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AB-1698 Continuing care home services.(2011-2012)

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AB1698:v98#DOCUMENT

Amended  IN  Assembly  April 18, 2012

CALIFORNIA LEGISLATURE— 2011–2012 REGULAR SESSION

Assembly Bill
No. 1698


Introduced  by  Assembly Member Portantino

February 15, 2012


An act to amend Sections 1569.145, 1569.80, 1771, 1771.3, 1771.8, 1789.1,and 1790 of, and to add Section 1779.12 to, the Health and Safety Code, relating to continuing care.


LEGISLATIVE COUNSEL'S DIGEST


AB 1698, as amended, Portantino. Continuing care home services.
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 designates the contents of a continuing care contract, including the conditions under which a resident of a continuing care retirement community may be voluntarily or involuntarily transferred from his or her designated living unit.
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.
Under existing law, the department licenses and regulates residential care facilities for the elderly, as defined.
This bill would exempt a care at-home program, as defined, from the licensing provisions applicable to residential care facilities for the elderly, if certain conditions are met. The bill would define a continuing care at-home program as a care at-home program operated by a continuing care provider that meets prescribed requirements provided for in the bill. The bill would increase from $7,500 to $10,000 the maximum entrance fee for certain residence agreements that is exempt from continuing care contract provisions, and would require adjustments for cost-of-living increases every 4 years.
By revising the provisions relating to continuing care providers, this bill would change the definition of an existing crime, thus imposing a state‑mandated local program.
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   Local Program: YES  

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


SECTION 1.

 Section 1569.145 of the Health and Safety Code is amended to read:

1569.145.
 (a) This chapter shall not apply to any of the following:
(1) A health facility, as defined by Section 1250.
(2) A clinic, as defined by Section 1200.
(3) A facility conducted by and for the adherents of a well-recognized church or religious denomination for the purpose of providing facilities for the care or treatment of the sick who depend upon prayer or spiritual means for healing in the practice of the religion of that church or denomination.
(4) A house, institution, hotel, congregate housing project for the elderly, or other similar place that is limited to providing one or more of the following: housing, meals, transportation, housekeeping, or recreational and social activities; or that have residents independently accessing supportive services, provided, however, that no resident thereof requires an element of care and supervision or protective supervision as determined by the director. This paragraph does not include a home or residence that is described in paragraph (6).
(5) Recovery houses or other similar facilities providing group living arrangements for persons recovering from alcoholism or drug addiction where the facility provides no care or supervision.
(6) (A) An arrangement for the care and supervision of a person or persons by a family member.
(B) An arrangement for the care and supervision of a person or persons from only one family by a close friend, whose friendship preexisted the contact between the provider and the recipient, and both of the following are met:
(i) The care and supervision is provided in a home or residence chosen by the recipient.
(ii) The arrangement is not of a business nature and occurs only as long as the needs of the recipient for care and supervision are adequately met.
(7) (A) Any housing occupied by elderly or disabled persons, or both, that is approved and operated pursuant to Section 202 of Public Law 86-372 (12 U.S.C. Sec. 1701q), or Section 811 of Public Law 101-625 (42 U.S.C. Sec. 8013), or whose mortgage is insured pursuant to Section 236 of Public Law 90-448 (12 U.S.C. Sec. 1715z), or that receives mortgage assistance pursuant to Section 221d(3) of Public Law 87-70 (12 U.S.C. Sec. 1715l), where supportive services are made available to residents at their option, as long as the project owner or operator does not contract for or provide the supportive services. The project owner or operator may coordinate, or help residents gain access to, the supportive services, either directly, or through a service coordinator.
(B)  Any housing that qualifies for a low-income housing credit pursuant to Section 252 of Public Law 99-514 (26 U.S.C. Sec. 42) or that is subject to the requirements for rental dwellings for low-income families pursuant to Section 8 of Public Law 93-383 (42 U.S.C. Sec. 1437f), and that is occupied by elderly or disabled persons, or both, where supportive services are made available to residents at their option, as long as the project owner or operator does not contract for or provide the supportive services.
(8) A care at-home program in which a person or entity provides one or more services, including, but not limited to, care and supervision, meal preparation, housekeeping, laundry, home maintenance, grounds maintenance, companionship, social activities, recreational activities, and referrals to other care providers, to an elderly person in his or her residence.
(A) For purposes of this paragraph, a care at-home program includes a continuing care at-home program, as described in Section 1779.12.
(B) A person or entity that provides services to an elderly person under a care at-home program shall satisfy all the requirements of Chapter 10 (commencing with Section 1770) before entering into a continuing care contract with a recipient of care at-home services.
(9) A similar facility determined by the director.
(b) For purposes of this section, the following definitions shall apply:
(1) “Close friend” means a person who is attached to another by feelings of personal regard, as indicated by both parties involved.
(2) “Family member” means a spouse, by marriage or otherwise, child or stepchild, by natural birth or by adoption, parent, brother, sister, half brother, half sister, parent-in-law, brother-in-law, sister-in-law, nephew, niece, aunt, uncle, first cousin, or a person denoted by the prefix “grand” or “great,” or the spouse of one of these persons.
(3) “Residence” means a house, apartment, or other dwelling where all of the following conditions are met:
(A) Only family members or close friends of the elderly person receiving services under a care at-home program reside with the recipient of care at-home services in the residence.
(B) The residence is either owned or rented by the elderly person receiving the services under a care at-home program, or owned or rented by a family member or close friend of the person receiving services.
(C) Neither the residence as a whole, nor any part of it, is licensed as a residential care facility for the elderly.
(D) A provider of care at-home program services does not have any direct or indirect ownership or financial interest in the residence. For purposes of this paragraph, indirect ownership or financial interest includes any interest held by a corporation, limited liability company, partnership, or any other entity in which the care at-home provider, a family member, or family members, individually or in combination, hold a majority interest.
(E) The provider of care at-home program services has not had any influence or involvement in the care at-home recipient’s decision to occupy the residence.
(c) A person shall not be exempted from this chapter’s licensure requirements if he or she has been appointed as conservator of the person, estate of the person, or both, if the person is receiving care and supervision from the conservator as regulated by this chapter, unless the conservator is otherwise exempted under other provisions of this section.

