BILL ANALYSIS �
SB 897
Page 1
Date of Hearing: June 28, 2011
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Jim Beall Jr., Chair
SB 897 (Leno) - As Amended: May 17, 2011
SENATE VOTE : 38-0
SUBJECT : Residential care facilities for the elderly
SUMMARY : Requires licensees of residential care facilities for
the elderly (RCFEs) to notify the State Long-Term Care Ombudsman
and, in some instances, residents and potential residents, and
the Department of Social Services (DSS) of specified events
indicating financial distress. Specifically, this bill :
1)Requires an RCFE licensee to notify, in writing or as
specified, the State Long-Term Care Ombudsman of the following
events within two business days of the event or knowledge of
the event:
a) Failure to make one or more mortgage, lease, or rental
payments on the property within 30 days of the due date;
b) A provider of electricity, gas, or water services has
sent notice of intent to terminate a utility on the
property; or,
c) 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.
2)Requires an RCFE licensee to notify, in writing, the State
Long-Term Care Ombudsman; DSS; all residents and, if
applicable, their legal representatives; all applicants for
potential residency and, if applicable, their legal
representatives, prior to admission, of the following within
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two business days of the event or knowledge of the event:
a) Notice of default, trustee's sale, or any other
indication of foreclosure issued on the property;
b) An unlawful detainer action initiated against the
licensee; or,
c) Bankruptcy filing by the licensee.
3)Requires DSS to initiate a compliance plan, noncompliance
conference, or other appropriate action upon receiving notice
as specified in paragraph 2), above.
4)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 transfer trauma or other harm to his or
her health and safety.
5)Clarifies that suspension or revocation proceedings related to
the provisions of this bill are to be conducted pursuant to
due process procedures applicable to suspension or revocation
actions under existing law.
6)Exempts RCFE licensees that have obtained a certificate of
authority to offer continuing care contracts from the
requirements above.
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 DSS, Community Care Licensing Division
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(CCL).
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 $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 and $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.
5)Establishes due process appeal procedures for proceedings
related to suspension or revocation of an RCFE license.
FISCAL EFFECT : Unknown
COMMENTS : RCFEs are licensed assisted living facilities for
persons 60 years of age and over and persons under 60 with
compatible needs.
Need for this bill : According to the author, this bill "will
protect the elderly residents living in RCFEs from the
emotional, physical and unexpected upheaval that results from
abrupt foreclosure of RCFEs." As of June 1, 2011, there were
7,673 RCFEs in California with a total capacity of 170,724
residents. Approximately 75%, are located in single-family
dwelling units, operated by a lone individual or family with a
mortgage on the property, and have 6 or fewer residents. "In
recent years," the author notes, "1 in 8 homes have been
foreclosed in California; RCFEs in foreclosure or bankruptcy
have also surged, leaving vulnerable residents subject to loss
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of their home and needed care." The author further says that:
Under current law, RCFEs are not required to provide
notice to the residents or to �CCL] when these homes
are in foreclosure or suffering from severe financial
distress. In some foreclosure cases, residents had no
idea they were losing their home until sheriffs
forcibly removed them. Without timely notice, RCFE
residents are effectively deprived of their legal
recourse. They are rendered much more vulnerable to
transfer trauma and placements in homes that are not
able to meet their needs. Without timely notice,
family, guardians and friends of the residents are
subject to hardships as they struggle to find a safe,
secure and compatible living arrangement for the loved
one.
Under existing law, the RCFE Relocation Act of 2008,
RCFEs are required to provide 60-day notice when RCFEs
close due to the sale of the business for different
uses or forfeiture of the RCFE license. SB 897 will
require RCFE operators give notice to all residents
and their legal representatives of any foreclosure
proceedings when they are initiated. This will allow
residents to prepare for a possible transfer to a new
home with appropriate levels of care.
