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AB-1953 Skilled nursing facilities: disclosure of interests in business providing services.(2017-2018)

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Date Published: 08/06/2018 02:00 PM
AB1953:v96#DOCUMENT

Amended  IN  Senate  August 06, 2018
Amended  IN  Senate  June 25, 2018
Amended  IN  Senate  June 04, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 1953


Introduced by Assembly Member Wood

January 29, 2018


An act to amend Section 1267.5 of add Section 128734 to the Health and Safety Code, relating to health care facilities.


LEGISLATIVE COUNSEL'S DIGEST


AB 1953, as amended, Wood. Skilled nursing facilities: disclosure of interests in business providing services.

(1)Existing

Existing law requires each applicant for a license to operate a skilled nursing facility or intermediate care facility to disclose to the State Department of Public Health, among other things, the names and addresses of any person or organization, or both, having an ownership or control interest of 5% or more in a management company that operates, or is proposed to operate, the facility. A failure to disclose this information is a basis for an action to revoke or deny a license. Existing law requires these disclosures to be available to the public, as specified, and further requires a licensee to update these disclosures to the department within 30 calendar days of a change. A violation of these provisions is a crime.
Existing law requires an organization that operates, conducts, owns, or maintains a health facility, and the officers of the health facility, to make and file with the Office of Statewide Health Planning and Development, at the times as the office requires, a report that includes certain accounting information, including, but not limited to, a balance sheet detailing assets, liabilities, and net worth of the health facility, a statement of income, expenses, and operating surplus or deficit, and a statement of cashflows. Existing law provides civil penalties for a violation of that provision.

This

As part of that report, effective January 1, 2020, this bill would require similar disclosures to the Office of Statewide Health Planning and Development by an applicant for a license to operate a skilled nursing facility and by an organization that operates, conducts, owns or maintains a skilled nursing facility licensee relating to additionally report to the office whether the licensee, or a general partner, director, or officer of the licensee, has an ownership or control interest of 5% or more in a related party, as defined, that provides, or is proposed to provide, provides any service to the skilled nursing facility. The bill would specifically require the applicant or licensee to disclose all services provided, or to be provided, provided to the skilled nursing facility, the number of individuals who are intended to provide that service at the skilled nursing facility facility, and any other information requested by the office. If goods, fees, and services collectively worth $10,000 or more per year are to be delivered to the skilled nursing facility, the bill would require the disclosure to include the related party’s profit and loss statement and the Payroll-Based Journal public use data for the previous quarter for the skilled nursing facility’s direct caregivers.

By expanding the required disclosures by an applicant or licensee of a health care facility, the bill would expand the scope of a crime, thereby imposing a state-mandated local program.

(2)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: YESNO  

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


SECTION 1.

 Section 128734 is added to the Health and Safety Code, to read:

128734.
 (a) Each organization that operates, conducts, owns, or maintains a skilled nursing facility licensed pursuant to subdivision (c) of Section 1250 shall file with the office as part of the information required in subdivisions (a) to (e), inclusive, of Section 128735, whether the licensee, or a general partner, director, or officer of the licensee, has an ownership or control interest of 5 percent or more in a related party that provides any service to the skilled nursing facility. If the licensee, or the general partner, director, or officer of the licensee has such an interest, the licensee shall disclose all services provided to the skilled nursing facility, the number of individuals who provide that service at the skilled nursing facility, and any other information requested by the office. If goods, fees, and services collectively worth ten thousand dollars ($10,000) or more per year are delivered to the skilled nursing facility, the disclosure required pursuant to this subdivision shall include the related party’s profit and loss statement, and the Payroll-Based Journal public use data of the previous quarter for the skilled nursing facility’s direct caregivers.
(b) For purposes of this section, all of the following definitions shall apply:
(1) “Direct caregiver” shall have the same meaning as that term is defined in Section 1276.65.
(2) “Profit and loss statement” means the most recent annual statement on profits and losses finalized by a related party for the most recent year available.
(3) “Related party” means any organization that the licensee is, to a significant extent, associated or affiliated with, has control of, or is controlled by.
(c) Current licensees shall provide the information required by this section to the office in a manner prescribed by the office.
(d) The provisions of this section shall become effective on January 1, 2020.

SECTION 1.Section 1267.5 of the Health and Safety Code is amended to read:
1267.5.

(a)(1)Each applicant for a license to operate a skilled nursing facility or intermediate care facility shall disclose to the state department the name and business address of each general partner if the applicant is a partnership, or each director and officer if the applicant is a corporation, and each person having a beneficial ownership interest of 5 percent or more in the applicant corporation or partnership.

(2)If any person described in paragraph (1) has served or currently serves as an administrator, general partner, trustee or trust applicant, sole proprietor of any applicant or licensee who is a sole proprietorship, executor, or corporate officer or director of, or has held a beneficial ownership interest of 5 percent or more in, any other skilled nursing facility or intermediate care facility or in any community care facility licensed pursuant to Chapter 3 (commencing with Section 1500) of this division, the applicant shall disclose the relationship to the state department, including the name and current or last address of the health facility or community care facility and the date the relationship commenced and, if applicable, the date it was terminated.

(3)(A)If the facility is operated by, or proposed to be operated in whole or part under, a management contract, the names and addresses of any person or organization, or both, having an ownership or control interest of 5 percent or more in the management company shall be disclosed to the state department. This provision shall not apply if the management company has submitted an application for licensure with the state department and has complied with paragraph (1).