SEC. 2.

 Section 1569.80 of the Health and Safety Code is amended to read:

1569.80.
 (a)  A resident of a residential care facility for the elderly, or the resident’s representative, or both, shall have the right to participate in decisionmaking regarding the care and services to be provided to the resident. Accordingly, prior to, or within two weeks after, the resident’s admission, the facility shall coordinate a meeting with the resident and the resident’s representative, if any, an appropriate member or members of the facility’s staff, if the resident is receiving home health services in the facility, a representative of the home health agency involved, and any other appropriate parties. The facility shall ensure that participants in the meeting prepare a written record of the care the resident will receive in the facility, and the resident’s preferences regarding the services provided at the facility.
(b)  Once prepared, the written record described in subdivision (a) shall be used by the facility, and, if applicable pursuant to Section 1569.725, the home health agency, to determine the care and services provided to the resident. If the resident has a regular physician, the written record shall be sent by the facility to that physician.
(c)  The written record described in subdivision (a) shall be reviewed, and, if necessary, revised, at least once every 12 months, or upon a significant change in the resident’s condition, as defined by regulations, whichever occurs first. The review shall take place at a meeting coordinated by the facility, and attended by the resident, the resident’s representative, if any, an appropriate member or members of the facility’s staff, and, if the resident is receiving home health services in the facility, a representative from the home health agency involved.
(d)  This section shall not preclude a residential care facility for the elderly or home health agency from satisfying other state or federal obligations at a meeting required by subdivision (a) or (c).
(e)  If the residential care facility for the elderly is a continuing care retirement community, as defined in paragraph (11) of subdivision (c) of Section 1771, this section shall apply only to residents who require care and supervision, as defined in subdivision (b) of Section 1569.2.

SEC. 3.

 Section 1771 of the Health and Safety Code is amended to read:

1771.
 Unless the context otherwise requires, the definitions in this section govern the interpretation of this chapter.
(a) (1) “Affiliate” means any person, corporation, limited liability company, business trust, trust, partnership, unincorporated association, or other legal entity that directly or indirectly controls, is controlled by, or is under common control with, a provider or applicant.
(2) “Affinity group” means a grouping of entities sharing a common interest, philosophy, or connection (e.g., military officers, religion).
(3) “Annual report” means the report each provider is required to file annually with the department, as described in Section 1790.
(4) “Applicant” means any entity, or combination of entities, that submits and has pending an application to the department for a permit to accept deposits and a certificate of authority.
(5) “Assisted living services” includes, but is not limited to, assistance with personal activities of daily living, including dressing, feeding, toileting, bathing, grooming, mobility, and associated tasks, to help provide for and maintain physical and psychosocial comfort.
(6) “Assisted living unit” means the living area or unit within a continuing care retirement community that is specifically designed to provide ongoing assisted living services.
(7) “Audited financial statement” means financial statements prepared in accordance with generally accepted accounting principles, including the opinion of an independent certified public accountant, and notes to the financial statements considered customary or necessary to provide full disclosure and complete information regarding the provider’s financial statements, financial condition, and operation.
(b) (reserved)
(c) (1) “Cancel” means to destroy the force and effect of an agreement or continuing care contract.
(2) “Cancellation period” means the 90-day period, beginning when the resident physically moves into the continuing care retirement community, during which the resident may cancel the continuing care contract, as provided in Section 1788.2.
(3) “Care” means nursing, medical, or other health-related services, protection or supervision, assistance with the personal activities of daily living, or any combination of those services.
(4) “Cash equivalent” means certificates of deposit and United States treasury securities with a maturity of five years or less.
(5) “Certificate” or “certificate of authority” means the certificate issued by the department, properly executed and bearing the State Seal, authorizing a specified provider to enter into one or more continuing care contracts at a single specified continuing care retirement community.
(6) “Condition” means a restriction, specific action, or other requirement imposed by the department for the initial or continuing validity of a permit to accept deposits, a provisional certificate of authority, or a certificate of authority. A condition may limit the circumstances under which the provider may enter into any new deposit agreement or contract, or may be imposed as a condition precedent to the issuance of a permit to accept deposits, a provisional certificate of authority, or a certificate of authority.
(7) “Consideration” means some right, interest, profit, or benefit paid, transferred, promised, or provided by one party to another as an inducement to contract. Consideration includes some forbearance, detriment, loss, or responsibility, that is given, suffered, or undertaken by a party as an inducement to another party to contract.
(8) “Continuing care contract” means a contract that includes a continuing care promise made, in exchange for an entrance fee, the payment of periodic charges, or both types of payments. A continuing care contract may consist of one agreement or a series of agreements and other writings incorporated by reference.
(9) “Continuing care at-home program” means a care at-home program, as described in paragraph (8) of subdivision (a) of Section 1569.145, that is operated by a continuing care provider that has satisfied each of the requirements specified in Section 1779.12, and that is operated in the manner described in this chapter. A provider that provides services to elderly persons under a continuing care at-home program shall satisfy all the requirements of this chapter before entering into a continuing care contract with a recipient of care at-home services.
(10) “Continuing care promise” means a promise, expressed or implied, by a provider to provide one or more elements of care to an elderly resident for the duration of his or her life or for a term in excess of one year. Any such promise or representation, whether part of a continuing care contract, other agreement, or series of agreements, or contained in any advertisement, brochure, or other material, either written or oral, is a continuing care promise.
(11) “Continuing care retirement community” means a facility located within the State of California where services promised in a continuing care contract are provided. A distinct phase of development approved by the department may be considered to be the continuing care retirement community when a project is being developed in successive distinct phases over a period of time. When the services are provided in residents’ own homes, the homes into which the provider takes those services are considered part of the continuing care retirement community.
(12) “Control” means directing or causing the direction of the financial management or the policies of another entity, including an operator of a continuing care retirement community, whether by means of the controlling entity’s ownership interest, contract, or any other involvement. A parent entity or sole member of an entity controls a subsidiary entity provider for a continuing care retirement community if its officers, directors, or agents directly participate in the management of the subsidiary entity or in the initiation or approval of policies that affect the continuing care retirement community’s operations, including, but not limited to, approving budgets or the administrator for a continuing care retirement community.
(d) (1) “Department” means the State Department of Social Services.
(2) “Deposit” means any transfer of consideration, including a promise to transfer money or property, made by a depositor to any entity that promises or proposes to promise to provide continuing care, but is not authorized to enter into a continuing care contract with the potential depositor.
(3) “Deposit agreement” means any agreement made between any entity accepting a deposit and a depositor. Deposit agreements for deposits received by an applicant prior to the department’s release of funds from the deposit escrow account shall be subject to the requirements described in Section 1780.4.
(4) “Depository” means a bank or institution that is a member of the Federal Deposit Insurance Corporation or a comparable deposit insurance program.
(5) “Depositor” means any prospective resident who pays a deposit. Where any portion of the consideration transferred to an applicant as a deposit or to a provider as consideration for a continuing care contract is transferred by a person other than the prospective resident or a resident, that third-party transferor shall have the same cancellation or refund rights as the prospective resident or resident for whose benefit the consideration was transferred.
(6) “Director” means the Director of Social Services.
(e) (1) “Elderly” means an individual who is 60 years of age or older.
(2) “Entity” means an individual, partnership, corporation, limited liability company, and any other form for doing business. Entity includes a person, sole proprietorship, estate, trust, association, and joint venture.
(3) “Entrance fee” means the sum of any initial, amortized, or deferred transfer of consideration made or promised to be made by, or on behalf of, a person entering into a continuing care contract for the purpose of ensuring care or related services pursuant to that continuing care contract or as full or partial payment for the promise to provide care for the term of the continuing care contract. Entrance fee includes the purchase price of a condominium, cooperative, or other interest sold in connection with a promise of continuing care. An initial, amortized, or deferred transfer of consideration that is greater in value than 12 times the monthly care fee shall be presumed to be an entrance fee.
(4) “Equity” means the value of real property in excess of the aggregate amount of all liabilities secured by the property.
(5) “Equity interest” means an interest held by a resident in a continuing care retirement community that consists of either an ownership interest in any part of the continuing care retirement community property or a transferable membership that entitles the holder to reside at the continuing care retirement community.
(6) “Equity project” means a continuing care retirement community where residents receive an equity interest in the continuing care retirement community property.
(7) “Equity securities” shall refer generally to large and midcapitalization corporate stocks that are publicly traded and readily liquidated for cash, and shall include shares in mutual funds that hold portfolios consisting predominantly of these stocks and other qualifying assets, as defined by Section 1792.2. Equity securities shall also include other similar securities that are specifically approved by the department.
(8) “Escrow agent” means a bank or institution, including, but not limited to, a title insurance company, approved by the department to hold and render accountings for deposits of cash or cash equivalents.
(f) “Facility” means any place or accommodation where a provider provides or will provide a resident with care or related services, whether or not the place or accommodation is constructed, owned, leased, rented, or otherwise contracted for by the provider.
(g) (reserved)
(h) (reserved)
(i) (1) “Inactive certificate of authority” means a certificate that has been terminated under Section 1793.8.
(2) “Investment securities” means any of the following:
(A) Direct obligations of the United States, including obligations issued or held in book-entry form on the books of the United States Department of the Treasury or obligations the timely payment of the principal of, and the interest on, which are fully guaranteed by the United States.
(B) Obligations, debentures, notes, or other evidences of indebtedness issued or guaranteed by any of the following:
(i) The Federal Home Loan Bank System.
(ii) The Export-Import Bank of the United States.
(iii) The Federal Financing Bank.
(iv) The Government National Mortgage Association.
(v) The Farmer’s Home Administration.
(vi) The Federal Home Loan Mortgage Corporation of the Federal Housing Administration.
(vii) Any agency, department, or other instrumentality of the United States if the obligations are rated in one of the two highest rating categories of each rating agency rating those obligations.
(C) Bonds of the State of California or of any county, city and county, or city in this state, if rated in one of the two highest rating categories of each rating agency rating those bonds.
