SB 939: Continuing care contracts: cancellation: payments.
- Session Year: 2015-2016
- House: Senate
- Latest Version Date: 2016-07-25
Existing law requires a continuing care retirement facility, as defined, to possess a certificate of authority issued by the State Department of Social Services before it can enter into a continuing care contract, as defined. Existing law requires that a continuing care contract be in writing and contain specified information. Existing law provides that a continuing care contract may be canceled without cause by written notice from either party within 90 days of the residents initial occupancy.
Existing law requires a provider to pay, during the cancellation period, all refunds owed to a resident within 14 days after a resident makes possession of the living unit available to the provider. Existing law requires a provider to pay a lump-sum payment that is conditioned upon resale of a unit to a resident within 14 days after resale of the unit.
This bill would define a repayable contract as 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. The bill would require any amount owed that is not paid to a resident or the residents estate within 180 days after termination of a repayable contract to accrue simple interest at a rate of 4% until the full amount owed is paid. The bill would require any amount owed that is not paid to a resident or the residents estate within 240 days after termination of a repayable contract to accrue simple interest at a rate of 6% until the full amount owed is paid. The bill would require any amount owed that is not paid to a resident or the residents estate within one year after the 240-day period to accrue compound interest annually at a rate of 6% until the amount owed is paid. The bill would provide that the above-mentioned provisions apply only to repayable contracts entered into on or after January 1, 2017. The bill would provide that, until January 1, 2018, these provisions do not apply to specified projects that are in development prior to January 1, 2017, provided that the initial contract for the project is entered into on or before January 1, 2018. The bill would provide that the repayment by a provider of all or a portion of an entrance fee before the resale of a unit would not subject any other entrance fee to the refund reserve requirements, except as provided.
The bill would make corresponding changes to require a continuing care contract to contain a statement that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract. The bill would also require a continuing care contract that provides for a refund or repayment of a lump sum of all or part of the entrance fee to include a statement that the provider will make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit.
Existing law requires a continuing care retirement facility, as defined, to possess a certificate of authority issued by the State Department of Social Services before it can enter into a continuing care contract, as defined. Existing law requires that a continuing care contract be in writing and contain specified information. Existing law provides that a continuing care contract may be canceled without cause by written notice from either party within 90 days of the residents initial occupancy.
Existing law requires a provider to pay, during the cancellation period, all refunds owed to a resident within 14 days after a resident makes possession of the living unit available to the provider. Existing law requires a provider to pay a lump-sum payment that is conditioned upon resale of a unit to a resident within 14 days after resale of the unit.
This bill would define a repayable contract as 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. The bill would require any amount owed that is not paid to a resident or the residents estate within 180 days after termination of a repayable contract to accrue simple interest at a rate of 4% until the full amount owed is paid. The bill would require any amount owed that is not paid to a resident or the residents estate within 240 days after termination of a repayable contract to accrue simple interest at a rate of 6% until the full amount owed is paid. The bill would require any amount owed that is not paid to a resident or the residents estate within one year after the 240-day period to accrue compound interest annually at a rate of 6% until the amount owed is paid. The bill would provide that the above-mentioned provisions apply only to repayable contracts entered into on or after January 1, 2017. The bill would provide that, until January 1, 2018, these provisions do not apply to specified projects that are in development prior to January 1, 2017, provided that the initial contract for the project is entered into on or before January 1, 2018. The bill would provide that the repayment by a provider of all or a portion of an entrance fee before the resale of a unit would not subject any other entrance fee to the refund reserve requirements, except as provided.
The bill would make corresponding changes to require a continuing care contract to contain a statement that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract. The bill would also require a continuing care contract that provides for a refund or repayment of a lump sum of all or part of the entrance fee to include a statement that the provider will make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit.
Existing law requires a continuing care retirement facility, as defined, to possess a certificate of authority issued by the State Department of Social Services before it can enter into a continuing care contract, as defined. Existing law requires that a continuing care contract be in writing and contain specified information. Existing law provides that a continuing care contract may be canceled without cause by written notice from either party within 90 days of the residents initial occupancy.
Existing law requires a provider to pay, during the cancellation period, all refunds owed to a resident within 14 days after a resident makes possession of the living unit available to the provider. Existing law requires a provider to pay a lump-sum payment that is conditioned upon resale of a unit to a resident within 14 days after resale of the unit.
This bill would define a repayable contract as 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. The bill would require any amount owed that is not paid to a resident or the residents estate within 180 days after the residents termination of a repayable contract to accrue simple interest at a rate of 4% until the full amount owed is paid. The bill would require any amount owed that is not paid to a resident or the residents estate within 240 days after the residents termination of a repayable contract to accrue simple interest at a rate of 6% until the full amount owed is paid. The bill would require any amount owed that is not paid to a resident or the residents estate within one year after the 240-day period to accrue compound interest annually at a rate of 6% until the amount owed is paid. The bill would provide that the above-mentioned provisions apply only to repayable contracts entered into on or after January 1, 2017. The bill would require a facility to pay the lump sum owed, including any interest accrued, to a residents estate if the resident is deceased. The bill would provide that, until January 1, 2018, these provisions do not apply to specified projects that are in development prior to January 1, 2017, provided that the initial contract for the project is entered into on or before January 1, 2018. The bill would provide that the repayment by a provider of all or a portion of an entrance fee before the resale of a unit would not subject any other entrance fee to the refund reserve requirements, except as provided.
The bill would make corresponding changes to require a continuing care contract to contain a statement that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract. The bill would also require a continuing care contract that provides for a refund or repayment of a lump sum of all or part of the entrance fee to include a statement that the provider will make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit.
Existing law requires a continuing care retirement facility, as defined, to possess a certificate of authority issued by the State Department of Social Services before it can enter into a continuing care contract, as defined. Existing law requires that a continuing care contract be in writing and contain specified information. Existing law provides that a continuing care contract may be canceled without cause by written notice from either party within 90 days of the residents initial occupancy.
Existing law requires a provider to pay, during the cancellation period, all refunds owed to a resident within 14 days after a resident makes possession of the living unit available to the provider. Existing law requires a provider to pay a lump-sum payment that is conditioned upon resale of a unit to a resident within 14 days after resale of the unit.
This bill would instead specify that a continuing care retirement facility pay the full lump-sum payment that is conditioned upon resale of a unit to a resident, including any interest accrued, within 14 days after resale of a unit. The bill would require a continuing care retirement facility, for contracts signed after January 1, 2017, to pay a resident or his or her estate a specified portion of the full lump sum owed, notwithstanding a providers documented good-faith effort to resell the unit, if the unit remains vacant 120 days after the residents termination. define a repayable contract as 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. The bill would require any amount owed that is not paid to a resident within 180 days after the residents termination of a repayable contract to accrue simple interest at a rate of 4% until the full amount owed is paid. The bill would require any amount owed that is not paid to a resident within 240 days after the residents termination of a repayable contract to accrue simple interest at a rate of 6% until the full amount owed is paid. The bill would require any amount owed that is not paid to a resident within one year after the 240-day period to accrue compound interest annually at a rate of 6% until the amount owed is paid. The bill would provide that the above-mentioned provisions apply only to repayable contracts entered into on or after January 1, 2017. The bill would require a facility to pay the lump sum owed, including any interest accrued, to a residents estate if the resident is deceased. The bill would provide that, until January 1, 2018, these provisions do not apply to specified projects that are in development prior to January 1, 2017, provided that the initial contract for the project is entered into on or before January 1, 2018. The bill would provide that the repayment by a provider of all or a portion of an entrance fee before the resale of a unit would not subject any other entrance fee to the refund reserve requirements, except as provided.
The bill would make corresponding changes to require a continuing care contract to contain a statement that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract. The bill would also require a continuing care contract that provides for a refund or repayment of a lump sum of all or part of the entrance fee to include a statement that the provider will make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit.
Existing law requires a continuing care retirement facility, as defined, to possess a certificate of authority issued by the State Department of Social Services before it can enter into a continuing care contract, as defined. Existing law requires that a continuing care contract be in writing and contain specified information. Existing law provides that a continuing care contract may be canceled without cause by written notice from either party within 90 days of the residents initial occupancy.
Existing law requires a provider to pay, during the cancellation period, all refunds owed to a resident within 14 days after a resident makes possession of the living unit available to the provider. Existing law requires a provider to pay a lump-sum payment that is conditioned upon resale of a unit to a resident within 14 days after resale of the unit.
This bill would instead specify that a continuing care retirement facility pay the full lump-sum payment that is conditioned upon resale of a unit to a resident resident, including any interest accrued, within 14 days after resale of a unit. The bill would require a continuing care retirement facility, for contracts signed after January 1, 2017, to pay a resident or his or her estate a specified portion of the full lump-sum payment, lump sum owed, notwithstanding a providers documented good-faith effort to resell the unit, if the unit remains vacant 120 days after the residents termination. The bill would require any payment balance amount owed that is not paid to a resident within 180 days to accrue simple interest, to be compounded annually, interest at a rate of 4% until the full lump-sum payment amount owed is made. paid. The bill would require any payment balance amount owed that is not paid to a resident within 240 days to accrue simple interest, to be compounded annually, interest at a rate of 6% until the full lump-sum payment amount owed is made. paid. The bill would require any amount owed that is not paid to a resident within one year after the 240-day period to accrue compound interest annually at a rate of 6% until the amount owed is paid. The bill would require a facility to make the lump-sum payment pay the lump sum owed, including any interest accrued, to a residents estate if the resident is deceased. The bill would provide that, until January 1, 2018, these provisions do not apply to specified projects that are in development prior to January 1, 2017, provided that the initial contract for the project is entered into on or before January 1, 2018. The bill would provide that the repayment by a provider of all or a portion of an entrance fee before the resale of a unit would not subject any other entrance fee to the refund reserve requirements, except as provided.
The bill would make corresponding changes to require a continuing care contract to contain a statement that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract. The bill would also require a continuing care contract that provides for a refund or repayment of a lump sum of all or part of the entrance fee to include a statement that the provider will make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit.
Existing law requires a continuing care retirement facility, as defined, to possess a certificate of authority issued by the State Department of Social Services before it can enter into a continuing care contract, as defined. Existing law requires that a continuing care contract be in writing and contain specified information. Existing law provides that a continuing care contract may be canceled without cause by written notice from either party within 90 days of the residents initial occupancy.
Existing law requires a provider to pay, during the cancellation period, all refunds owed to a resident within 14 days after a resident makes possession of the living unit available to the provider. Existing law requires a provider to pay a lump-sum payment that is conditioned upon resale of a unit to a resident within 14 days after resale of the unit.
This bill would instead specify that a continuing care retirement facility pay the full lump-sum payment that is conditioned upon resale of a unit to a resident within 14 days after resale of a unit. The bill would require a continuing care retirement facility, for contracts signed after January 1, 2017, to pay a resident or his or her estate a specified portion of the full lump-sum payment, notwithstanding a providers documented good-faith effort to resell the unit, if the unit remains vacant 120 days after the residents termination. The bill would require any payment balance not paid to a resident within 180 days to accrue simple interest, to be compounded annually, at a rate of 4% until the full lump-sum payment is made. The bill would require any payment balance not paid to a resident within 240 days to accrue simple interest, to be compounded annually, at a rate of 6% until the full lump-sum payment is made. The bill would require a facility to make the lump-sum payment to a residents estate if the resident is deceased. The bill would provide that, until January 1, 2018, these provisions do not apply to specified projects that are in development prior to January 1, 2017, provided that the initial contract for the project is entered into on or before January 1, 2018. The bill would provide that the repayment by a provider of all or a portion of an entrance fee before the resale of a unit would not subject any other entrance fee to the refund reserve requirements, except as provided.
The bill would make corresponding changes to require a continuing care contract to contain a statement that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract. The bill would also require a continuing care contract that provides for a refund or repayment of a lump sum of all or part of the entrance fee to include a statement that the provider will make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit.
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 providers 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 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.
(10)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.
(11)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 entitys 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 communitys 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 departments 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 Farmers 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 institutions 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)Bankers 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 Moodys Investors Service, or the equivalent rating by Standard and Poors 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 Moodys Investors Service or AA by Standard and Poors 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. A change shall not 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 communitys 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 providers 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 providers 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 homeowners 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 applicants 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 transferors 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 residents sixth year of residency. Providers that enter into refundable contracts shall be subject to the refund reserve requirements of Section 1792.6.
(3)Repayable contract means 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. A repayable contract 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. A provider may repay all or a portion of an entrance fee that is conditioned upon resale of the unit before the resale of the unit. The repayment of an entrance fee before the resale of the unit shall not cause any other entrance fee to be subject to the refund reserve requirements of Section 1792.6, provided that the provider does not promise, at the time of contracting or thereafter, to make this type of early repayment, represent that the provider intends to make this type of early repayment, or indicate that the provider has a practice of making this type of early repayment.
(4)Resale fee means a levy by the provider against the proceeds from the sale of a transferors equity interest.
(5)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.
(6)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.
(7)Residential care facility for the elderly means a housing arrangement as defined by Section 1569.2.
(8)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.
(9)Residential temporary relocation means the relocation of one or more residents, except in the case of a natural disaster that is out of the providers 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 9 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. 2.Section 1788 of the Health and Safety Code is amended to read:1788.(a)A continuing care contract shall contain all of the following:
(1)The legal name and address of each provider.
(2)The name and address of the continuing care retirement community.
(3)The residents name and the identity of the unit the resident will occupy.
(4)If there is a transferor other than the resident, the transferor shall be a party to the contract and the transferors name and address shall be specified.
(5)If the provider has used the name of any charitable or religious or nonprofit organization in its title before January 1, 1979, and continues to use that name, and that organization is not responsible for the financial and contractual obligations of the provider or the obligations specified in the continuing care contract, the provider shall include in every continuing care contract a conspicuous statement that clearly informs the resident that the organization is not financially responsible.
(6)The date the continuing care contract is signed by the resident and, where applicable, any other transferor.
(7)The duration of the continuing care contract.
(8)A list of the services that will be made available to the resident as required to provide the appropriate level of care. The list of services shall include the services required as a condition for licensure as a residential care facility for the elderly, including all of the following:
(A)Regular observation of the residents health status to ensure that his or her dietary needs, social needs, and needs for special services are satisfied.
(B)Safe and healthful living accommodations, including housekeeping services and utilities.
(C)Maintenance of house rules for the protection of residents.
(D)A planned activities program, which includes social and recreational activities appropriate to the interests and capabilities of the resident.
(E)Three balanced, nutritious meals and snacks made available daily, including special diets prescribed by a physician as a medical necessity.
(F)Assisted living services.
(G)Assistance with taking medications.
(H)Central storing and distribution of medications.
(I)Arrangements to meet health needs, including arranging transportation.
