BILL NUMBER: AB 1044 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 23, 2009
AMENDED IN ASSEMBLY APRIL 14, 2009
INTRODUCED BY Assembly Member Jones
FEBRUARY 27, 2009
An act to amend Sections 1770, 1771, 1771.7, 1776.3, 1777.2, and
1788 of, and to add Section 1770.5 to, and to
repeal and add Section 1778 of, the Health and Safety Code,
relating to continuing care retirement communities
, and making an appropriation therefor .
LEGISLATIVE COUNSEL'S DIGEST
AB 1044, as amended, Jones. Continuing care retirement
communities: contracts.
Under
(1) Under existing law, the State
Department of Social Services is responsible for regulating
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.
This bill would transfer that responsibility , except with
respect to oversight and regulation of programs and services provided
directly to residents of the communities, to the Department of
Insurance and would make related conforming changes.
(2) Existing law establishes the Continuing Care Provider Fee
Fund, which is continuously appropriated to the State Department of
Social Services for purposes of administering the continuing care
retirement community requirements of existing law.
This bill would, for purposes of administering the above
provisions, create 2 accounts within the fund, the Insurance Account,
which would be continuously appropriated to the Department of
Insurance, and the State Department of Social Services Account, which
would be continuously appropriated to the State Department of Social
Services. Ninety-five percent of fees collected pursuant to the
above-described provisions would be deposited into the Insurance
Account and 5% into the State Department of Social Services Account.
Vote: majority. Appropriation: no yes
. Fiscal committee: yes. State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature hereby finds and declares the
following:
(a) California is home to nearly four million people over 65 years
of age; the largest older adult population in the nation. This
number is expected to more than double over the next several decades
as the baby boomers begin reaching this milestone.
(b) Continuing care retirement communities are an alternative for
the long-term residential, social, and health care needs of
California's elderly residents and seek to provide a continuum of
care, minimize transfer trauma, and allow services to be provided in
an appropriately licensed setting.
(c) Because elderly residents often both expend a significant
portion of their savings in order to purchase care in a continuing
care retirement community and expect to receive care at their
continuing care retirement community for the rest of their lives,
tragic consequences can result if a continuing care provider becomes
insolvent or unable to provide responsible care.
(d) The Legislature has recognized the importance of continuing
care provider solvency and the need for disclosure concerning the
terms of agreements made between prospective residents and the
continuing care provider, and concerning the operations of the
continuing care retirement community.
(e) The Legislature defines continuing care contracts in terms of
a promise of the future provision of services which are analogous to
insurance products.
(f) Continuing care retirement communities have long-term
obligations and may have a corporate or capital structure similar to
insurance holding company systems, as defined in the Insurance Code.
(g) Therefore, it is the intent of the Legislature to transfer
general regulatory responsibility for continuing care
retirement communities , except for oversight and regulation of
programs and services provided directly to residents of the
communities, from the Department of Social Services to the
Department of Insurance.
SEC. 2. Section 1770 of the Health and Safety Code is amended to
read:
1770. The Legislature finds, declares, and intends all of the
following:
(a) Continuing care retirement communities are an alternative for
the long-term residential, social, and health care needs of
California's elderly residents and seek to provide a continuum of
care, minimize transfer trauma, and allow services to be provided in
an appropriately licensed setting.
(b) Because elderly residents often both expend a significant
portion of their savings in order to purchase care in a continuing
care retirement community and expect to receive care at their
continuing care retirement community for the rest of their lives,
tragic consequences can result if a continuing care provider becomes
insolvent or unable to provide responsible care.
(c) There is a need for disclosure concerning the terms of
agreements made between prospective residents and the continuing care
provider, and concerning the operations of the continuing care
retirement community.
(d) Providers of continuing care should be required to obtain a
certificate of authority to enter into continuing care contracts and
should be monitored and regulated by the Department of Insurance.
(e) This chapter applies equally to for-profit and nonprofit
provider entities.
(f) This chapter states the minimum requirements to be imposed
upon any entity offering or providing continuing care.
(g) Because the authority to enter into continuing care contracts
granted by the Department of Insurance is neither a guarantee of
performance by the providers nor an endorsement of any continuing
care contract provisions, prospective residents must carefully
consider the risks, benefits, and costs before signing a continuing
care contract and should be encouraged to seek financial and legal
advice before doing so.
