BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1523|
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CONSENT
Bill No: AB 1523
Author: Atkins (D) and Weber (D), et al.
Amended: 6/12/14 in Senate
Vote: 21
SENATE HUMAN SERVICES COMMITTEE : 4-0, 6/10/14
AYES: Beall, DeSaulnier, Liu, Wyland
NO VOTE RECORDED: Berryhill
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 77-0, 5/15/14 - See last page for vote
SUBJECT : Residential care facilities for the elderly
SOURCE : Author
DIGEST : This bill requires residential care facilities for
the elderly (RCFEs), by July 1, 2015, to maintain liability
insurance in an amount of at least $1 million dollars per
occurrence and $3 million in the annual aggregate for the
purpose of covering injury to residents and guests caused by the
negligence of the licensee or its employees.
ANALYSIS :
Existing Law:
1. Establishes the Residential Care Facilities for the Elderly
Act which provides for the licensure and regulation of RCFEs
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by the Department of Social Services (DSS) as a separate
category within the existing residential care licensing
structure of DSS.
2. Requires RCFE licensees who are entrusted to safeguard
resident cash resources to file or have on file with DSS a
copy of a bond issued by a surety company admitted to do
business in this state in an amount set by DSS.
3. Through regulation, provides that any applicable facility
shall have at least $1,000 on the bond and establishes a
schedule for safeguarded amounts under $3,000. Additionally
provides that for every $1,000 safeguarded above $3,000, the
facility shall have an additional $1,000 on the bond.
4. Through regulation, provides that DSS may require the
licensee to file an additional bond in such amount as the
licensing agency determines to be necessary to adequately
protect the residents' money.
5. Requires continuing care retirement communities (CCRCs) to
maintain a fidelity bond for each agent or employee, who, in
the course of his/her agency or employment, has access to any
substantial amount of funds.
This bill:
1. Provides that on and after July 1, 2015, RCFEs shall maintain
at least $1 million per occurrence and $3 million in the
total annual aggregate of liability insurance coverage
against negligent acts or omissions to act of, or neglect by,
the licensee or its employees.
2. Exempts RCFEs that are an integral part of CCRCs from the
above requirement.
Background
RCFEs . Within California's continuum of long term care,
situated between in-home care and skilled nursing facilities, is
the RCFE, also commonly called Assisted Living, Board and Care,
or Residential Care. There are approximately 8,000 Assisted
Living, Board and Care, and Continuing Care Retirement homes
that are licensed as RCFEs in California. These residences are
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designed to provide homelike housing options to seniors and
other adults who need some help with activities of daily living,
such as cooking, bathing, or getting dressed, but otherwise do
not need continuous, 24-hour assistance or nursing care.
Increasingly residents are entering RCFEs with significant
health needs including diabetes, bedsores, or require the use of
oxygen tanks, catheters, colostomies or ileostomies.
Financial Structure . More than 90% of RCFEs in California are
for-profit homes, the majority of which are small facilities.
Most residents pay privately or with long-term care insurance
since there is very little public funding available through
Medi-Cal, Supplemental Security Income (SSI/SSP) or Medicare,
and fees can range from $1,500 to more than $8,000 per month. A
very few beds are available to seniors who pay their entire
SSI/SSP checks in rent. In 2013 the maximum SSI/SSP grant was
$866.40. Residents who rely on SSI have a maximum payment of
$2,642 per month in 2014, although that amount varies widely
based on the recipient's prior income while working.
As a result, low-income and middle-income seniors who do not
have long-term-care insurance are largely unable to afford to
reside in an RCFE. Many low-income seniors receive services
through the In Home Supportive Services program, or in a skilled
nursing facility if they are Medi-Cal eligible. Increasingly,
complex corporate mergers and acquisitions have meant that many
RCFEs are owned by national corporate chains that control
numerous facilities. Administrators employed by these chains
may also oversee multiple facilities. This development has led
to regulatory challenges since the Community Care Licensing
Division (CCL) citations and other licensing reports are
facility specific, and management problems common to multiple
RCFEs with the same owner may easily go unnoticed.
Current Surety Bond Requirements . Under existing law, RCFEs (as
well as other community care facilities) that are entrusted to
safeguard money or property of residents are required to provide
to DSS a copy of a surety bond issued by a California company in
specified amounts to adequately protect resident's money or
property. DSS establishes the required amount of the bond
through regulation in accordance with the following schedule:
Total Safeguarded Per Month Bond Required
$750 or less ..................................................