SB 897 will also require RCFE operators to notify CCL
and the state Ombudsman of events indicating financial
distress that would threaten the housing security of
the residents such as foreclosure proceedings, a
missed mortgage payment, or threatened utility
shut-off. Such notice would enable CCL to monitor the
facility and ensure the residents are protected.
SB 897 will ensure vulnerable RCFE residents and their
loved ones are notified when their home is being
threatened. With such notification, they will be able
to carefully plan for a possible move and avoid
dangerous last-minute evictions.
RCFE foreclosures : According to CCL data, 41 RCFEs were in
foreclosure or had been foreclosed between January 2009 and
March 2010, out of 65 foreclosures for all CCL-licensed
residential facilities statewide. RCFEs do not report any
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annual financial information to CCL. The author gives several
illustrative examples of recent foreclosures:
In Hemet, Parkside Gardens was abruptly shut down when
the staff refused to report to work after the facility
failed to make payroll. One hundred two residents were
forced to immediately find placement without any prior
notice.
At Paradise Living, an RCFE in Granite Bay, a resident's
family member was shocked to learn that the facility was
for sale following 18 months of foreclosure proceedings.
The residents had not been given any notice.
Residents of Northstar Manor in Woodland were abruptly
served with eviction notices by the sheriff on April 7,
2010. The residents and their families had no idea that
their home had already been foreclosed and sold at auction.
This bill requires that RCFE operators give notice to residents
(and, when applicable, to their families) whenever their homes
are subject to foreclosure, bankruptcy, or unlawful detainer.
This advance notice will give residents an opportunity to
investigate the stability of their placement and to explore
other housing options. This bill also requires RCFE operators
to give notice to CCL and the State Office of the Long-term Care
Ombudsman when a facility is in foreclosure, bankruptcy, or
suffers other specified indicators of severe financial distress.
Under this bill, CCL's response in most instances is
discretionary; although, early reports of financial troubles
will enable CCL to counsel facilities through their crisis or to
minimize transfer trauma to residents of the closing facility.
In the case of foreclosure, bankruptcy, or unlawful detainer, on
the other hand, this bill requires CCL to take appropriate
action. At its discretion, CCL may initiate a compliance plan,
noncompliance conference, or other appropriate administrative
action.
Prior legislation :
SB 1329 (Leno 2010) was substantially similar to this bill. SB
1329 was heard by this committee and passed by the Legislature
in the last Session, but was vetoed by Governor Schwarzenegger.
The veto message stated:
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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.
This bill differs from SB 1329 in several respects:
This bill includes notification to the State Office
of the Long-term Care Ombudsman.
SB 1329 would have authorized suspension or
revocation proceedings if relocation occurs without
adequate notification or a resident suffers transfer
trauma or other harm to his or her health or safety;
this bill requires both lack of notification and
transfer trauma or other harm to the resident's health
or safety.
This bill clarifies licensees' due process appeal
rights in the event that DSS takes action to suspend
or revoke a facility's license.
The civil penalty provided for under this bill is
discretionary; the civil penalty under SB 1329 was
mandatory.
SB 781 (Leno), Chapter 617, Statutes of 2009, requires an RCFE
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
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
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proceedings have begun.
AB 949 (Krekorian), Chapter 686, Statutes of 2007, establishes
procedures to be followed by an 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 provides remedies for noncompliance.
REGISTERED SUPPORT / OPPOSITION :
Support
AARP
Alzheimer's Association
Alzheimer's Association
Bet Tzedek Legal Services (cosponsor)
California Advocates for Nursing Home Reform (cosponsor)
California Alliance for Retired Americans
California Commission on Aging
California Commission on the Status of Women
California Long-Term Care Ombudsman Association
California Senior Legislature (cosponsor)
Congress of California Seniors
County Welfare Directors Association (CWDA)
Ombudsman Services of Northern California
Ombudsman Services of San Mateo County
The Arc and United Cerebral Palsy in California
Opposition
None on file.
Analysis Prepared by : Eric Gelber / HUM. S. / (916) 319-2089