(D) Commercial paper of finance companies and banking institutions rated in one of the two highest categories of each rating agency rating those instruments.
(E) Repurchase agreements fully secured by collateral security described in subparagraph (A) or (B), as evidenced by an opinion of counsel, if the collateral is held by the provider or a third party during the term of the repurchase agreement, pursuant to the terms of the agreement, subject to liens or claims of third parties, and has a market value, which is determined at least every 14 days, at least equal to the amount so invested.
(F) Long-term investment agreements, which have maturity dates in excess of one year, with financial institutions, including, but not limited to, banks and insurance companies or their affiliates, if the financial institution’s paying ability for debt obligations or long-term claims or the paying ability of a related guarantor of the financial institution for these obligations or claims, is rated in one of the two highest rating categories of each rating agency rating those instruments, or if the short-term investment agreements are with the financial institution or the related guarantor of the financial institution, the long-term or short-term debt obligations, whichever is applicable, of which are rated in one of the two highest long-term or short-term rating categories, of each rating agency rating the bonds of the financial institution or the related guarantor, provided that if the rating falls below the two highest rating categories, the investment agreement shall allow the provider the option to replace the financial institution or the related guarantor of the financial institution or shall provide for the investment securities to be fully collateralized by investments described in subparagraph (A), and, provided further, if so collateralized, that the provider has a perfected first security lien on the collateral, as evidenced by an opinion of counsel and the collateral is held by the provider.
(G) Banker’s acceptances or certificates of deposit of, or time deposits in, any savings and loan association that meets any of the following criteria:
(i) The debt obligations of the savings and loan association, or in the case of a principal bank, of the bank holding company, are rated in one of the two highest rating categories of each rating agency rating those instruments.
(ii) The certificates of deposit or time deposits are fully insured by the Federal Deposit Insurance Corporation.
(iii) The certificates of deposit or time deposits are secured at all times, in the manner and to the extent provided by law, by collateral security described in subparagraph (A) or (B) with a market value, valued at least quarterly, of no less than the original amount of moneys so invested.
(H) Taxable money market government portfolios restricted to obligations issued or guaranteed as to payment of principal and interest by the full faith and credit of the United States.
(I) Obligations the interest on which is excluded from gross income for federal income tax purposes and money market mutual funds whose portfolios are restricted to these obligations, if the obligations or mutual funds are rated in one of the two highest rating categories by each rating agency rating those obligations.
(J) Bonds that are not issued by the United States or any federal agency, but that are listed on a national exchange and that are rated at least “A” by Moody’s Investors Service, or the equivalent rating by Standard and Poor’s Corporation or Fitch Investors Service.
(K) Bonds not listed on a national exchange that are traded on an over-the-counter basis, and that are rated at least “Aa” by Moody’s Investors Service or “AA” by Standard and Poor’s Corporation or Fitch Investors Service.
(j) (reserved)
(k) (reserved)
(l) “Life care contract” means a continuing care contract that includes a promise, expressed or implied, by a provider to provide or pay for routine services at all levels of care, including acute care and the services of physicians and surgeons, to the extent not covered by other public or private insurance benefits, to a resident for the duration of his or her life. Care shall be provided under a life care contract in a continuing care retirement community having a comprehensive continuum of care, including a skilled nursing facility, under the ownership and supervision of the provider on or adjacent to the premises. No change may be made in the monthly fee based on level of care. A life care contract shall also include provisions to subsidize residents who become financially unable to pay their monthly care fees.
(m) (1) “Monthly care fee” means the fee charged to a resident in a continuing care contract on a monthly or other periodic basis for current accommodations and services including care, board, or lodging. Periodic entrance fee payments or other prepayments shall not be monthly care fees.
(2) “Monthly fee contract” means a continuing care contract that requires residents to pay monthly care fees.
(n) “Nonambulatory person” means a person who is unable to leave a building unassisted under emergency conditions in the manner described by Section 13131.
(o) (reserved)
(p) (1) “Per capita cost” means a continuing care retirement community’s operating expenses, excluding depreciation, divided by the average number of residents.
(2) “Periodic charges” means fees paid by a resident on a periodic basis.
(3) “Permanent closure” means the voluntary or involuntary termination or forfeiture, as specified in subdivisions (a), (b), (g), (h), and (i) of Section 1793.7, of a provider’s certificate of authority or license, or another action that results in the permanent relocation of residents. Permanent closure does not apply in the case of a natural disaster or other event out of the provider’s control.
(4) “Permit to accept deposits” means a written authorization by the department permitting an applicant to enter into deposit agreements regarding a single specified continuing care retirement community.
(5) “Prepaid contract” means a continuing care contract in which the monthly care fee, if any, may not be adjusted to cover the actual cost of care and services.
(6) “Preferred access” means that residents who have previously occupied a residential living unit have a right over other persons to any assisted living or skilled nursing beds that are available at the community.
(7) “Processing fee” means a payment to cover administrative costs of processing the application of a depositor or prospective resident.
(8) “Promise to provide one or more elements of care” means any expressed or implied representation that one or more elements of care will be provided or will be available, such as by preferred access.
(9) “Proposes” means a representation that an applicant or provider will or intends to make a future promise to provide care, including a promise that is subject to a condition, such as the construction of a continuing care retirement community or the acquisition of a certificate of authority.
(10) “Provider” means an entity that provides continuing care, makes a continuing care promise, or proposes to promise to provide continuing care. “Provider” also includes any entity that controls an entity that provides continuing care, makes a continuing care promise, or proposes to promise to provide continuing care. The department shall determine whether an entity controls another entity for purposes of this article. No homeowner’s association, cooperative, or condominium association may be a provider.
(11) “Provisional certificate of authority” means the certificate issued by the department, properly executed and bearing the State Seal, under Section 1786. A provisional certificate of authority shall be limited to the specific continuing care retirement community and number of units identified in the applicant’s application.
(q) (reserved)
(r) (1) “Refund reserve” means the reserve a provider is required to maintain, as provided in Section 1792.6.
(2) “Refundable contract” means a continuing care contract that includes a promise, expressed or implied, by the provider to pay an entrance fee refund or to repurchase the transferor’s unit, membership, stock, or other interest in the continuing care retirement community when the promise to refund some or all of the initial entrance fee extends beyond the resident’s sixth year of residency. Providers that enter into refundable contracts shall be subject to the refund reserve requirements of Section 1792.6. A continuing care contract that includes a promise to repay all or a portion of an entrance fee that is conditioned upon reoccupancy or resale of the unit previously occupied by the resident shall not be considered a refundable contract for purposes of the refund reserve requirements of Section 1792.6, provided that this conditional promise of repayment is not referred to by the applicant or provider as a “refund.”
(3) “Resale fee” means a levy by the provider against the proceeds from the sale of a transferor’s equity interest.
(4) “Reservation fee” refers to consideration collected by an entity that has made a continuing care promise or is proposing to make this promise and has complied with Section 1771.4.
(5) “Resident” means a person who enters into a continuing care contract with a provider, or who is designated in a continuing care contract to be a person being provided or to be provided services, including care, board, or lodging.
(6) “Residential care facility for the elderly” means a housing arrangement as defined by Section 1569.2.
(7) “Residential living unit” means a living unit in a continuing care retirement community that is not used exclusively for assisted living services or nursing services.
(8) “Residential temporary relocation” means the relocation of one or more residents, except in the case of a natural disaster that is out of the provider’s control, from one or more residential living units, assisted living units, skilled nursing units, or a wing, floor, or entire continuing care retirement community building, due to a change of use or major repairs or renovations. A residential temporary relocation shall mean a relocation pursuant to this subdivision that lasts for a period of at least nine months but that does not exceed 18 months without the written agreement of the resident.
(s) (reserved)
(t) (1) “Termination” means the ending of a continuing care contract as provided for in the terms of the continuing care contract.
(2) “Transfer trauma” means death, depression, or regressive behavior, that is caused by the abrupt and involuntary transfer of an elderly resident from one home to another and results from a loss of familiar physical environment, loss of well-known neighbors, attendants, nurses and medical personnel, the stress of an abrupt break in the small routines of daily life, or the loss of visits from friends and relatives who may be unable to reach the new facility.
(3) “Transferor” means a person who transfers, or promises to transfer, consideration in exchange for care and related services under a continuing care contract or proposed continuing care contract, for the benefit of another. A transferor shall have the same rights to cancel and obtain a refund as the depositor under the deposit agreement or the resident under a continuing care contract.

