BILL NUMBER: SB 1212 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 16, 2006
AMENDED IN SENATE MARCH 16, 2006
INTRODUCED BY Senator Torlakson
( Coauthor: Senator Alquist
)
JANUARY 30, 2006
An act to amend Sections 1771.7, 1777, 1788, and 1790 of the
Health and Safety Code, relating to continuing care.
LEGISLATIVE COUNSEL'S DIGEST
SB 1212, as amended, Torlakson Continuing care retirement
communities: advisory committee memberships and provider financial
requirements.
Existing law provides for the regulation by the State Department
of Social Services of activities relating to continuing care
contracts that govern care provided to an elderly resident in a
continuing care retirement community for the duration of the resident'
s life or a term in excess of one year.
Existing law provides that the Continuing Care Advisory Committee
of the department, comprised of specified membership, shall act in an
advisory capacity to the department on matters relating to
continuing care contracts.
This bill would revise the membership and administrative operating
procedures of the committee.
Existing law requires that a continuing care contract shall
contain specified elements, including requirements for procedures and
conditions under which a resident of a continuing care retirement
community may be transferred.
This bill would revise those procedures.
Existing law requires each continuing care provider to submit an
annual report of its financial condition, consisting of audited
financial statements and required reserve calculations. Existing law
further requires the report to include full details on the status of
reserves and on per capita costs of operation for each continuing
care retirement community operated.
This bill would define "reserves" for purposes of the continuing
care provider's annual report. The bill would specify the details to
be provided in the report with respect to these reserves.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1771.7 of the Health and Safety Code is amended
to read:
1771.7. (a) No resident of a continuing care retirement community
shall be deprived of any civil or legal right, benefit, or privilege
guaranteed by law, by the California Constitution, or by the United
States Constitution solely by reason of status as a resident of a
community. In addition, because of the discretely different character
of residential living unit programs that are a part of continuing
care retirement communities, this section shall augment Chapter 3.9
(commencing with Section 1599), Sections 72527 and 87572 of Title 22
of the California Code of Regulations, and other applicable state and
federal law and regulations.
(b) A prospective resident shall have the right to visit each of
the different care levels and to inspect assisted living and skilled
nursing home licensing reports including, but not limited to, the
most recent inspection reports and findings of complaint
investigations covering a period of no less than two years, prior to
signing a continuing care contract.
(c) All residents in residential living units shall have all of
the following rights:
(1) To live in an attractive, safe, and well maintained physical
environment.
(2) To live in an environment that enhances personal dignity,
maintains independence, and encourages self-determination.
(3) To participate in activities that meet individual physical,
intellectual, social, and spiritual needs.
(4) To expect effective channels of communication between
residents and staff, and between residents and the administration or
provider's governing body.
(5) To receive a clear and complete written contract that
establishes the mutual rights and obligations of the resident and the
continuing care retirement community.
(6) To manage his or her financial affairs.
(7) To be assured that all donations, contributions, gifts, or
purchases of provider-sponsored financial products shall be
voluntary, and may not be a condition of acceptance or of ongoing
eligibility for services.
(8) To maintain and establish ties to the local community.
(9) To organize and participate freely in the operation of
independent resident organizations and associations.
(d) A continuing care retirement community shall maintain an
environment that enhances the residents' self-determination and
independence. The provider shall do both of the following:
(1) Encourage the formation of a resident association by
interested residents who may elect a governing body. The provider
shall provide space and post notices for meetings, and provide
assistance in attending meetings for those residents who request it.
In order to promote a free exchange of ideas, at least part of each
meeting shall be conducted without the presence of any continuing
care retirement community personnel. The association may, among other
things, make recommendations to management regarding resident issues
that impact the residents' quality of life, quality of care,
exercise of rights, safety and quality of the physical environment,
concerns about the contract, fiscal matters, or other issues of
concern to residents. The management shall respond, in writing, to a
written request or concern of the resident association within 20
working days of receiving the written request or concern. Meetings
shall be open to all residents to attend as well as to present
issues. Executive sessions of the governing body shall be attended
only by the governing body.
