Amended in Assembly April 6, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 927

Introduced by Assembly Member McCarty

begin delete (Coauthor: end delete begin insert (Coauthors: end insert Assembly begin delete Member end delete begin insert Members Brown and end insert Rodriguez)

February 26, 2015

An act to amend Sections 1265, 1265.3, 1267.5, and 1422.5 of the Health and Safety Code, relating to health facilities.

LEGISLATIVE COUNSEL’S DIGEST

AB 927, as amended, McCarty. Health facilities: nursing homes.

Existing law provides for the licensure and regulation of health facilities, as defined. A violation of those provisions is a crime. Existing law requires any person or government entity desiring a license for a health facility, approval for a special service, or approval to manage a health facility currently licensed as a general acute care hospital, acute psychiatric hospital, skilled nursing facility, intermediate care facility, or special hospital, that has not filed an application for a license to operate that facility, to file with the department a verified application containing specific information.

This bill would require the denial of an application under those provisions if the applicant fails to provide the requisite information or provide it in the form requested.

Existing law requires each applicant for a license to operate a skilled nursing facility or intermediate care facility to make certain disclosures regarding corporate governance and ownership to the State Department of Public Health. Existing law prohibits certain persons, as defined, from governing or owning a beneficial interest of 5% or more of a skilled nursing facility or intermediate care facility, as specified, without approval of the department.

This bill would expand those disclosure requirements and the provisions that prohibit certain persons from governing or owning a beneficial interest in a skilled nursing facility or intermediate care facility, as specified. The bill would establish provisions for the denial of an application under circumstances in which a person named in an application has governed or owned a facility that has violated the law during a certain timeframe, as specified.

Existing law requires the department to implement a consumer information service system regarding long-term care facilities.

This bill would revise the information the system is required to contain and would require it to be available on the Internet by March 1, 2016.

Because this bill would require additional disclosures, of which a failure to disclose or a false disclosure would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

This act shall be known as the Nursing Home
Ownership Disclosure Act of 2015.

SEC. 2.  

Section 1265 of the Health and Safety Code is amended
to read:

1265.  

(a) Any person, political subdivision of the state, or
governmental agency desiring a license for a health facility,
approval for a special service under this chapter, or approval to
manage a health facility currently licensed as a health facility, as
defined in subdivision (a), (b), (c), (d), or (f) of Section 1250, that
has not filed an application for a license to operate that facility
shall file with the department a verified application on forms
prescribed and furnished by the department, containing all of the
following:

(1) The name of the applicant and, if an individual, whether the
applicant has attained the age of 18 years.

(2) The type of facility or health facility.

(3) The location thereof.

(4) The name of the person in charge thereof.

(5) Evidence satisfactory to the department that the applicant
is of reputable and responsible character. If the applicant is a firm,
association, organization, partnership, business trust, corporation,
or company, like evidence shall be submitted as to the members
or shareholders thereof, and the person in charge of the health
facility for which application for license is made. If the applicant
is a political subdivision of the state or other governmental agency,
like evidence shall be submitted as to the person in charge of the
health facility for which application for license is made.

(6) Evidence satisfactory to the department of the ability of the
applicant to comply with this chapter and of rules and regulations
promulgated under this chapter by the department.

(7) Evidence satisfactory to the department that the applicant
to operate a skilled nursing facility or intermediate care facility
possesses financial resources sufficient to operate the facility for
a period of at least 45 days. A management company shall not be
required to submit this information.

(8) Each applicant for a license to operate a skilled nursing
facility or intermediate care facility shall disclose to the department
evidence of the right to possession of the facility at the time the
application will be granted, which may be satisfied by the
submission of a copy of applicable portions of a lease agreement
or deed of trust. The names and addresses of any persons or
organizations listed as owner of record in the real estate, including
the buildings and the grounds appurtenant to the buildings, shall
be disclosed to the department.

(9) Any other information as may be required by the department
for the proper administration and enforcement of this chapter.

