BILL ANALYSIS Ó
AB 601
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
601 (Eggman)
As Amended August 31, 2015
Majority vote
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|ASSEMBLY: |66-7 |(May 18, 2015) |SENATE: |39-0 |(September 2, |
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Original Committee Reference: HUM. S.
SUMMARY: Expands and further specifies licensure requirements
for Residential Care Facilities for the Elderly. Specifically,
this bill:
1)Defines "beneficial ownership interest" to mean an ownership
interest, as specified, in the profits of a residential care
facility for the elderly (RCFE) applicant or licensee or
through the possession of such an interest in other entities
that directly or indirectly hold an interest in the applicant
or licensee. Further, specifies the method for calculating
the percentage of beneficial ownership.
2)Defines "chain" to mean a group of two or more licensees that
are controlled, as specified, by the same persons or entities.
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3)Defines "control" to mean the ability to direct the operation
and management of the applicant or licensee, as specified.
4)Defines "parent organization" to mean an organization in
control of another organization either director or through one
or more intermediaries.
5)Specifies that any party applying for an RCFE license that is
a firm, or other entity, shall submit evidence affirming the
reputable and responsible character of any individuals or
entities holding a beneficial ownership interest of at least
10% and of the person holding operational control of the RCFE
in question, as specified. Further, exempts an applicant or
licensee from having to disclose the names of investors in a
publically traded company or investment fund if those
investors are silent investors, as specified.
6)Requires an applicant for an RCFE license to disclose
specified information including, but not limited to, previous
facility ownership, management, and/or operation.
7)Expands required disclosure of an RCFE license applicant's
prior and present administrative service in or ownership of
other facilities, as specified. Further, specifies that such
facilities can be located in California or any other state and
that disclosure must encompass the past 10 years, as
specified.
8)Requires an RCFE license applicant to disclose the applicant's
chief executive officer's, general partner's, or like party's
prior and present administrative service in or ownership of
any health or care facility within the past 10 years, as
specified.
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9)Expands and specifies required disclosure of an RCFE license
applicant's licensing history to include actions taken in
California or any other state, and to include any revocation,
suspension, probation, exclusion order, or similar
administrative disciplinary action filed and sustained or in
the process of being adjudicated against a facility associated
with applicant or the applicant's chief executive officer,
general partner, or like party, within the past 10 years, as
specified.
10)Requires an RCFE applicant to disclose any petition for
bankruptcy relief including operation or closure of a care
facility in California or any other state, along with
specified information, including information related to any
discharge or discharge denial, filed within five years of the
date of application.
11)Requires an RCFE license applicant to submit evidence of
right of possession of the facility at the time the license is
granted, as specified.
12)Requires the Department of Social Services (DSS) to
cross-check the RCFE license applicant's information regarding
facility ownership, if electronically available and as
specified, with the Department of Public Health (DPH).
13)Removes the requirement that failure of an RCFE license
applicant to cooperate with DSS in completion of the
application, as specified, result in denial of the application
and instead makes such denial permissive.
14)Requires RCFE license application information, as specified,
to be provided to DSS upon initial application and further
requires that any changes in such information be provided to
DSS within 30 calendar days of that change, unless a shorter
timeframe is required by the department. Further specifies
that a licensee of multiple facilities may provide as single
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notice of change, as specified.
15)Permits information pertaining to facilities operated in
other states to be updated annually, except as specified.
16)Requires an applicant or licensee to maintain an email
address of record with the department, as specified.
17)Permits DSS to deny an RCFE license application, and allows
it to subsequently revoke an RCFE license, if the applicant
knowingly withheld information or made a false statement of
fact regarding application information.
18)Permits DSS to deny an RCFE application or subsequently
revoke an RCFE license if the applicant did not disclose
administrative disciplinary actions, as specified, on the
application.
19)Permits DSS to, subsequent to licensure, assess a civil
penalty of $1,000 for a material violation related to
provisions of this bill.
20)Includes protections for co-applicants that are not deemed to
be the subject of licensure concern, as specified.
21)Requires DSS, to the extent that its computer system can
accommodate additional RCFE information, to post identifying
and descriptive information, as specified, for licensed
providers.
22)States that noncompliance by the chief executive officer,
general partner, or like party with RCFE licensure
requirements and implementing regulations, as specified, may
be the basis for license decisions against the owner.