(2) Establish policies and procedures that promote the sharing of
information, dialogue between residents and management, and access to
the provider's governing body. The provider shall biennially conduct
a resident satisfaction survey that shall be made available to the
resident association or its governing body, or, if neither exists, to
a committee of residents at least 14 days prior to the next
semiannual meeting of residents and the governing board of the
provider required by subdivision (c) of Section 1771.8. A copy of the
survey shall be posted in a conspicuous location at each facility.
(e) In addition to any statutory or regulatory bill of rights
required to be provided to residents of residential care facilities
for the elderly or skilled nursing facilities, the provider shall
provide a copy of the bill of rights prescribed by this section to
each resident at the time or before the resident signs a continuing
care contract, and at any time when the resident is proposed to be
moved to a different level of care.
(f) Each continuing care retirement community shall prominently
post in areas accessible to the residents and visitors a notice that
a copy of rights applicable to residents pursuant to this section and
any governing regulation issued by the Continuing Care Contracts
Branch of the State Department of Social Services is available upon
request from the provider. The notice shall also state that the
residents have a right to file a complaint with the Continuing Care
Contracts Branch for any violation of those rights and shall contain
information explaining how a complaint may be filed, including the
telephone number and address of the Continuing Care Contracts Branch.
(g) The resident has the right to freely exercise all rights
pursuant to this section, in addition to political rights, without
retaliation by the provider.
(h) The department may, upon receiving a complaint of a violation
of this section, request a copy of the policies and procedures along
with documentation on the conduct and findings of any
self-evaluations and consult with the Continuing Care Advisory
Committee for determination of compliance.
(i) Failure to comply with this section shall be grounds for the
imposition of conditions on, suspension of, or revocation of the
provisional certificate of authority or certificate of authority
pursuant to Section 1793.21.
(j) Failure to comply with this section constitutes a violation of
residents' rights. Pursuant to Section 1569.49 of the Health and
Safety Code, the department shall impose and collect a civil penalty
of not more than one hundred fifty dollars ($150) per violation upon
a continuing care retirement community that violates a right
guaranteed by this section.
SEC. 2. Section 1777 of the Health and Safety Code is amended to
read:
1777. (a) The Continuing Care Advisory Committee of the
department shall act in an advisory capacity to the department on
matters relating to continuing care contracts.
(b) The members of the committee shall include:
(1) Three representatives who are current, full-time management
employees of different nonprofit continuing care providers pursuant
to this chapter, each of whom shall be a current provider in good
standing with the department and shall have offered continuing care
services for at least five years prior to appointment. One member
shall represent a multifacility provider and shall be appointed by
the Governor in even years. One member shall be appointed by the
Senate Committee on Rules in odd years. One member shall be appointed
by the Speaker of the Assembly in odd years.
(2) Four senior citizens who are not eligible for appointment
pursuant to paragraphs (1) and (3) who shall represent consumers of
continuing care services, all of whom shall be residents of
continuing care retirement communities but not residents of the same
provider. Any senior citizen who serves or has served on the board of
directors of any provider or provider organization in the past three
years shall not be eligible for appointment. Two senior citizen
members shall be appointed by the Governor in even years. One senior
citizen member shall be appointed by the Senate Committee on Rules in
odd years. One senior citizen member shall be appointed by the
Speaker of the Assembly in odd years.
(3) A representative of a for-profit provider of continuing care
contracts pursuant to this chapter. This member shall be appointed by
the Governor in even years, shall be a current, full-time management
employee of a provider in good standing with the department, and
shall have offered continuing care services for at least five years
prior to his or her appointment.
(4) One representative of residents of continuing care retirement
communities appointed by the senior citizen representatives on the
committee, who is a resident of a continuing care retirement
community of a provider other than those of the senior citizen
representatives appointed pursuant to paragraph (2). Any senior
citizen who has served on the board of directors of any provider or
provider organization within the past three years shall not be
eligible for appointment.
(5) One representative of either nonprofit or for-profit providers
appointed by the representatives of nonprofit and for-profit
providers on the committee.
(c) The consultants to the committee shall include the following:
(1) An actuary with experience in the continuing care industry,
who shall be appointed by the committee as a consultant in
even-numbered years.
(2) A certified public accountant with experience in the
continuing care industry shall be appointed by the committee as a
consultant in odd-numbered years.
(d) The committee members and consultants shall serve two-year
terms and be appointed based on their interest and expertise in the
subject area. A member may be reappointed at the pleasure of the
appointing power. The appointing power shall fill all vacancies on
the committee within 60 days. All members shall continue to serve
until their successors are appointed and qualified.
