Amended in Assembly January 4, 2016

Amended in Assembly April 6, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 927


Introduced by Assembly Member McCarty

(Coauthors: Assembly Members Brown and 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 specifiedbegin insert, and would require the department to investigate whether an applicant has been subject to professional disciplineend insert.

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,begin delete 2016end deletebegin insert 2017end insert.

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:

P2    1

SECTION 1.  

This act shall be known as the Nursing Home
2Ownership Disclosure Act ofbegin delete 2015.end deletebegin insert 2016end insertbegin insert.end insert

3

SEC. 2.  

Section 1265 of the Health and Safety Code is amended
4to read:

5

1265.  

(a) Any person, political subdivision of the state, or
6governmental agency desiring a license for a health facility,
7approval for a special service under this chapter, or approval to
8manage a health facility currently licensed as a health facility, as
9defined in subdivision (a), (b), (c), (d), or (f) of Section 1250, that
10has not filed an application for a license to operate that facility
P3    1shall file with the department a verified application on forms
2prescribed and furnished by the department, containing all of the
3following:

4(1) The name of the applicant and, if an individual, whether the
5applicant has attained the age of 18 years.

6(2) The type of facility or health facility.

7(3) The location thereof.

8(4) The name of the person in charge thereof.

9(5) Evidence satisfactory to the department that the applicant
10is of reputable and responsible character. If the applicant is a firm,
11association, organization, partnership, business trust, corporation,
12or company, like evidence shall be submitted as to the members
13or shareholders thereof, and the person in charge of the health
14facility for which application for license is made. If the applicant
15is a political subdivision of the state or other governmental agency,
16like evidence shall be submitted as to the person in charge of the
17health facility for which application for license is made.

18(6) Evidence satisfactory to the department of the ability of the
19applicant to comply with this chapter and of rules and regulations
20promulgated under this chapter by the department.

21(7) Evidence satisfactory to the department that the applicant
22to operate a skilled nursing facility or intermediate care facility
23possesses financial resources sufficient to operate the facility for
24a period of at least 45 days. A management company shall not be
25required to submit this information.

26(8) Each applicant for a license to operate a skilled nursing
27facility or intermediate care facility shall disclose to the department
28evidence of the right to possession of the facility at the time the
29 application will be granted, which may be satisfied by the
30submission of a copy of applicable portions of a lease agreement
31or deed of trust. The names and addresses of any persons or
32organizations listed as owner of record in the real estate, including
33the buildings and the grounds appurtenant to the buildings, shall
34be disclosed to the department.

35(9) Any other information as may be required by the department
36for the proper administration and enforcement of this chapter.

37(10) Upon submission of an application to the department by
38an intermediate care facility/developmentally disabled habilitative
39or an intermediate care facility/developmentally disabled-nursing,
40the application shall include a statement of need signed by the
P4    1chairperson of the area board pursuant to Chapter 4 (commencing
2with Section 4570) of Division 4.5 of the Welfare and Institutions
3Code. In the event the area board has not provided the statement
4of need within 30 days of receipt of the request from the applicant,
5the department may process the application for license without the
6statement.

7(b) The information required pursuant to this section, other than
8individuals’ social security numbers, shall be made available to
9the public upon request, and shall be included in the department’s
10public file regarding the facility.

11(c) With respect to a facility licensed as a health facility, as
12defined in subdivision (a), (b), or (f) of Section 1250, for purposes
13of this section, “manage” means to assume operational control of
14the facility.

15(d) Failure of an applicant to cooperate with the licensing agency
16in the completion of an application pursuant to this section shall
17result in the denial of the application. “Failure of an applicant to
18cooperate” means that the information required pursuant to this
19chapter and by regulations of the department has not been provided,
20or has not been provided in the form requested by the licensing
21agency, or both.

22

SEC. 3.  

Section 1265.3 of the Health and Safety Code is
23amended to read:

24

1265.3.  

(a) For any individual or entity that seeks approval to
25operate or manage a health facility licensed pursuant to subdivision
26(a), (b), (c), (d), or (f) of Section 1250 and is subject to Section
271265, the department shall consider the following:

28(1) To determine whether the applicant is of reputable and
29responsible character, the department shall consider any available
30information that the applicant has demonstrated a pattern and
31practice of violations of state or federal laws and regulations. The
32department shall give particular consideration to those violations
33that affect the applicant’s ability to deliver safe patient or resident
34care.

