BILL ANALYSIS �
SENATE HUMAN
SERVICES COMMITTEE
Senator Carol Liu, Chair
BILL NO: SB 897
S
AUTHOR: Leno
B
VERSION: March 31, 2011
HEARING DATE: April 12, 2011
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FISCAL: Appropriations
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CONSULTANT:
Park
SUBJECT
Residential care facilities for the elderly
SUMMARY
Requires licensees of residential care facilities for the
elderly to notify the Department of Social Services, its
residents, and other parties within two business days of
specified events indicating financial distress. Requires
the Department of Social Services to take discretionary
actions, upon notification of specified events.
ABSTRACT
Existing law:
1.Under the Residential Care Facilities for the Elderly
Act, provides for the licensure of residential care
facilities for the elderly (RCFEs) by the Department of
Social Services (DSS), Community Care Licensing Division
(CCL).
Continued---
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2.Provides that any person who violates the Residential
Care Facilities for the Elderly Act, or who willfully or
repeatedly violates any rule or regulation adopted under
the Act, is guilty of a misdemeanor, with a fine not to
exceed one thousand dollars ($1,000), by imprisonment in
the county jail for up to a year, or by both the fine and
imprisonment.
3.Provides broad authority for the director of DSS to take
enforcement action, including, but not limited to,
actions to suspend or revoke a license and to impose
civil penalties (generally between $25 to $50 per day,
but no greater than $150 per day) for violations of RCFE
statutes.
4.Provides for a state long-term care ombudsman office
(including approved organizations) within the Department
of Aging to investigate and seek to resolve complaints
and concerns communicated by, or on behalf of, patients,
residents, or clients of any long-term care facility.
This bill:
1.Requires an RCFE licensee to notify DSS and the State
Long-Term Care Ombudsman, in writing or as specified, of
the following events within two business days of the
event or knowledge of the event:
o Failure to make one or more mortgage, lease, or
rental payments on the property within 30 days of the
due date.
o A provider of electricity, gas, or water services
has sent notice of intent to terminate a utility on
the property.
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o 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.
1.Requires an RCFE licensee to notify DSS, the State
Long-Term Care Ombudsman, all residents, and, if
applicable, their legal representatives, of the following
within two business days of the event or knowledge of the
event.
o Notice of default, trustee's sale, or any other
indication of foreclosure issued on the property.
o An unlawful detainer action initiated against the
licensee.
o Bankruptcy filing by the licensee.
1.Requires RCFE licensees to notify all applicants for
potential residence, and if applicable, their legal
representatives, of these same events under 2) or
knowledge of those events, prior to admission.
2.Allows DSS to initiate a compliance plan, noncompliance
conference , or other appropriate action, upon notice of
the above in 1), but requires DSS to initiate a
compliance plan, noncompliance conference, or other
appropriate action upon notice of the above in 2).
3.Authorizes civil penalties in the amount of $100 per day
for failure to provide the notifications required above,
not to exceed $2,000, and allows DSS to suspend or revoke
a license or permanently revoke a licensee's ability to
operate, or act as an administrator of, a facility
anywhere in the state, if a resident is relocated without
the notification required by the section and suffers
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transfer trauma or other harm to his or her health and
safety.
4.Exempts RCFE licensees that have obtained a certificate
of authority to offer continuing care contracts from the
requirements above.
FISCAL IMPACT
Unknown.
BACKGROUND AND DISCUSSION
Author's statement
The author writes that current law fails to provide elderly
residents living in residential care facilities with
adequate notification to avoid harmful last-minute
evictions when a licensee suffers severe financial distress
or bankruptcy. The author states that abrupt RCFE closures
due to financial distress are particularly traumatic for
the residents, who are often very physically frail or
suffer from Alzheimer's disease or other form of dementia.
The author notes that since the previous bill was
introduced (SB 1329, Leno, of 2010) more RCFE closures due
to financial distress have forced residents to scramble to
find a place to live and points to several examples.
The author believes that the advance notice requirements in
the bill will give residents an opportunity to investigate
the stability of their placement and to explore other
housing options. The author notes that, while CCL's
response to notifications is discretionary, early reports
of financial troubles will enable CCL to counsel facilities
through their crisis or at least minimize transfer trauma
to residents of the closing facility. Finally, the author
believes that SB 897 will reduce the number of times CCL
will have to take over operations of an abruptly closed
RCFE.
Residential care facilities for the elderly
RCFEs are assisted living facilities for persons 60 years
of age and over and persons under 60 with compatible needs.
RCFEs, which may also be known as retirement homes or board
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and care homes, provide varying levels and intensities of
care and supervision, protective supervision, or personal
care, based upon residents' needs. As of March 2011, there
were 7,662 licensed facilities in the state with a total
capacity of 170,061 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.
