BILL ANALYSIS
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THIRD READING
Bill No: AB 407
Author: Beall (D), et al
Amended: 9/1/09 in Senate
Vote: 21
SENATE HUMAN SERVICES COMMITTEE : 5-0, 6/9/09
AYES: Liu, Maldonado, Alquist, Runner, Yee
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 80-0, 5/11/9 - See last page for vote
SUBJECT : Continuing care contracts: retirement
communities: closure
SOURCE : Author
DIGEST : This bill imposes requirements on continuing
care retirement communities in the event of their permanent
closure.
Senate Floor Amendments of 9/1/09 make technical changes to
the language of the bill.
ANALYSIS :
Existing Law
1.Establishes, within the Department of Social Services
(DSS), the licensure of community care facilities,
CONTINUED
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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.
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 $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 $200 per day for violations.
This bill:
1.Defines "permanent closure" of a continuing care
retirement community 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 continuing care retirement community 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 continuing care retirement community.
4.Prescribes the content of the closure notice, including
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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
between the resident and the provider as if that
contract had been fully performed. The options are:
A. Relocation to another continuing care retirement
community owned or operated by the provider, if
available.
B. Relocation to a continuing care retirement
community 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.
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
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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
program.
Comments
SB 489 (Steinberg), 2007-08 Session, would have established
procedures and protections governing both permanent and
temporary closures of continuing care retirement
communities. 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."
This bill differs from SB 489 in two ways: it deletes
language implying DSS's acceptance of closure plans; this
bill merely requires that DSS receive a copy of the closure
plan. In addition, this bill addresses only permanent
closures, not renovations.
In a letter to the author, a continuing care retirement
community 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
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According to the Assembly Appropriations Committee, this
bill has minor and absorbable costs.
SUPPORT : (Verified 9/2/09)
California Advocates for Nursing Home Reform (co-source)
California Continuing Care Residents Association
(co-source)
AARP
Aging Services of California
American Federation of State, County and Municipal
Employees, AFL-CIO
Disability Rights California
National Association of Social Workers, California Chapter
ARGUMENTS IN SUPPORT : The author's office notes that,
while current law regulates the establishment and operation
of continuing care retirement communities, there are
minimal regulations governing what happens when a facility
must close. According to California Advocates for Nursing
Home Reform (CANHR), one of the sponsors, "[t]here are
limited legal protections for consumers when facilities
close. Since thousands of continuing care retirement
community 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 continuing
care retirement community 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 a $20,000 citation for
failure to assess the residents' medical and psychological
conditions before they were transferred. According to the
author's office, the failure to 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
continuing care retirement community closures.
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While there have been few closures of continuing care
retirement communities to date, the author's office 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's office, will likely close.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi,
Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,
Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza,
Miller, Monning, Nava, Nestande, Niello, Nielsen, John A.
Perez, V. Manuel Perez, Portantino, Price, Ruskin, Salas,
Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada, Bass
CTW:cm 9/2/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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