SEC. 3. Section 1770.5 is added to the Health and Safety Code, to
read:
1770.5. (a) The Department of Insurance shall succeed to and be
vested with all the duties, powers, purposes, functions,
responsibilities, and jurisdiction of the State Department of Social
Services described in this chapter , except for oversight and
regulation of programs and services provided directly to residents of
the communities . The Department of Insurance shall create a
Continuing Care Contracts Branch which shall succeed to and be vested
with the duties, powers, functions, responsibilities, and
jurisdiction of the former Continuing Care Contracts Branch in the
State Department of Social Services.
(b) All regulations, orders, and guidelines adopted pursuant to
this chapter by the State Department of Social Services, including
the former Continuing Care Contracts Branch in the State Department
of Social Services, and any of its predecessors in effect immediately
preceding the operative date of this section shall remain in effect
and shall be fully enforceable unless and until readopted, amended,
or repealed, or until they expire by their own terms.
(c) Any action by or against the State Department of Social
Services pertaining to matters vested in the State Department of
Social Services by this chapter shall not abate but shall continue in
the name of the Department of Insurance, and the Department of
Insurance shall be substituted for the State Department of Social
Services and any of its predecessors by the court wherein the action
is pending. The substitution shall not in any way affect the rights
of the parties to the action. This substitution shall not be
construed to affect the continuing responsibility of the State
Department of Social Services to provide oversight and regulation of
programs and services provided directly to residents of the
communities.
(d) All books, documents, records, and property of the State
Department of Social Services pertaining to functions transferred to
the Department of Insurance pursuant to this section shall be
transferred to the Department of Insurance.
(e) All unexpended balances of appropriations and other funds
available for use in connection with any function or the
administration of any law transferred to the Department of Insurance
pursuant to this section shall be transferred to the Department of
Insurance for use for the purpose for which the appropriation was
originally made or the funds were originally available. If there is
any doubt as to where those balances and funds are transferred, the
Department of Finance shall determine where the balances and funds
are transferred.
(f) No contract, lease, license, or any other agreement to which
the State Department of Social Services is a party pursuant to this
chapter shall be void or voidable by reason of this section, but
shall continue in full force and effect, with the Department of
Insurance assuming all of the rights, obligations, and duties of the
State Department of Social Services under this chapter. That
assumption by the Department of Insurance shall not in any way affect
the rights of the parties to the contract, lease, license, or
agreement.
(g) Every officer and employee of the State Department of Social
Services who is performing a function transferred to the Department
of Insurance pursuant to this section and who is serving in the state
civil service, other than as a temporary employee, shall be
transferred to the Department of Insurance pursuant to the provisions
of Section 19050.9 of the Government Code. The status, position, and
rights of these officers and employees shall not be affected by the
transfer and shall be retained by the person as an officer or
employee of the Department of Insurance, as the case may be, pursuant
to the State Civil Service Act (Part 2 (commencing with Section
18500) of Division 5 of Title 2 of the Government Code), except as to
a position that is exempt from civil service.
(h) The commissioner shall review the requirements of this chapter
and make recommendations to the Legislature as he or she deems
necessary to improve the oversight and regulation of the financial
management of continuing care retirement communities to protect
consumers who enter into continuing care contracts.
SEC. 4. Section 1771 of the Health and Safety Code is amended to
read:
1771. Unless the context otherwise requires, the definitions in
this section govern the interpretation of this chapter.
(a) (1) "Affiliate" means any person, corporation, limited
liability company, business trust, trust, partnership, unincorporated
association, or other legal entity that directly or indirectly
controls, is controlled by, or is under common control with, a
provider or applicant.
(2) "Affinity group" means a grouping of entities sharing a common
interest, philosophy, or connection (e.g., military officers,
religion).
(3) "Annual report" means the report each provider is required to
file annually with the department, as described in Section 1790.
(4) "Applicant" means any entity, or combination of entities, that
submits and has pending an application to the department for a
permit to accept deposits and a certificate of authority.
(5) "Assisted living services" includes, but is not limited to,
assistance with personal activities of daily living, including
dressing, feeding, toileting, bathing, grooming, mobility, and
associated tasks, to help provide for and maintain physical and
psychosocial comfort.
(6) "Assisted living unit" means the living area or unit within a
continuing care retirement community that is specifically designed to
provide ongoing assisted living services.
