BILL ANALYSIS
SENATE HUMAN
SERVICES COMMITTEE
Senator Carol Liu, Chair
BILL NO: SB 1329
S
AUTHOR: Leno
B
VERSION: As introduced
HEARING DATE: March 23, 2010
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FISCAL: Appropriations
3
2
CONSULTANT:
9
Park
SUBJECT
Residential care facilities for the elderly
SUMMARY
Requires licensees of residential care facilities for the
elderly to notify residents and other specified parties
within 24 hours when a notice of foreclosure is issued on
the property, an unlawful detainer action is initiated
against a licensee, or when a licensee files for
bankruptcy. Requires immediate successors in interest to
property on which a residential care facility for the
elderly is located to follow the same transfer protections
required of licensees when a license is forfeited or a
change of use of the facility occurs. Requires the
Department of Social Services to make an annual unannounced
visit when a facility experiences these events, and
requires licensees of these facilities to report to the
department additional specified events indicating financial
distress. Provides for additional civil penalties related
to notification.
Continued---
STAFF ANALYSIS OF SENATE BILL 1329 (Leno) Page
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ABSTRACT
Current law:
1)Provides for the licensure of residential care facilities
for the elderly (RCFEs) by the Department of Social
Services (DSS) and requires DSS to visit an RCFE at a
minimum of once every five years. Requires DSS to
conduct an annual unannounced event under specified
conditions.
2)Requires a licensee of a licensed RCFE ("licensee") to,
prior to transferring a resident as a result of the
forfeiture of a license or other reason, as specified,
take all reasonable steps to provide for the safe
transfer of residents and minimize transfer trauma. Such
steps include at a minimum:
a) Preparing a relocation evaluation of the needs of
the resident, including recommendations on the type of
facility that meets the needs of the resident and
providing a list of facilities that meet the
resident's present needs.
b) Providing each resident or resident's responsible
person with a written notice no later than 60 days
before the intended eviction, which must include
specified information.
c) Discussing the relocation evaluation with the
resident and his or her legal representative within 30
days of issuing the notice of eviction.
d) Submitting a written report of any eviction to the
licensing agency within five days.
e) Refunding a resident's preadmission fees in excess
of $500 according to a specified schedule, and other
STAFF ANALYSIS OF SENATE BILL 1329 (Leno) Page
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monthly fees, as specified.
f) Other reporting requirements to the licensing
agency and local ombudsperson program.
3)Prohibits a licensee from accepting new residents or
entering into new admission agreements upon issuing a
written notice of eviction for a resident.
4)Requires the licensee to submit a proposed closure plan,
as specified, for DSS' approval if seven or more
residents of an RCFE will be transferred as the result of
the forfeiture of a license or other specified reasons.
Imposes related procedural requirements on a licensee
that submits a closure plan.
5)Requires DSS to follow specified procedures in approving
or disapproving the closure plan.
6)Requires DSS to take any necessary action to minimize
trauma for residents, if a licensee fails to comply with
transfer protections noted above, and if the director of
DSS determines it is necessary to protect residents from
abuse, abandonment, or other substantial threat to health
and safety.
7)Requires a licensee that fails to comply with transfer
protections to reimburse the department and local
agencies for the cost of providing relocation services,
and allows DSS to ask the Attorney General, city
attorney, or local district attorney to pursue remedies,
and provides for specified civil penalties of $100 per
violation per day, and provides for civil action to be
brought by a resident.
8)Provides that any person, firm, partnership, corporation
who owns, operates, establishes, manages, conducts, or
maintains an RCFE that violates the requirements above
STAFF ANALYSIS OF SENATE BILL 1329 (Leno) Page
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shall be responsible for acts of an RCFE's employees and
liable for costs and attorneys fees.
9)Excludes continuing care retirement communities from
these requirements, but imposes separate requirements for
closure of a continuing care retirement community.
This bill:
1)Requires DSS to make an annual unannounced visit to an
RCFE when a facility experiences a notice of foreclosure
of the property, an unlawful detainer action is initiated
against a licensee, or when a licensee files for
bankruptcy.
2)Requires immediate successors in interest to property on
which an RCFE is located to follow the same transfer
protections required of licensees when a license is
forfeited or a change of use of the facility occurs,
pursuant to DSS regulations.
3)Includes immediate successors in interest to property on
which an RCFE is located to the list of parties that are
responsible for acts of an RCFE's employees and liable
for attorney fees and costs when an RCFE violates
specified transfer protections.
4)Requires a licensee to notify DSS, in writing, of the
following events within 24 hours of the event or
knowledge of the event:
o Failure to make one or more mortgage payments on
the property.
o Failure to make timely payment of any premiums
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required to maintain mandated insurance policies or
bonds in effect, or any tax lien levied by any
government agency.
o A utility company has sent notice of intent to
terminate a utility on the property.
o A judgment lien has been levied against the
facility or any of the assets of the facility or
licensee.
o A financial institution refuses to honor a check or
other instrument issued by the licensee to its
employees for a regular payroll.
o The financial resources of the licensee fall below
the amount needed to operate the facility for a period
of at least 45 days based on the current occupancy of
the facility.
o A notice of foreclosure is issued on the property.
o An unlawful detainer action is initiated against
the licensee.
o The licensee files for bankruptcy.
