BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 897 (Leno)
Hearing Date: 05/23/2011 Amended: 05/17/2011
Consultant: Jolie Onodera Policy Vote: Human Services 7-0
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BILL SUMMARY: SB 897 would require licensees of residential care
facilities for the elderly (RCFE) to notify residents, potential
residents, the Department of Social Services (DSS), and the
State Long-Term Care Ombudsman within two business days of
specified events that could be indicators of an RCFE closure,
including but not limited to a notice of foreclosure upon the
property or a bankruptcy filing by the licensee. The bill also
provides for increased civil penalties related to notification.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
DSS notification Potentially significant savings;
General
possibly increased fine revenue Special*
State LTC Ombudsman Minor, absorbable costs
General
notification
DSS administrative action Potential, minor costs
General
Notification to residents No direct state costs
*Technical Assistance Fund
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STAFF COMMENTS:
This bill places new notification requirements on RCFEs. As
these facilities are private entities, the costs associated with
the requirements to notify DSS, the State Long-Term Care
Ombudsman, residents, applicants, and/or their legal
representatives of specified occurrences that may indicate
financial distress and potential facility closure will not
create new state costs.
The bill requires a licensee to notify the State Long-Term Care
Ombudsman in writing, or as specified, of any of the following
events within two business days of the event or knowledge of the
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event:
1) Failure to make one or more mortgage, lease, or rental
payments on the property within 30 days of the due date;
2) A utility company (electricity, gas, or water
services) has sent notice of intent to terminate a utility
on the property; or
3) 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.
This bill requires an RCFE to notify DSS, the State Long-Term
Care Ombudsman, residents, and applicants (and/or their legal
representatives) of the following events within two business
days of the event or knowledge of the event:
1) A notice of default, notice of a trustee's sale, or
any other indication of foreclosure is issued on the
property;
2) An unlawful detainer action is initiated against the
licensee; or
3) The licensee files for bankruptcy.
For these events directly related to foreclosure or bankruptcy,
DSS is required to initiate a compliance plan, noncompliance
conference, or other appropriate action. Existing regulations
require RCFE's to notify DSS if there are "activities related to
bankruptcy or foreclosure" affecting the facility, so some of
the notifications required in the bill should have already been
received under current regulations. This bill would provide
specific language regarding the events subject to notification,
and authorizes increased civil penalties for failure to do so.
To the extent this provision results in additional notifications
that DSS must respond to, there could be additional workload,
however, the language is flexible in allowing DSS to decide the
appropriate course of administrative action. Any additional
workload to DSS would be minor and absorbable within existing
resources.
Currently, when an RCFE closes for any reason, DSS is involved
in the closure. In the absence of notification prior to closure,
Adult Protective Services is involved in locating emergency
placements for residents, and the Attorney General may become
involved in litigation surrounding the closure. According to
DSS, from January 2009 to March 2010, there were 41 RCFE
foreclosures, and the California Advocates for Nursing Home
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Reform states that approximately half resulted in closures. This
bill will, at a minimum, give DSS more time to work on a plan
for an RCFE that will ultimately close, which should reduce
department workload. To the extent that it prevents an RCFE from
closing, there will be significant workload savings.
The State Long-Term Care Ombudsman within the Department of
Aging (CDA) is not required to initiate any administrative
action upon notification for any of the provisions of the bill.
The State Ombudsman would likely provide a copy of the notices
to the appropriate local Long-Term Care Ombudsman office,
however, these costs will be minor and absorbable within
existing resources.
Prior Legislation. SB 1329 (Leno) 2010 was similar to this
measure but required the DSS to receive and review additional
notifications, as well as authorized the DSS to initiate a
compliance plan based on those notifications. SB 1329 was vetoed
by the Governor with the following message:
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.