BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 1523
                                                                  Page  1

          Date of Hearing:   May 7, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                    AB 1523 (Atkins) - As Amended:  April 1, 2014 

          Policy Committee:                              Human  
          ServicesVote:6 - 0

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill requires all RCFEs to carry liability insurance.  
          Specifically, this bill: 

          1)Requires all RCFEs, on or after July 1, 2015, to acquire  
            liability insurance to cover injury to residents and guests in  
            the amount of at least one million dollars ($1,000,000) per  
            occurrence and three million dollars ($3,000,000) in total, or  
            a bond in the amount of three million dollars ($3,000,000). 

          2)Provides that the liability insurance will cover injuries  
            sustained by acts, omission to act, or neglect of the licensee  
            or his or her employees. 

           FISCAL EFFECT  

          1)Minor costs to DSS in the range of $32,000 to ensure each  
            facility complies with the requirement.  

          2)Unknown costs to RCFEs licensees to acquire insurance.

           COMMENTS
           
           1)Purpose of the bill  .  The author states, "Because RCFEs are  
            not required to carry liability insurance, many facilities  
            lack even the minimum liability insurance coverage, exposing  
            both them and residents to great financial risk. Currently,  
            the only action residents have to be compensated for damages  
            sustained from elder abuse or neglect is civil litigation.   
            Civil litigation is expensive, and typically, the only way  
            most families can actually seek damages from a licensed  








                                                                  AB 1523
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            provider is on a contingency basis.  If the licensee does not  
            carry liability insurance, it would be very difficult for the  
            resident, or his/her heirs, to find an attorney willing to  
            litigate a wrongful death or neglect case on contingency.  And  
            in the event the case is accepted and successfully litigated,  
            an uninsured facility would have a difficult time paying from  
            their own budget, forcing them to consider claiming  
            bankruptcy.  This circumstance benefits no one:  the RCFE is  
            out of business and the victim is left with no recourse for  
            compensation."

           2)Background  . RCFEs, commonly referred to as assisted living  
            facilities, are licensed retirement  residential homes and  
            board and care homes that provide personal care and  
            supervision or health related services to persons who are 60  
            years of age and  over, who voluntarily choose to reside in  
            the facility.  RCFEs enable older persons to live  
            independently in a home-like environment rather than in  
            nursing home or other institutionalized facility.  Services  
            include personal care and protective supervision, including  
            incidental medical services, based upon the needs of the  
            resident.  

            There are 7,589 licensed RCFEs in California with a capacity  
            to serve over 176, 000 residents.  Licensed by DSS' Community  
            Care Licensing Division (CCLD), RCFEs range in size from  
            residential homes with six or less beds to more formal  
            residential facilities with 100 beds or more.  DSS is required  
            to conduct unannounced licensing inspections of the more than  
            75,000 licensed community care facilities, including RCFEs, at  
            least once every five years, more often in some circumstances.  


            Neither statute nor regulation requires any RCFE to carry  
            liability insurance as a condition of licensure.

           3)RCFE Reform Package  . In response to a growing demand for  
            assisted living facilities and a number of highly publicized  
            events at facilities that have raised questions about the  
            adequacy of RCFEs and the state's ability to comply with  
            existing oversight and enforcement requirements, a number of  
            legislative measures are being pursued to strengthen, address  
            shortcomings, resolve legal liabilities and gaps in the  
            provision of services, and ultimately reform the RCFE  
            industry.  








                                                                  AB 1523
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           4)Opposition  . This bill is opposed by the Community Residential  
            Care Association of California which represents residential  
            care facilities primarily licensed for six beds or less.  They  
            argue this bill will create a financial hardship for  
            facilities that accept SSI/SSP reimbursement because they will  
            have no way to recoup the costs from low-income residents and  
            will be forced to stop accepting SSI/SSP recipients or close  
            their doors.


           Analysis Prepared by  :    Jennifer Swenson / APPR. / (916)  
          319-2081