2013, the maximum SSI/SSP grant was
---------------------------
<1> Flores and Newcomer, "Monitoring Quality of Care in
Residential Care for the Elderly: The Information Challenge".
Journal of Aging and Social Policy, 21:225-242, 2009.
<2> SCAN Foundation. "Long Term Care Fundamentals: Residential
Care Facilities for the Elderly." March 2011.
http://thescanfoundation.org/sites/thescanfoundation.org/files/LT
C_Fundamental_7_0.pdf
<3> "Assisted Living and Residential Care in the States in
2010," Mollica, Robert, AARP Public Policy Institute
<4> "Residents Living in Residential Care Facilities: United
States, 2010, Caffrey, Christine, et al., US Centers for
Disease Control, April 2012
AB 1523
Page C
$866.40. Residents who rely solely on Social Security Income
may have a maximum payment of $2,642 per month in 2014,<5>
although that amount varies widely based on the recipient's
prior income while working.
As a result, low-income seniors and middle-income seniors who do
not have long-term care insurance are largely unable to afford
to reside in a RCFE. Most low-income seniors may receive
services through In-Home Supportive Services or a skilled
nursing facility if they are Medi-Cal eligible. A small number
of Medi-Cal patients who are eligible for nursing home care may
be placed in an RCFE through the state's Assisted Living Waiver,
which began in 2006. According to state data, 172 RCFEs
currently participate in the waiver program benefitting 2,200
residents. There are an additional 3,700 slots available.
Need for the bill: Writing for the need of this bill, the
author states:
Neither statute nor regulation requires any RCFE to
carry liability insurance as a condition of licensure.
As a result, 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 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.
Additionally, liability insurance is a consumer
protection that all residents and families of
----------------------
<5> http://www.ssa.gov/pressoffice/factsheets/colafacts2014.pdf
AB 1523
Page D
residents in assisted living deserve. As most often
the case, only when there is a belief that a resident
living in assisted living was harmed through neglect,
negligence, or other criminal act does the resident or
family discover the facility does not have liability
insurance. With no guarantee of RCFE's maintaining
liability coverage, residents and their families will
continue to be at the mercy of uninsured facilities,
hoping that nothing goes wrong.
Additionally, according to the author, "Anecdotally, the range
of premiums appears to be $2,000 to $4,000 annually." However,
it is unclear whether this range of premiums is reflective of
the proposed $3 million minimum coverage. Further, it is
unclear how these additional costs will be borne by RCFEs, which
could ultimately be passed on to residents. This could place
additional financial burdens on seniors with limited resources,
and potentially reduce options for those who live on fixed
incomes, such as seniors whose only income is SSI/SSP.
Analysis Prepared by : Chris Reefe / HUM. S. / (916) 319-2089
FN: 0004107