BILL ANALYSIS
SB 1329
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Date of Hearing: June 22, 2010
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 1329 (Leno) - As Amended: April 28, 2010
SENATE VOTE : 30-0
SUBJECT : RESIDENTIAL CARE FACILITIES FOR THE ELDERLY: RCFE
RESIDENTS FORECLOSURE PROTECTION ACT OF 2010
KEY ISSUE : TO PROTECT VULNERABLE SENIORS IN ASSISTED LIVING,
SHOULD LICENSEES OF RESIDENTIAL CARE FACILITIES FOR THE ELDERLY
(RCFE) BE REQUIRED TO NOTIFY THE RESIDENTS AND THE DEPARTMENT OF
SOCIAL SERVICES WHEN THE PROPERTY IS SUBJECT TO FORECLOSURE OR
OTHER EVENT INDICATING FINANCIAL DISTRESS?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This bill, co-sponsored by California Advocates for Nursing Home
Reform (CANHR) and Bet Tzedek Legal Services, would enact the
RCFE Residents Foreclosure Protection Act of 2010--legislation
intended to protect the interest of vulnerable seniors living in
assisted living homes in the event of foreclosure or other
financial distress experienced by the licensee operating the
facility. Under this bill, the RCFE licensee would be required
to notify the Department of Social Services and the residents of
the home upon the occurrence of, or upon obtaining knowledge of,
certain triggering events, all of which are meant to indicate
that the facility is experiencing financial distress or is
subject to foreclosure. Upon receiving the notification, in
most cases DSS would be authorized, but necessarily required, to
initiate administrative action. If, however, foreclosure,
eviction, or bankruptcy proceedings have actually begun against
the licensee, then this bill appropriately requires
administrative action to protect the interests of the residents.
The author has expressed intent to make clarifying amendments
suggested in Assembly Human Services to address concerns of one
association of care providers who have yet to officially oppose
the bill. The bill is supported by a number of organizations
that advocate for seniors, including AARP and the Congress of
California Seniors, and has no current opposition. This bill
passed out of the Senate by a 30-0 vote.
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SUMMARY : Enacts the RCFE Residents Foreclosure Protection Act
of 2010, to require licensees of residential care facilities for
the elderly to notify authorities and the residents of the home
when the property is subject to foreclosure or certain other
events indicating financial distress. Specifically, this bill :
1)Requires a RCFE licensee to notify the Department of Social
Services (DSS) in writing within 2 business days of the
occurrence of, or the licensee obtaining knowledge of, any of
the following events:
a) Failure to make one or more mortgage, lease, or rental
payments on the property within 30 days of the due date;
b) Failure to make timely payment of any premiums required
to maintain mandated insurance policies or bonds in effect,
or any tax lien levied by any government agency, unless an
insurance premium has not been paid due to the fault of an
escrow account servicer;
c) A utility company has sent notice of intent to terminate
a utility on the property;
d) A judgment lien has been levied against the facility or
any of the assets of the facility or licensee;
e) A financial institution refuses to honor a check or
other instrument issued by the licensee to its employees
for a regular payroll due to insufficient funds;
f) 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.
2)Authorizes, but does not require, DSS to initiate a compliance
plan, noncompliance conference or other administrative action
upon receipt of notification of any of the factors (a) through
(f) above indicating financial distress.
3)Requires that a RCFE licensee notify DSS, all residents, and,
if applicable, their legal representatives, in writing within
2 business days, of the occurrence of, or the licensee
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obtaining knowledge of, any of the following events:
a) A notice of foreclosure is issued on the property;
b) An unlawful detainer is initiated against the licensee;
c) The licensee files for bankruptcy.
4)Requires that a RCFE licensee notify all applicants or
potential residents of the facility, and, if applicable, their
legal representatives, in writing and prior to admission to
the facility, of the occurrence of, or the licensee obtaining
knowledge of, any of the following events:
a) A notice of foreclosure is issued on the property;
b) An unlawful detainer is initiated against the licensee;
or,
c) The licensee files for bankruptcy.
5)Requires DSS to initiate a compliance plan, noncompliance
conference, or other administrative action upon receipt of
notification of any foreclosure, unlawful detainer, or
bankruptcy events, as specified above.
6)Provides for civil penalties of $100 for each day a licensee
fails to provide required notification, up to a total civil
penalty not more than $2000.
7)Authorizes DSS to suspend or revoke the licensee's license, or
permanently revoke the licensee's ability to operate or act as
an administrator of a facility anywhere in the state, if a
resident is relocated without adequate notification, or if the
resident's health and safety has been compromised as a result
of a relocation that has occurred without the required
notification.
8)Exempts from these requirements RCFE licensees who have
obtained a certificate of authority from DSS permitting the
licensee to enter into continuing care contracts at a
continuing care retirement community.
EXISTING LAW , the California Residential Care Facilities for the
Elderly Act (Chapter 3.2 of Division 2 of the Health and Safety
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Code), provides for the licensure and regulation of RCFEs by the
Department of Social Services, Community Care Licensing Division
(CCL), and generally authorizes the Department to take
enforcement action, including, but not limited to, actions to
suspend, temporarily suspend, or revoke a license, and to impose
civil penalties for violations of rules and regulations
established under RCFE licensing provisions.