SEC. 4.

 Section 1771.3 of the Health and Safety Code is amended to read:

1771.3.
 (a) This chapter shall not apply to either of the following:
(1) An arrangement for the care of a person by a relative.
(2) An arrangement for the care of a person or persons from only one family by a friend.
(b) This chapter shall not apply to any admission or residence agreements offered by residential communities for the elderly or residential care facilities for the elderly that promise residents preferred access to assisted living services or nursing care, when each of the following conditions is satisfied:
(1) Residents pay on a fee-for-service basis for available assisted living services and nursing care.
(2) The fees paid for available assisted living services and nursing care are the same for residents who have previously occupied a residential living unit as for residents who have not previously occupied a residential living unit.
(3) No entrance fee or prepayment for future care or access, other than monthly care fees, is paid by, or charged to, any resident at the community or facility. For purposes of this paragraph, the term entrance fee shall not include initial, deferred, or amortized payments that cumulatively do not exceed ten thousand dollars ($10,000). This maximum shall be adjusted every four years by the department after consultation with the continuing care advisory committee and considered after considering changes in the Consumer Price Index for the Western United States, as well as any other economic and industry-related factors the department determines to be relevant.
(4) The provider has not made a continuing care promise of preferred access, other than a promise as described in paragraph (5).
(5) The admission or residence agreement states:
(A) “This agreement does not guarantee that an assisted living or nursing bed will be available for residents, but, instead, promises preferred access to any assisted living or nursing beds that are available at the community or facility. The promise of preferred access gives residents who have previously occupied a residential living unit a right over other persons to such beds.”
(B) “A continuing care contract promises that care will be provided to residents for life or for a term in excess of a year. (Name of community or facility) is not a continuing care retirement community and (name of provider) does not hold a certificate of authority to enter into continuing care contracts and is not required to have the same fiscal reserves as a continuing care provider. This agreement is not a continuing care contract and is exempted from the continuing care statutes under subdivision (b) of Section 1771.3 of the Health and Safety Code so long as the conditions set forth in that section are met.”
(6) The admission or residence agreement also states the policies and procedures regarding transfers to higher levels of care within the community or facility.
(c) Any entity may apply to the department for a Letter of Exemption stating that the requesting entity satisfies the requirements for an exemption under this section.
(d) The department shall issue a Letter of Exemption to a requesting entity if the department determines either of the following:
(1) The requesting entity satisfies each of the requirements for an exemption under subdivision (b).
(2) The requesting entity satisfies each of the requirements for an exemption under subdivision (b) other than the requirements of paragraph (2) of subdivision (b), and there is no substantial difference between the following:
(A) The fees for available assisted living services and skilled nursing care paid by residents who have previously occupied a residential living unit.
(B) The fees for available assisted living services and skilled nursing care paid by residents who have not previously occupied a residential living unit.
(e) An application to the department for a Letter of Exemption shall include all of the following:
(1) A nonrefundable one thousand dollar ($1,000) application fee.
(2) The name and business address of the applicant.
(3) A description of the services and care available or provided to residents of the community or facility.
(4) Documentation establishing that the requesting entity satisfies the requirements for an exemption under this section, including all of the following:
(A) A schedule showing all fees for assisted living services and skilled nursing care charged to residents at the facility or community who have previously occupied a residential living unit.
(B) A schedule showing all fees for assisted living services and skilled nursing care charged to residents at the facility or community who have not previously occupied a residential living unit.
(C) A description of the differences between the fees for assisted living services and skilled nursing care charged to residents who have not previously occupied a residential unit and the fees for assisted living services and skilled nursing care charged to residents who have previously occupied a residential unit.
(D) A schedule showing any other fees charged to residents of the community or facility.
(E) Copies of all admission and residence agreement forms that have been entered into, or will be entered into, with residents at the community or facility.
(5) Any other information reasonably requested by the department.
(f) If at any time any of the conditions stated in this section are not satisfied, then the requirements of this chapter apply, and the department may impose appropriate remedies and penalties set forth in Article 7 (commencing with Section 1793.5).