(B)If the management company is a subsidiary of one or more other organizations, the information shall include the names and addresses of the parent organizations of the management company and the names and addresses of any officer or director of the parent organizations. The failure to comply with this subparagraph may result in action to revoke or deny a license. However, once the information that is required under this subparagraph is provided, the action to revoke the license shall terminate.

(4)(A)Each applicant for a license to operate a skilled nursing facility, and each licensee of a skilled nursing facility, shall disclose to the Office of Statewide Health Planning and Development whether the applicant or licensee, or a general partner, director, or officer of the applicant or licensee, has an ownership or control interest of 5 percent or more in a related party that provides, or is proposed to provide, any service to the skilled nursing facility. If the applicant or licensee, or the general partner, director, or officer of the applicant or licensee, has such an interest, the applicant or licensee shall disclose all services provided, or to be provided, to the skilled nursing facility, the number of individuals who are intended to provide that service at the skilled nursing facility, and any other information requested by the office. If goods, fees, and services collectively worth ten thousand dollars ($10,000) or more per year are to be delivered to the skilled nursing facility, the disclosure required pursuant to this paragraph shall include the related party’s profit and loss statement and the Payroll-Based Journal public use data of the previous quarter for the skilled nursing facility’s direct caregivers.

(B)For purposes of this paragraph, all of the following definitions apply:

(i)“Company” means any person, partnership, association, company, holding company, limited liability company, or corporation.

(ii)“Direct caregiver” shall have the same meaning as that term is defined in Section 1276.65.

(iii)“Family association” means a relationship by birth, marriage, or domestic partnership.

(iv)“Profit and loss statement” means the most recent annual statement on profits and losses finalized by a related party, for the related party and the skilled nursing facility, for the most recent year available.

(v)“Related party” means any organization that the applicant or licensee is, to a significant extent, associated or affiliated with, has control of, or is controlled by.

(C)The information required by this paragraph shall be provided to the office on the same reporting form for which the information specified in Section 128730 is reported.

(5)If the applicant or licensee is a subsidiary of one or more other organizations, the information shall include the names and addresses of the parent organizations of the subsidiary and the names and addresses of any officer or director of the parent organizations.

(6)The information required by paragraphs (1) to (3), inclusive, and the information required by paragraph (4) shall be provided to the state department and the office, respectfully, upon initial application for licensure, and any change in the information shall be provided to the state department or the office, as appropriate, within 30 calendar days of that change.

(7)Except as provided in subparagraph (B) of paragraph (3), the failure to comply with this section may result in action to revoke or deny a license.

(8)The information required by this section shall be made available to the public upon request, shall be included in the public file of the facility, and by July 1, 2002, shall be included in the department’s automated certification licensing administration information management system.

(b)On and after January 1, 1990, no person may acquire a beneficial interest of 5 percent or more in any corporation or partnership licensed to operate a skilled nursing facility or intermediate care facility, or in any management company under contract with a licensee of a skilled nursing facility or intermediate care facility, nor may any person become an officer or director of, or general partner in, a corporation, partnership, or management company of this type without the prior written approval of the state department. Each application for departmental approval pursuant to this subdivision shall include the information specified in subdivision (a) as regards the person for whom the application is made.

The state department shall approve or disapprove the application within 30 days after receipt thereof, unless the state department, with just cause, extends the application review period beyond 30 days.

(c)The state department may deny approval of a license application or of an application for approval under subdivision (b) if a person named in the application, as required by this section, was an officer, director, general partner, or owner of a 5-percent or greater beneficial interest in a licensee of, or in a management company under contract with a licensee of, a skilled nursing facility, intermediate care facility, community care facility, or residential care facility for the elderly at a time when one or more violations of law were committed therein that resulted in suspension or revocation of its license, or at a time when a court-ordered receiver was appointed pursuant to Section 1327, or at a time when a final Medi-Cal decertification action was taken under federal law. However, the prior suspension, revocation, or court-ordered receivership of a license shall not be grounds for denial of the application if the applicant shows to the satisfaction of the state department (1) that the person in question took every reasonably available action to prevent the violation or violations that resulted in the disciplinary action and (2) that he or she took every reasonably available action to correct the violation or violations once he or she knew, or with the exercise of reasonable diligence should have known of, the violation or violations.

(d)No application shall be denied pursuant to this section until the state department first (1) provides the applicant with notice in writing of grounds for the proposed denial of application, and (2) affords the applicant an opportunity to submit additional documentary evidence in opposition to the proposed denial.

(e)Nothing in this section shall cause any individual to be personally liable for any civil penalty assessed pursuant to Chapter 2.4 (commencing with Section 1417) or create any new criminal or civil liability contrary to general laws limiting that liability.

(f)This section shall not apply to a bank, trust company, financial institution, title insurer, controlled escrow company, or underwritten title company to which a license is issued in a fiduciary capacity.

(g)As used in this section, “person” has the same meaning as specified in Section 19.

(h)This section shall not apply to the directors of a nonprofit corporation exempt from taxation under Section 23701d of the Revenue and Taxation Code that operates a skilled nursing facility or intermediate care facility in conjunction with a licensed residential facility, where the directors serve without financial compensation and are not compensated by the nonprofit corporation in any other capacity.

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.