(10) Upon submission of an application to the department by
an intermediate care facility/developmentally disabled habilitative
or an intermediate care facility/developmentally disabled-nursing,
the application shall include a statement of need signed by the
chairperson of the area board pursuant to Chapter 4 (commencing
with Section 4570) of Division 4.5 of the Welfare and Institutions
Code. In the event the area board has not provided the statement
of need within 30 days of receipt of the request from the applicant,
the department may process the application for license without the
statement.

(b) The information required pursuant to this section, other than
individuals’ social security numbers, shall be made available to
the public upon request, and shall be included in the department’s
public file regarding the facility.

(c) With respect to a facility licensed as a health facility, as
defined in subdivision (a), (b), begin delete (c), (d), end delete or (f) of Section 1250, for
purposes of this section, “manage” means to assume operational
control of the facility.

(d) Failure of an applicant to cooperate with the licensing agency
in the completion of an application pursuant to this section shall
result in the denial of the application. “Failure of an applicant to
cooperate” means that the information required pursuant to this
chapter and by regulations of the department has not been provided,
or has not been provided in the form requested by the licensing
agency, or both.

SEC. 3.  

Section 1265.3 of the Health and Safety Code is
amended to read:

1265.3.  

(a) For any individual or entity that seeks approval to
operate or manage a health facility licensed pursuant to subdivision
(a), (b), (c), (d), or (f) of Section 1250 and is subject to Section
1265, the department shall consider the following:

(1) To determine whether the applicant is of reputable and
responsible character, the department shall consider any available
information that the applicant has demonstrated a pattern and
practice of violations of state or federal laws and regulations. The
department shall give particular consideration to those violations
that affect the applicant’s ability to deliver safe patient or resident
care.

(2) To determine whether the applicant has the ability to comply
with this chapter and the rules and regulations adopted under this
chapter, the department shall consider evidence that shall include
all of the following:

(A) If any, prior history of operating in this state any other
facility licensed pursuant to Section 1250, and the applicant’s
history of substantial compliance with the requirements imposed
under that license, applicable federal laws and regulations, and
requirements governing the operators of those facilities.

(B) If any, prior history of operating in any other state any
facility authorized to receive Medicare Program reimbursement
or Medicaid Program reimbursement, and the applicant’s history
of substantial compliance with that state’s requirements, and
applicable federal laws, regulations, and requirements.

(C) If any, prior history of providing health services as a licensed
health professional or an individual or entity contracting with a
health care service plan or insurer, and the applicant’s history of
substantial compliance with state requirements, and applicable
federal begin delete law, end delete begin insert laws, end insert regulations, and requirements.

(b) The department may also require the entity described in
subdivision (a) to furnish other information or documents for the
proper administration and enforcement of the licensing laws.

SEC. 4.  

Section 1267.5 of the Health and Safety Code is
amended to read:

1267.5.  

(a) (1) Each applicant for a license to operate a skilled
nursing facility or intermediate care facility shall disclose to the
state department the name and business address of each general
partner if the applicant is a partnership, or each director and officer
if the applicant is a corporation, and each person having a beneficial
ownership interest of 5 percent or more in the applicant corporation
or partnership.

(2) If any person described in paragraph (1) has served or
currently serves as an administrator, general partner, trustee or
trust applicant, sole proprietor of any applicant or licensee who is
a sole proprietorship, executor, or corporate officer or director of,
or has held a direct or indirect beneficial ownership interest of 5
percent or more in, any other skilled nursing facility or intermediate
care facility in this state or any other state, in any community care
facility licensed pursuant to Chapter 3 (commencing with Section
1500), or in any residential care facility for the elderly licensed
pursuant to Chapter 3.2 (commencing with Section 1569), the
applicant shall disclose the relationship to the state department,
including the name and current or last address of the health facility,
community care facility, or residential care facility for the elderly,
and the date the relationship commenced and, if applicable, the
date it was terminated.

