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AB-1158 Alcoholism or drug abuse recovery or treatment facilities: recovery residences: insurance coverage.(2021-2022)

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Date Published: 10/04/2021 09:00 PM
AB1158:v91#DOCUMENT

Assembly Bill No. 1158
CHAPTER 443

An act to amend Section 11834.10 of, and to add Section 11853.5 to, the Health and Safety Code, and to amend Section 10087 of the Insurance Code, relating to alcoholism or drug abuse.

[ Approved by Governor  October 01, 2021. Filed with Secretary of State  October 01, 2021. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1158, Petrie-Norris. Alcoholism or drug abuse recovery or treatment facilities: recovery residences: insurance coverage.
Existing law requires the State Department of Health Care Services to license and regulate alcoholism or drug abuse recovery or treatment facilities serving adults. Existing law prohibits a licensee from operating an alcoholism or drug abuse recovery or treatment facility beyond the conditions and limitations specified on the license. Existing law also defines a “recovery residence” as a residential dwelling that provides primary housing for individuals who seek a cooperative living arrangement that supports personal recovery from a substance use disorder and that does not require licensure pursuant to those provisions or does not provide licensable services.
This bill would require a licensee operating an alcoholism or drug abuse recovery or treatment facility and serving more than 6 residents to maintain specified insurance coverages, including, among others, commercial general liability insurance and employer’s liability insurance. The bill would require a licensee that serves 6 or fewer residents to maintain general liability insurance coverage.
The bill would require any government entity that contracts with a privately owned recovery residence to provide recovery services, or with an alcoholism or drug abuse recovery or treatment facility to provide treatment services for more than 6 residents, to require the contractor to maintain those specified insurance coverages. If an alcoholism or drug abuse recovery or treatment facility provides services for 6 or fewer residents, the bill would require the government entity to require the contractor to maintain general liability insurance coverages, as specified. The bill would make these provisions applicable to contracts entered into, renewed, or amended on or after January 1, 2022.
Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and prescribes the department’s powers and duties, including various duties to regulate the business of insurance in this state.
Existing law prohibits a policy of residential property insurance from being issued or delivered unless the named insured is offered coverage for loss or damage caused by an earthquake, and specifies the minimum coverage that is required to be offered. Existing law defines a “policy of residential property insurance” for the purposes of these provisions to include a policy insuring, among other property, residential structures and their contents.
This bill would specify that a “policy of residential property insurance” does not include a policy that provides, or is construed to provide, any coverage or indemnity for the payment of any fine, penalty, or restitution in any criminal, civil, or administrative action or proceeding, or any coverage or indemnity for the payment of any loss or liability, arising from the operation of either a recovery residence or an alcoholism or drug abuse recovery or treatment facility. The bill would make this provision applicable to policies issued, renewed, or amended on or after January 1, 2022.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 11834.10 of the Health and Safety Code is amended to read:

11834.10.
 (a) A licensee shall not operate an alcoholism or drug abuse recovery or treatment facility beyond the conditions and limitations specified on the license.
(b) Licensed services offered or provided by a licensed alcoholism or drug abuse recovery or treatment facility, including, but not limited to, incidental medical services as defined in Section 11834.026, shall be specified on the license and provided exclusively:
(1) Within the licensed facility.
(2) Within any facilities identified on a single license by street address.
(c) Only residents of the licensed alcoholism or drug abuse recovery or treatment facility shall receive licensed services.
(d) A licensee that serves more than six residents shall, at all times, maintain all of the following insurance coverages, which shall include as an additional insured any government entity with which the licensee has a contract:
(1) Commercial general liability insurance that includes coverage for premises liability, products and completed operations, contractual liability, personal injury and advertising liability, abuse, molestation, sexual actions, and assault and battery, with minimum coverage amounts for bodily injury or property damage of not less than one million dollars ($1,000,000) per occurrence.
(2) Commercial or business automobile liability insurance covering all owned vehicles, hired or leased vehicles, nonowned vehicles, and borrowed and permissive uses, with minimum coverage amounts for bodily injury or property damage of not less than one million dollars ($1,000,000) per occurrence.
(3) Workers’ compensation insurance, as required by law. Notwithstanding subdivision (b) of Section 3700 of the Labor Code, a certificate of self-insurance obtained pursuant to that subdivision does not satisfy this requirement.
(4) Employer’s liability insurance, with minimum coverage amounts for bodily injury or disease of not less than one hundred thousand dollars ($100,000) per occurrence.
(5) Professional liability and errors and omissions insurance that includes an endorsement for contractual liability, with minimum coverage amounts of one million dollars ($1,000,000) per occurrence and two million dollars ($2,000,000) aggregate. If applicable, the contract shall include an endorsement for defense and indemnification of any government entity with which the licensee has contracted.
(e) A licensee that serves six or fewer residents shall, at all times, maintain general liability insurance coverage.
(f) (1) A licensee may meet the insurance requirements of this section by procuring coverage from an admitted insurer, or a nonadmitted insurer that is eligible to insure a home state insured under Chapter 6 (commencing with Section 1760) of Part 2 of Division 1 of the Insurance Code.
(2) Notwithstanding paragraph (1), the workers’ compensation insurance required by this section shall be obtained as required by Section 3700 of the Labor Code.
(g) The department may adopt regulations to implement this section in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(h) Notwithstanding the rulemaking provisions of the Administrative Procedure Act, the department may implement, interpret, or make specific this section by means of provider bulletins, written guidelines, or similar instructions.