(7) "Audited financial statement" means financial statements
prepared in accordance with generally accepted accounting principles
including the opinion of an independent certified public accountant,
and notes to the financial statements considered customary or
necessary to provide full disclosure and complete information
regarding the provider's financial statements, financial condition,
and operation.
(b) (reserved)
(c) (1) "Cancel" means to destroy the force and effect of an
agreement or continuing care contract.
(2) "Cancellation period" means the 90-day period, beginning when
the resident physically moves into the continuing care retirement
community, during which the resident may cancel the continuing care
contract, as provided in Section 1788.2.
(3) "Care" means nursing, medical, or other health related
services, protection or supervision, assistance with the personal
activities of daily living, or any combination of those services.
(4) "Cash equivalent" means certificates of deposit and United
States treasury securities with a maturity of five years or less.
(5) "Certificate" or "certificate of authority" means the
certificate issued by the department, properly executed and bearing
the State Seal, authorizing a specified provider to enter into one or
more continuing care contracts at a single specified continuing care
retirement community.
(6) "Commissioner" means the Insurance Commissioner.
(7) "Condition" means a restriction, specific action, or other
requirement imposed by the department for the initial or continuing
validity of a permit to accept deposits, a provisional certificate of
authority, or a certificate of authority. A condition may limit the
circumstances under which the provider may enter into any new deposit
agreement or contract, or may be imposed as a condition precedent to
the issuance of a permit to accept deposits, a provisional
certificate of authority, or a certificate of authority.
(8) "Consideration" means some right, interest, profit, or benefit
paid, transferred, promised, or provided by one party to another as
an inducement to contract. Consideration includes some forbearance,
detriment, loss, or responsibility, that is given, suffered, or
undertaken by a party as an inducement to another party to contract.
(9) "Continuing care contract" means a contract that includes a
continuing care promise made, in exchange for an entrance fee, the
payment of periodic charges, or both types of payments. A continuing
care contract may consist of one agreement or a series of agreements
and other writings incorporated by reference.
(10) "Continuing care advisory committee" means an advisory panel
appointed pursuant to Section 1777.
(11) "Continuing care promise" means a promise, expressed or
implied, by a provider to provide one or more elements of care to an
elderly resident for the duration of his or her life or for a term in
excess of one year. Any such promise or representation, whether part
of a continuing care contract, other agreement, or series of
agreements, or contained in any advertisement, brochure, or other
material, either written or oral, is a continuing care promise.
(12) "Continuing care retirement community" means a facility
located within the State of California where services promised in a
continuing care contract are provided. A distinct phase of
development approved by the department may be considered to be the
continuing care retirement community when a project is being
developed in successive distinct phases over a period of time. When
the services are provided in residents' own homes, the homes into
which the provider takes those services are considered part of the
continuing care retirement community.
(13) "Control" means directing or causing the direction of the
financial management or the policies of another entity, including an
operator of a continuing care retirement community, whether by means
of the controlling entity's ownership interest, contract, or any
other involvement. A parent entity or sole member of an entity
controls a subsidiary entity provider for a continuing care
retirement community if its officers, directors, or agents directly
participate in the management of the subsidiary entity or in the
initiation or approval of policies that affect the continuing care
retirement community's operations, including, but not limited to,
approving budgets or the administrator for a continuing care
retirement community.
(d) (1) "Department" means the Department of Insurance ,
except with respect to the oversight and regulation of programs and
services provided directly to residents of the communities, in which
case "department" means State Department of Social Services .
(2) "Deposit" means any transfer of consideration, including a
promise to transfer money or property, made by a depositor to any
entity that promises or proposes to promise to provide continuing
care, but is not authorized to enter into a continuing care contract
with the potential depositor.
(3) "Deposit agreement" means any agreement made between any
entity accepting a deposit and a depositor. Deposit agreements for
deposits received by an applicant prior to the department's release
of funds from the deposit escrow account shall be subject to the
requirements described in Section 1780.4.
(4) "Depository" means a bank or institution that is a member of
the Federal Deposit Insurance Corporation or a comparable deposit
insurance program.
(5) "Depositor" means any prospective resident who pays a deposit.