(9)An itemization of the services that are included in the monthly fee and the services that are available at an extra charge. The provider shall attach a current fee schedule to the continuing care contract. The schedule shall state that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
(10)The procedures and conditions under which a resident may be voluntarily and involuntarily transferred from a designated living unit. The transfer procedures, at a minimum, shall include provisions addressing all of the following circumstances under which a transfer may be authorized:
(A)A continuing care retirement community may transfer a resident under the following conditions, taking into account the appropriateness and necessity of the transfer and the goal of promoting resident independence:
(i)The resident is nonambulatory. The definition of nonambulatory, as provided in Section 13131, shall either be stated in full in the continuing care contract or be cited. If Section 13131 is cited, a copy of the statute shall be made available to the resident, either as an attachment to the continuing care contract or by specifying that it will be provided upon request. If a nonambulatory resident occupies a room that has a fire clearance for nonambulatory residents, transfer shall not be necessary.
(ii)The resident develops a physical or mental condition that endangers the health, safety, or well-being of the resident or another person.
(iii)The residents condition or needs require the residents transfer to an assisted living care unit or skilled nursing facility, because the level of care required by the resident exceeds that which may be lawfully provided in the living unit.
(iv)The residents condition or needs require the residents transfer to a nursing facility, hospital, or other facility, and the provider has no facilities available to provide that level of care.
(B)Before the continuing care retirement community transfers a resident under any of the conditions set forth in subparagraph (A), the community shall satisfy all of the following requirements:
(i)Involve the resident and the residents responsible person, as defined in paragraph (6) of subdivision (r) of Section 87101 of Title 22 of the California Code of Regulations, and upon the residents or responsible persons request, family members, or the residents physician or other appropriate health professional, in the assessment process that forms the basis for the level of care transfer decision by the provider. The provider shall offer an explanation of the assessment process. If an assessment tool or tools, including scoring and evaluating criteria, are used in the determination of the appropriateness of the transfer, the provider shall make copies of the completed assessment available upon the request of the resident or the residents responsible person.
(ii)Prior to sending a formal notification of transfer, the provider shall conduct a care conference with the resident and the residents responsible person, and upon the residents or responsible persons request, family members, and the residents health care professionals, to explain the reasons for transfer.
(iii)Notify the resident and the residents responsible person of the reasons for the transfer in writing.
(iv)Notwithstanding any other provision of this subparagraph, if the resident does not have impairment of cognitive abilities, the resident may request that his or her responsible person not be involved in the transfer process.
(v)The notice of transfer shall be made at least 30 days before the transfer is expected to occur, except when the health or safety of the resident or other residents is in danger, or the transfer is required by the residents urgent medical needs. Under those circumstances, the written notice shall be made as soon as practicable before the transfer.
(vi)The written notice shall contain the reasons for the transfer, the effective date, the designated level of care or location to which the resident will be transferred, a statement of the residents right to a review of the transfer decision at a care conference, as provided for in subparagraph (C), and for disputed transfer decisions, the right to review by the Continuing Care Contracts Branch of the State Department of Social Services, as provided for in subparagraph (D). The notice shall also contain the name, address, and telephone number of the departments Continuing Care Contracts Branch.
(vii)The continuing care retirement community shall provide sufficient preparation and orientation to the resident to ensure a safe and orderly transfer and to minimize trauma.
(C)The resident has the right to review the transfer decision at a subsequent care conference that shall include the resident, the residents responsible person, and upon the residents or responsible persons request, family members, the residents physician or other appropriate health care professional, and members of the providers interdisciplinary team. The local ombudsperson may also be included in the care conference, upon the request of the resident, the residents responsible person, or the provider.
(D)For disputed transfer decisions, the resident or the residents responsible person has the right to a prompt and timely review of the transfer process by the Continuing Care Contracts Branch of the State Department of Social Services.
(E)The decision of the departments Continuing Care Contracts Branch shall be in writing and shall determine whether the provider failed to comply with the transfer process pursuant to subparagraphs (A) to (C), inclusive. Pending the decision of the Continuing Care Contracts Branch, the provider shall specify any additional care the provider believes is necessary in order for the resident to remain in his or her unit. The resident may be required to pay for the extra care, as provided in the contract.
(F)Transfer of a second resident when a shared accommodation arrangement is terminated.
(11)Provisions describing any changes in the residents monthly fee and any changes in the entrance fee refund payable to the resident that will occur if the resident transfers from any unit, including, but not limited to, terminating his or her contract after 18 months of residential temporary relocation, as defined in paragraph (8) of subdivision (r) of Section 1771. Unless the fee is part of an equity interest contract, a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident.
(12)The providers continuing obligations, if any, in the event a resident is transferred from the continuing care retirement community to another facility.
(13)The providers obligations, if any, to resume care upon the residents return after a transfer from the continuing care retirement community.
(14)The providers obligations to provide services to the resident while the resident is absent from the continuing care retirement community.
(15)The conditions under which the resident must permanently release his or her living unit.
(16)If real or personal properties are transferred in lieu of cash, a statement specifying each items value at the time of transfer, and how the value was ascertained.
(A)An itemized receipt that includes the information described above is acceptable if incorporated as a part of the continuing care contract.
(B)When real property is or will be transferred, the continuing care contract shall include a statement that the deed or other instrument of conveyance shall specify that the real property is conveyed pursuant to a continuing care contract and may be subject to rescission by the transferor within 90 days from the date that the resident first occupies the residential unit.
(C)The failure to comply with this paragraph shall not affect the validity of title to real property transferred pursuant to this chapter.
(17)The amount of the entrance fee.
(18)In the event two parties have jointly paid the entrance fee or other payment that allows them to occupy the unit, the continuing care contract shall describe how any refund of entrance fees is allocated.
(19)The amount of any processing fee.
(20)The amount of any monthly care fee.
(21)For continuing care contracts that require a monthly care fee or other periodic payment, the continuing care contract shall include the following:
(A)A statement that the occupancy and use of the accommodations by the resident is contingent upon the regular payment of the fee.
(B)The regular rate of payment agreed upon (per day, week, or month).
(C)A provision specifying whether payment will be made in advance or after services have been provided.
(D)A provision specifying the provider will adjust monthly care fees for the residents support, maintenance, board, or lodging, when a resident requires medical attention while away from the continuing care retirement community.
(E)A provision specifying whether a credit or allowance will be given to a resident who is absent from the continuing care retirement community or from meals. This provision shall also state, when applicable, that the credit may be permitted at the discretion or by special permission of the provider.
(F)A statement of billing practices, procedures, and timelines. A provider shall allow a minimum of 14 days between the date a bill is sent and the date payment is due. A charge for a late payment may only be assessed if the amount and any condition for the penalty is stated on the bill.
(G)A statement that the provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
(22)All continuing care contracts that include monthly care fees shall address changes in monthly care fees by including either of the following provisions:
(A)For prepaid continuing care contracts, which include monthly care fees, one of the following methods:
(i)Fees shall not be subject to change during the lifetime of the agreement.
(ii)Fees shall not be increased by more than a specified number of dollars in any one year and not more than a specified number of dollars during the lifetime of the agreement.
(iii)Fees shall not be increased in excess of a specified percentage over the preceding year and not more than a specified percentage during the lifetime of the agreement.
(B)For monthly fee continuing care contracts, except prepaid contracts, changes in monthly care fees shall be based on projected costs, prior year per capita costs, and economic indicators.
(23)A provision requiring that the provider give written notice to the resident at least 30 days in advance of any change in the residents monthly care fees or in the price or scope of any component of care or other services.
(24)A provision indicating whether the residents rights under the continuing care contract include any proprietary interests in the assets of the provider or in the continuing care retirement community, or both. Any statement in a contract concerning an ownership interest shall appear in a large-sized font or print.
(25)If the continuing care retirement community property is encumbered by a security interest that is senior to any claims the residents may have to enforce continuing care contracts, a provision shall advise the residents that any claims they may have under the continuing care contract are subordinate to the rights of the secured lender. For equity projects, the continuing care contract shall specify the type and extent of the equity interest and whether any entity holds a security interest.
(26)Notice that the living units are part of a continuing care retirement community that is licensed as a residential care facility for the elderly and, as a result, any duly authorized agent of the department may, upon proper identification and upon stating the purpose of his or her visit, enter and inspect the entire premises at any time, without advance notice.
(27)A conspicuous statement, in at least 10-point boldface type in immediate proximity to the space reserved for the signatures of the resident and, if applicable, the transferor, that provides as follows: You, the resident or transferor, may cancel the transaction without cause at any time within 90 days from the date you first occupy your living unit. See the attached notice of cancellation form for an explanation of this right.
(28)Notice that during the cancellation period, the continuing care contract may be canceled upon 30 days written notice by the provider without cause, or that the provider waives this right.
(29)The terms and conditions under which the continuing care contract may be terminated after the cancellation period by either party, including any health or financial conditions.
(30)A statement that, after the cancellation period, a provider may unilaterally terminate the continuing care contract only if the provider has good and sufficient cause.
(A)Any continuing care contract containing a clause that provides for a continuing care contract to be terminated for just cause, good cause, or other similar provision, shall also include a provision that none of the following activities by the resident, or on behalf of the resident, constitutes just cause, good cause, or otherwise activates the termination provision:
(i)Filing or lodging a formal complaint with the department or other appropriate authority.
(ii)Participation in an organization or affiliation of residents, or other similar lawful activity.
(B)The provision required by this paragraph shall also state that the provider shall not discriminate or retaliate in any manner against any resident of a continuing care retirement community for contacting the department, or any other state, county, or city agency, or any elected or appointed government official to file a complaint or for any other reason, or for participation in a residents organization or association.
(C)Nothing in this paragraph diminishes the providers ability to terminate the continuing care contract for good and sufficient cause.
(31)A statement that at least 90 days written notice to the resident is required for a unilateral termination of the continuing care contract by the provider.
(32)A statement concerning the length of notice that a resident is required to give the provider to voluntarily terminate the continuing care contract after the cancellation period.
(33)The policy or terms for refunding or repaying a lump sum of any portion of the entrance fee, in the event of cancellation, termination, or death. Every continuing care contract that provides for a refund or repaying a lump sum of all or a part of the entrance fee shall also do all of the following:
(A)Specify the amount, if any, the resident has paid or will pay for upgrades, special features, or modifications to the residents unit.
(B)State that if the continuing care contract is canceled or terminated by the provider, the provider shall do both of the following:
(i)Amortize the specified amount at the same rate as the residents entrance fee.
(ii)Refund the unamortized balance to the resident at the same time the provider pays the residents entrance fee refund.
(C)State that the resident has a right to terminate his or her contract after 18 months of residential temporary relocation, as defined in paragraph (8) of subdivision (r) of Section 1771. Provisions for refunds due to cancellation pursuant to this subparagraph shall be set forth in the contract.
(D)State the provider shall make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit. No later than July 1, 2017, a provider shall provide notice to all current residents with contracts applicable to this subparagraph regarding the statement required by this subparagraph as a clarification of the residents existing contract.
(E)For all contracts with a repayment of all or a portion of the entrance fee conditioned upon the resale of the unit, the provider shall state the average and longest amount of time that it has taken to resell a unit within the last five calendar years.
(34)The following notice at the bottom of the signatory page:
NOTICE | (date) |
This is a continuing care contract as defined by paragraph (8) of subdivision (c), or subdivision (l) of Section 1771 of the California Health and Safety Code. This continuing care contract form has been approved by the State Department of Social Services as required by subdivision (b) of Section 1787 of the California Health and Safety Code. The basis for this approval was a determination that (provider name) has submitted a contract that complies with the minimum statutory requirements applicable to continuing care contracts. The department does not approve or disapprove any of the financial or health care coverage provisions in this contract. Approval by the department is NOT a guaranty of performance or an endorsement of any continuing care contract provisions. Prospective transferors and residents are strongly encouraged to carefully consider the benefits and risks of this continuing care contract and to seek financial and legal advice before signing.
(35)The provider may not attempt to absolve itself in the continuing care contract from liability for its negligence by any statement to that effect, and shall include the following statement in the contract: Nothing in this continuing care contract limits either the providers obligation to provide adequate care and supervision for the resident or any liability on the part of the provider which may result from the providers failure to provide this care and supervision.
(36)Provisions describing how the provider will proceed in the event of a closure, including an explanation of how the provider will comply with Sections 1793.80, 1793.81, 1793.82, and 1793.83.
(b)A life care contract shall also provide that:
(1)All levels of care, including acute care and physicians and surgeons services, will be provided to a resident.
(2)Care will be provided for the duration of the residents life unless the life care contract is canceled or terminated by the provider during the cancellation period or after the cancellation period for good cause.
(3)A comprehensive continuum of care will be provided to the resident, including skilled nursing, in a facility under the ownership and supervision of the provider on, or adjacent to, the continuing care retirement community premises.
(4)Monthly care fees will not be changed based on the residents level of care or service.
(5)A resident who becomes financially unable to pay his or her monthly care fees shall be subsidized provided the residents financial need does not arise from action by the resident to divest the resident of his or her assets.
(c)Continuing care contracts may include provisions that do any of the following:
(1)Subsidize a resident who becomes financially unable to pay for his or her monthly care fees at some future date. If a continuing care contract provides for subsidizing a resident, it may also provide for any of the following:
(A)The resident shall apply for any public assistance or other aid for which he or she is eligible and that the provider may apply for assistance on behalf of the resident.
(B)The providers decision shall be final and conclusive regarding any adjustments to be made or any action to be taken regarding any charitable consideration extended to any of its residents.
(C)The provider is entitled to payment for the actual costs of care out of any property acquired by the resident subsequent to any adjustment extended to the resident under this paragraph, or from any other property of the resident that the resident failed to disclose.
(D)The provider may pay the monthly premium of the residents health insurance coverage under Medicare to ensure that those payments will be made.
(E)The provider may receive an assignment from the resident of the right to apply for and to receive the benefits, for and on behalf of the resident.
(F)The provider is not responsible for the costs of furnishing the resident with any services, supplies, and medication, when reimbursement is reasonably available from any governmental agency, or any private insurance.
(G)Any refund due to the resident at the termination of the continuing care contract may be offset by any prior subsidy to the resident by the provider.
(2)Limit responsibility for costs associated with the treatment or medication of an ailment or illness existing prior to the date of admission. In these cases, the medical or surgical exceptions, as disclosed by the medical entrance examination, shall be listed in the continuing care contract or in a medical report attached to and made a part of the continuing care contract.
(3)Identify legal remedies that may be available to the provider if the resident makes any material misrepresentation or omission pertaining to the residents assets or health.
(4)Restrict transfer or assignments of the residents rights and privileges under a continuing care contract due to the personal nature of the continuing care contract.
(5)Protect the providers ability to waive a residents breach of the terms or provisions of the continuing care contract in specific instances without relinquishing its right to insist upon full compliance by the resident with all terms or provisions in the contract.
(6)Provide that the resident shall reimburse the provider for any uninsured loss or damage to the residents unit, beyond normal wear and tear, resulting from the residents carelessness or negligence.
(7)Provide that the resident agrees to observe the off-limit areas of the continuing care retirement community designated by the provider for safety reasons. The provider may not include any provision in a continuing care contract that absolves the provider from liability for its negligence.
(8)Provide for the subrogation to the provider of the residents rights in the case of injury to a resident caused by the acts or omissions of a third party, or for the assignment of the residents recovery or benefits in this case to the provider, to the extent of the value of the goods and services furnished by the provider to or on behalf of the resident as a result of the injury.
