Amended in Senate August 19, 2014

Amended in Senate June 15, 2014

Amended in Assembly May 23, 2014

Amended in Assembly May 1, 2014

Amended in Assembly March 26, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1751

Introduced by Assembly Member Bloom

February 14, 2014

An act to amend Section 1771.8 of the Health and Safety Code, relating to continuing care.

LEGISLATIVE COUNSEL’S DIGEST

AB 1751, as amended, Bloom. Continuing care retirement communities.

(1) Existing law provides for the regulation by the State Department of Social Services of activities relating to continuing care contracts that govern care provided to an elderly resident in a continuing care retirement community for the duration of the resident’s life or a term in excess of one year. Existing law declares the Legislature’s finding that the residents of continuing care retirement communities have a unique and valuable perspective on the operations of, and services provided in, the community in which they live and should have input into decisions made by the provider.

Existing law requires every continuing care retirement community provider to make available to the resident association or its governing body, or if neither exists, to a committee of residents, a financial statement of activities for that facility comparing actual costs to budgeted costs broken down by expense category, not less than semiannually. Existing law also requires a provider to provide a copy of the annual report at a central and conspicuous location in the community. Under existing law, an entity that issues, delivers, or publishes, or as manager or officer or in any other administrative capacity, assists in the issuance, delivery, or publication of, any printed matter, oral representation, or advertising material that does not comply with the requirements of the law relating to continuing care contracts is guilty of a misdemeanor.

This bill would instead require the financial statement to be provided not less than quarterly, and would require it to include a written explanation of all significant budget variances. This bill would additionally require a provider to make a copy of the annual report available on its Internet Web site. By expanding the scope of a crime, this bill would impose a state-mandated local program.

(2) Existing law requires the governing body of a provider that is not part of a multifacility organization with more than one continuing care retirement community in the state to accept at least one resident of the continuing care retirement community it operates to participate as a nonvoting resident representative to the governing body. Existing law requires the governing body of a multifacility organization begin delete to elect either to end delete begin insert to either end insert have at least one nonvoting resident representative to the provider’s governing body for each California-based continuing care retirement community the provider operates or to have a resident-elected committee composed of representatives of the residents of each California-based continuing care retirement community that the provider operates select or nominate at least one nonvoting resident representative to the provider’s governing body for every 3 California-based continuing care retirement communities begin insert , end insert or fraction thereof begin insert , end insert that the provider operates.

This bill would additionally require the governing body of all providers to accept at least one resident, or 2 residents for a governing body with 21 or more members, from the continuing care retirement community or communities it operates to participate as voting members of the provider’s governing body, and would make other technical and conforming changes. The bill would require a resident member to be nominated to participate on the provider’s governing body by the resident association or, if a resident association does not exist, a committee of residents, and would authorize the resident association or committee of residents to nominate multiple nominees from which the provider’s governing body may approve a resident member. If the governing body disapproves of the resident association’s nominations, the bill would require the resident association or committee of residents to nominate additional resident members until the vacancy is filled. This bill would authorize a provider that has at least one continuing care retirement community in the state and does not have a governing body within the state to, in lieu of appointing a resident to be a voting member of its governing body, appoint a select committee of its governing body members to meet with the resident association or a resident elected committee of residents, as specified, no less frequently than at a reasonable period prior to any regularly scheduled meeting of the governing body at each of its facilities in the state to address concerns of the residents and to ensure that the opinions of residents are relayed to all governing body members of the provider. begin insert The bill would also provide for alternative representation options for a provider that is a sole proprietorship, general partnership, limited partnership, limited liability company, or a closely held corporation in lieu of appointing a resident as a voting member of the provider’s governing body, as specified. end insert

(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1771.8 of the Health and Safety Code is
amended to read:

1771.8.  

(a) The Legislature finds and declares all of the
following:

(1) The residents of continuing care retirement communities
have a unique and valuable perspective on the operations of, and
services provided in, the community in which they live.