(e) The committee chair shall alternate between a provider and
resident members each year. The chairperson shall be selected by
resident members in odd-numbered years and by provider members in
even-numbered years.
(f) The members of the committee and the committee consultants
shall serve without compensation, except that each member shall be
paid from the Continuing Care Provider Fee Fund a per diem of
twenty-five dollars ($25) for each day's attendance at a meeting of
the committee not to exceed six days in any month. The committee
members and consultants shall also receive their actual and necessary
travel expenses incurred in the course of their duties.
Reimbursement of travel expenses shall be at rates not to exceed
those applicable to comparable state employees under Department of
Personnel Administration regulations.
(g) Prior to commencement of service, each member shall file with
the department a statement of economic interest and a statement of
conflict of interest pursuant to Article 3 (commencing with Section
87300) of the Government Code.
(h) If, during the period of appointment, any member no longer
meets the qualifications of subdivision (b), that member shall submit
his or her resignation to the committee chair within 10 days. The
committee chair shall notify the appointing power and a qualified new
member shall be appointed by the same power to fulfill the remainder
of the term.
SEC. 3. Section 1788 of the Health and Safety Code is amended to
read:
1788. (a) A continuing care contract shall contain all of the
following:
(1) The legal name and address of each provider.
(2) The name and address of the continuing care retirement
community.
(3) The resident's name and the identity of the unit the resident
will occupy.
(4) If there is a transferor other than the resident, the
transferor shall be a party to the contract and the transferor's name
and address shall be specified.
(5) If the provider has used the name of any charitable or
religious or nonprofit organization in its title before January 1,
1979, and continues to use that name, and that organization is not
responsible for the financial and contractual obligations of the
provider or the obligations specified in the continuing care
contract, the provider shall include in every continuing care
contract a conspicuous statement which clearly informs the resident
that the organization is not financially responsible.
(6) The date the continuing care contract is signed by the
resident and, where applicable, any other transferor.
(7) The duration of the continuing care contract.
(8) A list of the services that will be made available to the
resident as required to provide the appropriate level of care. The
list of services shall include the services required as a condition
for licensure as a residential care facility for the elderly,
including all of the following:
(A) Regular observation of the resident's health status to ensure
that his or her dietary needs, social needs, and needs for special
services are satisfied.
(B) Safe and healthful living accommodations, including
housekeeping services and utilities.
(C) Maintenance of house rules for the protection of residents.
(D) A planned activities program, which includes social and
recreational activities appropriate to the interests and capabilities
of the resident.
(E) Three balanced, nutritious meals and snacks made available
daily, including special diets prescribed by a physician as a medical
necessity.
(F) Assisted living services.
(G) Assistance with taking medications.
(H) Central storing and distribution of medications.
(I) Arrangements to meet health needs, including arranging
transportation.
(9) An itemization of the services that are included in the
monthly fee and the services that are available at an extra charge.
The provider shall attach a current fee schedule to the continuing
care contract.
(10) The procedures and conditions under which a resident may be
voluntarily and involuntarily transferred from a designated living
unit. The transfer procedures shall include the following provisions:
(A) A continuing care retirement community may transfer a resident
only if one of the following conditions apply, taking into account
the appropriateness and necessity of the transfer and the goal of
promoting resident independence:
(i) The resident is nonambulatory. The definition of
"nonambulatory," as provided in Section 13131, shall either be stated
in full in the continuing care contract or be cited. If Section
13131 is cited, a copy of the statute shall be made available to the
resident, either as an attachment to the continuing care contract or
by specifying that it will be provided upon request. If a
nonambulatory resident occupies a room that has a fire clearance for
nonambulatory residence, transfer shall not be necessary.
(ii) The resident develops a physical or mental condition that
endangers the health, safety, or well-being of the resident or
another person.
(iii) The resident's condition or needs require the resident's
transfer to an assisted living care unit or skilled nursing facility,
because the level of care required by the resident exceeds that
which may be lawfully provided in the living unit.
(iv) The resident's condition or needs require the resident's
transfer to a nursing facility, hospital, or other facility, and the
provider has no facilities available to provide that level of care.