35(2) To determine whether the applicant has the ability to comply
36with this chapter and the rules and regulations adopted under this
37chapter, the department shall consider evidence that shall include
38all of the following:

39(A) If any, prior history of operating in this state any other
40facility licensed pursuant to Section 1250, and the applicant’s
P5    1history of substantial compliance with the requirements imposed
2under that license, applicable federal laws and regulations, and
3requirements governing the operators of those facilities.

4(B) If any, prior history of operating in any other state any
5facility authorized to receive Medicare Program reimbursement
6or Medicaid Program reimbursement, and the applicant’s history
7of substantial compliance with that state’s requirements, and
8applicable federal laws, regulations, and requirements.

9(C) If any, prior history of providing health services as a licensed
10health professional or an individual or entity contracting with a
11health care service plan or insurer, and the applicant’s history of
12substantial compliance with state requirements, and applicable
13federal laws, regulations, and requirements.

14(b) The department may also require the entity described in
15subdivision (a) to furnish other information or documents for the
16proper administration and enforcement of the licensing laws.

17

SEC. 4.  

Section 1267.5 of the Health and Safety Code is
18amended to read:

19

1267.5.  

(a) (1) Each applicant for a license to operate a skilled
20nursing facility or intermediate care facility shall disclose to the
21state department the name and business address of each general
22partner if the applicant is a partnership, or each director and officer
23if the applicant is a corporation, and each person having a beneficial
24ownership interest of 5 percent or more in the applicant corporation
25or partnership.

26(2) If any person described in paragraph (1) has served or
27currently serves as an administrator, general partner, trustee or
28trust applicant, sole proprietor of any applicant or licensee who is
29a sole proprietorship, executor, or corporate officer or director of,
30or has held a direct or indirect beneficial ownership interest of 5
31percent or more in, any other skilled nursing facility or intermediate
32care facility in this state or any other state, in any community care
33facility licensed pursuant to Chapter 3 (commencing with Section
341500), or in any residential care facility for the elderly licensed
35pursuant to Chapter 3.2 (commencing with Section 1569), the
36applicant shall disclose the relationship to the state department,
37including the name and current or last address of the health facility,
38community care facility, or residential care facility for the elderly,
39and the date the relationship commenced and, if applicable, the
40date it was terminated.

P6    1(3) (A) If the facility is operated by, or proposed to be operated
2in whole or part under, a management contract, the names and
3addresses of any person or organization, or both, having an
4ownership or control interest of 5 percent or more in the
5management company shall be disclosed to the state department.
6This provision shall not apply if the management company has
7submitted an application for licensure with the state department
8and has complied with paragraph (1).

9(B) If the management company is a subsidiary of one or more
10other organizations, the information shall include the names and
11addresses of the parent organizations of the management company
12and the names and addresses of any officer or director of the parent
13organizations. The failure to comply with this subparagraph may
14result in action to revoke or deny a license. However, once the
15information that is required under this subparagraph is provided,
16the action to revoke the license shall terminate.

17(C) If the management company or parent organizations of the
18management company manage or previously managed any other
19skilled nursing facility or intermediate care facility in this state or
20any other state, any community care facility licensed pursuant to
21Chapter 3 (commencing with Section 1500), or any residential
22care facility for the elderly licensed pursuant to Chapter 3.2
23(commencing with Section 1569), the applicant shall disclose the
24name and current or last address of the health facility, community
25care facility, or residential care facility for the elderly, and the date
26the management commenced and, if applicable, the date it was
27terminated.

28(4) (A) If the applicant or licensee is a subsidiary of one or
29more other organizations, the information shall include the names
30and addresses of the parent organizations of the subsidiary and the
31names and addresses of any officer or director of the parent
32organizations.