(3) (A) If the facility is operated by, or proposed to be operated
in whole or part under, a management contract, the names and
addresses of any person or organization, or both, having an
ownership or control interest of 5 percent or more in the
management company shall be disclosed to the state department.
This provision shall not apply if the management company has
submitted an application for licensure with the state department
and has complied with paragraph (1).

(B) If the management company is a subsidiary of one or more
other organizations, the information shall include the names and
addresses of the parent organizations of the management company
and the names and addresses of any officer or director of the parent
organizations. The failure to comply with this subparagraph may
result in action to revoke or deny a license. However, once the
information that is required under this subparagraph is provided,
the action to revoke the license shall terminate.

(C) If the management company or parent organizations of the
management company manage or previously managed any other
skilled nursing facility or intermediate care facility in this state or
any other state, any community care facility licensed pursuant to
Chapter 3 (commencing with Section 1500), or any residential
care facility for the elderly licensed pursuant to Chapter 3.2
(commencing with Section 1569), the applicant shall disclose the
name and current or last address of the health facility, community
care facility, or residential care facility for the elderly, and the date
the management commenced and, if applicable, the date it was
terminated.

(4) (A) If the applicant or licensee is a subsidiary of one or
more other organizations, the information shall include the names
and addresses of the parent organizations of the subsidiary and the
names and addresses of any officer or director of the parent
organizations.

(B) If the parent organizations of the subsidiary or applicant
own or manage, or previously owned or managed, any other skilled
nursing facility or intermediate care facility in this state or any
other state, any community care facility licensed pursuant to
Chapter 3 (commencing with Section 1500), or any residential
care facility for the elderly licensed pursuant to Chapter 3.2
(commencing with Section 1569), the applicant shall disclose the
relationship to the state department, including the name and current
or last address of the health facility, community care facility, or
residential care facility for the elderly, and the date the relationship
commenced and, if applicable, the date it was terminated.

(5) The applicant shall disclose the history of compliance and
any history of noncompliance with any applicable state or federal
law or regulation for each facility described in paragraph (2),
subparagraph (C) of paragraph (3), and subparagraph (B) of
paragraph (4) during the period in which any of the following
apply:

(A) Any person described in paragraph (1) had a relationship
to the facility.

(B) Any management company described in paragraph (3)
managed the facility.

(C) Any parent organizations described in paragraph (4) had a
relationship to the facility.

(6) The information required by this subdivision shall be
provided to the state department upon initial application for
licensure, and any change in the information shall be provided to
the state department within 30 calendar days of that change.

(7) Except as provided in subparagraph (B) of paragraph (3),
the failure to comply with this section may result in action to
revoke or deny a license.

(8) The information required by this section shall be made
available to the public upon request, shall be included in the public
file of the facility, and by July 1, 2002, shall be included in the
department’s automated certification licensing administration
information management system.

(b) (1) On and after January 1, 1990, no person may acquire a
direct or indirect beneficial interest of 5 percent or more in any
corporation, partnership, or limited liability company licensed to
operate a skilled nursing facility or intermediate care facility, in
any parent organizations of a corporation, partnership, or limited
liability company licensed to operate a skilled nursing facility or
intermediate care facility, in any management company under
contract with a licensee of a skilled nursing facility or intermediate
care facility, or in any parent organizations of a management
company under contract with a licensee of a skilled nursing facility
or intermediate care facility, nor may any person become an officer
or director of, or general partner in, a corporation, partnership,
limited liability company, or management company of this type
without the prior written approval of the state department. Each
application for departmental approval pursuant to this subdivision
shall include the information specified in subdivision (a) as regards
the person for whom the application is made.

(2) The state department shall approve or disapprove the
application within 30 days after receipt thereof, unless the state
department, with just cause, extends the application review period
beyond 30 days.