(B) Before the continuing care retirement community transfers a
resident under any of the conditions set forth in subparagraph (A),
the community shall satisfy all of the following requirements:
(i) Involve the resident and the resident's responsible person, as
defined in paragraph (6) of subdivision (r) of Section 87101 of
Title 22 of the California Code of Regulations, and upon the resident'
s or responsible person's request, family members, or the resident's
physician or other appropriate health professional, in the assessment
process that forms the basis for the level of care transfer decision
by the provider. The provider shall offer an explanation of the
assessment process. If an assessment tool or tools, including scoring
and evaluating criteria, are used in the determination of the
appropriateness of the transfer, the provider shall make copies of
the completed assessment available upon the request of the resident
or the resident's responsible person.
(ii) Prior to sending a formal notification of transfer, the
provider shall conduct a care conference with the resident and the
resident's responsible person, and upon the resident's or responsible
person's request, family members, and the resident's health care
professionals, to explain the reasons for transfer.
(iii) Notify the resident and the resident's responsible person
the reasons for the transfer in writing.
(iv) Notwithstanding any other provision of this subparagraph, if
the resident does not have impairment of cognitive abilities, the
resident may request that his or her responsible person not be
involved in the transfer process.
(v) The notice of transfer shall be made at least 30 days before
the transfer is expected to occur, except when the health or safety
of the resident or other residents is in danger, or the transfer is
required by the resident's urgent medical needs. Under those
circumstances, the written notice shall be made as soon as
practicable before the transfer.
(vi) The written notice shall contain the reasons for the
transfer, the effective date, the designated level of care or
location to which the resident will be transferred, a statement of
the resident's right to a review of the transfer decision at a care
conference, as provided for in subparagraph (C), and for disputed
transfer decisions, the right to review by the Continuing Care
Contracts Branch of the State Department of Social Services, as
provided for in subparagraph (D). The notice shall also contain the
name, address, and telephone number of the department's Continuing
Care Contracts Branch.
(vii) The continuing care retirement community shall
provide sufficient preparation and orientation to the resident to
ensure a safe and orderly transfer and to minimize trauma.
(C) The resident has the right to review the transfer decision at
a subsequent care conference that shall include the resident, the
resident's responsible person, and upon the resident's or responsible
person's request, family members, the resident's physician or other
appropriate health care professional, and members of the provider's
interdisciplinary team. The local ombudsperson may also be included
in the care conference, upon the request of the resident, the
resident's responsible person, or the provider.
(D) For disputed transfer decisions, the resident or the resident'
s responsible person has the right to a prompt and timely review of
the transfer process by the Continuing Care Contracts Branch of the
State Department of Social Services.
(E) The decision of the department's Continuing Care Contracts
Branch shall be in writing and shall determine whether the provider
failed to comply with the transfer process pursuant to subparagraphs
(A) to (C), inclusive. Pending the decision of the Continuing Care
Contracts Branch, the provider shall specify any additional care the
provider believes is necessary in order for the resident to remain in
his or her unit. The resident may be required to pay for the extra
care, as provided in the contract.
(F) Transfer of a second resident when a shared accommodation
arrangement is terminated.
(G) Other nonlevel of care transfers within the independent living
units.
(11) Provisions describing any changes in the resident's monthly
fee and any changes in the entrance fee refund payable to the
resident that will occur if the resident transfers from any unit.
(12) The provider's continuing obligations if any, in the event a
resident is transferred from the continuing care retirement community
to another facility.
(13) The provider's obligations, if any, to resume care upon the
resident's return after a transfer from the continuing care
retirement community.
(14) The provider's obligations to provide services to the
resident while the resident is absent from the continuing care
retirement community.
(15) The conditions under which the resident must permanently
release his or her living unit.
(16) If real or personal properties are transferred in lieu of
cash, a statement specifying each item's value at the time of
transfer, and how the value was ascertained.
(A) An itemized receipt which includes the information described
above is acceptable if incorporated as a part of the continuing care
contract.
(B) When real property is or will be transferred, the continuing
care contract shall include a statement that the deed or other
instrument of conveyance shall specify that the real property is
conveyed pursuant to a continuing care contract and may be subject to
rescission by the transferor within 90 days from the date that the
resident first occupies the residential unit.
(C) The failure to comply with paragraph (16) shall not affect the
validity of title to real property transferred pursuant to this
chapter.