Where any portion of the consideration transferred to an applicant
as a deposit or to a provider as consideration for a continuing care
contract is transferred by a person other than the prospective
resident or a resident, that third-party transferor shall have the
same cancellation or refund rights as the prospective resident or
resident for whose benefit the consideration was transferred.
(e) (1) "Elderly" means an individual who is 60 years of age or
older.
(2) "Entity" means an individual, partnership, corporation,
limited liability company, and any other form for doing business.
Entity includes a person, sole proprietorship, estate, trust,
association, and joint venture.
(3) "Entrance fee" means the sum of any initial, amortized, or
deferred transfer of consideration made or promised to be made by, or
on behalf of, a person entering into a continuing care contract for
the purpose of assuring care or related services pursuant to that
continuing care contract or as full or partial payment for the
promise to provide care for the term of the continuing care contract.
Entrance fee includes the purchase price of a condominium,
cooperative, or other interest sold in connection with a promise of
continuing care. An initial, amortized, or deferred transfer of
consideration that is greater in value than 12 times the monthly care
fee shall be presumed to be an entrance fee.
(4) "Equity" means the value of real property in excess of the
aggregate amount of all liabilities secured by the property.
(5) "Equity interest" means an interest held by a resident in a
continuing care retirement community that consists of either an
ownership interest in any part of the continuing care retirement
community property or a transferable membership that entitles the
holder to reside at the continuing care retirement community.
(6) "Equity project" means a continuing care retirement community
where residents receive an equity interest in the continuing care
retirement community property.
(7) "Equity securities" shall refer generally to large and
midcapitalization corporate stocks that are publicly traded and
readily liquidated for cash, and shall include shares in mutual funds
that hold portfolios consisting predominantly of these stocks and
other qualifying assets, as defined by Section 1792.2. Equity
securities shall also include other similar securities that are
specifically approved by the department.
(8) "Escrow agent" means a bank or institution, including, but not
limited to, a title insurance company, approved by the department to
hold and render accountings for deposits of cash or cash
equivalents.
(f) "Facility" means any place or accommodation where a provider
provides or will provide a resident with care or related services,
whether or not the place or accommodation is constructed, owned,
leased, rented, or otherwise contracted for by the provider.
(g) (reserved)
(h) (reserved)
(i) (1) "Inactive certificate of authority" means a certificate
that has been terminated under Section 1793.8.
(2) "Investment securities" means any of the following:
(A) Direct obligations of the United States, including obligations
issued or held in book-entry form on the books of the United States
Department of the Treasury or obligations the timely payment of the
principal of, and the interest on, which are fully guaranteed by the
United States.
(B) Obligations, debentures, notes, or other evidences of
indebtedness issued or guaranteed by any of the following:
(i) The Federal Home Loan Bank System.
(ii) The Export-Import Bank of the United States.
(iii) The Federal Financing Bank.
(iv) The Government National Mortgage Association.
(v) The Farmer's Home Administration.
(vi) The Federal Home Loan Mortgage Corporation of the Federal
Housing Administration.
(vii) Any agency, department, or other instrumentality of the
United States if the obligations are rated in one of the two highest
rating categories of each rating agency rating those obligations.
(C) Bonds of the State of California or of any county, city and
county, or city in this state, if rated in one of the two highest
rating categories of each rating agency rating those bonds.
(D) Commercial paper of finance companies and banking institutions
rated in one of the two highest categories of each rating agency
rating those instruments.
(E) Repurchase agreements fully secured by collateral security
described in subparagraph (A) or (B), as evidenced by an opinion of
counsel, if the collateral is held by the provider or a third party
during the term of the repurchase agreement, pursuant to the terms of
the agreement, subject to liens or claims of third parties, and has
a market value, which is determined at least every 14 days, at least
equal to the amount so invested.
(F) Long-term investment agreements, which have maturity dates in
excess of one year, with financial institutions, including, but not
limited to, banks and insurance companies or their affiliates, if the
financial institution's paying ability for debt obligations or
long-term claims or the paying ability of a related guarantor of the
financial institution for these obligations or claims, is rated in
one of the two highest rating categories of each rating agency rating
those instruments, or if the short-term investment agreements are
with the financial institution or the related guarantor of the
financial institution, the long-term or short-term debt obligations,
whichever is applicable, of which are rated in one of the two highest
long-term or short-term rating categories, of each rating agency
rating the bonds of the financial institution or the related
guarantor, provided that if the rating falls below the two highest
rating categories, the investment agreement shall allow the provider
the option to replace the financial institution or the related
guarantor of the financial institution or shall provide for the
investment securities to be fully collateralized by investments
described in subparagraph (A), and, provided further, if so
collateralized, that the provider has a perfected first security lien
on the collateral, as evidenced by an opinion of counsel and the
collateral is held by the provider.