1)Requires a licensee to notify residents, and, if
applicable, their legal representatives, applicants and
potential residents, prior to admission, of a notice of
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foreclosure on the property, an unlawful detainer action
against the licensee, or bankruptcy filing by the
licensee. Such notices must be provided within 24 hours
of the event or knowledge of the event.
2)Provides civil penalties in the amount of $100 per day
for failure to provide the required notification above,
and allows DSS to suspend or revoke a license or
permanently revoke a licensee's ability to operate a
facility anywhere in the state, if failure to notify has
compromised the health or safety of a resident or led to
the relocation of any residents.
FISCAL IMPACT
Unknown
BACKGROUND AND DISCUSSION
Author's statement
The author states that residential care facilities for the
elderly (RCFEs) have not been immune from the massive
number of housing foreclosures in California. The author
states that the vast majority of California's RCFEs are
housed in single-family dwelling units, operated by a lone
individual or family with a mortgage on the property, and
these facilities are highly vulnerable to foreclosure.
The author points to reports that RCFE properties in
foreclosure or bankruptcy have surged and notes that
California has reported a six-fold increase in the number
of complaints regarding the financial condition of RCFEs
from 2006 to 2008. The author notes that, in San Mateo
County, the local Ombudsman program reports that fifteen
facilities are currently in foreclosure or bankruptcy in
its jurisdiction.
The author believes that the impact of a foreclosure on
RCFE residents can be particularly devastating, because
residents often rely on the facility to provide assistance
with most of their activities of daily living, and a
foreclosure or bankruptcy not only requires they find a new
home but also new care providers. The author states that
many residents never receive notice of the imminent loss of
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their home, leaving them and their family members
unprepared for locating a new placement. The author
highlights a recent foreclosure in Contra Costa County,
which occurred without any notice to the facility's six
residents or their families. In facilities in Alameda and
Los Angeles counties, residents were evicted by sheriff's
officers while staff from local Adult Protective Services
offices sought emergency placements.
Residential care facilities for the elderly
RCFEs are assisted living facilities for the aged where
varying levels and intensities of care and supervision,
protective supervision, or personal care are provided,
based upon residents' varying needs. As of March 2010,
there were 7,825 licensed facilities in the state with a
total capacity of 170,290 residents. According to DSS data
from 2007, approximately three-quarters of RCFEs are
licensed for six or fewer residents; the remaining RCFEs
have an average licensed capacity of approximately 60
residents.
Legislative history
AB 949 (Krekorian), Chapter 686, Statutes of 2007,
established procedures to be followed by a residential care
facility for the elderly (RCFE) prior to transferring a
resident to another facility or living arrangement as a
result of forfeiture of a license or change in the use of
the facility, and provided remedies for noncompliance. The
bill was prompted by a closure at the Burbank Gardens
Retirement Hotel in mid-January 2007, in which, according
to the author, 78 residents received a 30-day eviction
notice when the owner decided to sell the property for a
different use.
RCFE foreclosures
According to the Community Care Licensing division of DSS,
41 facilities were in foreclosure or had been foreclosed
between January 2009 and March 2010. The California
Advocates for Nursing Home Reform, a co-sponsor of the
bill, states that of these, about half resulted in the
building shutting down.
According to the federal Administration on Aging's National
Ombudsman Reporting System, California reported a six-fold
increase in the number of complaints received for
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"insufficient funds to operate" between 2006 and 2008,
increasing from 3 to 20 complaints. It is worth noting,
however, that 17 and 25 complaints in this category were
reported for 2003 and 2004, respectively.
Attorney General's brief on RCFE foreclosure
A brief filed by the state's Attorney General in June 2009
concerning an RCFE foreclosure observed the following
relative to transfer trauma:
"Transfer trauma" ? refers to the phenomenon that when
frail elderly are relocated, especially suddenly and
unexpectedly, often death results in a short time.
(See Robinson, Victoria, MSc, "A Brief Literature
Review of the Effects of Relocation on the Elderly,"
prepared for the Hospital Employees' Union of British
Columbia, September 23, 2002.) "Elevated mortality
rates among patients following a relocation have been
observed and studied since the mid-1960's." (Id. at p.
4.) As recently reported in the Wall Street Journal,
"'[t]ransfer trauma kills elderly, frail people,' says
Esther Houser, Oklahoma's long-term care ombudsman for
more than 25 years. After a small nursing home in her
state closed suddenly last fall, 10 of the 16 relocated
residents were dead by early March, she says. 'People
get lost, people don't know which side of the bed to
get out of, or where the bathroom is.'" (Frances, Theo,
"To Be Old, Frail And Evicted: Patients at Risk," Wall
Street Journal, Aug. 7, 2008, p. D1.)