(2) Resident input into decisions made by the provider is an
important factor in creating an environment of cooperation,
reducing conflict, and ensuring timely response and resolution to
issues that may arise.

(3) Continuing care retirement communities are strengthened
when residents know that their views are heard and respected.

(b) The Legislature encourages continuing care retirement
communities to exceed the minimum resident participation
requirements established by this section by, among other things,
the following:

(1) Encouraging residents to form a resident association, and
assisting the residents, the resident association, and its governing
body to keep informed about the operation of the continuing care
retirement community.

(2) Encouraging residents of a continuing care retirement
community or their elected representatives to select residents to
participate as members of the governing body of the provider.

(3) Quickly and fairly resolving any dispute, claim, or grievance
arising between a resident and the continuing care retirement
community.

(c) The governing body of a provider, or the designated
representative of the provider, shall hold, at a minimum,
semiannual meetings with the residents of the continuing care
retirement community, or the resident association or its governing
body, for the purpose of the free discussion of subjects including,
but not limited to, income, expenditures, and financial trends and
issues as they apply to the continuing care retirement community
and proposed changes in policies, programs, and services. This
section does not preclude a provider from taking action or making
a decision at any time, without regard to the meetings required
under this subdivision.

(d) At least 30 days prior to the implementation of an increase
in the monthly care fee, the designated representative of the
provider shall convene a meeting, to which all residents shall be
invited, for the purpose of discussing the reasons for the increase,
the basis for determining the amount of the increase, and the data
used for calculating the increase. This meeting may coincide with
the semiannual meetings required in subdivision (c). At least 14
days prior to the meeting to discuss an increase in the monthly
care fee, the provider shall make available to each resident or
resident household comparative data showing the budget for the
upcoming year, the current year’s budget, and actual and projected
expenses for the current year, and a copy shall be posted in a
conspicuous location at each facility.

(e) The governing body of a provider or the designated
representative of the provider shall provide residents with at least
14 days’ advance notice of each meeting provided for in
subdivisions (c) and (d), and shall permit residents attending the
meeting to present issues orally and in writing. The governing
body of a provider or the designated representative of the provider
shall post the notice of, and the agenda for, the meeting in a
conspicuous place in the continuing care retirement community
at least 14 days prior to the meeting. The governing body of a
provider or the designated representative of the provider shall make
available to residents of the continuing care retirement community
upon request the agenda and accompanying materials at least seven
days prior to the meeting.

(f) A provider shall make available to the resident association
or its governing body, or if neither exists, to a committee of
residents, a financial statement of activities for that facility
comparing actual costs to budgeted costs broken down by expense
category, not less than quarterly, with a written explanation of all
significant budget variances, and shall consult with the resident
association or its governing body, or, if neither exists, with a
committee of residents, during the annual budget planning process.
The effectiveness of consultations during the annual budget
planning process shall be evaluated at a minimum every two years
by the continuing care retirement community administration. The
evaluation, including any policies adopted relating to cooperation
with residents, shall be made available to the resident association
or its governing body, or, if neither exists, to a committee of
residents at least 14 days prior to the next semiannual meeting of
residents and the provider’s governing body provided for in
subdivision (c), and a copy of the evaluation shall be posted in a
conspicuous location at each facility.

(g) A provider shall, within 10 days after the annual report
required pursuant to Section 1790 is submitted to the department,
provide, at a central and conspicuous location in the community
and in a conspicuous location on the provider’s Internet Web site,
a copy of the annual report, including the multifacility statement
of activities and a copy of the annual audited financial statement,
but excluding personal confidential information.

(h) A provider shall maintain, as public information, available
upon request to residents, prospective residents, and the public,
minutes of the meetings held by the provider’s governing body
and shall retain these records for at least three years from the date
the records were filed or issued.