(9)Provide for a lien on any judgment, settlement, or recovery for any additional expense incurred by the provider in caring for the resident as a result of injury.
(10)Require the residents cooperation and assistance in the diligent prosecution of any claim or action against any third party.
(11)Provide for the appointment of a conservator or guardian by a court with jurisdiction in the event a resident becomes unable to handle his or her personal or financial affairs.
(12)Allow a provider, whose property is tax exempt, to charge the resident, on a pro rata basis, property taxes, or in-lieu taxes, that the provider is required to pay.
(13)Make any other provision approved by the department.
(d)A copy of the residents rights as described in Section 1771.7 shall be attached to every continuing care contract.
(e)A copy of the current audited financial statement of the provider shall be attached to every continuing care contract. For a provider whose current audited financial statement does not accurately reflect the financial ability of the provider to fulfill the continuing care contract obligations, the financial statement attached to the continuing care contract shall include all of the following:
(1)A disclosure that the reserve requirement has not yet been determined or met, and that entrance fees will not be held in escrow.
(2)A disclosure that the ability to provide the services promised in the continuing care contract will depend on successful compliance with the approved financial plan.
(3)A copy of the approved financial plan for meeting the reserve requirements.
(4)Any other supplemental statements or attachments necessary to accurately represent the providers financial ability to fulfill its continuing care contract obligations.
(f)A schedule of the average monthly care fees charged to residents for each type of residential living unit for each of the five years preceding execution of the continuing care contract shall be attached to every continuing care contract. The provider shall update this schedule annually at the end of each fiscal year. If the continuing care retirement community has not been in existence for five years, the information shall be provided for each of the years the continuing care retirement community has been in existence.
(g)If any continuing care contract provides for a health insurance policy for the benefit of the resident, the provider shall attach to the continuing care contract a binder complying with Sections 382 and 382.5 of the Insurance Code.
(h)The provider shall attach to every continuing care contract a completed form in duplicate, captioned Notice of Cancellation. The notice shall be easily detachable, and shall contain, in at least 10-point boldface type, the following statement:
NOTICE OF CANCELLATION | (date) |
Your first date of occupancy under this contract | |
is: _____________________________________________ | |
You may cancel this transaction, without any penalty within 90 calendar days from the above date.
If you cancel, any property transferred, any payments made by you under the contract, and any negotiable instrument executed by you will be returned within 14 calendar days after making possession of the living unit available to the provider. Any security interest arising out of the transaction will be canceled.
If you cancel, you are obligated to pay a reasonable processing fee to cover costs and to pay for the reasonable value of the services received by you from the provider up to the date you canceled or made available to the provider the possession of any living unit delivered to you under this contract, whichever is later.
If you cancel, you must return possession of any living unit delivered to you under this contract to the provider in substantially the same condition as when you took possession.
Possession of the living unit must be made available to the provider within 20 calendar days of your notice of cancellation. If you fail to make the possession of any living unit available to the provider, then you remain liable for performance of all obligations under the contract.
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram
to | |
(Name of provider) | |
|---|---|
at | |
(Address of providers place of business) | |
not later than midnight of_____________(date). | |
I hereby cancel this | |
(Residentsor | |
(a)During the cancellation period, the provider shall pay all refunds owed to a resident within 14 calendar days after a resident makes possession of the living unit available to the provider.
(b)After the cancellation period, any refunds due to a resident under a continuing care contract shall be paid within 14 calendar days after a resident makes possession of the living unit available to the provider or 90 calendar days after death or receipt of notice of termination, whichever is later.
(c)In nonequity projects, if the continuing care contract is canceled by either party during the cancellation period or terminated by the provider after the cancellation period, the resident shall be refunded the difference between the total amount of entrance, monthly, and optional fees paid and the amount used for care of the resident.
(d)If a resident has paid additional amounts for upgrades, special features, or modifications to the living unit and the provider terminates the residents continuing care contract, the provider shall amortize those additional amounts at the same rate as the entrance fee and shall refund the unamortized balance to the resident.
(e)A lump-sum payment after termination of a repayable contract, as defined in paragraph (3) of subdivision (r) of Section 1771, shall not be considered to be a refund and may not be characterized or advertised as a refund. The full lump sum owed, including any interest accrued, shall be paid to the resident or the residents estate within 14 calendar days after resale of the unit.
(f)(1)Any balance of the lump sum owed that has not been paid to the resident or the residents estate within 180 days after termination of a repayable contract shall accrue interest at a rate calculated pursuant to paragraph (2). Any balance of the lump sum owed that has not been paid to the resident or the residents estate within 240 days after termination of a repayable contract shall accrue interest at a rate calculated pursuant to paragraph (3). Interest shall continue to accrue annually pursuant to paragraph (4) until the date the full lump sum owed is paid to the resident or the residents estate. This subdivision shall apply only to repayable contracts entered into on or after January 1, 2017.
(2)Any amount owed that is not paid to the resident or the residents estate within the 180-day period pursuant to paragraph (1) shall accrue simple interest at a rate of 4 percent of the amount owed.
(3)Any amount owed that is not paid to the resident or the residents estate within the 240-day period pursuant to paragraph (1) shall accrue simple interest at a rate of 6 percent of the amount owed.
(4)Any amount owed that is not paid to the resident or the residents estate within one year after the 240-day period pursuant to paragraph (3) shall accrue interest at a rate of 6 percent, compounded annually.
(5)Until January 1, 2018, this subdivision shall not apply to a project that is in development prior to January 1, 2017, including current repayable agreements, current deposit agreements that contemplate repayable entrance fees, and other projects that have received department approval to market units pursuant to Section 1771.4, or have received issuer, lender, or bond insurer approval to obtain bond financing, or other governmental approval based on a repayable entrance fee option, if the initial contract for the project is entered into on or before January 1, 2018.
(g)Except as otherwise obligated by an equity interest contract, once the unit has been vacated and made available to the provider, the provider shall not make any further charges to the resident or his or her estate or charges against the lump sum owed to the resident or the residents estate for purposes of continued monthly payments to the provider or for maintenance or housekeeping on the vacated unit.
(h)Nothing in this section shall be construed to limit or alter any legal remedies otherwise available to a resident or his or her estate.
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 providers 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 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.
(10)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.
(11)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 entitys 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 communitys 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 departments 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 Farmers 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 institutions 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)Bankers 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 Moodys Investors Service, or the equivalent rating by Standard and Poors 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 Moodys Investors Service or AA by Standard and Poors 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. A change shall not 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 communitys 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 providers 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 providers 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 homeowners 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 applicants 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 transferors 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 residents sixth year of residency. Providers that enter into refundable contracts shall be subject to the refund reserve requirements of Section 1792.6.
(3)Repayable contract means 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. A repayable contract 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. A provider may repay all or a portion of an entrance fee that is conditioned upon resale of the unit before the resale of the unit. The repayment of an entrance fee before the resale of the unit shall not cause any other entrance fee to be subject to the refund reserve requirements of Section 1792.6, provided that the provider does not promise, at the time of contracting or thereafter, to make this type of early repayment, represent that the provider intends to make this type of early repayment, or indicate that the provider has a practice of making this type of early repayment.
(4)Resale fee means a levy by the provider against the proceeds from the sale of a transferors equity interest.
(5)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.
(6)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.
(7)Residential care facility for the elderly means a housing arrangement as defined by Section 1569.2.
(8)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.
(9)Residential temporary relocation means the relocation of one or more residents, except in the case of a natural disaster that is out of the providers 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 9 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. 2.Section 1788 of the Health and Safety Code is amended to read:1788.(a)A continuing care contract shall contain all of the following:
(1)The legal name and address of each provider.
(2)The name and address of the continuing care retirement community.
(3)The residents name and the identity of the unit the resident will occupy.
(4)If there is a transferor other than the resident, the transferor shall be a party to the contract and the transferors name and address shall be specified.
(5)If the provider has used the name of any charitable or religious or nonprofit organization in its title before January 1, 1979, and continues to use that name, and that organization is not responsible for the financial and contractual obligations of the provider or the obligations specified in the continuing care contract, the provider shall include in every continuing care contract a conspicuous statement that clearly informs the resident that the organization is not financially responsible.
(6)The date the continuing care contract is signed by the resident and, where applicable, any other transferor.
(7)The duration of the continuing care contract.
(8)A list of the services that will be made available to the resident as required to provide the appropriate level of care. The list of services shall include the services required as a condition for licensure as a residential care facility for the elderly, including all of the following:
(A)Regular observation of the residents health status to ensure that his or her dietary needs, social needs, and needs for special services are satisfied.
(B)Safe and healthful living accommodations, including housekeeping services and utilities.
(C)Maintenance of house rules for the protection of residents.
(D)A planned activities program, which includes social and recreational activities appropriate to the interests and capabilities of the resident.
(E)Three balanced, nutritious meals and snacks made available daily, including special diets prescribed by a physician as a medical necessity.
(F)Assisted living services.
(G)Assistance with taking medications.
(H)Central storing and distribution of medications.
(I)Arrangements to meet health needs, including arranging transportation.
(9)An itemization of the services that are included in the monthly fee and the services that are available at an extra charge. The provider shall attach a current fee schedule to the continuing care contract. The schedule shall state that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
(10)The procedures and conditions under which a resident may be voluntarily and involuntarily transferred from a designated living unit. The transfer procedures, at a minimum, shall include provisions addressing all of the following circumstances under which a transfer may be authorized:
(A)A continuing care retirement community may transfer a resident under the following conditions, taking into account the appropriateness and necessity of the transfer and the goal of promoting resident independence:
(i)The resident is nonambulatory. The definition of nonambulatory, as provided in Section 13131, shall either be stated in full in the continuing care contract or be cited. If Section 13131 is cited, a copy of the statute shall be made available to the resident, either as an attachment to the continuing care contract or by specifying that it will be provided upon request. If a nonambulatory resident occupies a room that has a fire clearance for nonambulatory residents, transfer shall not be necessary.
(ii)The resident develops a physical or mental condition that endangers the health, safety, or well-being of the resident or another person.
(iii)The residents condition or needs require the residents transfer to an assisted living care unit or skilled nursing facility, because the level of care required by the resident exceeds that which may be lawfully provided in the living unit.
(iv)The residents condition or needs require the residents transfer to a nursing facility, hospital, or other facility, and the provider has no facilities available to provide that level of care.
(B)Before the continuing care retirement community transfers a resident under any of the conditions set forth in subparagraph (A), the community shall satisfy all of the following requirements:
(i)Involve the resident and the residents responsible person, as defined in paragraph (6) of subdivision (r) of Section 87101 of Title 22 of the California Code of Regulations, and upon the residents or responsible persons request, family members, or the residents physician or other appropriate health professional, in the assessment process that forms the basis for the level of care transfer decision by the provider. The provider shall offer an explanation of the assessment process. If an assessment tool or tools, including scoring and evaluating criteria, are used in the determination of the appropriateness of the transfer, the provider shall make copies of the completed assessment available upon the request of the resident or the residents responsible person.
(ii)Prior to sending a formal notification of transfer, the provider shall conduct a care conference with the resident and the residents responsible person, and upon the residents or responsible persons request, family members, and the residents health care professionals, to explain the reasons for transfer.
(iii)Notify the resident and the residents responsible person of the reasons for the transfer in writing.
(iv)Notwithstanding any other provision of this subparagraph, if the resident does not have impairment of cognitive abilities, the resident may request that his or her responsible person not be involved in the transfer process.
(v)The notice of transfer shall be made at least 30 days before the transfer is expected to occur, except when the health or safety of the resident or other residents is in danger, or the transfer is required by the residents urgent medical needs. Under those circumstances, the written notice shall be made as soon as practicable before the transfer.
(vi)The written notice shall contain the reasons for the transfer, the effective date, the designated level of care or location to which the resident will be transferred, a statement of the residents right to a review of the transfer decision at a care conference, as provided for in subparagraph (C), and for disputed transfer decisions, the right to review by the Continuing Care Contracts Branch of the State Department of Social Services, as provided for in subparagraph (D). The notice shall also contain the name, address, and telephone number of the departments Continuing Care Contracts Branch.
(vii)The continuing care retirement community shall provide sufficient preparation and orientation to the resident to ensure a safe and orderly transfer and to minimize trauma.
(C)The resident has the right to review the transfer decision at a subsequent care conference that shall include the resident, the residents responsible person, and upon the residents or responsible persons request, family members, the residents physician or other appropriate health care professional, and members of the providers interdisciplinary team. The local ombudsperson may also be included in the care conference, upon the request of the resident, the residents responsible person, or the provider.
(D)For disputed transfer decisions, the resident or the residents responsible person has the right to a prompt and timely review of the transfer process by the Continuing Care Contracts Branch of the State Department of Social Services.
(E)The decision of the departments Continuing Care Contracts Branch shall be in writing and shall determine whether the provider failed to comply with the transfer process pursuant to subparagraphs (A) to (C), inclusive. Pending the decision of the Continuing Care Contracts Branch, the provider shall specify any additional care the provider believes is necessary in order for the resident to remain in his or her unit. The resident may be required to pay for the extra care, as provided in the contract.
(F)Transfer of a second resident when a shared accommodation arrangement is terminated.
(11)Provisions describing any changes in the residents monthly fee and any changes in the entrance fee refund payable to the resident that will occur if the resident transfers from any unit, including, but not limited to, terminating his or her contract after 18 months of residential temporary relocation, as defined in paragraph (8) of subdivision (r) of Section 1771. Unless the fee is part of an equity interest contract, a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident.
(12)The providers continuing obligations, if any, in the event a resident is transferred from the continuing care retirement community to another facility.
(13)The providers obligations, if any, to resume care upon the residents return after a transfer from the continuing care retirement community.
(14)The providers obligations to provide services to the resident while the resident is absent from the continuing care retirement community.
(15)The conditions under which the resident must permanently release his or her living unit.
(16)If real or personal properties are transferred in lieu of cash, a statement specifying each items value at the time of transfer, and how the value was ascertained.
(A)An itemized receipt that includes the information described above is acceptable if incorporated as a part of the continuing care contract.
(B)When real property is or will be transferred, the continuing care contract shall include a statement that the deed or other instrument of conveyance shall specify that the real property is conveyed pursuant to a continuing care contract and may be subject to rescission by the transferor within 90 days from the date that the resident first occupies the residential unit.
(C)The failure to comply with this paragraph shall not affect the validity of title to real property transferred pursuant to this chapter.
(17)The amount of the entrance fee.
(18)In the event two parties have jointly paid the entrance fee or other payment that allows them to occupy the unit, the continuing care contract shall describe how any refund of entrance fees is allocated.
(19)The amount of any processing fee.
(20)The amount of any monthly care fee.
(21)For continuing care contracts that require a monthly care fee or other periodic payment, the continuing care contract shall include the following:
(A)A statement that the occupancy and use of the accommodations by the resident is contingent upon the regular payment of the fee.
(B)The regular rate of payment agreed upon (per day, week, or month).
(C)A provision specifying whether payment will be made in advance or after services have been provided.