The brief additionally noted that, "When transfer cannot be
avoided, only a slow closure with appropriate measures to
assist the resident helps to decrease transfer trauma."
(Murtiashaw, S., "The Role of Long-Term Care Ombudsmen In
Nursing Home Closures And Natural Disasters," prepared with
support from the U.S. Administration on Aging (January
2000), at p. 11.)
Prior legislation
SB 781 (Leno), Chapter 617, Statutes of 2009, requires a
residential care facility for the elderly to include
additional information when providing a notice of eviction
to a resident, including the reason for the eviction, the
effective date of the eviction, and additional information
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informing the resident of his/her rights regarding
evictions.
AB 407 (Beall), Chapter 442, Statutes of 2009 imposes
requirements on continuing care retirement communities in
the event of their permanent closure, including requiring
the continuing care retirement community to provide written
notice to DSS and to the affected residents or designated
representatives 120 days prior to the intended date of
closure of a continuing care retirement community.
SB 1137 (Perata, Corbett, Machado), Chapter 69, Statutes of
2008, imposes requirements related to real estate
foreclosures, including requiring the holder of a mortgage
to mail a specified notice to the tenant(s) of a property
on which foreclosure proceedings have begun.
AB 949 (Krekorian), Chapter 686, Statutes of 2007,
established procedures to be followed by a residential care
facility for the elderly prior to transferring a resident
to another facility or living arrangement as a result of
forfeiture of a license or change in the use of the
facility, and provides remedies for noncompliance.
Arguments in support
California Advocates for Nursing Home Reform (CANHR), a
co-sponsor of the measure, writes that reports of RCFE
properties in foreclosure or bankruptcy have surged and
that the bill will substantially reduce the grave harm that
threatens assisted living residents whose homes are in
foreclosure or suffering severe financial distress.
Bet Tzedek Legal Services writes that the foreclosure
crisis is severely impacting housing for California's RCFE
residents, and that, increasingly, RCFE owners are losing
their homes and residents are being forced to move with
little or no notice. Bet Tzedek points out that such
residents are more vulnerable to emotional and physical
trauma and placement in facilities that cannot meet their
care. Bet Tzedek believes that, ideally, families would
have several months to search for the perfect care home.
Consumer Attorneys of California writes that the
information notices required by the bill will ensure that
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all residents receive their legal rights and protections
and will allow for elderly residents and their loved ones
to arrange a safe, trauma-free move and avoid dangerous
last-minute evictions. AARP writes that the bill creates
new protections for RCFE residents.
Concerns
Aging Services of California states that it supports the
intent of the bill, but has concerns related to continuing
care retirement communities (CCRCs). The group points out
that, last year, AB 407 (Beall), Chapter 442, Statutes of
2009, specifically addressed the permanent closures of
CCRCs, and is concerned that this bill might duplicate
those requirements. Aging Services of California asks that
this measure exclude CCRCs similar to other areas of the
RCFE Act, where CCRCs are held to a higher level of
accountability.
QUESTIONS AND COMMENTS
1.Unannounced annual visits. It is unclear how an
unannounced annual visit by DSS, following the notice of
eviction, filing of bankruptcy or issuance of an unlawful
detainer against a licensee, with no requirement for
timeliness or specified actions concerning foreclosure or
financial distress, will assist a licensee or residents
in a timely manner with the problem at hand. The
author's staff indicates that an alternative requirement
to address timeliness and assistance specific to
financial distress or foreclosure is being evaluated.
2.Compliance with transfer protection requirement. The
sponsor indicates that, in a foreclosure proceeding, a
bank or purchaser of the property may not follow the same
transfer protections that are required of a licensee, and
a licensee that loses a license based on a foreclosure
may not follow transfer protections.
3.In-process evictions. It is unclear whether an immediate
successor would be held harmless from the requirements or
penalties of the bill when an eviction has been initiated
prior to the bill's effective date, but not yet completed
by the bill's effective date, in the case the eviction
has not been initiated in accordance with the process or
timeline outlined by this bill. The author may wish to
clarify the intent of such in-process evictions.
4.Application of other licensee requirements and remedies
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to immediate successors. The author may wish to consider
the application of other requirements and remedies
applicable to licensees for violation of transfer
protections to immediate successors, such as recovery of
relocation costs when there is failure to comply with
transfer protections.
5.Clarifying amendment. Staff recommends a clarifying
amendment on page 9, lines 1-5.
If the failure to notify has compromised the health or
safety of a resident or led to the relocation of any
residents, If any residents are relocated without
adequate notification, as required by this section, or
if the health or safety of a resident has been
compromised as a result of a relocation that has
occurred with adequate notification, as required by
this section, the department may also suspend or
revoke the licensee's license and issue a permanent
revocation of the licensee's ability to operate a
facility anywhere in the state.
POSITIONS
Support: Bet Tzedek Legal Services (co-sponsor)
California Advocates for Nursing Home Reform
(co-sponsor)
AARP California
Consumer Attorneys of California
Oppose:None received
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