(c) The state department shall deny approval of a license
application or of an application for approval under subdivision (b)
if a person named in the application, as required by this section,
was an officer, director, general partner, or owner of a 5-percent
or greater direct or indirect beneficial interest in a licensee or in
any parent organizations of a licensee of, or in a management
company under contract with a licensee of, a skilled nursing
facility, intermediate care facility, community care facility, or
residential care facility for the elderly at a time during the
seven-year period prior to the application in which that facility
committed one or more violations of law or regulatory requirements
that resulted in any of the following:

(1) Immediate jeopardy to the health, safety, or welfare of one
or more residents.

(2) Suspension or revocation of a facility’s license.

(3) Termination of a facility’s Medicare or Medi-Cal
certification.

(4) Appointment of a court-ordered receiver pursuant to Section
1327.

(d) The state department may deny approval of a license
application or of an application for approval under subdivision (b)
if a person named in the application, as required by this section,
was an officer, director, general partner, or owner of a 5-percent
or greater beneficial interest in a licensee or in any parent
organizations of a licensee of, or in a management company under
contract with a licensee of, a skilled nursing facility, intermediate
care facility, community care facility, or residential care facility
for the elderly at a time during the seven-year period prior to the
application in which any of the following occurred:

(1) The department revoked, suspended, or denied a nursing
home administrator’s license held or sought by the person.

(2) The State Department of Social Services revoked, suspended,
or denied a residential care facility for the elderly administrator’s
certificate held or sought by the person pursuant to Chapter 3.2
(commencing with Section 1569).

(3) The person prevented or attempted to impede the work of
any authorized representative of the department.

(4) The person failed to demonstrate competence in operating
a facility.

(5) The person failed to report abuse of residents in accordance
with any state or federal requirement.

(6) The facility committed one or more violations of law or
regulatory requirements that resulted in any of the following:

(A) A settlement agreement to resolve proceedings to suspend,
deny, or revoke the license of a facility or to terminate a facility’s
Medicare or Medi-Cal certification.

(B) Appointment of a temporary manager pursuant to Section
1325.5.

(C) One or more class “A” or class “AA” citations pursuant to
Section 1424 or 1424.5.

(D) A court order or judgment granting damages or any form
of equitable relief, including an injunction, resulting from an action
filed by the Attorney General.

(e) No application shall be denied pursuant to this section until
the state department first (1) provides the applicant with notice in
writing of grounds for the proposed denial of application, and (2)
affords the applicant an opportunity to submit additional
documentary evidence in opposition to the proposed denial.

(f) Nothing in this section shall cause any individual to be
personally liable for any civil penalty assessed pursuant to Chapter
2.4 (commencing with Section 1417) or create any new criminal
or civil liability contrary to general laws limiting that liability.

(g) This section shall not apply to a bank, trust company,
financial institution, title insurer, controlled escrow company, or
underwritten title company to which a license is issued in a
fiduciary capacity.

(h) This section shall not apply to the directors of a nonprofit
corporation exempt from taxation under Section 23701d of the
Revenue and Taxation Code that operates a skilled nursing facility
or intermediate care facility in conjunction with a licensed
residential facility, where the directors serve without financial
compensation and are not compensated by the nonprofit corporation
in any other capacity.

(i) For purposes of this section:

(1) “Beneficial interest” means the interest held by any person,
including a private equity firm and real estate investment trust,
that acquires an interest in any entity, including, but not limited
to, any firm, association, organization, partnership, business trust,
investment trust, corporation, or limited liability begin delete corporation, end delete
begin insert company, end insert that is licensed to operate a facility, as defined in
subdivision (c) or (d) of Section 1250, by assuming that entity’s
debt.

(2) “Indirect beneficial interest” means the begin delete internet end delete begin insert interest end insert held
by any person, including a private equity firm and real estate
investment trust, that provides capital or assets to a facility, as
defined in subdivision (c) or (d) of Section 1250, in exchange for
a share of 5 percent or more of the facility’s gross income or
profits.

(3) “Management company” means any company or entity that
has assumed operational or managerial control over the facility or
who directly or indirectly conducts the day-to-day operations of
the facility either under contract or through some other
arrangement.

(4) “Person” has the same meaning as specified in Section 19.

SEC. 5.  