(i) Except as provided in subdivision (s), the governing body
of a provider that is not part of a multifacility organization with
more than one continuing care retirement community in the state
shall accept both of the following:

(1) At least one resident of the continuing care retirement
community it operates to participate as a nonvoting resident
representative to the provider’s governing body.

(2) At least one resident, or two residents for a governing body
with 21 or more members, of the continuing care retirement
community it operates to participate as a voting member of the
provider’s governing body. A provider’s governing body shall not
be required to meet the requirements of this paragraph until there
is a vacancy on the provider’s governing body or upon the next
regularly scheduled selection of the provider’s governing body
occurring on or after January 1, 2015. A resident member shall
perform his or her duties in a manner that complies with the
standards of conduct and fiduciary duties of all other members of
the governing board.

(j) Except as provided in subdivision (s), in a multifacility
organization having more than one continuing care retirement
community in the state, the governing body of the multifacility
organization shall do both of the following:

(1) Elect either to have at least one nonvoting resident
representative to the provider’s governing body for each
California-based continuing care retirement community the
provider operates or to have a resident-elected committee composed
of representatives of the residents of each California-based
continuing care retirement community that the provider operates
select or nominate at least one nonvoting resident representative
to the provider’s governing body for every three California-based
continuing care retirement communities, or fraction thereof, that
the provider operates. If a multifacility organization elects to have
one representative for every three communities that the provider
operates, the provider shall provide to the president of the residents
association of each of the communities that do not have a resident
representative the same notice of meetings, packets, minutes, and
other materials as the resident representative. At the reasonable
discretion of the provider, information related to litigation,
personnel, competitive advantage, or confidential information that
is not appropriate to disclose, may be withheld.

(2) (A) Elect to have at least one resident, or two residents for
a governing body with 21 or more members, from any of the
continuing care retirement communities it operates to participate
as voting members of the provider’s governing body. A provider’s
governing body shall not be required to meet the requirements of
this subparagraph until there is a vacancy on the provider’s
governing body or upon the next regularly scheduled selection of
the provider’s governing body occurring on or after January 1,
2015. A resident member shall perform his or her duties in a
manner that complies with the standards of conduct and fiduciary
duties of all other members of the governing board.

(B) If there are communities that do not have a resident from
the community as a voting member of the provider’s governing
body, the provider shall provide to the president of the resident
association of each of those communities the same notice of
meetings, packets, minutes, and other materials as the resident
voting members. At the reasonable discretion of the provider,
information related to litigation, personnel, competitive advantage,
or confidential information that is not appropriate to disclose may
be withheld.

(k) In order to encourage innovative and alternative models of
resident involvement, residents selected pursuant to paragraph (1)
of subdivision (i) or paragraph (1) of subdivision (j) to participate
as a resident representative to the provider’s governing body may,
at the option of the resident association, be selected in any one of
the following ways:

(1) By a majority vote of the resident association of a provider
or by a majority vote of a resident-elected committee of residents
of a multifacility organization.

(2) If no resident association exists, any resident may organize
a meeting of the majority of the residents of the continuing care
retirement community to select or nominate residents to represent
them on the governing body.

(3) Any other method designated by the resident association.

(l) A resident member of the provider’s governing body selected
pursuant to paragraph (2) of subdivision (i) or paragraph (2) of
subdivision (j) shall be nominated to participate on the provider’s
governing body by the resident association or, if a resident
association does not exist, a committee of residents. The resident
association or committee of residents may nominate multiple
nominees from which the provider’s governing body may approve
a resident member. If the governing body disapproves of the
resident association’s nominations, the resident association or the
committee of residents shall nominate additional resident members
for the governing body’s approval or disapproval until the vacancy
is filled.

(m) The resident association, organizing resident, or, in the case
of a multifacility organization, the resident-elected committee of
residents, shall give residents of the continuing care retirement
community at least 30 days’ advance notice of the meeting to select
a resident representative and resident members of the governing
body and shall post the notice in a conspicuous place at the
continuing care retirement community.