33(B) If the parent organizations of the subsidiary or applicant
34own or manage, or previously owned or managed, any other skilled
35nursing facility or intermediate care facility in this state or any
36other state, any community care facility licensed pursuant to
37Chapter 3 (commencing with Section 1500), or any residential
38care facility for the elderly licensed pursuant to Chapter 3.2
39(commencing with Section 1569), the applicant shall disclose the
40relationship to the state department, including the name and current
P7    1or last address of the health facility, community care facility, or
2residential care facility for the elderly, and the date the relationship
3 commenced and, if applicable, the date it was terminated.

begin insert

4(C) If the information provided by the applicant indicates that
5the applicant is a professional licensed by the State of California,
6the department shall contact the appropriate licensing agency to
7obtain information about disciplinary actions taken against the
8licensee and to confirm that the applicant is a licensee in good
9standing.

end insert

10(5) The applicant shall disclose the history of compliance and
11any history of noncompliance with any applicable state or federal
12law or regulation for each facility described in paragraph (2),
13subparagraph (C) of paragraph (3), and subparagraph (B) of
14paragraph (4) during the period in which any of the following
15apply:

16(A) Any person described in paragraph (1) had a relationship
17to the facility.

18(B) Any management company described in paragraph (3)
19managed the facility.

20(C) Any parent organizations described in paragraph (4) had a
21relationship to the facility.

begin insert

22(D) This paragraph does not apply to applicants that are
23currently licensed as a health facility, as defined in subdivision
24(a), (b), or (f) of Section 1250.

end insert

25(6) The information required by this subdivision shall be
26provided to the state department upon initial application for
27licensure, and any change in the information shall be provided to
28the state department within 30 calendar days of that change.

29(7) Except as provided in subparagraph (B) of paragraph (3),
30the failure to comply with this section may result in action to
31revoke or deny a license.

32(8) The information required by this section shall be made
33available to the public upon request, shall be included in the public
34file of the facility, and by July 1, 2002, shall be included in the
35department’s automated certification licensing administration
36information management system.

37(b) (1) On and after January 1, 1990, no person may acquire a
38direct or indirect beneficial interest of 5 percent or more in any
39corporation, partnership, or limited liability company licensed to
40operate a skilled nursing facility or intermediate care facility, in
P8    1any parent organizations of a corporation, partnership, or limited
2liability company licensed to operate a skilled nursing facility or
3intermediate care facility, in any management company under
4contract with a licensee of a skilled nursing facility or intermediate
5care facility, or in any parent organizations of a management
6company under contract with a licensee of a skilled nursing facility
7or intermediate care facility, nor may any person become an officer
8or director of, or general partner in, a corporation, partnership,
9limited liability company, or management company of this type
10without the prior written approval of the state department. Each
11application for departmental approval pursuant to this subdivision
12shall include the information specified in subdivision (a)begin delete as regardsend delete
13begin insert regardingend insert the person for whom the application is made.

14(2) The state department shall approve or disapprove the
15application within 30 days after receipt thereof, unless the state
16department, with just cause, extends the application review period
17beyond 30 days.

18(c) The state department shall deny approval of a license
19application or of an application for approval under subdivision (b)
20if a person named in the application, as required by this section,
21was an officer, director, general partner, or owner of a 5-percent
22or greater direct or indirect beneficial interest in a licensee or in
23any parent organizations of a licensee of, or in a management
24company under contract with a licensee of, a skilled nursing
25facility, intermediate care facility, community care facility, or
26residential care facility for the elderly at a time during the
27seven-year period prior to the application in which that facility
28committed one or more violations of law or regulatory requirements
29that resulted in any of the following:

begin delete

30(1) Immediate jeopardy to the health, safety, or welfare of one
31or more residents.

end delete
begin delete

32(2) Suspension or

end delete

33begin insert(1)end insertbegin insertend insertbegin insertIssuance of a temporary suspension order orend insert revocation of
34a facility’sbegin delete license.end deletebegin insert license by the department.end insert

begin delete

35(3) Termination of

end delete

36begin insert (2)end insertbegin insertend insertbegin insertInvoluntary termination ofend insert a facility’s Medicare or Medi-Cal
37certification.

begin delete

38(4)

end delete

39begin insert(3)end insert Appointment of a court-ordered receiver pursuant to Section
401327.