SEC. 5.

 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 board 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. Nothing in this section precludes 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 any 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 provided for in subdivision (c). At least 14 days prior to the meeting to discuss any 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) Each 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 semiannually, 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. A provider who operates a continuing care at-home program shall also make available a financial statement of activities showing the revenue and expense details for the program. 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) Each 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, a copy of the annual report, including the multifacility statement of activities, and including a copy of the annual audited financial statement, but excluding personal confidential information.
(h) Each provider shall maintain, as public information, available upon request to residents, prospective residents, and the public, minutes of the board of director’s meetings of the board of directors, and shall retain these records for at least three years from the date the records were filed or issued.
(i) 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 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.
(j) In a multifacility organization having more than one continuing care retirement community in the state, the governing body of the multifacility organization shall 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 board meetings, board 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.
(k) In order to encourage innovative and alternative models of resident involvement, a resident selected pursuant to subdivision (i) 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 before the governing body.
(3) Any other method designated by the resident association.
(l)  The resident association, or 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 shall post the notice in a conspicuous place at the continuing care retirement community.
(m) (1) Except as provided in subdivision (n), the resident representative shall receive the same notice of board meetings, board packets, minutes, and other materials as members and shall be permitted to attend, speak at, and participate in, all meetings of the board.
(2) Resident representatives may share information from board meetings with other residents, unless the information is confidential or doing so would violate fiduciary duties to the provider. In addition, a resident representative shall be permitted to attend meetings of the board committee or committees that review the annual budget of the facility or facilities and recommend increases in monthly care fees. The resident shall receive the same notice of committee meetings, information packets, minutes, and other materials as committee members, and shall be permitted to attend, speak at, and participate in, 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.
(n) Notwithstanding subdivision (m), the governing body may exclude resident representatives from its executive sessions and from receiving board materials to be discussed during executive sessions. However, resident representatives shall be included in executive sessions and shall receive all board 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.
(o) The provider shall pay all reasonable travel costs for the resident representative.
(p) The provider shall disclose in writing the extent of resident involvement with the board to prospective residents.
(q) Nothing in this section prohibits a provider from exceeding the minimum resident participation requirements of this section by, for example, having more resident meetings or more resident representatives to the board than required or by having one or more residents on the provider’s governing body who are selected with the active involvement of residents.
(r) On or before April 1, 2003, the department shall do all of the following:
(1) Make recommendations to the Legislature as to whether any changes in current law regarding resident representation to the board is needed.
(2) Provide written guidelines available to residents and providers that address issues related to board participation, including rights and responsibilities, and that provide guidance on the extent to which resident representatives who are not voting members of the board have a duty of care, loyalty, and obedience to the provider and the extent to which providers can classify information as confidential and not subject to disclosure by resident representatives to other residents.

SEC. 6.

 Section 1779.12 is added to the Health and Safety Code, to read:

1779.12.
 (a) A provider of a continuing care at-home program, prior to operating the program, shall do all of the following:
(1) Hold a certificate of authority issued by the department authorizing the provider to enter into continuing care contracts.
(2) File with the department for its approval an abbreviated application to commence and operate the program. The application shall include, but not be limited to, all of the following:
(A) A description of the proposed continuing care at-home program, including the target market, the types of services to be provided, and the fees to be charged.
(B) A description of the intended use of the provider’s continuing care retirement community to furnish services to continuing care at-home residents. The provider shall specifically describe those areas of the continuing care retirement community that will be made available to participants in the continuing care at-home program.
(C) Information showing the financial feasibility of the continuing care at-home program and the program’s financial impact on the provider and its continuing care facility or facilities.
(D) A sample copy of the proposed written service agreement.
(E) An actuarial analysis that presents the impact the continuing care at-home program will have on the overall operation of the continuing care retirement community.
(3) Notify the residents of the provider’s existing continuing care retirement community or communities of its application, within 30 days of submitting the application to the department. A summary of the application shall be made available at the provider’s community or communities accessible to the provider’s continuing care retirement community residents and the general public. The summary shall indicate where a complete copy of the application may be inspected. A complete copy of the application shall be available for inspection at each continuing care retirement community that may be used to provide services to any person in the continuing care at-home program.
(b) The provider shall enter into a written service agreement with each of its continuing care at-home clients. The service agreement shall include, but need not be limited to, provisions setting forth all of the following:
(1) A detailed description of the services to be provided, and whether the services will be provided in the home or on the provider’s campus.
(2) The An itemized list of the fees to be paid by the client, including, but not limited to, a description of, and the basis for, any potential increase in those fees.
(3) The grounds for termination of the service agreement by both the client and the provider, and the grounds upon which the provider may recommend that the client be transferred to another a residential, assisted living, or skilled nursing facility.
(4) The duration of the service agreement. The duration of the agreement shall not exceed one year without negotiation with the participant or his or her legal representative.
(5) The cancellation period within which a participant is entitled to a refund of all or a portion of his or her entrance fees, and prorated monthly fees.
(c) (1) The provider may recommend to the client, or to his or her legal representative, that the client transfer to an appropriate licensed health facility or residential care facility if the client’s health or care needs exceed the provider’s ability to provide needed services, or exceed the provider’s authorized scope of services.
(2) The provider may provide services, as specified in the service agreement, in the facility or in the client’s residence. The provider shall give continuing care retirement community residents priority over continuing care at-home residents when applying for skilled nursing services.
(d) A provider of a continuing care at-home program may do all of the following:
(1) Furnish one or more services to an elderly person in the elderly person’s own residence, including, but not limited to, the following:
(A) Care and supervision.
(B) Remote monitoring.
(C) Assistance with bathing, dressing, or grooming.
(D) Assistance with the storage and administration of medications.
(E) Meals, housekeeping, laundry, home maintenance, grounds maintenance, companionship, social activities, recreational activities, and referrals to other care and service providers.
(F) Services of a licensed home health agency, as defined in subdivision (a) of Section 1727.
(G) Services of a licensed hospice agency, as defined in subdivision (b) of Section 1746.
(H) Access to a social worker or other qualified professional, to inform the recipient of his or her home-based care options.
(2) Furnish, at the provider’s discretion, additional services on the provider’s campus, as appropriate. This paragraph does not authorize an unlicensed person to provide services, or services to be provided in an unlicensed setting, if a license or licensed setting is otherwise required by law.
(3) Furnish any additional supportive services in an elderly person’s residence, as specified in the service agreement, in a manner that is consistent with the licensing statutes and regulations.

(4)Recommend the installation within the residence of the elderly person of a smoke detection system, a fire alarm, a fire suppression sprinkler system, a medical alert system, a system for routine inspections, or other safety features.

(5)

(4) Notwithstanding the restrictions contained in subparagraphs (D) and (E) of paragraph (3) of subdivision (b) of Section 1569.145, hold an ownership or financial interest in the continuing care at-home recipient’s residence and be involved in the recipient’s decision to reside in the residence make recommendations to the recipient regarding his or her decision to continue to reside in the residence. Nothing in this paragraph shall be construed to authorize a provider to cause the recipient to move involuntarily from his or her home.

SEC. 7.

 Section 1789.1 of the Health and Safety Code is amended to read:

1789.1.
 (a) Before executing a deposit agreement or continuing care agreement, or receiving any payment from a depositor or prospective resident, a provider shall deliver to the other parties in the deposit or continuing care agreement a disclosure statement in the form prescribed by the department.
(b)  The department shall issue a disclosure statement form that shall generally require disclosure, at a minimum, of the following information:
(1)  General information regarding the provider and the continuing care retirement community, including at a minimum all of the following:
(A)  The continuing care retirement community’s name, address, and telephone number.
(B)  The type of ownership, names of the continuing care retirement community’s owner and operator, the names of any affiliated facilities, and any direct religious affiliation.
(C)  Whether accredited and by what organization.
(D)  The year the continuing care retirement community opened and the distance to the nearest shopping center and hospital.
(E)  Whether the continuing care retirement community offers life care contracts or continuing care contracts, and whether the continuing care retirement community is single story or multistory.
(F)  The number of the continuing care retirement community’s studio units, one bedroom units, two bedroom units, cottages or houses, assisted living beds, and skilled nursing beds.
(G)  The continuing care retirement community’s percentage occupancy at the provider’s most recent fiscal yearend.
(H)  The form of contracts offered, the range of entrance fees, the percentages of a resident’s entrance fees that may be refunded, and the health care benefits included in contract.
(I)  Any age and insurance requirements for admission.
(J)  A listing of common area amenities and other services included with the monthly service fee, and a listing of those amenities and services that are available for an additional charge.
(K)  The number of meals each day included in the monthly service fee, the number of meals available for an extra charge, the frequency of housekeeping services, and additional cost, if any , for housekeeping services.
(L) Whether or not the provider operates a continuing care at-home program, as described in paragraph (9) of subdivision (c) of Section 1771. If a provider operates a continuing care at-home program, and services are provided on the continuing care retirement community campus, a brief description of the areas of the campus that will be made accessible to those participants.
(2)  Income from operations during the most recent five years for which audited financial statements have been completed, including all of the following:
(A)  Operating income (excluding amortization of entrance fee income).
(B)  Operating expense (excluding depreciation, amortization, and interest).
(C)  Net income from operations.
(D)  Interest expense.
(E)  Unrestricted contributions.
(F)  Nonoperating income or expense, excluding extraordinary items.
(G)  Net income or loss before entrance fees.
(H)  Net cash-flow from entrance fees, that is the total deposits less refunds.
(3)  The name of the lender, outstanding balance, interest rate, date of origination, date of maturity, and amortization period for all secured debt.
(4)  Financial ratios for each of the three most recent years for which audited financial statements have been prepared, including all of the following: debt-to-asset ratio, operating ratio, debt service coverage ratio, and days cash-on-hand. The formulas for each ratio shall be determined by the department after consultation with the Continuing Care Advisory Committee.
(5)  The average monthly service fees charged during the most recent five years, and the percentage changes in the average from year to year, for each of the following: studio units, one bedroom units, two bedroom units, cottages and houses, assisted living units, and skilled nursing units.
(6)  Comments from the provider explaining any of the information included in the disclosure form.
(c)  Each provider shall update its disclosure statement at least annually when it completes its annual audited financial statements. Each provider shall file its updated version of the disclosure statement with the department not later than the final filing date for its annual report.
(d)  The form prescribed by the department under this section shall be used by providers to comply with the requirements of this section.