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$1,000
$751 to $1,500. ............................................
$2,000
$1,501 to $2,500 ..........................................
$3,000
Additionally, regulation provides that whenever DSS determines
that the amount of the bond is insufficient to adequately
protect the money of residents, or whenever the amount of any
bond is impaired by any recovery against the bond, DSS may
require the licensee to file an additional bond in such amount
as the licensing agency determines to be necessary to adequately
protect the residents' money.
CCRCs are required to maintain in effect insurance or a fidelity
bond for each employee who has access to a significant amount of
funds in addition to the above bond requirements on any RCFEs
they may operate. Residents of CCRCs frequently pay substantial
entrance fees in the hundreds of thousands to millions of
dollars, of which a portion may be refundable depending on the
terms of the contract with the resident. In exchange, the
facility agrees to take a certain amount of financial risk in
meeting the long-term-care needs of the resident. Such fidelity
bonds protect the resident against dishonest acts of facility
employees pertaining to the management of the refundable monies
and of the financial stability of the facility which has
accepted a future service obligation to the resident. The bonds
however do not provide general liability coverage although many
CCRCs maintain such coverage voluntarily.
This bill additionally requires RCFEs to maintain liability
insurance or a surety bond for coverage of injury to residents
or guests caused by the negligent acts or omissions to act of,
or neglect by, the licensee or is employees. An important
distinction between surety bonds and liability insurance is that
surety bonds represent a promise to indemnify the injured party
only if the bond holder is unable or unwilling to make full
payment; the bond company is then free to recover the costs from
the bond holder. Additionally, a bond includes no requirement
to defend the bond holder in court, as is the case in liability
insurance.
Recent events . A series of recent events has drawn attention to
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questions about the adequacy of DSS oversight and the state's
ability to protect people who receive services within
DSS-licensed facilities.
In July 2013, ProPublica and Frontline reporters wrote and
produced a series of stories on Emeritus, the nation's largest
RCFE provider. Featured in the article was a woman who died
after receiving poor care at in a facility in Auburn,
California. The series documented chronic understaffing and a
lack of required assessments and substandard care.
Reports in September 2013, prompted by a consumer watchdog
group that had hand-culled through stacks of documents in San
Diego, revealed that more than two dozen seniors had died in
recent years in RCFEs under questionable circumstances that
went ignored or unpunished by CCL.
In late October 2013, 19 frail seniors were abandoned at
Valley Springs Manor in Castro Valley by the licensee and all
but two staff after the state began license revocation
proceedings for the facility. DSS inspectors, noting the
facility had been abandoned, left the two unpaid service staff
to care for the abandoned residents with insufficient food and
medication, handing them a $3,800 citation before leaving for
the weekend. The next day sheriff's deputies and paramedics
sent the patients to local hospitals.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 6/20/14)
California Advocates for Nursing Home Reform
California Assisted Living Association
California Long-Term Ombudsman Association
California School Employees Association
Consumer Advocates for RCFE Reform
Consumer Attorneys of California
County of San Diego
Donner & Donner Attorneys at Law
Green Bryant & French, LLP, Attorneys at Law
Leading Age California
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National Senior Citizens Law Center
Progressive Law Group
Retired Public Employees Association
San Diego State University School of Social Work
Selik Law Services
Stand Up for Rosie
ARGUMENTS IN SUPPORT : According to the author's office, RCFEs
are not required to carry liability insurance as condition of
licensure under California statute or regulation. As a result,
the author's office states that many facilities lack even the
minimum liability insurance coverage, exposing both them and
residents to great financial risk. The author's office further
states that without an RCFE licensee maintaining liability
insurance, it will be difficult for a harmed resident to find an
attorney willing to litigate a wrongful death or neglect case
and that should the case be successfully litigated, an uninsured
facility may be forced to consider bankruptcy.
The author's office additionally notes that California law
requires family day care homes for children to either maintain
liability insurance or inform their residents (or resident's
guardians) if they don't and that California drivers are
required to maintain liability insurance.
ASSEMBLY FLOOR : 77-0, 5/15/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Holden,
Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, John A. P�rez, V.
Manuel P�rez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,
Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron,
Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Donnelly, Mansoor, Vacancy
JL:d 6/24/14 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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