Section 1422.5 of the Health and Safety Code is
amended to read:

1422.5.  

(a)  The department shall develop and establish a
statewide consumer information service system to provide current
and accurate information to the general public and consumers
regarding long-term care facilities in their communities. The
consumer information service system shall include, but need not
be limited to, all of the following elements:

(1) An online information system available on the Internet
through an accessible Internet Web site. The Internet Web site
created pursuant to this paragraph shall be operational and made
available to the public by March 1, 2016, and shall include the
information elements specified in paragraph (2).

(2) Long-term health care facility profiles, with data on services
provided, a history of all deficiencies, citations, and complaints
for the last three full survey cycles, and current ownership
information. The profile for each facility shall include, but not be
limited to, all of the following:

(A) The name, address, and telephone number of the facility.

(B) The name of the current administrator, director of nursing,
and medical director.

(C) Current and accurate ownership information pursuant to
Sections 1265, 1267.5, 1599.64, and 1599.645, including, but not
limited to, all of the following:

(i) Whether the facility is a for-profit or not-for-profit provider.

(ii) The name, address, and telephone number of the licensee.

(iii) The name and contact information of a single entity that is
responsible for all aspects of patient care and the operation of the
facility.

(iv) Whether the facility is part of a multifacility organization
and, if so, the name, address, and telephone number of the
organization and, if applicable, of any parent organizations.

(v) Whether the facility is operated by a management company
and, if so, the name, address, and telephone number of the
management company and, if applicable, of any parent
organizations of the management company.

(vi) The names and addresses of each person who is an officer
or director of the licensee, parent organizations, and management
company, if applicable.

(vii) The names and addresses of any person or organization,
or both, having an ownership or control interest of 5 percent or
more in the licensee, parent organizations, and management
company, if applicable.

(viii) The names and addresses of all long-term health care
facilities owned, leased, managed, or operated by any person,
corporation, management company, parent organization, or other
entity described in clauses (ii) to (vii), inclusive.

(ix) The names and addresses of the property owners.

(D) The number of licensed beds in the facility.

(E) Whether the facility accepts Medicare or Medi-Cal patients.

(F) Whether the facility has filed a notice of intent to withdraw
from the Medi-Cal program, and the date that the notice of intent
to withdraw was filed with the department.

(G) Whether the facility has a special care unit or program for
people with Alzheimer’s disease and other dementias, and whether
the facility participates in the voluntary disclosure program for
special care units.

(H) Information regarding all complaints, along with any
outcome, including, but not limited to, the date of the complaint,
the nature of the complaint, the date the complaint was investigated,
the action taken, and the date of the action taken.

(I) Information describing all state and federal deficiencies
issued to the facility, including, but not limited to, the date of the
deficiency, the nature of the deficiency, the scope and severity of
the deficiency, and a statement that the facility’s plan of correction
is available upon request through the department’s district offices.

(J) Information describing all state citations assessed, including,
but not limited to, the date of the citation, the nature of the citation,
the class of the citation, the amount of the penalty assessed, and
the status of the citation.

(K) Updated information, on a regular and timely basis,
regarding any appeal resolution pertaining to a citation or
complaint.

(L) Information describing state enforcement actions imposed,
including, but not limited to, license suspensions, revocations, and
the appointment of temporary managers and receiverships.

(M) Information describing federal enforcement sanctions
imposed, including, but not limited to, any denial of payment,
temporary management, termination, or any civil monetary penalty
imposed.

(N) Information on compliance with staffing ratio requirements.

(O) Any information or data the department deems beneficial
to the public and consumers.

(b) It is the intent of the Legislature that the department, in
developing and establishing the system pursuant to subdivision
(a), maximize the use of available federal funds.

(c) In implementing this section, the department shall ensure
the confidentiality of personal and identifying information of
residents and employees and shall not disclose this information
through the consumer information service system developed
pursuant to this section.

(d) The department shall make current written copies of the
long-term health care facility profiles available to the public
through its district offices.

SEC. 6.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.