(D)A provision specifying the provider will adjust monthly care fees for the residents support, maintenance, board, or lodging, when a resident requires medical attention while away from the continuing care retirement community.
(E)A provision specifying whether a credit or allowance will be given to a resident who is absent from the continuing care retirement community or from meals. This provision shall also state, when applicable, that the credit may be permitted at the discretion or by special permission of the provider.
(F)A statement of billing practices, procedures, and timelines. A provider shall allow a minimum of 14 days between the date a bill is sent and the date payment is due. A charge for a late payment may only be assessed if the amount and any condition for the penalty is stated on the bill.
(G)A statement that the provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
(22)All continuing care contracts that include monthly care fees shall address changes in monthly care fees by including either of the following provisions:
(A)For prepaid continuing care contracts, which include monthly care fees, one of the following methods:
(i)Fees shall not be subject to change during the lifetime of the agreement.
(ii)Fees shall not be increased by more than a specified number of dollars in any one year and not more than a specified number of dollars during the lifetime of the agreement.
(iii)Fees shall not be increased in excess of a specified percentage over the preceding year and not more than a specified percentage during the lifetime of the agreement.
(B)For monthly fee continuing care contracts, except prepaid contracts, changes in monthly care fees shall be based on projected costs, prior year per capita costs, and economic indicators.
(23)A provision requiring that the provider give written notice to the resident at least 30 days in advance of any change in the residents monthly care fees or in the price or scope of any component of care or other services.
(24)A provision indicating whether the residents rights under the continuing care contract include any proprietary interests in the assets of the provider or in the continuing care retirement community, or both. Any statement in a contract concerning an ownership interest shall appear in a large-sized font or print.
(25)If the continuing care retirement community property is encumbered by a security interest that is senior to any claims the residents may have to enforce continuing care contracts, a provision shall advise the residents that any claims they may have under the continuing care contract are subordinate to the rights of the secured lender. For equity projects, the continuing care contract shall specify the type and extent of the equity interest and whether any entity holds a security interest.
(26)Notice that the living units are part of a continuing care retirement community that is licensed as a residential care facility for the elderly and, as a result, any duly authorized agent of the department may, upon proper identification and upon stating the purpose of his or her visit, enter and inspect the entire premises at any time, without advance notice.
(27)A conspicuous statement, in at least 10-point boldface type in immediate proximity to the space reserved for the signatures of the resident and, if applicable, the transferor, that provides as follows: You, the resident or transferor, may cancel the transaction without cause at any time within 90 days from the date you first occupy your living unit. See the attached notice of cancellation form for an explanation of this right.
(28)Notice that during the cancellation period, the continuing care contract may be canceled upon 30 days written notice by the provider without cause, or that the provider waives this right.
(29)The terms and conditions under which the continuing care contract may be terminated after the cancellation period by either party, including any health or financial conditions.
(30)A statement that, after the cancellation period, a provider may unilaterally terminate the continuing care contract only if the provider has good and sufficient cause.
(A)Any continuing care contract containing a clause that provides for a continuing care contract to be terminated for just cause, good cause, or other similar provision, shall also include a provision that none of the following activities by the resident, or on behalf of the resident, constitutes just cause, good cause, or otherwise activates the termination provision:
(i)Filing or lodging a formal complaint with the department or other appropriate authority.
(ii)Participation in an organization or affiliation of residents, or other similar lawful activity.
(B)The provision required by this paragraph shall also state that the provider shall not discriminate or retaliate in any manner against any resident of a continuing care retirement community for contacting the department, or any other state, county, or city agency, or any elected or appointed government official to file a complaint or for any other reason, or for participation in a residents organization or association.
(C)Nothing in this paragraph diminishes the providers ability to terminate the continuing care contract for good and sufficient cause.
(31)A statement that at least 90 days written notice to the resident is required for a unilateral termination of the continuing care contract by the provider.
(32)A statement concerning the length of notice that a resident is required to give the provider to voluntarily terminate the continuing care contract after the cancellation period.
(33)The policy or terms for refunding or repaying a lump sum of any portion of the entrance fee, in the event of cancellation, termination, or death. Every continuing care contract that provides for a refund or repaying a lump sum of all or a part of the entrance fee shall also do all of the following:
(A)Specify the amount, if any, the resident has paid or will pay for upgrades, special features, or modifications to the residents unit.
(B)State that if the continuing care contract is canceled or terminated by the provider, the provider shall do both of the following:
(i)Amortize the specified amount at the same rate as the residents entrance fee.
(ii)Refund the unamortized balance to the resident at the same time the provider pays the residents entrance fee refund.
(C)State that the resident has a right to terminate his or her contract after 18 months of residential temporary relocation, as defined in paragraph (8) of subdivision (r) of Section 1771. Provisions for refunds due to cancellation pursuant to this subparagraph shall be set forth in the contract.
(D)State the provider shall make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit. No later than July 1, 2017, a provider shall provide notice to all current residents with contracts applicable to this subparagraph regarding the statement required by this subparagraph as a clarification of the residents existing contract.
(E)For all contracts with a repayment of all or a portion of the entrance fee conditioned upon the resale of the unit, the provider shall state the average and longest amount of time that it has taken to resell a unit within the last five calendar years.
(34)The following notice at the bottom of the signatory page:
NOTICE | (date) |
This is a continuing care contract as defined by paragraph (8) of subdivision (c), or subdivision (l) of Section 1771 of the California Health and Safety Code. This continuing care contract form has been approved by the State Department of Social Services as required by subdivision (b) of Section 1787 of the California Health and Safety Code. The basis for this approval was a determination that (provider name) has submitted a contract that complies with the minimum statutory requirements applicable to continuing care contracts. The department does not approve or disapprove any of the financial or health care coverage provisions in this contract. Approval by the department is NOT a guaranty of performance or an endorsement of any continuing care contract provisions. Prospective transferors and residents are strongly encouraged to carefully consider the benefits and risks of this continuing care contract and to seek financial and legal advice before signing.
(35)The provider may not attempt to absolve itself in the continuing care contract from liability for its negligence by any statement to that effect, and shall include the following statement in the contract: Nothing in this continuing care contract limits either the providers obligation to provide adequate care and supervision for the resident or any liability on the part of the provider which may result from the providers failure to provide this care and supervision.
(36)Provisions describing how the provider will proceed in the event of a closure, including an explanation of how the provider will comply with Sections 1793.80, 1793.81, 1793.82, and 1793.83.
(b)A life care contract shall also provide that:
(1)All levels of care, including acute care and physicians and surgeons services, will be provided to a resident.
(2)Care will be provided for the duration of the residents life unless the life care contract is canceled or terminated by the provider during the cancellation period or after the cancellation period for good cause.
(3)A comprehensive continuum of care will be provided to the resident, including skilled nursing, in a facility under the ownership and supervision of the provider on, or adjacent to, the continuing care retirement community premises.
(4)Monthly care fees will not be changed based on the residents level of care or service.
(5)A resident who becomes financially unable to pay his or her monthly care fees shall be subsidized provided the residents financial need does not arise from action by the resident to divest the resident of his or her assets.
(c)Continuing care contracts may include provisions that do any of the following:
(1)Subsidize a resident who becomes financially unable to pay for his or her monthly care fees at some future date. If a continuing care contract provides for subsidizing a resident, it may also provide for any of the following:
(A)The resident shall apply for any public assistance or other aid for which he or she is eligible and that the provider may apply for assistance on behalf of the resident.
(B)The providers decision shall be final and conclusive regarding any adjustments to be made or any action to be taken regarding any charitable consideration extended to any of its residents.
(C)The provider is entitled to payment for the actual costs of care out of any property acquired by the resident subsequent to any adjustment extended to the resident under this paragraph, or from any other property of the resident that the resident failed to disclose.
(D)The provider may pay the monthly premium of the residents health insurance coverage under Medicare to ensure that those payments will be made.
(E)The provider may receive an assignment from the resident of the right to apply for and to receive the benefits, for and on behalf of the resident.
(F)The provider is not responsible for the costs of furnishing the resident with any services, supplies, and medication, when reimbursement is reasonably available from any governmental agency, or any private insurance.
(G)Any refund due to the resident at the termination of the continuing care contract may be offset by any prior subsidy to the resident by the provider.
(2)Limit responsibility for costs associated with the treatment or medication of an ailment or illness existing prior to the date of admission. In these cases, the medical or surgical exceptions, as disclosed by the medical entrance examination, shall be listed in the continuing care contract or in a medical report attached to and made a part of the continuing care contract.
(3)Identify legal remedies that may be available to the provider if the resident makes any material misrepresentation or omission pertaining to the residents assets or health.
(4)Restrict transfer or assignments of the residents rights and privileges under a continuing care contract due to the personal nature of the continuing care contract.
(5)Protect the providers ability to waive a residents breach of the terms or provisions of the continuing care contract in specific instances without relinquishing its right to insist upon full compliance by the resident with all terms or provisions in the contract.
(6)Provide that the resident shall reimburse the provider for any uninsured loss or damage to the residents unit, beyond normal wear and tear, resulting from the residents carelessness or negligence.
(7)Provide that the resident agrees to observe the off-limit areas of the continuing care retirement community designated by the provider for safety reasons. The provider may not include any provision in a continuing care contract that absolves the provider from liability for its negligence.
(8)Provide for the subrogation to the provider of the residents rights in the case of injury to a resident caused by the acts or omissions of a third party, or for the assignment of the residents recovery or benefits in this case to the provider, to the extent of the value of the goods and services furnished by the provider to or on behalf of the resident as a result of the injury.
(9)Provide for a lien on any judgment, settlement, or recovery for any additional expense incurred by the provider in caring for the resident as a result of injury.
(10)Require the residents cooperation and assistance in the diligent prosecution of any claim or action against any third party.
(11)Provide for the appointment of a conservator or guardian by a court with jurisdiction in the event a resident becomes unable to handle his or her personal or financial affairs.
(12)Allow a provider, whose property is tax exempt, to charge the resident, on a pro rata basis, property taxes, or in-lieu taxes, that the provider is required to pay.
(13)Make any other provision approved by the department.
(d)A copy of the residents rights as described in Section 1771.7 shall be attached to every continuing care contract.
(e)A copy of the current audited financial statement of the provider shall be attached to every continuing care contract. For a provider whose current audited financial statement does not accurately reflect the financial ability of the provider to fulfill the continuing care contract obligations, the financial statement attached to the continuing care contract shall include all of the following:
(1)A disclosure that the reserve requirement has not yet been determined or met, and that entrance fees will not be held in escrow.
(2)A disclosure that the ability to provide the services promised in the continuing care contract will depend on successful compliance with the approved financial plan.
(3)A copy of the approved financial plan for meeting the reserve requirements.
(4)Any other supplemental statements or attachments necessary to accurately represent the providers financial ability to fulfill its continuing care contract obligations.
(f)A schedule of the average monthly care fees charged to residents for each type of residential living unit for each of the five years preceding execution of the continuing care contract shall be attached to every continuing care contract. The provider shall update this schedule annually at the end of each fiscal year. If the continuing care retirement community has not been in existence for five years, the information shall be provided for each of the years the continuing care retirement community has been in existence.
(g)If any continuing care contract provides for a health insurance policy for the benefit of the resident, the provider shall attach to the continuing care contract a binder complying with Sections 382 and 382.5 of the Insurance Code.
(h)The provider shall attach to every continuing care contract a completed form in duplicate, captioned Notice of Cancellation. The notice shall be easily detachable, and shall contain, in at least 10-point boldface type, the following statement:
NOTICE OF CANCELLATION | (date) |
Your first date of occupancy under this contract | |
is: _____________________________________________ | |
You may cancel this transaction, without any penalty within 90 calendar days from the above date.
If you cancel, any property transferred, any payments made by you under the contract, and any negotiable instrument executed by you will be returned within 14 calendar days after making possession of the living unit available to the provider. Any security interest arising out of the transaction will be canceled.
If you cancel, you are obligated to pay a reasonable processing fee to cover costs and to pay for the reasonable value of the services received by you from the provider up to the date you canceled or made available to the provider the possession of any living unit delivered to you under this contract, whichever is later.
If you cancel, you must return possession of any living unit delivered to you under this contract to the provider in substantially the same condition as when you took possession.
Possession of the living unit must be made available to the provider within 20 calendar days of your notice of cancellation. If you fail to make the possession of any living unit available to the provider, then you remain liable for performance of all obligations under the contract.
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram
to | |
(Name of provider) | |
|---|---|
at | |
(Address of providers place of business) | |
not later than midnight of_____________(date). | |
I hereby cancel this | |
(Residentsor | |
(a)During the cancellation period, the provider shall pay all refunds owed to a resident within 14 calendar days after a resident makes possession of the living unit available to the provider.
(b)After the cancellation period, any refunds due to a resident under a continuing care contract shall be paid within 14 calendar days after a resident makes possession of the living unit available to the provider or 90 calendar days after death or receipt of notice of termination, whichever is later.
(c)In nonequity projects, if the continuing care contract is canceled by either party during the cancellation period or terminated by the provider after the cancellation period, the resident shall be refunded the difference between the total amount of entrance, monthly, and optional fees paid and the amount used for care of the resident.
(d)If a resident has paid additional amounts for upgrades, special features, or modifications to the living unit and the provider terminates the residents continuing care contract, the provider shall amortize those additional amounts at the same rate as the entrance fee and shall refund the unamortized balance to the resident.
(e)A lump-sum payment after termination of a repayable contract, as defined in paragraph (3) of subdivision (r) of Section 1771, shall not be considered to be a refund and may not be characterized or advertised as a refund. The full lump sum owed, including any interest accrued, shall be paid to the resident or the residents estate within 14 calendar days after resale of the unit.
(f)(1)Any balance of the lump sum owed that has not been paid to the resident or the residents estate within 180 days after termination of a repayable contract shall accrue interest at a rate calculated pursuant to paragraph (2). Any balance of the lump sum owed that has not been paid to the resident or the residents estate within 240 days after termination of a repayable contract shall accrue interest at a rate calculated pursuant to paragraph (3). Interest shall continue to accrue annually pursuant to paragraph (4) until the date the full lump sum owed is paid to the resident or the residents estate. This subdivision shall apply only to repayable contracts entered into on or after January 1, 2017.
(2)Any amount owed that is not paid to the resident or the residents estate within the 180-day period pursuant to paragraph (1) shall accrue simple interest at a rate of 4 percent of the amount owed.
(3)Any amount owed that is not paid to the resident or the residents estate within the 240-day period pursuant to paragraph (1) shall accrue simple interest at a rate of 6 percent of the amount owed.
(4)Any amount owed that is not paid to the resident or the residents estate within one year after the 240-day period pursuant to paragraph (3) shall accrue interest at a rate of 6 percent, compounded annually.
(5)Until January 1, 2018, this subdivision shall not apply to a project that is in development prior to January 1, 2017, including current repayable agreements, current deposit agreements that contemplate repayable entrance fees, and other projects that have received department approval to market units pursuant to Section 1771.4, or have received issuer, lender, or bond insurer approval to obtain bond financing, or other governmental approval based on a repayable entrance fee option, if the initial contract for the project is entered into on or before January 1, 2018.