SEC. 2.

 Section 11853.5 is added to the Health and Safety Code, to read:

11853.5.
 (a) Any government entity that contracts with a privately owned recovery residence to provide recovery services, or an alcoholism or drug abuse recovery or treatment facility to provide treatment services for more than six residents, shall require the contractor, at all times, to maintain all of the following insurance coverages, which shall include the government entity as an additional insured:
(1) Commercial general liability insurance that includes coverage for premises liability, products and completed operations, contractual liability, personal injury and advertising liability, abuse, molestation, sexual actions, and assault and battery, with minimum coverage amounts for bodily injury or property damage of not less than one million dollars ($1,000,000) per occurrence.
(2) Commercial or business automobile liability insurance covering all owned vehicles, hired or leased vehicles, nonowned vehicles, and borrowed and permissive uses, with minimum coverage amounts for bodily injury or property damage of not less than one million dollars ($1,000,000) per occurrence.
(3) Workers’ compensation insurance, as required by law. Notwithstanding subdivision (b) of Section 3700 of the Labor Code, a certificate of self-insurance obtained pursuant to that subdivision does not satisfy this requirement.
(4) Employer’s liability insurance, with minimum coverage amounts for bodily injury or disease of not less than one hundred thousand dollars ($100,000) per occurrence.
(5)  Professional liability and errors and omissions insurance that includes an endorsement for contractual liability, with minimum coverage amounts of one million dollars ($1,000,000) per occurrence and two million dollars ($2,000,000) aggregate. The contract shall include an endorsement for defense and indemnification of the government entity with which the licensee has contracted.
(b) Any government entity that contracts with an alcoholism or drug abuse recovery or treatment facility to provide treatment services for six or fewer residents, shall require the contractor, at all times, to maintain general liability insurance coverages, which shall include the government entity as an additional insured.
(c) (1) A privately owned recovery residence that contracts with a government entity may meet the insurance requirements of this section by procuring coverage from an admitted insurer, or a nonadmitted insurer that is eligible to insure a home state insured under Chapter 6 (commencing with Section 1760) of Part 2 of Division 1 of the Insurance Code.
(2) Notwithstanding paragraph (1), the workers’ compensation insurance required by this section shall be obtained as required by Section 3700 of the Labor Code.
(d) This section does not prohibit a government entity from requiring quality and performance standards or levels of insurance coverage that are similar to, or that exceed, the standards and levels described in this section when contracting for recovery residence services.
(e) For the purposes of this section, the following terms have the following meanings:
(1) “Alcoholism or drug abuse recovery or treatment facility” has the same meaning as in Section 11834.02.
(2) “Government entity” means the state, a county, or a city.
(3) “Recovery residence” has the same meaning as in Section 11833.05.
(f) This section shall apply to contracts entered into, renewed, or amended on or after January 1, 2022.

SEC. 3.

 Section 10087 of the Insurance Code is amended to read:

10087.
 (a) (1) As used in this chapter, “policy of residential property insurance” means a policy insuring individually owned residential structures of not more than four dwelling units, individually owned condominium units, or individually owned mobilehomes, and their contents, located in this state and used exclusively for residential purposes or a tenant’s policy insuring personal contents of a residential unit located in this state.
(2) “Policy of residential property insurance,” does not include any of the following:
(A) Insurance for real property or its contents used for any commercial, industrial, or business purpose, except a structure of not more than four dwelling units rented for individual residential purposes.
(B) A policy that does not include any of the perils insured against in a standard fire policy.
(C) A policy that provides, or is construed to provide, any coverage or indemnity for the payment of any fine, penalty, or restitution in any criminal, civil, or administrative action or proceeding, or any coverage or indemnity for the payment of any loss or liability, arising from the operation of either a recovery residence, as defined in Section 11833.05 of the Health and Safety Code, or an alcoholism or drug abuse recovery or treatment facility, as defined in Section 11834.02 of the Health and Safety Code. This subparagraph shall apply to policies issued, renewed, or amended on or after January 1, 2022.
(3) (A) Subparagraph (C) of paragraph (2) does not prohibit a recovery residence that is managed by its residents and operates on a not-for-profit basis from obtaining coverage under a policy of residential property insurance.
(B) For purposes of subparagraph (A), a recovery residence operates on a not-for-profit basis if it satisfies all of the following:
(i) It does not accept or require valuable consideration from or on behalf of residents other than a pro rata share of living expenses.
(ii) It is not owned by, or under contract with, an alcoholism or drug abuse recovery or treatment facility, as defined in Section 11834.02 of the Health and Safety Code.
(iii) It is not owned by, or under contract with, an affiliate, contractor, or intermediary of an alcoholism or drug abuse recovery or treatment facility, as defined in Section 11834.02 of the Health and Safety Code.
(b) Proof of mailing of any offer, disclosure, or document required to be delivered by this chapter by first-class mail addressed to a named insured or applicant at the mailing address shown on the policy or application shall create a conclusive presumption that the offer was made or that the disclosure or document was delivered as required. If an offer, disclosure, or document required to be delivered by this chapter is not mailed, but is hand delivered to the insured, the insured’s signed receipt creates a conclusive presumption that the offer was provided or that the disclosure or document was delivered as required.