BILL NUMBER: SB 408	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 12, 2011

INTRODUCED BY   Senator Hernandez

                        FEBRUARY 16, 2011

   An act to amend Section 1265 of the Health and Safety Code,
relating to health facilities.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 408, as amended, Hernandez. Health facilities: licensure.
   Existing law provides for the licensure and regulation of health
facilities administered by the State Department of Public Health. A
violation of these provisions is a crime.
   Existing law requires those desiring a license for a health
facility, approval for a specified special service, or approval to
manage a specified type of licensed health facility, that have not
filed an application for a license to operate that facility, to file
with the department a verified application on forms prescribed and
furnished by the department, containing specified information.
   Existing law provides that any requirement placed upon, or
reference to, a corporation in the provisions regulating health
facilities shall also apply to a limited liability company.
   This bill would require a new license application to be filed when
the holder of an existing license  for a health facility, as
defined,  changes ownership. This bill would provide that a
change of ownership occurs whenever the current holder of the license
sells, transfers, leases, exchanges, options, conveys, or otherwise
disposes of, a material amount of its assets or operations, as
provided, to another individual or entity. This bill would provide
that a change of ownership also occurs whenever the current holder of
the license transfers control, responsibility, or governance, as
prescribed, of a material amount of its assets or operations, as
provided, to another individual or entity.
   Because this bill expands the definition of a crime, it would
impose a state-mandated local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1265 of the Health and Safety Code is amended
to read:
   1265.  (a) Any person, political subdivision of the state, or
governmental agency desiring a license for a health facility,
approval for a special service under this chapter, or approval to
manage a health facility currently licensed as a health facility, as
defined in subdivision (a), (b), (c), (d), or (f) of Section 1250,
that has not filed an application for a license to operate that
facility shall file with the department a verified application on
forms prescribed and furnished by the department, containing all of
the following:
   (1) The name of the applicant and, if an individual, whether the
applicant has attained the age of 18 years.
   (2) The type of facility or health facility.
   (3) The location thereof.
   (4) The name of the person in charge thereof.
   (5) Evidence satisfactory to the department that the applicant is
of reputable and responsible character. If the applicant is a firm,
association, organization, partnership, business trust, corporation,
or company, like evidence shall be submitted as to the members or
shareholders thereof, and the person in charge of the health facility
for which application for license is made. If the applicant is a
political subdivision of the state or other governmental agency, like
evidence shall be submitted as to the person in charge of the health
facility for which application for license is made.
   (6) Evidence satisfactory to the department of the ability of the
applicant to comply with this chapter and of rules and regulations
promulgated under this chapter by the department.
   (7) Evidence satisfactory to the department that the applicant to
operate a skilled nursing facility or intermediate care facility
possesses financial resources sufficient to operate the facility for
a period of at least 45 days. A management company shall not be
required to submit this information.
   (8) Each applicant for a license to operate a skilled nursing
facility or intermediate care facility shall disclose to the
department evidence of the right to possession of the facility at the
time the application will be granted, which may be satisfied by the
submission of a copy of applicable portions of a lease agreement or
deed of trust. The names and addresses of any persons or
organizations listed as owner of record in the real estate, including
the buildings and the grounds appurtenant to the buildings, shall be
disclosed to the department.
   (9) Any other information as may be required by the department for
the proper administration and enforcement of this chapter.
   (10) Upon submission of an application to the department by an
intermediate care facility/developmentally disabled habilitative or
an intermediate care facility/developmentally disabled-nursing, the
application shall include a statement of need signed by the
chairperson of the area board pursuant to Chapter 4 (commencing with
Section 4570) of Division 4.5 of the Welfare and Institutions Code.
In the event the area board has not provided the statement of need
within 30 days of receipt of the request from the applicant, the
department may process the application for license without the
statement.
   (11) The information required pursuant to this section, other than
individuals' social security numbers, shall be made available to the
public upon request, and shall be included in the department's
public file regarding the facility.
   (12) With respect to a facility licensed as a health facility, as
defined in subdivision (a), (b), or (f) of Section 1250, for purposes
of this section, "manage" means to assume operational control of the
facility.
   (b) A new license application shall be filed when the holder of an
existing license  for a health facility, as defined in
subdivision (a), (b), or (f) of Section 1250,  changes
ownership. A change of ownership occurs whenever the current holder
of the license:
   (1) Sells, transfers, leases, exchanges, options, conveys, or
otherwise disposes of, a material amount of its assets or operations
to another individual or entity.
   (2) Transfers control, responsibility, or governance of a material
amount of  its assets or operations   the
assets or operations of the current licenseholder  to another
individual or entity.
   (c) An agreement or transaction involves a "material amount of the
assets or operations" pursuant to paragraph (1) of subdivision (b)
if either:
   (1) The agreement or transaction directly affects more than 10
percent of the value of the health facility,  or facilities,
 as defined in subdivision (a), (b), or (f) of Section 1250,
that provide similar health care  and  that are
operated or controlled by the current  license holder
  licenseholder  , or
   (2) The agreement or transaction involves the sale, transfer,
exchange, change in control, governance, or otherwise disposes of any
health facility,  or facilities,  as defined in
subdivision (a), (b), or (f) of Section 1250, that  provide
  provides  similar health care and that 
are   is  controlled, operated, or managed by the
current  license holder  licenseholder  and
that  have   has  a fair market value that
exceeds three million dollars ($3,000,000).
   (d) An agreement or transaction will "transfer control,
responsibility, or governance" pursuant to paragraph (2) of
subdivision (b) if any of the following occurs:
   (1) There is a transfer, assignment, or disposition of 10 percent
or more of the membership interests or voting rights of a limited
liability company or partnership which operates or manages a licensed
health facility, as defined in subdivision (a), (b), or (f) of
Section 1250, to a new partner or member that did not hold 10 percent
or more of the membership interests or voting rights at the time the
existing license was issued to the limited liability company or
partnership.
   (2) There is a transfer, assignment, or disposition of 10 percent
or more of the stock or voting rights of a corporation which operates
or manages a licensed health facility, or which is a member of a
limited liability company that operates or manages a licensed health
facility, as defined in subdivision (a), (b), or (f) of Section 1250,
to a new stockholder that did not hold 10 percent or more of the
stock or voting rights at the time the existing license was issued to
the corporation.
   (3) There is a substitution of a new corporate member or members
that transfers the control of, responsibility for, or governance of,
the current  license holder   licenseholder
 .
   (4) There is a substitution of one or more members of the
governing body, or any arrangement, written or oral, that would
transfer voting control of the members of the governing body.
  SEC. 2.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.