(g)Except as otherwise obligated by an equity interest contract, once the unit has been vacated and made available to the provider, the provider shall not make any further charges to the resident or his or her estate or charges against the lump sum owed to the resident or the residents estate for purposes of continued monthly payments to the provider or for maintenance or housekeeping on the vacated unit.
(h)Nothing in this section shall be construed to limit or alter any legal remedies otherwise available to a resident or his or her estate.
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 providers 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 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.
(10)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.
(11)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 entitys 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 communitys 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 departments 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 Farmers 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 institutions 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)Bankers 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 Moodys Investors Service, or the equivalent rating by Standard and Poors 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 Moodys Investors Service or AA by Standard and Poors 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. A change shall not 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 communitys 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 providers 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 providers 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 homeowners 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 applicants 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 transferors 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 residents sixth year of residency. Providers that enter into refundable contracts shall be subject to the refund reserve requirements of Section 1792.6.
(3)Repayable contract means 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. A repayable contract 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. A provider may repay all or a portion of an entrance fee that is conditioned upon resale of the unit before the resale of the unit. The repayment of an entrance fee before the resale of the unit shall not cause any other entrance fee to be subject to the refund reserve requirements of Section 1792.6, provided that the provider does not promise, at the time of contracting or thereafter, to make this type of early repayment, represent that the provider intends to make this type of early repayment, or indicate that the provider has a practice of making this type of early repayment.
(4)Resale fee means a levy by the provider against the proceeds from the sale of a transferors equity interest.
(5)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.
(6)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.
(7)Residential care facility for the elderly means a housing arrangement as defined by Section 1569.2.
(8)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.
(9)Residential temporary relocation means the relocation of one or more residents, except in the case of a natural disaster that is out of the providers 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 9 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. 2.Section 1788 of the Health and Safety Code is amended to read:1788.(a)A continuing care contract shall contain all of the following:
(1)The legal name and address of each provider.
(2)The name and address of the continuing care retirement community.
(3)The residents name and the identity of the unit the resident will occupy.
(4)If there is a transferor other than the resident, the transferor shall be a party to the contract and the transferors name and address shall be specified.
(5)If the provider has used the name of any charitable or religious or nonprofit organization in its title before January 1, 1979, and continues to use that name, and that organization is not responsible for the financial and contractual obligations of the provider or the obligations specified in the continuing care contract, the provider shall include in every continuing care contract a conspicuous statement that clearly informs the resident that the organization is not financially responsible.
(6)The date the continuing care contract is signed by the resident and, where applicable, any other transferor.
(7)The duration of the continuing care contract.
(8)A list of the services that will be made available to the resident as required to provide the appropriate level of care. The list of services shall include the services required as a condition for licensure as a residential care facility for the elderly, including all of the following:
(A)Regular observation of the residents health status to ensure that his or her dietary needs, social needs, and needs for special services are satisfied.
(B)Safe and healthful living accommodations, including housekeeping services and utilities.
(C)Maintenance of house rules for the protection of residents.
(D)A planned activities program, which includes social and recreational activities appropriate to the interests and capabilities of the resident.
(E)Three balanced, nutritious meals and snacks made available daily, including special diets prescribed by a physician as a medical necessity.
(F)Assisted living services.
(G)Assistance with taking medications.
(H)Central storing and distribution of medications.
(I)Arrangements to meet health needs, including arranging transportation.
(9)An itemization of the services that are included in the monthly fee and the services that are available at an extra charge. The provider shall attach a current fee schedule to the continuing care contract. The schedule shall state that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
(10)The procedures and conditions under which a resident may be voluntarily and involuntarily transferred from a designated living unit. The transfer procedures, at a minimum, shall include provisions addressing all of the following circumstances under which a transfer may be authorized:
(A)A continuing care retirement community may transfer a resident under the following conditions, taking into account the appropriateness and necessity of the transfer and the goal of promoting resident independence:
(i)The resident is nonambulatory. The definition of nonambulatory, as provided in Section 13131, shall either be stated in full in the continuing care contract or be cited. If Section 13131 is cited, a copy of the statute shall be made available to the resident, either as an attachment to the continuing care contract or by specifying that it will be provided upon request. If a nonambulatory resident occupies a room that has a fire clearance for nonambulatory residents, transfer shall not be necessary.
(ii)The resident develops a physical or mental condition that endangers the health, safety, or well-being of the resident or another person.
(iii)The residents condition or needs require the residents transfer to an assisted living care unit or skilled nursing facility, because the level of care required by the resident exceeds that which may be lawfully provided in the living unit.
(iv)The residents condition or needs require the residents transfer to a nursing facility, hospital, or other facility, and the provider has no facilities available to provide that level of care.
(B)Before the continuing care retirement community transfers a resident under any of the conditions set forth in subparagraph (A), the community shall satisfy all of the following requirements:
(i)Involve the resident and the residents responsible person, as defined in paragraph (6) of subdivision (r) of Section 87101 of Title 22 of the California Code of Regulations, and upon the residents or responsible persons request, family members, or the residents physician or other appropriate health professional, in the assessment process that forms the basis for the level of care transfer decision by the provider. The provider shall offer an explanation of the assessment process. If an assessment tool or tools, including scoring and evaluating criteria, are used in the determination of the appropriateness of the transfer, the provider shall make copies of the completed assessment available upon the request of the resident or the residents responsible person.
(ii)Prior to sending a formal notification of transfer, the provider shall conduct a care conference with the resident and the residents responsible person, and upon the residents or responsible persons request, family members, and the residents health care professionals, to explain the reasons for transfer.
(iii)Notify the resident and the residents responsible person of the reasons for the transfer in writing.
(iv)Notwithstanding any other provision of this subparagraph, if the resident does not have impairment of cognitive abilities, the resident may request that his or her responsible person not be involved in the transfer process.
(v)The notice of transfer shall be made at least 30 days before the transfer is expected to occur, except when the health or safety of the resident or other residents is in danger, or the transfer is required by the residents urgent medical needs. Under those circumstances, the written notice shall be made as soon as practicable before the transfer.
(vi)The written notice shall contain the reasons for the transfer, the effective date, the designated level of care or location to which the resident will be transferred, a statement of the residents right to a review of the transfer decision at a care conference, as provided for in subparagraph (C), and for disputed transfer decisions, the right to review by the Continuing Care Contracts Branch of the State Department of Social Services, as provided for in subparagraph (D). The notice shall also contain the name, address, and telephone number of the departments Continuing Care Contracts Branch.
(vii)The continuing care retirement community shall provide sufficient preparation and orientation to the resident to ensure a safe and orderly transfer and to minimize trauma.
(C)The resident has the right to review the transfer decision at a subsequent care conference that shall include the resident, the residents responsible person, and upon the residents or responsible persons request, family members, the residents physician or other appropriate health care professional, and members of the providers interdisciplinary team. The local ombudsperson may also be included in the care conference, upon the request of the resident, the residents responsible person, or the provider.
(D)For disputed transfer decisions, the resident or the residents responsible person has the right to a prompt and timely review of the transfer process by the Continuing Care Contracts Branch of the State Department of Social Services.
(E)The decision of the departments Continuing Care Contracts Branch shall be in writing and shall determine whether the provider failed to comply with the transfer process pursuant to subparagraphs (A) to (C), inclusive. Pending the decision of the Continuing Care Contracts Branch, the provider shall specify any additional care the provider believes is necessary in order for the resident to remain in his or her unit. The resident may be required to pay for the extra care, as provided in the contract.
(F)Transfer of a second resident when a shared accommodation arrangement is terminated.
(11)Provisions describing any changes in the residents monthly fee and any changes in the entrance fee refund payable to the resident that will occur if the resident transfers from any unit, including, but not limited to, terminating his or her contract after 18 months of residential temporary relocation, as defined in paragraph (8) of subdivision (r) of Section 1771. Unless the fee is part of an equity interest contract, a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident.
(12)The providers continuing obligations, if any, in the event a resident is transferred from the continuing care retirement community to another facility.
(13)The providers obligations, if any, to resume care upon the residents return after a transfer from the continuing care retirement community.
(14)The providers obligations to provide services to the resident while the resident is absent from the continuing care retirement community.
(15)The conditions under which the resident must permanently release his or her living unit.
(16)If real or personal properties are transferred in lieu of cash, a statement specifying each items value at the time of transfer, and how the value was ascertained.
(A)An itemized receipt that includes the information described above is acceptable if incorporated as a part of the continuing care contract.
(B)When real property is or will be transferred, the continuing care contract shall include a statement that the deed or other instrument of conveyance shall specify that the real property is conveyed pursuant to a continuing care contract and may be subject to rescission by the transferor within 90 days from the date that the resident first occupies the residential unit.
(C)The failure to comply with this paragraph shall not affect the validity of title to real property transferred pursuant to this chapter.
(17)The amount of the entrance fee.
(18)In the event two parties have jointly paid the entrance fee or other payment that allows them to occupy the unit, the continuing care contract shall describe how any refund of entrance fees is allocated.
(19)The amount of any processing fee.
(20)The amount of any monthly care fee.
(21)For continuing care contracts that require a monthly care fee or other periodic payment, the continuing care contract shall include the following:
(A)A statement that the occupancy and use of the accommodations by the resident is contingent upon the regular payment of the fee.
(B)The regular rate of payment agreed upon (per day, week, or month).
(C)A provision specifying whether payment will be made in advance or after services have been provided.
(D)A provision specifying the provider will adjust monthly care fees for the residents support, maintenance, board, or lodging, when a resident requires medical attention while away from the continuing care retirement community.
(E)A provision specifying whether a credit or allowance will be given to a resident who is absent from the continuing care retirement community or from meals. This provision shall also state, when applicable, that the credit may be permitted at the discretion or by special permission of the provider.
(F)A statement of billing practices, procedures, and timelines. A provider shall allow a minimum of 14 days between the date a bill is sent and the date payment is due. A charge for a late payment may only be assessed if the amount and any condition for the penalty is stated on the bill.
(G)A statement that the provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
(22)All continuing care contracts that include monthly care fees shall address changes in monthly care fees by including either of the following provisions:
(A)For prepaid continuing care contracts, which include monthly care fees, one of the following methods:
(i)Fees shall not be subject to change during the lifetime of the agreement.
(ii)Fees shall not be increased by more than a specified number of dollars in any one year and not more than a specified number of dollars during the lifetime of the agreement.
(iii)Fees shall not be increased in excess of a specified percentage over the preceding year and not more than a specified percentage during the lifetime of the agreement.
(B)For monthly fee continuing care contracts, except prepaid contracts, changes in monthly care fees shall be based on projected costs, prior year per capita costs, and economic indicators.
(23)A provision requiring that the provider give written notice to the resident at least 30 days in advance of any change in the residents monthly care fees or in the price or scope of any component of care or other services.
(24)A provision indicating whether the residents rights under the continuing care contract include any proprietary interests in the assets of the provider or in the continuing care retirement community, or both. Any statement in a contract concerning an ownership interest shall appear in a large-sized font or print.
(25)If the continuing care retirement community property is encumbered by a security interest that is senior to any claims the residents may have to enforce continuing care contracts, a provision shall advise the residents that any claims they may have under the continuing care contract are subordinate to the rights of the secured lender. For equity projects, the continuing care contract shall specify the type and extent of the equity interest and whether any entity holds a security interest.
(26)Notice that the living units are part of a continuing care retirement community that is licensed as a residential care facility for the elderly and, as a result, any duly authorized agent of the department may, upon proper identification and upon stating the purpose of his or her visit, enter and inspect the entire premises at any time, without advance notice.
(27)A conspicuous statement, in at least 10-point boldface type in immediate proximity to the space reserved for the signatures of the resident and, if applicable, the transferor, that provides as follows: You, the resident or transferor, may cancel the transaction without cause at any time within 90 days from the date you first occupy your living unit. See the attached notice of cancellation form for an explanation of this right.
(28)Notice that during the cancellation period, the continuing care contract may be canceled upon 30 days written notice by the provider without cause, or that the provider waives this right.
(29)The terms and conditions under which the continuing care contract may be terminated after the cancellation period by either party, including any health or financial conditions.
(30)A statement that, after the cancellation period, a provider may unilaterally terminate the continuing care contract only if the provider has good and sufficient cause.
(A)Any continuing care contract containing a clause that provides for a continuing care contract to be terminated for just cause, good cause, or other similar provision, shall also include a provision that none of the following activities by the resident, or on behalf of the resident, constitutes just cause, good cause, or otherwise activates the termination provision:
(i)Filing or lodging a formal complaint with the department or other appropriate authority.
(ii)Participation in an organization or affiliation of residents, or other similar lawful activity.
(B)The provision required by this paragraph shall also state that the provider shall not discriminate or retaliate in any manner against any resident of a continuing care retirement community for contacting the department, or any other state, county, or city agency, or any elected or appointed government official to file a complaint or for any other reason, or for participation in a residents organization or association.
(C)Nothing in this paragraph diminishes the providers ability to terminate the continuing care contract for good and sufficient cause.
(31)A statement that at least 90 days written notice to the resident is required for a unilateral termination of the continuing care contract by the provider.
(32)A statement concerning the length of notice that a resident is required to give the provider to voluntarily terminate the continuing care contract after the cancellation period.
(33)The policy or terms for refunding or repaying a lump sum of any portion of the entrance fee, in the event of cancellation, termination, or death. Every continuing care contract that provides for a refund or repaying a lump sum of all or a part of the entrance fee shall also do all of the following:
(A)Specify the amount, if any, the resident has paid or will pay for upgrades, special features, or modifications to the residents unit.
(B)State that if the continuing care contract is canceled or terminated by the provider, the provider shall do both of the following:
(i)Amortize the specified amount at the same rate as the residents entrance fee.
(ii)Refund the unamortized balance to the resident at the same time the provider pays the residents entrance fee refund.
(C)State that the resident has a right to terminate his or her contract after 18 months of residential temporary relocation, as defined in paragraph (8) of subdivision (r) of Section 1771. Provisions for refunds due to cancellation pursuant to this subparagraph shall be set forth in the contract.
(D)State the provider shall make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit. No later than July 1, 2017, a provider shall provide notice to all current residents with contracts applicable to this subparagraph regarding the statement required by this subparagraph as a clarification of the residents existing contract.
(E)For all contracts with a repayment of all or a portion of the entrance fee conditioned upon the resale of the unit, the provider shall state the average and longest amount of time that it has taken to resell a unit within the last five calendar years.
(34)The following notice at the bottom of the signatory page:
NOTICE | (date) |
This is a continuing care contract as defined by paragraph (8) of subdivision (c), or subdivision (l) of Section 1771 of the California Health and Safety Code. This continuing care contract form has been approved by the State Department of Social Services as required by subdivision (b) of Section 1787 of the California Health and Safety Code. The basis for this approval was a determination that (provider name) has submitted a contract that complies with the minimum statutory requirements applicable to continuing care contracts. The department does not approve or disapprove any of the financial or health care coverage provisions in this contract. Approval by the department is NOT a guaranty of performance or an endorsement of any continuing care contract provisions. Prospective transferors and residents are strongly encouraged to carefully consider the benefits and risks of this continuing care contract and to seek financial and legal advice before signing.