P9    1(d) The state department may deny approval of a license
2application or of an application for approval under subdivision (b)
3if a person named in the application, as required by this section,
4was an officer, director, general partner, or owner of a 5-percent
5or greater beneficial interest in a licensee or in any parent
6organizations of a licensee of, or in a management company under
7contract with a licensee of, a skilled nursing facility, intermediate
8care facility, community care facility, or residential care facility
9for the elderly at a time during the seven-year period prior to the
10application in which any of the following occurred:

11(1) The department revoked, suspended, or denied a nursing
12home administrator’s license held or sought by the person.

13(2) The State Department of Social Services revoked, suspended,
14or denied a residential care facility for the elderly administrator’s
15certificate held or sought by the person pursuant to Chapter 3.2
16(commencing with Section 1569).

17(3) The person prevented or attempted to impede the work of
18any authorized representative of the department.

19(4) The person failed to demonstrate competence in operating
20a facility.

21(5) The person failed to report abuse of residents in accordance
22with any state or federal requirement.

23(6) The facility committed one or more violations of law or
24regulatory requirements that resulted in any of the following:

begin insert

25(A) Immediate jeopardy to the health, safety, or welfare of one
26of more residents.

end insert
begin delete

27(A)

end delete

28begin insert(B)end insert A settlement agreement to resolve proceedings to suspend,
29deny, or revoke the license of a facility or to terminate a facility’s
30Medicare or Medi-Cal certification.

begin delete

31(B)

end delete

32begin insert(C)end insert Appointment of a temporary manager pursuant to Section
331325.5.

begin delete

34(C)

end delete

35begin insert(D)end insert One or more class “A” or class “AA” citations pursuant to
36Section 1424 or 1424.5.

begin delete

37(D)

end delete

38begin insert(E)end insert A court order or judgment granting damages or any form
39of equitable relief, including an injunction, resulting from an action
40filed by the Attorney General.

P10   1(e) No application shall be denied pursuant to this section until
2the state department first (1) provides the applicant with notice in
3writing of grounds for the proposed denial of application, and (2)
4affords the applicant an opportunity to submit additional
5documentary evidence in opposition to the proposed denial.

6(f) Nothing in this section shall cause any individual to be
7personally liable for any civil penalty assessed pursuant to Chapter
82.4 (commencing with Section 1417) or create any new criminal
9or civil liability contrary to general laws limiting that liability.

10(g) This section shall not apply to a bank, trust company,
11financial institution, title insurer, controlled escrow company, or
12underwritten title company to which a license is issued in a
13fiduciary capacity.

14(h) This section shall not apply to the directors of a nonprofit
15corporation exempt from taxation under Section 23701d of the
16Revenue and Taxation Code that operates a skilled nursing facility
17or intermediate care facility in conjunction with a licensed
18residential facility, where the directors serve without financial
19compensation and are not compensated by the nonprofit corporation
20in any other capacity.

21(i) For purposes of this section:

22(1) “Beneficial interest” means the interest held by any person,
23including a private equity firm and real estate investment trust,
24that acquires an interest in any entity, including, but not limited
25to, any firm, association, organization, partnership, business trust,
26investment trust, corporation, or limited liability company, that is
27licensed to operate a facility, as defined in subdivision (c) or (d)
28of Section 1250, by assuming that entity’s debt.

29(2) “Indirect beneficial interest” means the interest held by any
30person, including a private equity firm and real estate investment
31trust, that provides capital or assets to a facility, as defined in
32subdivision (c) or (d) of Section 1250, in exchange for a share of
335 percent or more of the facility’s gross income or profits.

34(3) “Management company” means any company or entity that
35has assumed operational or managerial control over the facility or
36who directly or indirectly conducts the day-to-day operations of
37the facility either under contract or through some other
38arrangement.

39(4) “Person” has the same meaning as specified in Section 19.

P11   1

SEC. 5.  

Section 1422.5 of the Health and Safety Code is
2amended to read:

3

1422.5.  

(a)  The department shall develop and establish a
4statewide consumer information service system to provide current
5and accurate information to the general public and consumers
6regarding long-term care facilities in their communities. The
7consumer information service system shall include, but need not
8be limited to, all of the following elements:

9(1) An online information system available on the Internet
10through an accessible Internet Web site. The Internet Web site
11created pursuant to this paragraph shall be operational and made
12available to the public by March 1,begin delete 2016,end deletebegin insert 201end insertbegin insert7,end insert and shall include
13the information elements specified in paragraph (2).