(17) The amount of the entrance fee.
(18) In the event two parties have jointly paid the entrance fee
or other payment which allows them to occupy the unit, the continuing
care contract shall describe how any refund of entrance fees is
allocated.
(19) The amount of any processing fee.
(20) The amount of any monthly care fee.
(21) For continuing care contracts that require a monthly care fee
or other periodic payment, the continuing care contract shall
include the following:
(A) A statement that the occupancy and use of the accommodations
by the resident is contingent upon the regular payment of the fee.
(B) The regular rate of payment agreed upon (per day, week, or
month).
(C) A provision specifying whether payment will be made in advance
or after services have been provided.
(D) A provision specifying the provider will adjust monthly care
fees for the resident's support, maintenance, board, or lodging, when
a resident requires medical attention while away from the continuing
care retirement community.
(E) A provision specifying whether a credit or allowance will be
given to a resident who is absent from the continuing care retirement
community or from meals. This provision shall also state, when
applicable, that the credit may be permitted at the discretion or by
special permission of the provider.
(F) A statement of billing practices, procedures, and timelines. A
provider shall allow a minimum of 14 days between the date a bill is
sent and the date payment is due. A charge for a late payment may
only be assessed if the amount and any condition for the penalty is
stated on the bill.
(22) All continuing care contracts that include monthly care fees
shall address changes in monthly care fees by including either of the
following provisions:
(A) For prepaid continuing care contracts, which include monthly
care fees, one of the following methods:
(i) Fees shall not be subject to change during the lifetime of the
agreement.
(ii) Fees shall not be increased by more than a specified number
of dollars in any one year and not more than a specified number of
dollars during the lifetime of the agreement.
(iii) Fees shall not be increased in excess of a specified
percentage over the preceding year and not more than a specified
percentage during the lifetime of the agreement.
(B) For monthly fee continuing care contracts, except prepaid
contracts, changes in monthly care fees shall be based on projected
costs, prior year per capita costs, and economic indicators.
(23) A provision requiring that the provider give written notice
to the resident at least 30 days in advance of any change in the
resident's monthly care fees or in the price or scope of any
component of care or other services.
(24) A provision indicating whether the resident's rights under
the continuing care contract include any proprietary interests in the
assets of the provider or in the continuing care retirement
community, or both. Any statement in a contract concerning an
ownership interest shall appear in a large-sized font or
print.
(25) If the continuing care retirement community property is
encumbered by a security interest that is senior to any claims the
residents may have to enforce continuing care contracts, a provision
shall advise the residents that any claims they may have under the
continuing care contract are subordinate to the rights of the secured
lender. For equity projects, the continuing care contract shall
specify the type and extent of the equity interest and whether any
entity holds a security interest.
(26) Notice that the living units are part of a continuing care
retirement community that is licensed as a residential care facility
for the elderly and, as a result, any duly authorized agent of the
department may, upon proper identification and upon stating the
purpose of his or her visit, enter and inspect the entire premises at
any time, without advance notice.
(27) A conspicuous statement, in at least 10-point boldface type
in immediate proximity to the space reserved for the signatures of
the resident and, if applicable, the transferor, that provides as
follows: "You, the resident or transferor, may cancel the transaction
without cause at any time within 90 days from the date you first
occupy your living unit. See the attached notice of cancellation form
for an explanation of this right."
(28) Notice that during the cancellation period, the continuing
care contract may be canceled upon 30 days' written notice by the
provider without cause, or that the provider waives this right.
(29) The terms and conditions under which the continuing care
contract may be terminated after the cancellation period by either
party, including any health or financial conditions.
(30) A statement that, after the cancellation period, a provider
may unilaterally terminate the continuing care contract only if the
provider has good and sufficient cause.
(A) Any continuing care contract containing a clause that provides
for a continuing care contract to be terminated for "just cause,"
"good cause," or other similar provision, shall also include a
provision that none of the following activities by the resident, or
on behalf of the resident, constitutes "just cause," "good cause," or
otherwise activates the termination provision:
(i) Filing or lodging a formal complaint with the department or
other appropriate authority.
(ii) Participation in an organization or affiliation of residents,
or other similar lawful activity.