(35)The provider may not attempt to absolve itself in the continuing care contract from liability for its negligence by any statement to that effect, and shall include the following statement in the contract: Nothing in this continuing care contract limits either the providers obligation to provide adequate care and supervision for the resident or any liability on the part of the provider which may result from the providers failure to provide this care and supervision.
(36)Provisions describing how the provider will proceed in the event of a closure, including an explanation of how the provider will comply with Sections 1793.80, 1793.81, 1793.82, and 1793.83.
(b)A life care contract shall also provide that:
(1)All levels of care, including acute care and physicians and surgeons services, will be provided to a resident.
(2)Care will be provided for the duration of the residents life unless the life care contract is canceled or terminated by the provider during the cancellation period or after the cancellation period for good cause.
(3)A comprehensive continuum of care will be provided to the resident, including skilled nursing, in a facility under the ownership and supervision of the provider on, or adjacent to, the continuing care retirement community premises.
(4)Monthly care fees will not be changed based on the residents level of care or service.
(5)A resident who becomes financially unable to pay his or her monthly care fees shall be subsidized provided the residents financial need does not arise from action by the resident to divest the resident of his or her assets.
(c)Continuing care contracts may include provisions that do any of the following:
(1)Subsidize a resident who becomes financially unable to pay for his or her monthly care fees at some future date. If a continuing care contract provides for subsidizing a resident, it may also provide for any of the following:
(A)The resident shall apply for any public assistance or other aid for which he or she is eligible and that the provider may apply for assistance on behalf of the resident.
(B)The providers decision shall be final and conclusive regarding any adjustments to be made or any action to be taken regarding any charitable consideration extended to any of its residents.
(C)The provider is entitled to payment for the actual costs of care out of any property acquired by the resident subsequent to any adjustment extended to the resident under this paragraph, or from any other property of the resident that the resident failed to disclose.
(D)The provider may pay the monthly premium of the residents health insurance coverage under Medicare to ensure that those payments will be made.
(E)The provider may receive an assignment from the resident of the right to apply for and to receive the benefits, for and on behalf of the resident.
(F)The provider is not responsible for the costs of furnishing the resident with any services, supplies, and medication, when reimbursement is reasonably available from any governmental agency, or any private insurance.
(G)Any refund due to the resident at the termination of the continuing care contract may be offset by any prior subsidy to the resident by the provider.
(2)Limit responsibility for costs associated with the treatment or medication of an ailment or illness existing prior to the date of admission. In these cases, the medical or surgical exceptions, as disclosed by the medical entrance examination, shall be listed in the continuing care contract or in a medical report attached to and made a part of the continuing care contract.
(3)Identify legal remedies that may be available to the provider if the resident makes any material misrepresentation or omission pertaining to the residents assets or health.
(4)Restrict transfer or assignments of the residents rights and privileges under a continuing care contract due to the personal nature of the continuing care contract.
(5)Protect the providers ability to waive a residents breach of the terms or provisions of the continuing care contract in specific instances without relinquishing its right to insist upon full compliance by the resident with all terms or provisions in the contract.
(6)Provide that the resident shall reimburse the provider for any uninsured loss or damage to the residents unit, beyond normal wear and tear, resulting from the residents carelessness or negligence.
(7)Provide that the resident agrees to observe the off-limit areas of the continuing care retirement community designated by the provider for safety reasons. The provider may not include any provision in a continuing care contract that absolves the provider from liability for its negligence.
(8)Provide for the subrogation to the provider of the residents rights in the case of injury to a resident caused by the acts or omissions of a third party, or for the assignment of the residents recovery or benefits in this case to the provider, to the extent of the value of the goods and services furnished by the provider to or on behalf of the resident as a result of the injury.
(9)Provide for a lien on any judgment, settlement, or recovery for any additional expense incurred by the provider in caring for the resident as a result of injury.
(10)Require the residents cooperation and assistance in the diligent prosecution of any claim or action against any third party.
(11)Provide for the appointment of a conservator or guardian by a court with jurisdiction in the event a resident becomes unable to handle his or her personal or financial affairs.
(12)Allow a provider, whose property is tax exempt, to charge the resident, on a pro rata basis, property taxes, or in-lieu taxes, that the provider is required to pay.
(13)Make any other provision approved by the department.
(d)A copy of the residents rights as described in Section 1771.7 shall be attached to every continuing care contract.
(e)A copy of the current audited financial statement of the provider shall be attached to every continuing care contract. For a provider whose current audited financial statement does not accurately reflect the financial ability of the provider to fulfill the continuing care contract obligations, the financial statement attached to the continuing care contract shall include all of the following:
(1)A disclosure that the reserve requirement has not yet been determined or met, and that entrance fees will not be held in escrow.
(2)A disclosure that the ability to provide the services promised in the continuing care contract will depend on successful compliance with the approved financial plan.
(3)A copy of the approved financial plan for meeting the reserve requirements.
(4)Any other supplemental statements or attachments necessary to accurately represent the providers financial ability to fulfill its continuing care contract obligations.
(f)A schedule of the average monthly care fees charged to residents for each type of residential living unit for each of the five years preceding execution of the continuing care contract shall be attached to every continuing care contract. The provider shall update this schedule annually at the end of each fiscal year. If the continuing care retirement community has not been in existence for five years, the information shall be provided for each of the years the continuing care retirement community has been in existence.
(g)If any continuing care contract provides for a health insurance policy for the benefit of the resident, the provider shall attach to the continuing care contract a binder complying with Sections 382 and 382.5 of the Insurance Code.
(h)The provider shall attach to every continuing care contract a completed form in duplicate, captioned Notice of Cancellation. The notice shall be easily detachable, and shall contain, in at least 10-point boldface type, the following statement:
NOTICE OF CANCELLATION | (date) |
Your first date of occupancy under this contract | |
is: _____________________________________________ | |
You may cancel this transaction, without any penalty within 90 calendar days from the above date.
If you cancel, any property transferred, any payments made by you under the contract, and any negotiable instrument executed by you will be returned within 14 calendar days after making possession of the living unit available to the provider. Any security interest arising out of the transaction will be canceled.
If you cancel, you are obligated to pay a reasonable processing fee to cover costs and to pay for the reasonable value of the services received by you from the provider up to the date you canceled or made available to the provider the possession of any living unit delivered to you under this contract, whichever is later.
If you cancel, you must return possession of any living unit delivered to you under this contract to the provider in substantially the same condition as when you took possession.
Possession of the living unit must be made available to the provider within 20 calendar days of your notice of cancellation. If you fail to make the possession of any living unit available to the provider, then you remain liable for performance of all obligations under the contract.
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram
to | |
(Name of provider) | |
|---|---|
at | |
(Address of providers place of business) | |
not later than midnight of_____________(date). | |
I hereby cancel this | |
(Residentsor | |
(a)During the cancellation period, the provider shall pay all refunds owed to a resident within 14 calendar days after a resident makes possession of the living unit available to the provider.
(b)After the cancellation period, any refunds due to a resident under a continuing care contract shall be paid within 14 calendar days after a resident makes possession of the living unit available to the provider or 90 calendar days after death or receipt of notice of termination, whichever is later.
(c)In nonequity projects, if the continuing care contract is canceled by either party during the cancellation period or terminated by the provider after the cancellation period, the resident shall be refunded the difference between the total amount of entrance, monthly, and optional fees paid and the amount used for care of the resident.
(d)If a resident has paid additional amounts for upgrades, special features, or modifications to the living unit and the provider terminates the residents continuing care contract, the provider shall amortize those additional amounts at the same rate as the entrance fee and shall refund the unamortized balance to the resident.
(e)A lump-sum payment to a resident after termination of a repayable contract that is conditioned upon resale of the unit contract, as defined in paragraph (3) of subdivision (r) of Section 1771, shall not be considered to be a refund and may not be characterized or advertised as a refund. The full lump sum owed, including any interest accrued, shall be paid to the resident or the residents estate within 14 calendar days after resale of the unit.
(f)(1)Any balance of the lump sum owed that has not been paid to the resident or the residents estate within 180 days after the residents termination of a repayable contract shall accrue interest at a rate calculated pursuant to paragraph (2). Any balance of the lump sum owed that has not been paid to the resident or the residents estate within 240 days after the residents termination of a repayable contract shall accrue interest at a rate calculated pursuant to paragraph (3). Interest shall continue to accrue annually pursuant to paragraph (4) until the date the full lump sum owed is paid to the resident. resident or the residents estate. This subdivision shall apply only to repayable contracts entered into on or after January 1, 2017.
(2)Any amount owed that is not paid to the resident or the residents estate within the 180-day period pursuant to paragraph (1) shall accrue simple interest at a rate of 4 percent of the amount owed.
(3)Any amount owed that is not paid to the resident or the residents estate within the 240-day period pursuant to paragraph (1) shall accrue simple interest at a rate of 6 percent of the amount owed.
(4)Any amount owed that is not paid to the resident or the residents estate within one year after the 240-day period pursuant to paragraph (3) shall accrue compound interest annually at a rate of 6 percent. interest at a rate of 6 percent, compounded annually.
(g)(1)After the death of a resident, a lump sum owed that is conditioned upon resale of a unit shall be subject to subdivision (f) and the lump sum owed shall include any interest accrued and shall be payable to the residents estate.
(2)
(5)Until January 1, 2018, this subdivision shall not apply to a project that is in development prior to January 1, 2017, including current repayable agreements, current deposit agreements that contemplate repayable entrance fees, and other projects that have received department approval to market units pursuant to Section 1771.4, or have received issuer, lender, or bond insurer approval to obtain bond financing, or other governmental approval based on a repayable entrance fee option, if the initial contract for the project is entered into on or before January 1, 2018.
(h)
(g)Except as otherwise obligated by an equity interest contract, once the unit has been vacated and made available to the provider, the provider shall not make any further charges to the resident or his or her estate or charges against the lump sum owed to the resident or the residents estate for purposes of continued monthly payments to the provider or for maintenance or housekeeping on the vacated unit.
(i)
(h)Nothing in this section shall be construed to limit or alter any legal remedies otherwise available to a resident or his or her estate.
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 providers 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 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.
(10)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.
(11)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 entitys 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 communitys 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 departments 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 Farmers 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 institutions 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)Bankers 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 Moodys Investors Service, or the equivalent rating by Standard and Poors 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 Moodys Investors Service or AA by Standard and Poors 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. A change shall not 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 communitys 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 providers 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 providers 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 homeowners 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 applicants application.
(q)(reserved)
(r)(1)Refund reserve means the reserve a provider is required to maintain, as provided in Section 1792.6.
(2)(A)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 transferors 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 residents sixth year of residency. Providers that enter into refundable contracts shall be subject to the refund reserve requirements of Section 1792.6.
(B)A
(3)Repayable contract means 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 resident. A repayable contract 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. A provider may repay all or a portion of an entrance fee that is conditioned upon resale of the unit before the resale of the unit. The repayment of an entrance fee before the resale of the unit shall not cause any other entrance fee to be subject to the refund reserve requirements of Section 1792.6, provided that the provider does not promise, at the time of contracting or thereafter, to make this type of early repayment, represent that the provider intends to make this type of early repayment, or indicate that the provider has a practice of making this type of early repayment.
(3)
(4)Resale fee means a levy by the provider against the proceeds from the sale of a transferors equity interest.
(4)
(5)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)
(6)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)
(7)Residential care facility for the elderly means a housing arrangement as defined by Section 1569.2.
(7)
(8)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)
(9)Residential temporary relocation means the relocation of one or more residents, except in the case of a natural disaster that is out of the providers 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 9 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. 2.Section 1788 of the Health and Safety Code is amended to read:1788.(a)A continuing care contract shall contain all of the following:
(1)The legal name and address of each provider.
(2)The name and address of the continuing care retirement community.
(3)The residents name and the identity of the unit the resident will occupy.
(4)If there is a transferor other than the resident, the transferor shall be a party to the contract and the transferors name and address shall be specified.
(5)If the provider has used the name of any charitable or religious or nonprofit organization in its title before January 1, 1979, and continues to use that name, and that organization is not responsible for the financial and contractual obligations of the provider or the obligations specified in the continuing care contract, the provider shall include in every continuing care contract a conspicuous statement that clearly informs the resident that the organization is not financially responsible.
(6)The date the continuing care contract is signed by the resident and, where applicable, any other transferor.
(7)The duration of the continuing care contract.
(8)A list of the services that will be made available to the resident as required to provide the appropriate level of care. The list of services shall include the services required as a condition for licensure as a residential care facility for the elderly, including all of the following:
(A)Regular observation of the residents health status to ensure that his or her dietary needs, social needs, and needs for special services are satisfied.
(B)Safe and healthful living accommodations, including housekeeping services and utilities.
(C)Maintenance of house rules for the protection of residents.
(D)A planned activities program, which includes social and recreational activities appropriate to the interests and capabilities of the resident.
(E)Three balanced, nutritious meals and snacks made available daily, including special diets prescribed by a physician as a medical necessity.
(F)Assisted living services.
(G)Assistance with taking medications.
(H)Central storing and distribution of medications.
(I)Arrangements to meet health needs, including arranging transportation.
(9)An itemization of the services that are included in the monthly fee and the services that are available at an extra charge. The provider shall attach a current fee schedule to the continuing care contract. The schedule shall state that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
(10)The procedures and conditions under which a resident may be voluntarily and involuntarily transferred from a designated living unit. The transfer procedures, at a minimum, shall include provisions addressing all of the following circumstances under which a transfer may be authorized:
(A)A continuing care retirement community may transfer a resident under the following conditions, taking into account the appropriateness and necessity of the transfer and the goal of promoting resident independence:
(i)The resident is nonambulatory. The definition of nonambulatory, as provided in Section 13131, shall either be stated in full in the continuing care contract or be cited. If Section 13131 is cited, a copy of the statute shall be made available to the resident, either as an attachment to the continuing care contract or by specifying that it will be provided upon request. If a nonambulatory resident occupies a room that has a fire clearance for nonambulatory residents, transfer shall not be necessary.
(ii)The resident develops a physical or mental condition that endangers the health, safety, or well-being of the resident or another person.
(iii)The residents condition or needs require the residents transfer to an assisted living care unit or skilled nursing facility, because the level of care required by the resident exceeds that which may be lawfully provided in the living unit.
(iv)The residents condition or needs require the residents transfer to a nursing facility, hospital, or other facility, and the provider has no facilities available to provide that level of care.
(B)Before the continuing care retirement community transfers a resident under any of the conditions set forth in subparagraph (A), the community shall satisfy all of the following requirements:
(i)Involve the resident and the residents responsible person, as defined in paragraph (6) of subdivision (r) of Section 87101 of Title 22 of the California Code of Regulations, and upon the residents or responsible persons request, family members, or the residents physician or other appropriate health professional, in the assessment process that forms the basis for the level of care transfer decision by the provider. The provider shall offer an explanation of the assessment process. If an assessment tool or tools, including scoring and evaluating criteria, are used in the determination of the appropriateness of the transfer, the provider shall make copies of the completed assessment available upon the request of the resident or the residents responsible person.
