BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        AB 601|
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                                   THIRD READING 


          Bill No:  AB 601
          Author:   Eggman (D), et al.
          Amended:  8/31/15 in Senate
          Vote:     21  

           SENATE HUMAN SERVICES COMMITTEE:  5-0, 6/23/15
           AYES:  McGuire, Berryhill, Hancock, Liu, Nguyen

           SENATE APPROPRIATIONS COMMITTEE:  6-1, 8/27/15
           AYES:  Lara, Bates, Beall, Hill, Leyva, Mendoza
           NOES:  Nielsen

           ASSEMBLY FLOOR:  66-7, 5/18/15 - See last page for vote

           SUBJECT:   Residential care facilities for the elderly:   
                     licensing and regulation


          SOURCE:    Author

          DIGEST:   This bill requires an applicant for licensure of a  
          residential care facility for the elderly (RCFE) to disclose  
          specified additional information related to other facilities  
          owned, managed or operated by the licensee or a parent  
          organization of the licensee, as well as information related to  
          individuals or entities holding a beneficial ownership interest  
          of 10 percent or more in the licensed facility. Additionally  
          requires licensees to disclose individuals or entities who have  
          control of the facility, as defined, and other information.  
          Further requires the California Department of Social Services  
          (CDSS) to cross-check all disclosed applicant information with  
          the California Department of Public Health (CDPH), as specified  
          and, to the extent the department's computer system can  
          accommodate the information, to post specified information on  
          its Internet website. Requires licensees to report any changes  








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          to the disclosed information within specified timeframes.

          ANALYSIS:   


          Existing law:


          1)Establishes the Residential Care Facilities for the Elderly  
            Act, which provides for CDSS to license and regulate RCFEs as  
            a separate category within the department's existing  
            residential care licensing structure. (HSC 1569 et seq.)


          2)Requires applicants for an RCFE license to submit a criminal  
            record clearance, employment history, character references,  
            evidence of certification, and disclosure of previous service  
            in other RCFEs, outpatient health clinics, health facilities  
            (including hospitals, skilled nursing facilities or  
            intermediate care facilities), or a community care facility,  
            among other requirements. (HSC 1569.15)


          3)Requires, if the licensee applicant is a firm, association,  
            organization, partnership, business trust, corporation, or  
            company, like evidence to be submitted regarding the members  
            or shareholders and for the person in charge of the facility.  
            (HSC 1569.15)


          This bill:


          1)Specifies that an applicant for an RCFE license who is a firm,  
            association, organization, partnership, business trust,  
            corporation, or company shall file evidence that individuals  
            or entities holding a beneficial ownership interest of 10  
            percent or more, and the person who has operational control of  
            the facility are of reputable and responsible character. 


          2)Provides that an applicant or licensee is not required to  








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            disclose the names of investors in a publicly traded company  
            or investment fund if those investors are silent investors who  
            do not have influence or control over operations of the  
            company, fund or facility.


          3)Requires applicants for an RCFE license to disclose specified  
            additional information including disclosure of others  
            facilities owned, managed or operated by the applicant or a  
            parent organization; persons or entities that control the  
            applicant; the relationships of persons or entities that are  
            part of a chain; and persons, organizations or entities that  
            own real property associated with facilities owned, managed or  
            operated by the applicant or parents organization; and  
            specified petitions for bankruptcy relief involving operating  
            or closure of a health, residential or community care and  
            other information.


          4)Requires CDSS to cross-check information pertaining to the  
            prior service of a person with operational control in another  
            RCFE or health related facility with the CDPH, if  
            electronically available.


          5)Provides that the required information shall be provided upon  
            initial application for licensure, that changes be updated  
            within 30 calendar days, except as specified.


          6)Permits the department, subsequent to licensure, to assess a  
            civil penalty of one thousand dollars for a material violation  
            of the above licensure disclosure requirements. 


          7)Provides that the department shall post specified information  
            on its Internet website including the licensee's name,  
            business address, and telephone number, the name of the owner  
            and any parent organization, the licensed capacity of the  
            facility, the capacity for nonambulatory residents, whether  
            the facility is permitted to accept residents receiving  
            hospice care, whether the facility has a special care unit or  








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            program for people with Alzheimer's disease, the name,  
            address, license number and licensing agency of other health,  
            residential or community care facilities owned, managed or  
            operated by the applicant or by any parent organization.


          8)Permits CDSS to prohibit any person from being a licensee,  
            owning a beneficial ownership interest of 10 percent or more  
            in a licensed facility, or being an administrator, officer,  
            member or manager of a licensee or entity controlling a  
            licensee under specified conditions.


          Background


          According to the author, there has been a marked increase in  
          corporate ownership of RCFEs. Facilities may be operated by one  
          business but owned by another. The author states that complex  
          ownership structures make it difficult for consumers to  
          determine who in fact is the owner and/or licensee and can lead  
          a consumer to unknowingly transfer their loved one from one  
          troubled facility to another without knowing the facilities are  
          part of the same chain.


          The author further states that current law does not require new  
          RCFE license applicants to disclose their history of operating  
          other licensed facilities. Therefore, CDSS is often unaware of  
          other facilities that may be owned and operated by the same  
          licensee. The author cites the example last year of Valley  
          Springs Manor in Castro Valley, where 19 RCFE residents were  
          abandoned by the owner and staff to the care of a part-time cook  
          and janitor. The owner had a history of hundreds of thousands of  
          dollars in fines owed to the federal and state licensing  
          agencies for deficiencies and citations when she owned four  
          California nursing homes. The author states that had CDSS known  
          of her prior regulatory history, her RCFE licenses would not  
          have been granted.  