(B) The provision required by this paragraph shall also state that
the provider shall not discriminate or retaliate in any manner
against any resident of a continuing care retirement
community for contacting the
department, or any other state, county, or city agency, or any
elected or appointed government official to file a complaint or for
any other reason, or for participation in a residents' organization
or association.
(C) Nothing in this paragraph diminishes the provider's ability to
terminate the continuing care contract for good and sufficient
cause.
(31) A statement that at least 90 days' written notice to the
resident is required for a unilateral termination of the continuing
care contract by the provider.
(32) A statement concerning the length of notice that a resident
is required to give the provider to voluntarily terminate the
continuing care contract after the cancellation period.
(33) The policy or terms for refunding any portion of the entrance
fee, in the event of cancellation, termination, or death. Every
continuing care contract that provides for a refund of all or a part
of the entrance fee shall also do all of the following:
(A) Specify the amount, if any, the resident has paid or will pay
for upgrades, special features, or modifications to the resident's
unit.
(B) State that if the continuing care contract is canceled or
terminated by the provider, the provider shall do both of the
following:
(i) Amortize the specified amount at the same rate as the resident'
s entrance fee.
(ii) Refund the unamortized balance to the resident at the same
time the provider pays the resident's entrance fee refund.
(34) The following notice at the bottom of the signatory page:
"NOTICE" (date)
This is a continuing care contract as defined by paragraph (8) of
subdivision (c), or subdivision (l) of Section 1771 of the California
Health and Safety Code. This continuing care contract form has been
approved by the State Department of Social Services as required by
subdivision (b) of Section 1787 of the California Health and Safety
Code. The basis for this approval was a determination that (provider
name) has submitted a contract that complies with the minimum
statutory requirements applicable to continuing care contracts. The
department does not approve or disapprove any of the financial or
health care coverage provisions in this contract. Approval by the
department is NOT a guaranty of performance or an endorsement of any
continuing care contract provisions. Prospective transferors and
residents are strongly encouraged to carefully consider the benefits
and risks of this continuing care contract and to seek financial and
legal advice before signing.
(35) The provider may not attempt to absolve itself in the
continuing care contract from liability for its negligence by any
statement to that effect, and shall include the following statement
in the contract: "Nothing in this continuing care contract limits
either the provider's obligation to provide adequate care and
supervision for the resident or any liability on the part of the
provider which may result from the provider's failure to provide this
care and supervision."
(b) A life care contract shall also provide that:
(1) All levels of care, including acute care and physicians' and
surgeons' services will be provided to a resident.
(2) Care will be provided for the duration of the resident's life
unless the life care contract is canceled or terminated by the
provider during the cancellation period or after the cancellation
period for good cause.
(3) A comprehensive continuum of care will be provided to the
resident, including skilled nursing, in a facility under the
ownership and supervision of the provider on, or adjacent to, the
continuing care retirement community premises.
(4) Monthly care fees will not be changed based on the resident's
level of care or service.
(5) A resident who becomes financially unable to pay his or her
monthly care fees shall be subsidized provided the resident's
financial need does not arise from action by the resident to divest
the resident of his or her assets.
(c) Continuing care contracts may include provisions that do any
of the following:
(1) Subsidize a resident who becomes financially unable to pay for
his or her monthly care fees at some future date. If a continuing
care contract provides for subsidizing a resident, it may also
provide for any of the following:
(A) The resident shall apply for any public assistance or other
aid for which he or she is eligible and that the provider may apply
for assistance on behalf of the resident.
(B) The provider's decision shall be final and conclusive
regarding any adjustments to be made or any action to be taken
regarding any charitable consideration extended to any of its
residents.
(C) The provider is entitled to payment for the actual costs of
care out of any property acquired by the resident subsequent to any
adjustment extended to the resident under paragraph (1), or from any
other property of the resident which the resident failed to disclose.
(D) The provider may pay the monthly premium of the resident's
health insurance coverage under Medicare to ensure that those
payments will be made.
(E) The provider may receive an assignment from the resident of
the right to apply for and to receive the benefits, for and on behalf
of the resident.
(F) The provider is not responsible for the costs of furnishing
the resident with any services, supplies, and medication, when
reimbursement is reasonably available from any governmental agency,
or any private insurance.
(G) Any refund due to the resident at the termination of the
continuing care contract may be offset by any prior subsidy to the
resident by the provider.