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The Senate amendments:
1)Define "beneficial ownership interest," "chain," "control,"
and "parent organization."
2)Exempt an applicant or licensee from having to disclose the
names of investors in a publically traded company or
investment fund if those investors are silent investors, as
specified.
3)Expand the information an RCFE applicant must disclose
regarding previous facility ownership, management, and/or
operation to include, among other things, a diagram, as
specified, indicating the relationship between the applicant
and the persons or entities that a part of a chain to which
the applicant belongs, if applicable.
4)Require an RCFE applicant to disclose any petition for
bankruptcy relief including operation or closure of a care
facility in California or any other state, along with
specified information, including information related to any
discharge or discharge denial, filed within five years of the
date of application.
5)Restrict the requirement that DSS cross-check a RCFE license
applicant's information regarding facility ownership with DPH
to electronically available information.
6)Require any change in applicant information to be provided to
the DSS in a timeframe shorter than 30 days from that change
if so required by the department.
7)Specify that a licensee of multiple facilities may provide as
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single notice of change in information, as specified.
8)Permit information pertaining to facilities operated in other
states to be updated annually, except as specified.
9)Require an applicant or licensee to maintain an email address
of record with the department, as specified.
10)Remove the requirement that DSS deny an RCFE application if
the applicant knowingly made a false statement of fact, and
instead permit DSS to deny an application under such
circumstances. Further, permit DSS to deny or revoke a
license application if the applicant knowingly withheld
information.
11)Permit DSS to, subsequent to licensure, assess a civil
penalty of $1,000 for a material violation related to
provisions of this bill.
12)Include protections for coapplicants that are not deemed to
be the subject of licensure concern, as specified.
13)Make conforming technical amendments.
FISCAL EFFECT: According to the Senate Appropriations
Committee, this bill may result in the following costs:
1)Increase in DSS workload, potentially in excess of $150,000
(General Fund), to cross-check information electronically
against DPH information and to compile and analyze the
additional information provided by all RCFE licensees.
Ongoing workload to post and update the RCFE information on
the DSS website is estimated to be minor and absorbable.
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2)Potential future cost pressure (General Fund) to update the
automation system to accommodate all of the specified RCFE
profile information.
3)Likely minor ongoing enforcement costs (General Fund), offset
to a degree by penalty revenue, to the extent DSS assesses
civil penalties for material violations of the provisions of
this measure.
COMMENTS:
Residential Care Facilities for the Elderly: RCFEs, sometimes
referred to as "assisted living facilities," provide housing,
care, supervision, and assistance with activities of daily
living to individual ages 60 and older, as well as individuals
under the age of 60 with compatible needs. RCFEs differ from
Skilled Nursing Facilities (SNFs) in that RCFEs are considered a
housing alternative, while SNFs are considered a medical
facility; however, incidental medical services may be provided
in RCFEs under special care plans. RCFE residents require
varying levels of care and services, and RCFEs can vary widely
in the services offered. Costs can range widely as well; in
California, the monthly cost for a one-bedroom single occupancy
unit can range from $700 to $10,650, with the median monthly
cost at $3,750. As of June 30, 2014, there were 7,474 RCFEs
licensed in California, with the capacity to serve 146,955
residents. RCFEs can range in size from six beds to over 100
beds, and are licensed by DSS's Community Care Licensing
Division (CCLD).
Health and safety concerns in RCFEs: Events in recent years
have drawn increased public attention to health and safety
issues in RCFEs. For example, a 2013 series by ProPublica and
Frontline profiled experiences with Emeritus Corp., an assisted
living company based in Seattle that, at the time, ran
approximately 500 facilities in 45 states. The series
chronicled persistent understaffing, substandard care, and a
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lack of required assessments.
Need for this bill: The author states that, "Currently, if
consumers want detailed information about an RCFE, they must
drive to one of the 13 regional or district offices located
throughout the state. Having to drive to obtain public
information is not in the best interest of consumers because
they may live hours away from a regional or district office or
may not be able to drive at all. Additionally, complex
ownership structures of RCFEs 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.
[This bill] will increase accountability and transparency of
RCFE licensees, as well as make facility information more
accessible to the public so consumers can make more informed
decisions when choosing a facility for a loved one."
Analysis Prepared by:Daphne Hunt / HUM. S. / (916) 319-2089 FN:
0001954