(ii)Prior to sending a formal notification of transfer, the provider shall conduct a care conference with the resident and the residents responsible person, and upon the residents or responsible persons request, family members, and the residents health care professionals, to explain the reasons for transfer.
(iii)Notify the resident and the residents responsible person of the reasons for the transfer in writing.
(iv)Notwithstanding any other provision of this subparagraph, if the resident does not have impairment of cognitive abilities, the resident may request that his or her responsible person not be involved in the transfer process.
(v)The notice of transfer shall be made at least 30 days before the transfer is expected to occur, except when the health or safety of the resident or other residents is in danger, or the transfer is required by the residents urgent medical needs. Under those circumstances, the written notice shall be made as soon as practicable before the transfer.
(vi)The written notice shall contain the reasons for the transfer, the effective date, the designated level of care or location to which the resident will be transferred, a statement of the residents right to a review of the transfer decision at a care conference, as provided for in subparagraph (C), and for disputed transfer decisions, the right to review by the Continuing Care Contracts Branch of the State Department of Social Services, as provided for in subparagraph (D). The notice shall also contain the name, address, and telephone number of the departments Continuing Care Contracts Branch.
(vii)The continuing care retirement community shall provide sufficient preparation and orientation to the resident to ensure a safe and orderly transfer and to minimize trauma.
(C)The resident has the right to review the transfer decision at a subsequent care conference that shall include the resident, the residents responsible person, and upon the residents or responsible persons request, family members, the residents physician or other appropriate health care professional, and members of the providers interdisciplinary team. The local ombudsperson may also be included in the care conference, upon the request of the resident, the residents responsible person, or the provider.
(D)For disputed transfer decisions, the resident or the residents responsible person has the right to a prompt and timely review of the transfer process by the Continuing Care Contracts Branch of the State Department of Social Services.
(E)The decision of the departments Continuing Care Contracts Branch shall be in writing and shall determine whether the provider failed to comply with the transfer process pursuant to subparagraphs (A) to (C), inclusive. Pending the decision of the Continuing Care Contracts Branch, the provider shall specify any additional care the provider believes is necessary in order for the resident to remain in his or her unit. The resident may be required to pay for the extra care, as provided in the contract.
(F)Transfer of a second resident when a shared accommodation arrangement is terminated.
(11)Provisions describing any changes in the residents monthly fee and any changes in the entrance fee refund payable to the resident that will occur if the resident transfers from any unit, including, but not limited to, terminating his or her contract after 18 months of residential temporary relocation, as defined in paragraph (8) of subdivision (r) of Section 1771. Unless the fee is part of an equity interest contract, a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident.
(12)The providers continuing obligations, if any, in the event a resident is transferred from the continuing care retirement community to another facility.
(13)The providers obligations, if any, to resume care upon the residents return after a transfer from the continuing care retirement community.
(14)The providers obligations to provide services to the resident while the resident is absent from the continuing care retirement community.
(15)The conditions under which the resident must permanently release his or her living unit.
(16)If real or personal properties are transferred in lieu of cash, a statement specifying each items value at the time of transfer, and how the value was ascertained.
(A)An itemized receipt that includes the information described above is acceptable if incorporated as a part of the continuing care contract.
(B)When real property is or will be transferred, the continuing care contract shall include a statement that the deed or other instrument of conveyance shall specify that the real property is conveyed pursuant to a continuing care contract and may be subject to rescission by the transferor within 90 days from the date that the resident first occupies the residential unit.
(C)The failure to comply with this paragraph shall not affect the validity of title to real property transferred pursuant to this chapter.
(17)The amount of the entrance fee.
(18)In the event two parties have jointly paid the entrance fee or other payment that allows them to occupy the unit, the continuing care contract shall describe how any refund of entrance fees is allocated.
(19)The amount of any processing fee.
(20)The amount of any monthly care fee.
(21)For continuing care contracts that require a monthly care fee or other periodic payment, the continuing care contract shall include the following:
(A)A statement that the occupancy and use of the accommodations by the resident is contingent upon the regular payment of the fee.
(B)The regular rate of payment agreed upon (per day, week, or month).
(C)A provision specifying whether payment will be made in advance or after services have been provided.
(D)A provision specifying the provider will adjust monthly care fees for the residents support, maintenance, board, or lodging, when a resident requires medical attention while away from the continuing care retirement community.
(E)A provision specifying whether a credit or allowance will be given to a resident who is absent from the continuing care retirement community or from meals. This provision shall also state, when applicable, that the credit may be permitted at the discretion or by special permission of the provider.
(F)A statement of billing practices, procedures, and timelines. A provider shall allow a minimum of 14 days between the date a bill is sent and the date payment is due. A charge for a late payment may only be assessed if the amount and any condition for the penalty is stated on the bill.
(G)A statement that the provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
(22)All continuing care contracts that include monthly care fees shall address changes in monthly care fees by including either of the following provisions:
(A)For prepaid continuing care contracts, which include monthly care fees, one of the following methods:
(i)Fees shall not be subject to change during the lifetime of the agreement.
(ii)Fees shall not be increased by more than a specified number of dollars in any one year and not more than a specified number of dollars during the lifetime of the agreement.
(iii)Fees shall not be increased in excess of a specified percentage over the preceding year and not more than a specified percentage during the lifetime of the agreement.
(B)For monthly fee continuing care contracts, except prepaid contracts, changes in monthly care fees shall be based on projected costs, prior year per capita costs, and economic indicators.
(23)A provision requiring that the provider give written notice to the resident at least 30 days in advance of any change in the residents monthly care fees or in the price or scope of any component of care or other services.
(24)A provision indicating whether the residents rights under the continuing care contract include any proprietary interests in the assets of the provider or in the continuing care retirement community, or both. Any statement in a contract concerning an ownership interest shall appear in a large-sized font or print.
(25)If the continuing care retirement community property is encumbered by a security interest that is senior to any claims the residents may have to enforce continuing care contracts, a provision shall advise the residents that any claims they may have under the continuing care contract are subordinate to the rights of the secured lender. For equity projects, the continuing care contract shall specify the type and extent of the equity interest and whether any entity holds a security interest.
(26)Notice that the living units are part of a continuing care retirement community that is licensed as a residential care facility for the elderly and, as a result, any duly authorized agent of the department may, upon proper identification and upon stating the purpose of his or her visit, enter and inspect the entire premises at any time, without advance notice.
(27)A conspicuous statement, in at least 10-point boldface type in immediate proximity to the space reserved for the signatures of the resident and, if applicable, the transferor, that provides as follows: You, the resident or transferor, may cancel the transaction without cause at any time within 90 days from the date you first occupy your living unit. See the attached notice of cancellation form for an explanation of this right.
(28)Notice that during the cancellation period, the continuing care contract may be canceled upon 30 days written notice by the provider without cause, or that the provider waives this right.
(29)The terms and conditions under which the continuing care contract may be terminated after the cancellation period by either party, including any health or financial conditions.
(30)A statement that, after the cancellation period, a provider may unilaterally terminate the continuing care contract only if the provider has good and sufficient cause.
(A)Any continuing care contract containing a clause that provides for a continuing care contract to be terminated for just cause, good cause, or other similar provision, shall also include a provision that none of the following activities by the resident, or on behalf of the resident, constitutes just cause, good cause, or otherwise activates the termination provision:
(i)Filing or lodging a formal complaint with the department or other appropriate authority.
(ii)Participation in an organization or affiliation of residents, or other similar lawful activity.
(B)The provision required by this paragraph shall also state that the provider shall not discriminate or retaliate in any manner against any resident of a continuing care retirement community for contacting the department, or any other state, county, or city agency, or any elected or appointed government official to file a complaint or for any other reason, or for participation in a residents organization or association.
(C)Nothing in this paragraph diminishes the providers ability to terminate the continuing care contract for good and sufficient cause.
(31)A statement that at least 90 days written notice to the resident is required for a unilateral termination of the continuing care contract by the provider.
(32)A statement concerning the length of notice that a resident is required to give the provider to voluntarily terminate the continuing care contract after the cancellation period.
(33)The policy or terms for refunding or repaying a lump sum of any portion of the entrance fee, in the event of cancellation, termination, or death. Every continuing care contract that provides for a refund or repaying a lump sum of all or a part of the entrance fee shall also do all of the following:
(A)Specify the amount, if any, the resident has paid or will pay for upgrades, special features, or modifications to the residents unit.
(B)State that if the continuing care contract is canceled or terminated by the provider, the provider shall do both of the following:
(i)Amortize the specified amount at the same rate as the residents entrance fee.
(ii)Refund the unamortized balance to the resident at the same time the provider pays the residents entrance fee refund.
(C)State that the resident has a right to terminate his or her contract after 18 months of residential temporary relocation, as defined in paragraph (8) of subdivision (r) of Section 1771. Provisions for refunds due to cancellation pursuant to this subparagraph shall be set forth in the contract.
(D)State the provider shall make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit. No later than July 1, 2017, a provider shall provide notice to all current residents with contracts applicable to this subparagraph regarding the statement required by this subparagraph as a clarification of the residents existing contract.
(E)For all contracts with a repayment of all or a portion of the entrance fee conditioned upon the resale of the unit, the provider shall state the average and longest amount of time that it has taken to resell a unit within the last five calendar years.
(34)The following notice at the bottom of the signatory page:
NOTICE | (date) |
This is a continuing care contract as defined by paragraph (8) of subdivision (c), or subdivision (l) of Section 1771 of the California Health and Safety Code. This continuing care contract form has been approved by the State Department of Social Services as required by subdivision (b) of Section 1787 of the California Health and Safety Code. The basis for this approval was a determination that (provider name) has submitted a contract that complies with the minimum statutory requirements applicable to continuing care contracts. The department does not approve or disapprove any of the financial or health care coverage provisions in this contract. Approval by the department is NOT a guaranty of performance or an endorsement of any continuing care contract provisions. Prospective transferors and residents are strongly encouraged to carefully consider the benefits and risks of this continuing care contract and to seek financial and legal advice before signing.
(35)The provider may not attempt to absolve itself in the continuing care contract from liability for its negligence by any statement to that effect, and shall include the following statement in the contract: Nothing in this continuing care contract limits either the providers obligation to provide adequate care and supervision for the resident or any liability on the part of the provider which may result from the providers failure to provide this care and supervision.
(36)Provisions describing how the provider will proceed in the event of a closure, including an explanation of how the provider will comply with Sections 1793.80, 1793.81, 1793.82, and 1793.83.
(b)A life care contract shall also provide that:
(1)All levels of care, including acute care and physicians and surgeons services, will be provided to a resident.
(2)Care will be provided for the duration of the residents life unless the life care contract is canceled or terminated by the provider during the cancellation period or after the cancellation period for good cause.
(3)A comprehensive continuum of care will be provided to the resident, including skilled nursing, in a facility under the ownership and supervision of the provider on, or adjacent to, the continuing care retirement community premises.
(4)Monthly care fees will not be changed based on the residents level of care or service.
(5)A resident who becomes financially unable to pay his or her monthly care fees shall be subsidized provided the residents financial need does not arise from action by the resident to divest the resident of his or her assets.
(c)Continuing care contracts may include provisions that do any of the following:
(1)Subsidize a resident who becomes financially unable to pay for his or her monthly care fees at some future date. If a continuing care contract provides for subsidizing a resident, it may also provide for any of the following:
(A)The resident shall apply for any public assistance or other aid for which he or she is eligible and that the provider may apply for assistance on behalf of the resident.
(B)The providers decision shall be final and conclusive regarding any adjustments to be made or any action to be taken regarding any charitable consideration extended to any of its residents.
(C)The provider is entitled to payment for the actual costs of care out of any property acquired by the resident subsequent to any adjustment extended to the resident under this paragraph, or from any other property of the resident that the resident failed to disclose.
(D)The provider may pay the monthly premium of the residents health insurance coverage under Medicare to ensure that those payments will be made.
(E)The provider may receive an assignment from the resident of the right to apply for and to receive the benefits, for and on behalf of the resident.
(F)The provider is not responsible for the costs of furnishing the resident with any services, supplies, and medication, when reimbursement is reasonably available from any governmental agency, or any private insurance.
(G)Any refund due to the resident at the termination of the continuing care contract may be offset by any prior subsidy to the resident by the provider.
(2)Limit responsibility for costs associated with the treatment or medication of an ailment or illness existing prior to the date of admission. In these cases, the medical or surgical exceptions, as disclosed by the medical entrance examination, shall be listed in the continuing care contract or in a medical report attached to and made a part of the continuing care contract.
(3)Identify legal remedies that may be available to the provider if the resident makes any material misrepresentation or omission pertaining to the residents assets or health.
(4)Restrict transfer or assignments of the residents rights and privileges under a continuing care contract due to the personal nature of the continuing care contract.
(5)Protect the providers ability to waive a residents breach of the terms or provisions of the continuing care contract in specific instances without relinquishing its right to insist upon full compliance by the resident with all terms or provisions in the contract.
(6)Provide that the resident shall reimburse the provider for any uninsured loss or damage to the residents unit, beyond normal wear and tear, resulting from the residents carelessness or negligence.
(7)Provide that the resident agrees to observe the off-limit areas of the continuing care retirement community designated by the provider for safety reasons. The provider may not include any provision in a continuing care contract that absolves the provider from liability for its negligence.
(8)Provide for the subrogation to the provider of the residents rights in the case of injury to a resident caused by the acts or omissions of a third party, or for the assignment of the residents recovery or benefits in this case to the provider, to the extent of the value of the goods and services furnished by the provider to or on behalf of the resident as a result of the injury.
(9)Provide for a lien on any judgment, settlement, or recovery for any additional expense incurred by the provider in caring for the resident as a result of injury.
(10)Require the residents cooperation and assistance in the diligent prosecution of any claim or action against any third party.
(11)Provide for the appointment of a conservator or guardian by a court with jurisdiction in the event a resident becomes unable to handle his or her personal or financial affairs.
(12)Allow a provider, whose property is tax exempt, to charge the resident, on a pro rata basis, property taxes, or in-lieu taxes, that the provider is required to pay.
(13)Make any other provision approved by the department.
(d)A copy of the residents rights as described in Section 1771.7 shall be attached to every continuing care contract.
(e)A copy of the current audited financial statement of the provider shall be attached to every continuing care contract. For a provider whose current audited financial statement does not accurately reflect the financial ability of the provider to fulfill the continuing care contract obligations, the financial statement attached to the continuing care contract shall include all of the following:
(1)A disclosure that the reserve requirement has not yet been determined or met, and that entrance fees will not be held in escrow.
(2)A disclosure that the ability to provide the services promised in the continuing care contract will depend on successful compliance with the approved financial plan.
(3)A copy of the approved financial plan for meeting the reserve requirements.
(4)Any other supplemental statements or attachments necessary to accurately represent the providers financial ability to fulfill its continuing care contract obligations.