(G) Banker's acceptances or certificates of deposit of, or time
deposits in, any savings and loan association that meets any of the
following criteria:
(i) The debt obligations of the savings and loan association, or
in the case of a principal bank, of the bank holding company, are
rated in one of the two highest rating categories of each rating
agency rating those instruments.
(ii) The certificates of deposit or time deposits are fully
insured by the Federal Deposit Insurance Corporation.
(iii) The certificates of deposit or time deposits are secured at
all times, in the manner and to the extent provided by law, by
collateral security described in subparagraph (A) or (B) with a
market value, valued at least quarterly, of no less than the original
amount of moneys so invested.
(H) Taxable money market government portfolios restricted to
obligations issued or guaranteed as to payment of principal and
interest by the full faith and credit of the United States.
(I) Obligations the interest on which is excluded from gross
income for federal income tax purposes and money market mutual funds
whose portfolios are restricted to these obligations, if the
obligations or mutual funds are rated in one of the two highest
rating categories by each rating agency rating those obligations.
(J) Bonds that are not issued by the United States or any federal
agency, but that are listed on a national exchange and that are rated
at least "A" by Moody's Investors Service, or the equivalent rating
by Standard and Poor's Corporation or Fitch Investors Service.
(K) Bonds not listed on a national exchange that are traded on an
over-the-counter basis, and that are rated at least "Aa" by Moody's
Investors Service or "AA" by Standard and Poor's Corporation or Fitch
Investors Service.
(j) (reserved)
(k) (reserved)
() "Life care contract" means a continuing care contract that
includes a promise, expressed or implied, by a provider to provide or
pay for routine services at all levels of care, including acute care
and the services of physicians and surgeons, to the extent not
covered by other public or private insurance benefits, to a resident
for the duration of his or her life. Care shall be provided under a
life care contract in a continuing care retirement community having a
comprehensive continuum of care, including a skilled nursing
facility, under the ownership and supervision of the provider on or
adjacent to the premises. No change may be made in the monthly fee
based on level of care. A life care contract shall also include
provisions to subsidize residents who become financially unable to
pay their monthly care fees.
(m) (1) "Monthly care fee" means the fee charged to a resident in
a continuing care contract on a monthly or other periodic basis for
current accommodations and services including care, board, or
lodging. Periodic entrance fee payments or other prepayments shall
not be monthly care fees.
(2) "Monthly fee contract" means a continuing care contract that
requires residents to pay monthly care fees.
(n) "Nonambulatory person" means a person who is unable to leave a
building unassisted under emergency conditions in the manner
described by Section 13131.
(o) (reserved)
(p) (1) "Per capita cost" means a continuing care retirement
community's operating expenses, excluding depreciation, divided by
the average number of residents.
(2) "Periodic charges" means fees paid by a resident on a periodic
basis.
(3) "Permit to accept deposits" means a written authorization by
the department permitting an applicant to enter into deposit
agreements regarding a single specified continuing care retirement
community.
(4) "Prepaid contract" means a continuing care contract in which
the monthly care fee, if any, may not be adjusted to cover the actual
cost of care and services.
(5) "Preferred access" means that residents who have previously
occupied a residential living unit have a right over other persons to
any assisted living or skilled nursing beds that are available at
the community.
(6) "Processing fee" means a payment to cover administrative costs
of processing the application of a depositor or prospective
resident.
(7) "Promise to provide one or more elements of care" means any
expressed or implied representation that one or more elements of care
will be provided or will be available, such as by preferred access.
(8) "Proposes" means a representation that an applicant or
provider will or intends to make a future promise to provide care,
including a promise that is subject to a condition, such as the
construction of a continuing care retirement community or the
acquisition of a certificate of authority.
(9) "Provider" means an entity that provides continuing care,
makes a continuing care promise, or proposes to promise to provide
continuing care. "Provider" also includes any entity that controls an
entity that provides continuing care, makes a continuing care
promise, or proposes to promise to provide continuing care. The
department shall determine whether an entity controls another entity
for purposes of this article. No homeowner's association,
cooperative, or condominium association may be a provider.