COMMENTS : This bill, co-sponsored by California Advocates for
Nursing Home Reform (CANHR) and Bet Tzedek Legal Services, would
enact the RCFE Residents Foreclosure Protection Act of
2010--legislation intended to protect the interest of vulnerable
seniors living in assisted living homes in the event of
foreclosure or other financial distress experienced by the
licensee operating the facility. Under this bill, the RCFE
licensee would be required to notify DSS and the residents of
the home upon the occurrence of, or upon obtaining knowledge of,
certain triggering events, all of which are meant to indicate
that the facility is experiencing financial distress or could be
vulnerable to foreclosure. Upon receiving the notification, in
most cases DSS would be authorized, but necessarily required, to
initiate administrative action. However, if foreclosure,
eviction, or bankruptcy proceedings have actually begun against
the licensee-a more serious type of event--then this bill
appropriately requires DSS to take administrative action to
protect the interests of the residents. Finally, this bill
provides up to $2000 in civil penalties for failure to comply
with the notification requirements, with the possibility of
suspension or revocation of the licensee's license for the more
serious offense of relocating a resident without adequate
notification.
Background. RCFEs are assisted living facilities for seniors
where varying levels of care and supervision, protective
supervision, or personal care are provided, based upon
residents' needs. (Health and Safety Code Section 1569.2(k).)
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. As is
noted in this bill's legislative findings, the vast majority of
RCFEs are located in single-family dwellings, with a mortgage on
the property.
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Stated Need for the Bill . According to the sponsor, the housing
foreclosure crisis in California increasingly extends to RCFEs.
CANHR states that it has experienced a surge of reports about
RCFE properties in foreclosure or bankruptcy, and cites figures
from the State Long-term Care Ombudsman Program reporting a
six-fold increase in the number of RCFEs in financial distress
from 2006 to 2008. This unfortunate trend poses special
problems for seniors living in RCFEs because, as CANHR explains:
The impact of a foreclosure on RCFE residents can be
particularly devastating because they often rely on
the facility to provide assistance with most of their
activities of daily living. A foreclosure or
bankruptcy not only requires they find a new home but
also must find new care providers, disrupting the
patterns of care to which they had become accustomed.
The devastation of a foreclosure is exacerbated by the
fact that many residents never receive notice of the
imminent loss of their home, leaving them and their
family members entirely unprepared for locating a new
placement. A recent foreclosure in Contra Costa
County occurred without any notice to the six
residents [of the RCFE] or their families. As the
operator of the facility fought the foreclosure in
court, she continued to accept new residents who, like
the old residents, were stunned to learn their home
was lost when word finally leaked out. In facilities
in Alameda and Los Angeles Counties, residents were
actually sent to the curb by sheriff's officers while
staff from local Adult Protective Services offices
sought emergency placements.
According to Bet Tzedek Legal Services, current law does not
adequately protect these vulnerable senior residents of RCFEs,
because, as they explain:
Under current law, RCFE owners are not required to
provide notice to residents or the Community Care
Licensing Division when they are suffering severe
financial distress or their homes are in foreclosure.
Increasingly, RCFE owners are losing their homes and
residents are being forced to move with little or no
notice. Rather than having months to search for a new
care home, residents may have only several hours. As
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a result of this lack of notice, RCFE residents are
more vulnerable to emotional and physical trauma, and
placement in facilities that cannot meet their care
needs.
The author continues to work with residential care providers to
address concerns. Shortly before this bill was heard one week
ago by the Assembly Committee on Human Services, the author
received a letter from the Community Residential Care
Association of California (CRCAC), expressing neither support
nor opposition to the bill, but outlining some concerns CRCAC
continued to have. This Committee has received a copy of that
letter from CRCAC, as well as written comments from the author
that evidences the constructive dialogue that continues to
occur. At the time of this analysis, the author had expressed
his commitment to making several clarifying amendments to
address ambiguities in the bill that were raised by CRCAC and
recommended in the Committee on Human Services analysis. The
author identified to this Committee the specific ambiguities
that would be addressed by the impending amendments, but
unfortunately the precise language of those amendments was not
available in time for this analysis.
In its letter, CRCAC contends that although this bill requires
notice to "all applicants or potential residents" that a
foreclosure, eviction, or bankruptcy proceedings has begun (page
3, line 28), the bill does not adequately define those terms.
Because any eligible senior citizen in California may be
conceived of as a "potential resident", the author may wish to
require notice only to actual applicants, who are more readily
identifiable, by including such notice with the application to
any person seeking to apply for residency at the home.
CRCAC also contends in its letter that the bill language
requiring notification of DSS if "the financial resources of the
licensee fall below the amount needed to operate the facility
for a period of at least 45 days" (page 3, lines 20-22) needs
clarification. According to the author, a 45 day standard
currently applies to nursing homes, and this provision is
apparently intended to require that the licensee at all times
maintain sufficient assets to ensure future operations of the
RCFE for at least 45 days. The author's clarifying amendments
are expected to address these concerns.
ARGUMENTS IN SUPPORT : This bill is supported by a number of
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organizations that advocate for seniors, including AARP, the
Congress of California Seniors, and the Alzheimer's Association,
because they are aware of the potential emotional and physical
trauma to fragile seniors associated with moving from one
assisted living facility to another.
Other supporters include the Consumer Attorneys and the
California Retired Teachers Association, the latter writing in
support:
Unfortunately, in these difficult economic times some
residential care facilities can face economic troubles
leading to bankruptcy and closure. The clients who
are frail and elderly, however, have a much higher
risk of service loss and protection if a RCFE should
close due to financial troubles or bankruptcy. SB
1329 would create an early warning system to ensure
that (certain) obligations occur in a manner that will
protect the interests of the elderly clients.
REGISTERED SUPPORT / OPPOSITION :
Support
California Advocates for Nursing Home Reform (CANHR)
(co-sponsor)
Bet Tzedek Legal Services (co-sponsor)
Alzheimer's Association
Consumer Attorneys of California
American Association of Retired People (AARP)
California Retired Teachers Association
Congress of California Seniors
Opposition
None on file
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334