(2) Limit responsibility for costs associated with the treatment
or medication of an ailment or illness existing prior to the date of
admission. In these cases, the medical or surgical exceptions, as
disclosed by the medical entrance examination, shall be listed in the
continuing care contract or in a medical report attached to and made
a part of the continuing care contract.
(3) Identify legal remedies which may be available to the provider
if the resident makes any material misrepresentation or omission
pertaining to the resident's assets or health.
(4) Restrict transfer or assignments of the resident's rights and
privileges under a continuing care contract due to the personal
nature of the continuing care contract.
(5) Protect the provider's ability to waive a resident's breach of
the terms or provisions of the continuing care contract in specific
instances without relinquishing its right to insist upon full
compliance by the resident with all terms or provisions in the
contract.
(6) Provide that the resident shall reimburse the provider for any
uninsured loss or damage to the resident's unit, beyond normal wear
and tear, resulting from the resident's carelessness or negligence.
(7) Provide that the resident agrees to observe the off-limit
areas of the continuing care retirement community designated by the
provider for safety reasons. The provider may not include any
provision in a continuing care contract that absolves the provider
from liability for its negligence.
(8) Provide for the subrogation to the provider of the resident's
rights in the case of injury to a resident caused by the acts or
omissions of a third party, or for the assignment of the resident's
recovery or benefits in this case to the provider, to the extent of
the value of the goods and services furnished by the provider to or
on behalf of the resident as a result of the injury.
(9) Provide for a lien on any judgment, settlement, or recovery
for any additional expense incurred by the provider in caring for the
resident as a result of injury.
(10) Require the resident's cooperation and assistance in the
diligent prosecution of any claim or action against any third party.
(11) Provide for the appointment of a conservator or guardian by a
court with jurisdiction in the event a resident becomes unable to
handle his or her personal or financial affairs.
(12) Allow a provider, whose property is tax exempt, to charge the
resident on a pro rata basis property taxes, or in-lieu taxes, that
the provider is required to pay.
(13) Make any other provision approved by the department.
(d) A copy of the resident's rights as described in Section 1771.7
shall be attached to every continuing care contract.
(e) A copy of the current audited financial statement of the
provider shall be attached to every continuing care contract. For a
provider whose current audited financial statement does not
accurately reflect the financial ability of the provider to fulfill
the continuing care contract obligations, the financial statement
attached to the continuing care contract shall include all of the
following:
(1) A disclosure that the reserve requirement has not yet been
determined or met, and that entrance fees will not be held in escrow.
(2) A disclosure that the ability to provide the services promised
in the continuing care contract will depend on successful compliance
with the approved financial plan.
(3) A copy of the approved financial plan for meeting the reserve
requirements.
(4) Any other supplemental statements or attachments necessary to
accurately represent the provider's financial ability to fulfill its
continuing care contract obligations.
(f) A schedule of the average monthly care fees charged to
residents for each type of residential living unit for each of the
five years preceding execution of the continuing care contract shall
be attached to every continuing care contract. The provider shall
update this schedule annually at the end of each fiscal year. If the
continuing care retirement community has not been in existence for
five years, the information shall be provided for each of the years
the continuing care retirement community has been in existence.
(g) If any continuing care contract provides for a health
insurance policy for the benefit of the resident, the provider shall
attach to the continuing care contract a binder complying with
Sections 382 and 382.5 of the Insurance Code.
(h) The provider shall attach to every continuing care contract a
completed form in duplicate, captioned "Notice of Cancellation." The
notice shall be easily detachable, and shall contain, in at least
10-point boldface type, the following statement:
"NOTICE OF CANCELLATION" (date)
Your first date of occupancy under this contract
is: _______________________
"You may cancel this transaction, without any penalty within 90
calendar days from the above date.
If you cancel, any property transferred, any payments made by you
under the contract, and any negotiable instrument executed by you
will be returned within 14 calendar days after making possession of
the living unit available to the provider. Any security interest
arising out of the transaction will be canceled.
If you cancel, you are obligated to pay a reasonable processing
fee to cover costs and to pay for the reasonable value of the
services received by you from the provider up to the date you
canceled or made available to the provider the possession of any
living unit delivered to you under this contract, whichever is later.
If you cancel, you must return possession of any living unit
delivered to you under this contract to the provider in substantially
the same condition as when you took possession.