          Additionally, the author states that consumers of RCFEs are  








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          currently only able to obtain very basic information online  
          about an RCFE, including the facility name, address, a contact  
          person, the facility's license status, and a district office  
          number that a consumer may call if they have a question about a  
          particular facility. However, the author states that a consumer  
          does not have access to more substantive public information that  
          may help them make a more informed choice when selecting a  
          facility. According to the author, the additional information  
          required to be disclosed to the CDSS and the public will  
          increase accountability and transparency, and allow the public  
          to make more informed decisions when choosing an RCFE facility  
          for a loved one.  


          Residential Care Facilities for the Elderly


          Within California's continuum of long term care, situated  
          between in-home care and skilled nursing facilities, is the  
          RCFE, also commonly called Assisted Living, Board and Care, or  
          Residential Care. There are approximately 8,000 Assisted Living,  
          Board and Care, and Continuing Care Retirement homes that are  
          licensed as RCFEs in California. These residences are designed  
          to provide homelike housing options to seniors and other adults  
          who need some help with activities of daily living, such as  
          cooking, bathing, or getting dressed, but otherwise do not need  
          continuous, 24-hour assistance or nursing care. Increasingly  
          residents are entering RCFEs with significant health needs  
          including diabetes, bedsores, or the need for oxygen tanks,  
          catheters or colostomies.


          Financial Structure


          More than 90 percent of RCFE licenses in California are held by  
          for-profit providers, and the majority of those facilities 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  
          (SSI/SSP) or Medicare, and fees can range from $2,500 to more  
          than $8,000 per month. Increasingly, complex corporate mergers  








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          and acquisitions have meant that many RCFEs are owned by  
          national corporate chains that control more than one facility.  
          Administrators employed by these chains may also oversee  
          multiple facilities. This development has led to regulatory  
          challenges since Community Care Licensing citations and other  
          licensing reports are facility-specific, and management problems  
          common to multiple RCFEs with the same owner may easily go  
          unnoticed.


          Licensee and administrator requirements


          California statute differentiates between facility licensees,  
          who often are the business owners and may be property owners,  
          and administrators, who are charged with overseeing the quality  
          of the day-to-day operations and are generally required to be  
          present at the facility during normal working hours.


          State law requires RCFE licensees to provide evidence of  
          "reputable and responsible character" including a criminal  
          background clearance, employment history and character  
          references. Licensees must document sufficient financial  
          resources to maintain the standard of care required by law, must  
          disclose any prior role as an administrator or owner of any  
          community care facility and any prior disciplinary action.  
          Licensees must receive a one-time department-approved  
          certification involving 40 hours of classroom instruction  
          covering relevant laws and regulations, staff management, the  
          needs of elderly residents, and other issues. Facility  
          administrators are also required to hold a department-approved  
          certificate, similar to the licensee certificate, which must be  
          renewed every two years. 


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          According to the Senate Appropriations Committee, this bill will  
          incur workload costs to CDSS, potentially in excess of $150,000  
          (General Fund), to cross-check information electronically  








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          against CDPH information and to compile and analyze the  
          additional information provided by all RCFE licensees.  
          Additionally, this bill will incur minor and absorbable workload  
          costs to post and update the RCFE information on the CDSS  
          website. Additionally, Senate Appropriations states there is  
          potential future cost pressure (General Fund) to update the  
          automation system to accommodate all of the specified RCFE  
          profile information and likely minor ongoing enforcement costs  
          (General Fund), offset to a degree by penalty revenue, to the  
          extent CDSS assesses civil penalties for material violations of  
          the provisions of this bill. 


          SUPPORT:   (Verified8/28/15)


          Asian Law Alliance 
          California Advocates for Nursing Home Reform
          California Alliance for Retired Americans
          California Commission on Aging
          California Elder Justice Coalition
          California Long-Term Care Ombudsman Association
          California Senior Legislature
          California State Retirees 
          Consumer Attorneys of California 
          Consumer Federation of California
          County of San Diego
          Disability Rights California
          Formation Capitol
          Jewish Family Service of Los Angeles
          National Association of Social Workers, California Chapter
          10 individuals 


          OPPOSITION:   (Verified8/28/15)


          None received

          ASSEMBLY FLOOR:  66-7, 5/18/15
          AYES:  Achadjian, Alejo, Baker, Bloom, Bonilla, Bonta, Brown,  
            Burke, Calderon, Campos, Chau, Chávez, Chiu, Chu, Cooley,  








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            Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier,  
            Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  
            Gomez, Gonzalez, Gordon, Gray, Hadley, Roger Hernández,  
            Holden, Irwin, Jones-Sawyer, Lackey, Levine, Linder, Lopez,  
            Low, Maienschein, McCarty, Medina, Mullin, Nazarian,  
            Obernolte, O'Donnell, Olsen, Perea, Quirk, Rendon,  
            Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark  
            Stone, Thurmond, Ting, Waldron, Weber, Wilk, Williams, Wood,  
            Atkins
          NOES:  Travis Allen, Beth Gaines, Grove, Harper, Mayes,  
            Patterson, Wagner
          NO VOTE RECORDED:  Bigelow, Brough, Chang, Jones, Kim, Mathis,  
            Melendez

          Prepared by:Sara Rogers / HUMAN S. / (916) 651-1524
          8/31/15 12:47:55


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