(10) "Provisional certificate of
authority" means the certificate issued by the department, properly
executed and bearing the State Seal, under Section 1786. A
provisional certificate of authority shall be limited to the specific
continuing care retirement community and number of units identified
in the applicant's application.
(q) (reserved)
(r) (1) "Refund reserve" means the reserve a provider is required
to maintain, as provided in Section 1792.6.
(2) "Refundable contract" means a continuing care contract that
includes a promise, expressed or implied, by the provider to pay an
entrance fee refund or to repurchase the transferor's unit,
membership, stock, or other interest in the continuing care
retirement community when the promise to refund some or all of the
initial entrance fee extends beyond the resident's sixth year of
residency. Providers that enter into refundable contracts shall be
subject to the refund reserve requirements of Section 1792.6. A
continuing care contract that includes a promise to repay all or a
portion of an entrance fee that is conditioned upon reoccupancy or
resale of the unit previously occupied by the resident shall not be
considered a refundable contract for purposes of the refund reserve
requirements of Section 1792.6, provided that this conditional
promise of repayment is not referred to by the applicant or provider
as a "refund."
(3) "Resale fee" means a levy by the provider against the proceeds
from the sale of a transferor's equity interest.
(4) "Reservation fee" refers to consideration collected by an
entity that has made a continuing care promise or is proposing to
make this promise and has complied with Section 1771.4.
(5) "Resident" means a person who enters into a continuing care
contract with a provider, or who is designated in a continuing care
contract to be a person being provided or to be provided services,
including care, board, or lodging.
(6) "Residential care facility for the elderly" means a housing
arrangement as defined by Section 1569.2.
(7) "Residential living unit" means a living unit in a continuing
care retirement community that is not used exclusively for assisted
living services or nursing services.
(s) (reserved)
(t) (1) "Termination" means the ending of a continuing care
contract as provided for in the terms of the continuing care
contract.
(2) "Transfer trauma" means death, depression, or regressive
behavior, that is caused by the abrupt and involuntary transfer of an
elderly resident from one home to another and results from a loss of
familiar physical environment, loss of well-known neighbors,
attendants, nurses and medical personnel, the stress of an abrupt
break in the small routines of daily life, or the loss of visits from
friends and relatives who may be unable to reach the new facility.
(3) "Transferor" means a person who transfers, or promises to
transfer, consideration in exchange for care and related services
under a continuing care contract or proposed continuing care
contract, for the benefit of another. A transferor shall have the
same rights to cancel and obtain a refund as the depositor under the
deposit agreement or the resident under a continuing care contract.
SEC. 5. 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 department 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, 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. 6. Section 1776.3 of the Health and Safety Code is amended to
read:
1776.3. (a) The Continuing Care Contracts Branch of the
department shall enter and review each continuing care retirement
community in the state at least once every three years to augment the
branch's assessment of the provider's financial soundness.
(b) During its facility visits, the branch shall consider the
condition of the facility, whether the facility is operating in
compliance with applicable state law, and whether the provider is
performing the services it has specified in its continuing care
contracts.
(c) The branch shall issue guidelines that require each provider
to adopt a comprehensive disaster preparedness plan, update that plan
at least every three years, submit a copy to the department, and
make copies available to residents in a prominent location in each
continuing care retirement community facility.
(d) (1) The branch shall respond within 15 business days to
residents' rights, service-related, and financially related
complaints by residents, and shall furnish to residents upon request
and within 15 business days any document or report filed with the
department by a continuing care provider, except documents protected
by privacy laws.
(2) The branch shall provide the Continuing Care Advisory
Committee with a summary of all residents' rights, service-related,
and financially related complaints by residents. The provider shall
disclose any citation issued by the department pursuant to Section
1793.6 in its disclosure statement to residents as updated annually,
and shall post a notice of the citation in a conspicuous location in
the facility. The notice shall include a statement indicating that
residents may obtain additional information regarding the citation
from the provider and the department.
(e) The branch shall annually review, summarize, and report to the
commissioner on the work of the Continuing Care Advisory Committee,
including any issues arising from its review of the condition of any
continuing care retirement community or any continuing care
retirement community provider, and including any recommendations for
actions by the committee, the department, or the Legislature to
improve oversight of continuing care retirement community.