(n) (1) Except as provided in subdivision (o), resident
representatives shall receive the same notice of meetings, packets,
minutes, and other materials as members of the provider’s
governing body and shall be permitted to attend, speak, and
participate in all meetings of the governing body.

(2) Resident representatives may share information from
meetings with other residents, unless the information is confidential
or doing so would violate fiduciary duties to the provider. A
resident representative shall be permitted to attend meetings of the
governing body committee or committees that review the annual
budget of the facility or facilities and recommend increases in
monthly care fees. The resident representative shall receive the
same notice of meetings, information, packets, minutes, and other
materials as committee members, and shall be permitted to attend,
speak, and participate in the committee meetings. Resident
representatives shall perform their duties in good faith and with
such care, including reasonable inquiry, as an ordinarily prudent
person in a like position would use under similar circumstances.

(o) Notwithstanding subdivision (n), the provider’s governing
body may exclude resident representatives from its executive
sessions and from receiving meeting materials to be discussed
during executive session. However, resident representatives shall
be included in executive sessions and shall receive all meeting
materials to be discussed during executive sessions related to
discussions of the annual budgets, increases in monthly care fees,
indebtedness, and expansion of new and existing continuing care
retirement communities.

(p) The provider shall pay all reasonable travel costs for resident
representatives and resident members of the governing body.

(q) The provider shall disclose in writing the extent of resident
involvement with the governing body to prospective residents.

(r) A provider is not prohibited from exceeding the minimum
resident participation requirements of this section by, for example,
having more resident meetings, more resident representatives or
resident members of the governing body to the provider’s
governing body than required, or by having one or more residents
on the provider’s governing body who are selected with the active
involvement of residents.

(s)  begin insert (1) end insert begin insert   end insert If a provider having at least one continuing care
retirement community in the state does not have a governing body
within the state, the provider shall, in lieu of appointing a voting
member pursuant to subdivision (i) or (j), appoint a select
committee of its governing body members to meet pursuant to
paragraph (6) of subdivision (a) of Section 307 of the Corporations
Code, or in a location that has been designated in the notice of the
meeting, with the resident association or a resident-elected
committee of residents no less frequently than a reasonable period
prior to any regularly scheduled meeting of the governing body at
each of its facilities in the state to address concerns of the residents
and to ensure that the opinions of begin insert the end insert residents are relayed to all
governing body members of the provider.

begin insert

(2) (A) For a provider that is a sole proprietorship, general
partnership, limited partnership, limited liability company, or a
closely held corporation, the provider may, in lieu of appointing
a voting member pursuant to paragraph (2) of subdivision (i) or
paragraph (2) of subdivision (j), appoint a select committee of its
members to, or, if it is a sole proprietorship, the sole proprietor
shall, meet in a location that has been designated in the notice of
the meeting with the resident association or a resident-elected
committee of residents at each of its facilities semiannually and
at least 60 days prior to any financial or administrative changes,
including, but not limited to, any proposed increase in monthly
fees, indebtedness of the provider, expansion or contraction of the
community facility, or other changes that would result in a budget
variance, or any policies, programs, or services that would
materially change the operation or environment of the community,
to address concerns of the residents and to ensure that the opinions
of the residents are relayed to all members of the provider.

end insert begin insert

(B) If any member of a limited liability company is a
corporation, a nonvoting resident representative elected pursuant
to paragraph (1) of subdivision (i) or paragraph (1) of subdivision
(j) shall be invited to the meetings of the governing body of that
corporation that address any of the proposed changes specified
in subparagraph (A) and shall be permitted to address those
proposed changes. The governing body of the corporation shall
provide the nonvoting resident representative with at least 30 days’
advance notice of the meeting. If more than one member of the
limited liability company is a corporation, only the corporation
with the largest interest in the limited liability company shall
comply with this subparagraph.

end insert

SEC. 2.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.