SEC. 7.SEC. 8.

 Section 1790 of the Health and Safety Code is amended to read:

1790.
 (a) Each provider that has obtained a provisional or final certificate of authority and each provider that possesses an inactive certificate of authority shall submit an annual report of its financial condition. The report shall consist of audited financial statements and required reserve calculations, with accompanying certified public accountants’ opinions thereon, the reserve information required by paragraph (2), Continuing Care Provider Fee and Calculation Sheet, evidence of fidelity bond as required by Section 1789.8, and certification that the continuing care contract in use for new residents has been approved by the department, all in a format provided by the department, and shall include all of the following information:
(1) A certification, if applicable, that the entity is maintaining reserves for prepaid continuing care contracts, statutory reserves, and refund reserves.
(2) Full details on the status, description, and amount of all reserves that the provider currently designates and maintains, and on per capita costs of operation for each continuing care retirement community operated.
(3) Disclosure of any amounts accumulated or expended for identified projects or purposes, including, but not limited to, projects designated to meet the needs of the continuing care retirement community as permitted by a provider’s nonprofit status under Section 501(c)(3) of the Internal Revenue Code, and amounts maintained for contingencies. The disclosure of a nonprofit provider shall state how the project or purpose is consistent with the provider’s tax-exempt status. The disclosure of a for-profit provider shall identify amounts accumulated for specific projects or purposes and amounts maintained for contingencies. Nothing in this subdivision shall be construed to require the accumulation of funds or funding of contingencies, nor shall it be interpreted to alter existing law regarding the reserves that are required to be maintained.
(4)  Disclosure of the financial impact of any continuing care at-home program operated by the provider, or supported by the provider with either financing or the use of the provider’s continuing care facilities, on the facility’s overall financial health. This disclosure shall include a statement of activities showing the revenue and expense details for the continuing care at-home program.
(5) Full details on any increase in monthly care fees, the basis for determining the increase, and the data used to calculate the increase.
(6) The required reserve calculation schedules shall be accompanied by the auditor’s opinion as to compliance with applicable statutes.
(7) Any other information as the department may require.
(b) Each provider shall file the annual report with the department within four months after the provider’s fiscal yearend. If the complete annual report is not received by the due date, a one thousand dollar ($1,000) late fee shall accompany submission of the reports. If the reports are more than 30 days past due, an additional fee of thirty-three dollars ($33) for each day over the first 30 days shall accompany submission of the report. The department may, at its discretion, waive the late fee for good cause.
(c) The annual report and any amendments thereto shall be signed and certified by the chief executive officer of the provider, stating that, to the best of his or her knowledge and belief, the items are correct.
(d) A copy of the most recent annual audited financial statement shall be transmitted by the provider to each transferor requesting the statement.
(e) A provider shall amend its annual report on file with the department at any time, without the payment of any additional fee, if an amendment is necessary to prevent the report from containing a material misstatement of fact or omitting a material fact.
(f) If a provider is no longer entering into continuing care contracts, and currently is caring for 10 or fewer continuing care residents, the provider may request permission from the department, in lieu of filing the annual report, to establish a trust fund or to secure a performance bond to ensure fulfillment of continuing care contract obligations. The request shall be made each year within 30 days after the provider’s fiscal yearend. The request shall include the amount of the trust fund or performance bond determined by calculating the projected life costs, less the projected life revenue, for the remaining continuing care residents in the year the provider requests the waiver. If the department approves the request, the following shall be submitted to the department annually:
(1) Evidence of trust fund or performance bond and its amount.
(2) A list of continuing care residents. If the number of continuing care residents exceeds 10 at any time, the provider shall comply with the requirements of this section.
(3) A provider fee as required by subdivision (c) of Section 1791.
(g) If the department determines a provider’s annual audited report needs further analysis and investigation, as a result of incomplete and inaccurate financial statements, significant financial deficiencies, development of workout plans to stabilize financial solvency, or for any other reason, the provider shall reimburse the department for reasonable actual costs incurred by the department or its representative. The reimbursed funds shall be deposited in the Continuing Care Contract Provider Fee Fund.

SEC. 8.SEC. 9.

 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.