14(2) Long-term health care facility profiles, with data on services
15provided, a history of all deficiencies, citations, and complaints
16for the last three full survey cycles, and current ownership
17information. Thebegin insert onlineend insert profile for each facility shall include, but
18not be limited to, all of the following:

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

20(B) The name of the current administrator, director of nursing,
21and medical director.

22(C) Current and accurate ownership information pursuant to
23Sections 1265, 1267.5, 1599.64, and 1599.645, including, but not
24limited to, all of the following:

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

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

27(iii) The name and contact information of a single entity that is
28responsible for all aspects of patient care and the operation of the
29facility.

30(iv) Whether the facility is part of a multifacility organization
31and, if so, the name, address, and telephone number of the
32organization and, if applicable, of any parent organizations.

33(v) Whether the facility is operated by a management company
34and, if so, the name, address, and telephone number of the
35management company and, if applicable, of any parent
36organizations of the management company.

37(vi) The names and addresses of each person who is an officer
38or director of the licensee, parent organizations, and management
39company, if applicable.

P12   1(vii) The names and addresses of any person or organization,
2or both, having an ownership or control interest of 5 percent or
3more in the licensee, parent organizations, and management
4company, if applicable.

5(viii) The names and addresses of all long-term health care
6facilities owned, leased, managed, or operated by any person,
7corporation, management company, parent organization, or other
8entity described in clauses (ii) to (vii), inclusive.

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

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

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

12(F) Whether the facility has filed a notice of intent to withdraw
13from the Medi-Cal program, and the date that the notice of intent
14to withdraw was filed with the department.

15(G) Whether the facility has a special care unit or program for
16people with Alzheimer’s disease and other dementias, and whether
17the facility participates in the voluntary disclosure program for
18special care units.

19(H) Information regarding all complaints, along with any
20outcome, including, but not limited to, the date of the complaint,
21the nature of the complaint, the date the complaint was investigated,
22the action taken, and the date of the action taken.

begin delete

23(I) Information describing all

end delete

24begin insert(I)end insertbegin insertend insertbegin insertThe text of allend insert state and federal deficiencies issued to the
25facility, including, but not limited to, the date of the deficiency,
26the nature of the deficiency, the scope and severity of the
27deficiency, and a statement that the facility’s plan of correction is
28available upon request through the department’s district offices.

begin delete

29(J) Information describing all

end delete

30begin insert(J)end insertbegin insertend insertbegin insertThe text of allend insert state citations assessed, including, but not
31limited to, the date of the citation, the nature of the citation, the
32class of the citation, the amount of the penalty assessed, and the
33status of the citation.

34(K) Updated information, on a regular and timely basis,
35regarding any appeal resolution pertaining to a citation or
36complaint.

37(L) Information describing state enforcement actions imposed,
38including, but not limited to, license suspensions, revocations, and
39the appointment of temporary managers and receiverships.

P13   1(M) Information describing federal enforcement sanctions
2imposed, including, but not limited to, any denial of payment,
3temporary management, termination, or any civil monetary penalty
4begin delete imposed.end deletebegin insert imposed, if available from the federal Centers for
5Medicare and Medicaid Services.end insert

6(N) Information on compliance with staffing ratio requirements.

7(O) Any information or data the department deems beneficial
8to the public and consumers.

9(b) It is the intent of the Legislature that the department, in
10developing and establishing the system pursuant to subdivision
11(a), maximize the use of available federal funds.

12(c) In implementing this section, the department shall ensure
13the confidentiality of personal and identifying information of
14residents and employees and shall not disclose this information
15through the consumer information service system developed
16pursuant to this section.

17(d) The department shall make current written copies of the
18long-term health care facility profiles available to the public
19through its district offices.

20

SEC. 6.  

No reimbursement is required by this act pursuant to
21Section 6 of Article XIII B of the California Constitution because
22the only costs that may be incurred by a local agency or school
23district will be incurred because this act creates a new crime or
24infraction, eliminates a crime or infraction, or changes the penalty
25for a crime or infraction, within the meaning of Section 17556 of
26the Government Code, or changes the definition of a crime within
27the meaning of Section 6 of Article XIII B of the California
28Constitution.



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