RCFE foreclosures
According to the Community Care Licensing division of DSS,
41 RCFEs were in foreclosure or had been foreclosed between
January 2009 and March 2010, out of 65 foreclosures of all
CCL-licensed facility types. 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 DSS, RCFEs do not report any annual
financial information to CCL.
Other sources indicate a much more widespread problem with
foreclosures. An investigation undertaken by the New York
Times, published in April 2010, suggested that almost 16
percent of the Bay Area's 1,600 properties licensed as
small residential care homes had been at some stage of
foreclosure since June 2006 (although small residential
care homes may not correspond with the RCFE
classification), and that perhaps as many as 100 homes had
been under foreclosure within a six-month period.
Additionally, the San Mateo County ombudsman office
reported dealing with 16 foreclosure or bankruptcy cases
within a 16 month period, prior to June 2010. Notably, last
May (2010), the Press-Enterprise reported that a 102-bed
assisted living and respite care home in Hemet (Parkside
Gardens) was forced to close immediately following a staff
walk-out after the facility could not make payroll,
although DSS had been working with the facility managers
for more than six months after the report of a financial
default.
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
"insufficient funds to operate" between 2006 and 2008,
increasing from 3 to 20 complaints. It is worth noting,
however, that a high number of complaints in this category
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were noted for prior years (17 in 2003 and 25 in 2004).
Governor's veto of SB 1329 of 2010
As passed by this committee, SB 1329 of 2010 was broader in
scope than the current measure. The version of SB 1329
that was vetoed by Governor Schwarzenegger was
substantially similar to SB 897, with the following
exceptions: 1) it requires licensees to notify the State
Long-Term Care Ombudsman, in addition to DSS for identical
events; and 2) it provides that the civil penalty for
failure to meet the notification requirements is
discretionary rather than mandatory. The veto of SB 1329
reads:
I am returning Senate Bill 1329 without my
signature.
While I appreciate the author's continued effort
to improve
protections for residential care facilities, this
bill would
represent a new unfunded workload and redirect
scarce resources that
are currently dedicated to immediate health and
safety issues.
For this reason, I am unable to sign this bill.
Sincerely,
Arnold Schwarzenegger
Prior legislation
SB 1329 (Leno) of 2010, was substantially similar to this
measure. Would have required licensees of residential care
facilities for the elderly (RCFEs), with certain
exceptions, to notify the Department of Social Services
(DSS) and, in some instances, residents, applicants and
potential residents, of specified events, and would have
required DSS to initiate compliance plans, noncompliance
conferences, or other administrative actions upon receipt
of the notification. Vetoed by Governor.
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
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effective date of the eviction, and additional information
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. CANHR
believes that the notification provided for in the bill
will ensure that residents will be better able to plan for
a possible move and avoid dangerous last-minute evictions.
AARP writes that evaluating long-term care options and
making good decisions is difficult enough under normal
circumstances, but trying to make good decisions on short
notice is problematic. AARP believes this measure will
provide DSS and residents an early warning of financial
distress so that DSS may take appropriate action and that
residents can consider whether to reevaluate their
continued residence.
Bet Tzedek Legal Services, another co-sponsor, writes that
the foreclosure crisis is severely impacting housing for
California's RCFE residents, and that, increasingly, RCFE
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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 writes that notice to RCFE
residents will enable them to assert legal challenges to
involuntary relocations and give them additional time to
prepare for possible transfer to a new facility.
COMMENTS
1.Is the State Long-Term Care Ombudsman the right dual
reporting entity? The author may wish to consider
whether a local long-term care ombudsman office might not
be better able to intervene. Does the author intend for
the state office to respond directly, or to pass along
information to the local offices?
2.Penalties exist in current law.
a. Currently, DSS already has authority to issue civil
penalties in varying amounts, generally between $25 to
$50 per day, and even up to $150 per day, and beyond
if certain conditions are met. Is it the author's
intent to give DSS less flexibility in applying a
particular amount of penalty, e.g., applying a civil
penalty of $25 a day, rather than $100 a day, or
preventing providers from accumulating a penalty of
more than $2,000 total?
b. DSS currently has the ability to suspend or revoke
a license, or permanently exclude persons from
obtaining a license. It is unclear how the bill's
current discretionary language on suspension,
revocation, or permanent revocation varies from the
authority in current law.
POSITIONS
Support: Bet Tzedek Legal Services (co-sponsor)
California Advocates for Nursing Home Reform
(co-sponsor)
California Senior Legislature (co-sponsor)
AARP California
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California Long Term Care Ombudsman Association
Professional Fiduciary Association of California
Ombudsman Services of Northern California
Ombudsman Services of San Mateo County
Oppose:None received
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