BILL ANALYSIS
SENATE HUMAN
SERVICES COMMITTEE
Senator Carol Liu, Chair
BILL NO: AB 407
A
AUTHOR: Beall
B
VERSION: April 21, 2009
HEARING DATE: June 9, 2009
4
FISCAL: To Judiciary and Appropriations
0
7
CONSULTANT:
Hailey
SUBJECT
Continuing care contracts: retirement communities: closure
SUMMARY
Imposes requirements on continuing care retirement
communities (CCRCs) in the event of their permanent
closure.
ABSTRACT
Current law
1)Establishes, within the State Department of Social
Services (DSS), the licensure of community care
facilities, including continuing care retirement
communities.
2)Provides for the regulation by DSS 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.
Continued---
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3)Requires that continuing care retirement communities
maintain an environment that enhances residents'
independence and self-determination.
4)Deems guilty of a misdemeanor, punishable by a fine not
to exceed ten thousand dollars ($10,000) or imprisonment
in the county jail for a period not to exceed one year,
or both, any entity that abandons a continuing care
retirement community or its obligations under a
continuing care contract.
5)Gives the authority to DSS to issue citations for
violations of requirements of continuing care retirement
communities and to assess civil penalties in the amount
of two hundred dollars ($200) per day for violations.
This bill
1)Defines "permanent closure" of a CCRC to the voluntary or
involuntary termination or forfeiture or a provider's
certificate of authority or license or other action that
results in the permanent relocation of residents, except
in the case of a natural disaster or other event out of
the provider's control.
2)Requires a continuing care contract to include provisions
describing how the provider will proceed in the event of
a closure.
3)Requires the CCRC to provide written notice to DSS and to
the affected residents or designated representatives of
the affected residents 90 days prior to the intended date
of closure of a CCRC.
4)Prescribes the content of the closure notice, including
intended date of closure and the requirement of a
relocation plan.
5)Prohibits the provider from accepting new residents or
entering into new continuing care contracts once the
closure notice has been served.
6)Requires the provider to offer a resident a choice of
four placement options, the terms of which shall not be
less than the terms of the continuing care contract
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between the resident and the provider as if that contract
had been fully performed. The options are:
a) Relocation to another CCRC, owned or operated by
the provider, if available;
b) Relocation to a CCRC operated by another provider;
c) Monetary compensation equal to the value of the
remainder of the contract as if the contract had been
fully performed; or,
d) An alternative arrangement mutually agreed upon by
the provider and the resident or his or her
representative.
7)Requires that replacement housing must be, overall,
comparable in cost, size, services, features, and
amenities to the unit being vacated.
8)Requires the provider, within 30 days of submitting the
relocation plan for a permanent closure, to fund a
reserve, set up a trust fund, or secure a performance
bond to ensure fulfillment of costs associated with the
relocation, in an amount equal to or greater than the
estimated costs of relocating residents and relocation
options, funded with qualifying assets not subject to any
liens, judgments, garnishments or creditor's claims.
9)Requires the provider to submit monthly progress reports
to DSS detailing the progress and problems associated
with the closure until all affected residents are
relocated and all required payments are made.
10) Requires DSS to monitor the implementation of the
closure and to impose penalties if DSS determines that a
provider is closing a facility in violation of the
requirements established by this bill or is doing so in a
manner that endangers the health or safety of residents.
11) Prohibits the provider from displacing any resident or
to close the facility until the relocation plan has been
prepared and submitted to DSS and provided to the
affected residents, the affected residents'
representatives, and the local long-term care ombudsman
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program.
FISCAL IMPACT
According to the Assembly Appropriations Committee, this
bill has minor and absorbable costs.
BACKGROUND AND DISCUSSION
What are continuing care retirement communities?
A continuing care retirement community is a facility where
services promised in a continuing care contract are
provided. Continuing care retirement communities can be
apartment-type dwellings, high-rise buildings, a
subdivision setting, or any other housing design. Most
continuing care communities have three levels of care:
indpendent living, assisted living and skilled nursing
care. As a resident's needs increase, he or she moves to a
higher level of care within the facility. California has
79 CCRCs, which are home to about 20,000 seniors.
The need for the bill
The author notes that, while current law regulates the
establishment and operation of CCRCs, there are minimal
regulations governing what happens when a facility must
close. According to California Advocates for Nursing Home
Reform (CANHR), one of the AB 407's sponsors, "[t]here are
limited legal protections for consumers when facilities
close. Since thousands of CCRC residents have collectively
entrusted providers with well over $1 billion in entrance
fees in return for life-long care, a facility closure
translates into serious investment loss for residents.
Moreover, vulnerable displaced residents face severe
physical and psychological harm, such as transfer trauma."
In April of 2006, Marguerite Terrace, a 73-bed CCRC in San
Jose that had a 50 percent occupancy, announced to its
residents that it would be closing. Three residents died
soon after being transferred to other facilities, prompting
an investigation by the state licensing agency, which
issued in a $20,000 citation for failure to assess the
residents' medical and psychological conditions before they
were transferred. According to the author, the failure to
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plan adequately for the medical needs of residents when
they moved from Marguerite Terrace, the limited relocation
choices offered, and the residents' dissatisfaction with
the facility's buy-out terms, illustrated the need for
legislation to govern CCRC closures.
While there have been few closures of CCRCs to date, the
author reports that there are an increasing number of such
facilities that are aging and have low occupancy rates.
These facilities may require major renovations to enable
them to meet current and future market demands and others,
according to the author, will likely close.
Prior bill
SB 489 (Steinberg, 2007) would have established procedures
and protections governing both permanent and temporary
closures of CCRCs. In vetoing SB 489, the governor
expressed concerns over the oversight role of DSS under the
bill. The governor concluded that "[t]here are many good
consumer protections in this bill and I would encourage the
author and stakeholders to work with my Administration next
year to find the appropriate balance of government
oversight for these types of facilities."
AB 407 differs from SB 489 in two ways: it deletes language
implying DSS's acceptance of closure plans; AB 407 merely
requires that DSS receive a copy of the closure plan. In
addition, AB 407 addresses only permanent closures, not
renovations.
In a letter to the author, a CCRC named Front Porch offers
to support the bill if the definition of "permanent
closure" is amended to state that relocation of a resident
to a renovated unit at the same location does not
constitute permanent closure.
Previous votes
Assembly Floor 80-0
Assembly Appropriations 16-0
Assembly Human Services 6-0
POSITIONS
Support: California Advocates for Nursing Home Reform
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(sponsor)
California Continuing Care Residents
Association (sponsor)
AARP
Aging Services of California
American Federation of State, County and
Municipal Employees
Disability Rights California
National Association of Social Workers,
California Chapter
Oppose: None received
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