Possession of the living unit must be made available to the
provider within 20 calendar days of your notice of cancellation. If
you fail to make the possession of any living unit available to the
provider, then you remain liable for performance of all obligations
under the contract.
To cancel this transaction, mail or deliver a signed and dated
copy of this cancellation notice, or any other written notice, or
send a telegram
to
(Name of provider)
at
(Address of provider's place of business)
not later than midnight of _____________ (date).
I hereby cancel
this _________________________
transaction
(Resident
or
Transferor's signature)"
SEC. 4. Section 1790 of the Health and Safety Code is amended to
read:
1790. (a) Each provider that has obtained a provisional or final
certificate of authority and each provider that possesses an inactive
certificate of authority shall submit an annual report of its
financial condition. The report shall consist of audited financial
statements and required reserve calculations, with accompanying
certified public accountants' opinions thereon, the reserve
information required by paragraph (2), Continuing Care Provider Fee
and Calculation Sheet, evidence of fidelity bond as required by
Section 1789.8, and certification that the continuing care contract
in use for new residents has been approved by the department, all in
a format provided by the department, and shall include all of the
following information:
(1) A certification, if applicable, that the entity is maintaining
reserves for prepaid continuing care contracts, statutory reserves,
and refund reserves.
(2) Full details on the status of reserves and on per capita costs
of operation for each continuing care retirement community operated.
For purposes of this section, "reserves" means the amounts
accumulated to provide for future expenditures, including the
reserves required by Sections 1792.3, 1792.4, and 1792.6, as well as
all other reserves, whether funded or nonfunded. "Reserves" also
include, but are not limited to, amounts set aside for depreciation
or replacement, self-insurance, expansion, improvements, and
contingency, whether separately stated or included in surplus or
unrestricted net assets. Details for each reserve shall include all
of the following:
(A) The purpose of the reserve.
(B) The method of accumulation.
(C) The amount to be accumulated.
(D) With respect to nonfunded reserves, the intended source of
funds when they are required.
(3) Full details on any increase in monthly care fees, the basis
for determining the increase, and the data used to calculate the
increase.
(4) The required reserve calculation schedules shall be
accompanied by the auditor's opinion as to compliance with applicable
statutes.
(5) Any other information as the department may require.
(b) Each provider shall file the annual report with the department
within four months after the provider's fiscal yearend. If the
complete annual report is not received by the due date, a one
thousand dollar ($1,000) late fee shall accompany submission of the
reports. If the reports are more than 30 days past due, an additional
fee of thirty-three dollars ($33) for each day over the first 30
days shall accompany submission of the report. The department may, at
its discretion, waive the late fee for good cause.
(c) The annual report and any amendments thereto shall be signed
and certified by the chief executive officer of the provider, stating
that, to the best of his or her knowledge and belief, the items are
correct.
(d) A copy of the most recent annual audited financial statement
shall be transmitted by the provider to each transferor requesting
the statement.
(e) A provider shall amend its annual report on file with the
department at any time, without the payment of any additional fee, if
an amendment is necessary to prevent the report from containing a
material misstatement of fact or omitting a material fact.
(f) If a provider is no longer entering into continuing care
contracts, and currently is caring for 10 or fewer continuing care
residents, the provider may request permission from the department,
in lieu of filing the annual report, to establish a trust fund or to
secure a performance bond to ensure fulfillment of continuing care
contract obligations. The request shall be made each year within 30
days after the provider's fiscal yearend. The request shall include
the amount of the trust fund or performance bond determined by
calculating the projected life costs, less the projected life
revenue, for the remaining continuing care residents in the year the
provider requests the waiver. If the department approves the request,
the following shall be submitted to the department annually:
(1) Evidence of trust fund or performance bond and its amount.
(2) A list of continuing care contract residents. If the number of
continuing care residents exceeds 10 at any time, the provider shall
comply with the requirements of this section.
(3) A provider fee as required by subdivision (c) of Section 1791.
(g) If the department determines a provider's annual audited
report needs further analysis and investigation, as a result of
incomplete and inaccurate financial statements, significant financial
deficiencies, development of work out plans to stabilize financial
solvency, or for any other reason, the provider shall reimburse the
department for reasonable actual costs incurred by the department or
its representative. The reimbursed funds shall be deposited in the
Continuing Care Contract Provider Fee Fund.