SEC. 7. Section 1777.2 of the Health and Safety Code is amended to
read:
1777.2. (a) The Continuing Care Advisory Committee shall:
(1) Review the financial and managerial condition of continuing
care retirement communities operating under a certificate of
authority.
(2) Review the financial condition of any continuing care
retirement community that the committee determines is indicating
signs of financial difficulty and may be in need of close
supervision.
(3) Monitor the condition of those continuing care retirement
communities that the department or the chair of the committee may
request.
(4) Make available consumer information on the selection of
continuing care contracts and necessary contract protections in the
purchase of continuing care contracts.
(5) Review new applications regarding financial, actuarial, and
marketing feasibility as requested by the department.
(b) The committee shall make recommendations to the department
regarding needed changes in its rules and regulations and upon
request provide advice regarding the feasibility of new continuing
care retirement communities and the correction of problems relating
to the management or operation of any continuing care retirement
community. The committee shall also perform any other advisory
functions necessary to improve the management and operation of
continuing care retirement communities.
(c) The committee may report on its recommendations directly to
the commissioner.
(d) The committee may hold meetings, as deemed necessary to the
performance of its duties.
SEC. 8. Section 1778 of the Health and
Safety Code is repealed.
1778. (a) There is hereby created in the State Treasury a fund
which shall be known as the Continuing Care Provider Fee Fund. The
fund shall consist of fees received by the department pursuant to
this chapter. Notwithstanding Section 13340 of the Government Code,
the Continuing Care Provider Fee Fund is hereby continuously
appropriated to the department, without regard to fiscal years.
(b) Use of the funds appropriated pursuant to this section shall
include funding of the following:
(1) Program personnel salary costs, to include but not be limited
to: Continuing Care Contracts Program Manager at a level consistent
with other management classifications that direct a regulatory
program with statewide impact requiring skills and knowledge at the
highest level with responsibility for work of the most critical or
sensitive nature as it relates to the department's mission, including
protecting vulnerable elderly persons, supervising technical staff
with oversight of highly complex operations and responsibility for
policy and program evaluation and recommendations; full-time legal
counsel with a working knowledge of all laws relating to the
regulation of continuing care retirement communities and residential
care facilities for the elderly; financial analyst with working
knowledge of generally accepted accounting principles and auditing
standards; and other appropriate analytical and technical support
positions.
(2) Contracts with technically qualified persons, to include but
not be limited to financial, actuarial, and marketing consultants, as
necessary to provide advice regarding the feasibility or viability
of continuing care retirement communities and providers.
(3) Other program costs or costs directly supporting program
staff.
(4) The department shall use no more than 5 percent of the fees
collected pursuant to this section for overhead costs, including
facilities operation, and indirect department and division costs.
(c) If the balance in the Continuing Care Provider Fee Fund is
projected to exceed five hundred thousand dollars ($500,000) for the
next budget year, the department shall adjust the calculations for
the application fees under Section 1779.2 and annual fees under
Section 1791 to reduce the amounts collected.
(d) The intent of the Legislature is to empower the program
administrator with the ability and authorization to obtain necessary
resources or staffing to carry out the program objectives.
SEC. 9. Section 1778 is added to the
Health and Safety Code , to read:
1778. There is hereby created in the State Treasury a fund that
shall be known as the Continuing Care Provider Fee Fund. The fund
shall consist of two accounts, the Insurance Account and the State
Department of Social Services Account. Ninety-five percent of fees
received pursuant to this chapter shall be deposited into the
Insurance Account and 5 percent shall be deposited into the State
Department of Social Services Account. Notwithstanding Section 13340
of the Government Code, the moneys in the Insurance Account are
continuously appropriated to the Department of Insurance and moneys
in the State Department of Social Services Account are continuously
appropriated to the State Department of Social Services for the
purposes of this chapter.
SEC. 8. SEC. 10. 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, at a minimum, shall include provisions
addressing all of the following circumstances under which a transfer
may be authorized:
(A) A continuing care retirement community may transfer a resident
under the following conditions, 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 department, 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
department.
(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.
(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 () of Section 1771 of the California
Health and Safety Code. This continuing care contract form has been
approved by the Department of Insurance 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)''