(f)A schedule of the average monthly care fees charged to residents for each type of residential living unit for each of the five years preceding execution of the continuing care contract shall be attached to every continuing care contract. The provider shall update this schedule annually at the end of each fiscal year. If the continuing care retirement community has not been in existence for five years, the information shall be provided for each of the years the continuing care retirement community has been in existence.
(g)If any continuing care contract provides for a health insurance policy for the benefit of the resident, the provider shall attach to the continuing care contract a binder complying with Sections 382 and 382.5 of the Insurance Code.
(h)The provider shall attach to every continuing care contract a completed form in duplicate, captioned Notice of Cancellation. The notice shall be easily detachable, and shall contain, in at least 10-point boldface type, the following statement:
NOTICE
OF CANCELLATION | (date) |
Your first date of occupancy under this contract | |
is: _____________________________________________ | |
You may cancel this transaction, without any penalty within 90 calendar days from the above date.
If you cancel, any property transferred, any payments made by you under the contract, and any negotiable instrument executed by you will be returned within 14 calendar days after making possession of the living unit available to the provider. Any security interest arising out of the transaction will be canceled.
If you cancel, you are obligated to pay a reasonable processing fee to cover costs and to pay for the reasonable value of the services received by you from the provider up to the date you canceled or made available to the provider the possession of any living unit delivered to you under this contract, whichever is later.
If you cancel, you must return possession of any living unit delivered to you under this contract to the provider in substantially the same condition as when you took possession.
Possession of the living unit must be made available to the provider within 20 calendar days of your notice of cancellation. If you fail to make the possession of any living unit available to the provider, then you remain liable for performance of all obligations under the contract.
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram
to | |
(Name of provider) | |
|---|---|
at | |
(Address of providers place of business) | |
not later than midnight of_____________(date). | |
I hereby cancel this | |
(Residentsor | |
(a)During the cancellation period, the provider shall pay all refunds owed to a resident within 14 calendar days after a resident makes possession of the living unit available to the provider.
(b)After the cancellation period, any refunds due to a resident under a continuing care contract shall be paid within 14 calendar days after a resident makes possession of the living unit available to the provider or 90 calendar days after death or receipt of notice of termination, whichever is later.
(c)In nonequity projects, if the continuing care contract is canceled by either party during the cancellation period or terminated by the provider after the cancellation period, the resident shall be refunded the difference between the total amount of entrance, monthly, and optional fees paid and the amount used for care of the resident.
(d)If a resident has paid additional amounts for upgrades, special features, or modifications to the living unit and the provider terminates the residents continuing care contract, the provider shall amortize those additional amounts at the same rate as the entrance fee and shall refund the unamortized balance to the resident.
(e)A lump-sum payment to a resident after termination of a continuing care repayable contract that is conditioned upon resale of the unit shall not be considered to be a refund and may not be characterized or advertised as a refund. The full lump sum owed, including any interest accrued, shall be paid to the resident within 14 calendar days after resale of the unit.
(f)(1)For contracts signed on and after January 1, 2017, notwithstanding a providers documented good-faith effort to resell the unit, the resident is entitled to the repayment of a specified portion, pursuant to subparagraphs (A) and (B), of the full lump sum owed if the unit remains vacant 120 days after the residents termination of the contract. This repayment shall not cause the contract in question to be deemed a refundable contract, as defined in paragraph (2) of subdivision (r) of Section 1771.
(A)When a continuing care contract is terminated by the death of a resident, at least 10 percent of the full lump sum owed shall be paid to the residents estate within 120 days after the death of the resident.
(B)When a continuing care contract is terminated for a reason not described in subparagraph (A), at least 20 percent of the full lump sum owed shall be paid to the resident within 120 days after the residents termination of the contract.
(2)
(f)(1)Any balance of the lump sum owed that has not been paid to the resident within 180 days after the residents termination of a repayable contract shall accrue interest at a rate calculated pursuant to paragraph (3). (2). Any balance of the lump sum owed that has not been paid to the resident within 240 days after the residents termination of a repayable contract shall accrue interest at a rate calculated pursuant to paragraph (4). (3). Interest shall continue to accrue annually pursuant to paragraph (5) (4) until the date the full lump sum owed is paid to the resident. This paragraph subdivision shall apply only to continuing care repayable contracts entered into on or after January 1, 2017.
(3)
(2)Any amount owed that is not paid to the resident within the 180-day period pursuant to paragraph (2) (1) shall accrue simple interest at a rate of 4 percent of the amount owed.
(4)
(3)Any amount owed that is not paid to the resident within the 240-day period pursuant to paragraph (2) (1) shall accrue simple interest at a rate of 6 percent of the amount owed.
(5)
(4)Any amount owed that is not paid to the resident within one year after the 240-day period pursuant to paragraph (4) (3) shall accrue compound interest annually at a rate of 6 percent.
(6)Until January 1, 2018, this subdivision shall not apply to a project that is in development prior to January 1, 2017, including current repayable agreements, current deposit agreements that contemplate repayable entrance fees, and other projects that have received department approval to market units pursuant to Section 1771.4, or have received issuer, lender, or bond insurer approval to obtain bond financing, or other governmental approval based on a repayable entrance fee option, if the initial contract for the project is entered into on or before January 1, 2018.
(g)(1)After the death of a resident, a lump sum owed that is conditioned upon resale of a unit shall be subject to subdivision (f) and the lump sum owed shall include any interest accrued and shall be payable to the residents estate.
(2)Until January 1, 2018, this subdivision shall not apply to a project that is in development prior to January 1, 2017, including current repayable agreements, current deposit agreements that contemplate repayable entrance fees, and other projects that have received department approval to market units pursuant to Section 1771.4, or have received issuer, lender, or bond insurer approval to obtain bond financing, or other governmental approval based on a repayable entrance fee option, if the initial contract for the project is entered into on or before January 1, 2018.
(h)Except as otherwise obligated by an equity interest contract, once the unit has been vacated and made available to the provider, the provider shall not make any further charges to the resident or his or her estate or charges against the lump sum owed to the resident for purposes of continued monthly payments to the provider or for maintenance or housekeeping on the vacated unit.
(i)Nothing in this section shall be construed to limit or alter any legal remedies otherwise available to a resident or his or her estate.
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 providers 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 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.
(10)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.
(11)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 entitys 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 communitys 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 departments 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 Farmers 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 institutions 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)Bankers 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 Moodys Investors Service, or the equivalent rating by Standard and Poors 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 Moodys Investors Service or AA by Standard and Poors 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. A change shall not 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 communitys 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 providers 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 providers 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 homeowners 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 applicants application.
(q)(reserved)
(r)(1)Refund reserve means the reserve a provider is required to maintain, as provided in Section 1792.6.
(2)(A)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 transferors 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 residents sixth year of residency. Providers that enter into refundable contracts shall be subject to the refund reserve requirements of Section 1792.6.
(B)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. A provider may repay all or a portion of an entrance fee that is conditioned upon resale of the unit before the resale of the unit. The repayment of an entrance fee before the resale of the unit shall not cause any other entrance fee to be subject to the refund reserve requirements of Section 1792.6, provided that the provider does not promise, at the time of contracting or thereafter, to make this type of early repayment, represent that the provider intends to make this type of early repayment, or indicate that the provider has a practice of making this type of early repayment.
(3)Resale fee means a levy by the provider against the proceeds from the sale of a transferors 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 providers 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 9 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. 2.Section 1788 of the Health and Safety Code is amended to read:1788.(a)A continuing care contract shall contain all of the following:
(1)The legal name and address of each provider.
(2)The name and address of the continuing care retirement community.
(3)The residents name and the identity of the unit the resident will occupy.
(4)If there is a transferor other than the resident, the transferor shall be a party to the contract and the transferors name and address shall be specified.
(5)If the provider has used the name of any charitable or religious or nonprofit organization in its title before January 1, 1979, and continues to use that name, and that organization is not responsible for the financial and contractual obligations of the provider or the obligations specified in the continuing care contract, the provider shall include in every continuing care contract a conspicuous statement that clearly informs the resident that the organization is not financially responsible.
(6)The date the continuing care contract is signed by the resident and, where applicable, any other transferor.
(7)The duration of the continuing care contract.
(8)A list of the services that will be made available to the resident as required to provide the appropriate level of care. The list of services shall include the services required as a condition for licensure as a residential care facility for the elderly, including all of the following:
(A)Regular observation of the residents health status to ensure that his or her dietary needs, social needs, and needs for special services are satisfied.
(B)Safe and healthful living accommodations, including housekeeping services and utilities.
(C)Maintenance of house rules for the protection of residents.
(D)A planned activities program, which includes social and recreational activities appropriate to the interests and capabilities of the resident.
(E)Three balanced, nutritious meals and snacks made available daily, including special diets prescribed by a physician as a medical necessity.
(F)Assisted living services.
(G)Assistance with taking medications.
(H)Central storing and distribution of medications.
(I)Arrangements to meet health needs, including arranging transportation.
(9)An itemization of the services that are included in the monthly fee and the services that are available at an extra charge. The provider shall attach a current fee schedule to the continuing care contract. The schedule shall state that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
(10)The procedures and conditions under which a resident may be voluntarily and involuntarily transferred from a designated living unit. The transfer procedures, at a minimum, shall include provisions addressing all of the following circumstances under which a transfer may be authorized:
(A)A continuing care retirement community may transfer a resident under the following conditions, taking into account the appropriateness and necessity of the transfer and the goal of promoting resident independence:
(i)The resident is nonambulatory. The definition of nonambulatory, as provided in Section 13131, shall either be stated in full in the continuing care contract or be cited. If Section 13131 is cited, a copy of the statute shall be made available to the resident, either as an attachment to the continuing care contract or by specifying that it will be provided upon request. If a nonambulatory resident occupies a room that has a fire clearance for nonambulatory residents, transfer shall not be necessary.
(ii)The resident develops a physical or mental condition that endangers the health, safety, or well-being of the resident or another person.
(iii)The residents condition or needs require the residents transfer to an assisted living care unit or skilled nursing facility, because the level of care required by the resident exceeds that which may be lawfully provided in the living unit.
(iv)The residents condition or needs require the residents transfer to a nursing facility, hospital, or other facility, and the provider has no facilities available to provide that level of care.
(B)Before the continuing care retirement community transfers a resident under any of the conditions set forth in subparagraph (A), the community shall satisfy all of the following requirements:
(i)Involve the resident and the residents responsible person, as defined in paragraph (6) of subdivision (r) of Section 87101 of Title 22 of the California Code of Regulations, and upon the residents or responsible persons request, family members, or the residents physician or other appropriate health professional, in the assessment process that forms the basis for the level of care transfer decision by the provider. The provider shall offer an explanation of the assessment process. If an assessment tool or tools, including scoring and evaluating criteria, are used in the determination of the appropriateness of the transfer, the provider shall make copies of the completed assessment available upon the request of the resident or the residents responsible person.
(ii)Prior to sending a formal notification of transfer, the provider shall conduct a care conference with the resident and the residents responsible person, and upon the residents or responsible persons request, family members, and the residents health care professionals, to explain the reasons for transfer.
(iii)Notify the resident and the residents responsible person of the reasons for the transfer in writing.
(iv)Notwithstanding any other provision of this subparagraph, if the resident does not have impairment of cognitive abilities, the resident may request that his or her responsible person not be involved in the transfer process.
(v)The notice of transfer shall be made at least 30 days before the transfer is expected to occur, except when the health or safety of the resident or other residents is in danger, or the transfer is required by the residents urgent medical needs. Under those circumstances, the written notice shall be made as soon as practicable before the transfer.
(vi)The written notice shall contain the reasons for the transfer, the effective date, the designated level of care or location to which the resident will be transferred, a statement of the residents right to a review of the transfer decision at a care conference, as provided for in subparagraph (C), and for disputed transfer decisions, the right to review by the Continuing Care Contracts Branch of the State Department of Social Services, as provided for in subparagraph (D). The notice shall also contain the name, address, and telephone number of the departments Continuing Care Contracts Branch.
(vii)The continuing care retirement community shall provide sufficient preparation and orientation to the resident to ensure a safe and orderly transfer and to minimize trauma.
(C)The resident has the right to review the transfer decision at a subsequent care conference that shall include the resident, the residents responsible person, and upon the residents or responsible persons request, family members, the residents physician or other appropriate health care professional, and members of the providers interdisciplinary team. The local ombudsperson may also be included in the care conference, upon the request of the resident, the residents responsible person, or the provider.
(D)For disputed transfer decisions, the resident or the residents responsible person has the right to a prompt and timely review of the transfer process by the Continuing Care Contracts Branch of the State Department of Social Services.
(E)The decision of the departments Continuing Care Contracts Branch shall be in writing and shall determine whether the provider failed to comply with the transfer process pursuant to subparagraphs (A) to (C), inclusive. Pending the decision of the Continuing Care Contracts Branch, the provider shall specify any additional care the provider believes is necessary in order for the resident to remain in his or her unit. The resident may be required to pay for the extra care, as provided in the contract.
(F)Transfer of a second resident when a shared accommodation arrangement is terminated.
(11)Provisions describing any changes in the residents monthly fee and any changes in the entrance fee refund payable to the resident that will occur if the resident transfers from any unit, including, but not limited to, terminating his or her contract after 18 months of residential temporary relocation, as defined in paragraph (8) of subdivision (r) of Section 1771. Unless the fee is part of an equity interest contract, a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident.
(12)The providers continuing obligations, if any, in the event a resident is transferred from the continuing care retirement community to another facility.
(13)The providers obligations, if any, to resume care upon the residents return after a transfer from the continuing care retirement community.
(14)The providers obligations to provide services to the resident while the resident is absent from the continuing care retirement community.
(15)The conditions under which the resident must permanently release his or her living unit.
(16)If real or personal properties are transferred in lieu of cash, a statement specifying each items value at the time of transfer, and how the value was ascertained.
(A)An itemized receipt that includes the information described above is acceptable if incorporated as a part of the continuing care contract.
(B)When real property is or will be transferred, the continuing care contract shall include a statement that the deed or other instrument of conveyance shall specify that the real property is conveyed pursuant to a continuing care contract and may be subject to rescission by the transferor within 90 days from the date that the resident first occupies the residential unit.
(C)The failure to comply with this paragraph shall not affect the validity of title to real property transferred pursuant to this chapter.
(17)The amount of the entrance fee.
(18)In the event two parties have jointly paid the entrance fee or other payment that allows them to occupy the unit, the continuing care contract shall describe how any refund of entrance fees is allocated.
(19)The amount of any processing fee.
(20)The amount of any monthly care fee.
(21)For continuing care contracts that require a monthly care fee or other periodic payment, the continuing care contract shall include the following:
(A)A statement that the occupancy and use of the accommodations by the resident is contingent upon the regular payment of the fee.
(B)The regular rate of payment agreed upon (per day, week, or month).
(C)A provision specifying whether payment will be made in advance or after services have been provided.
(D)A provision specifying the provider will adjust monthly care fees for the residents support, maintenance, board, or lodging, when a resident requires medical attention while away from the continuing care retirement community.
(E)A provision specifying whether a credit or allowance will be given to a resident who is absent from the continuing care retirement community or from meals. This provision shall also state, when applicable, that the credit may be permitted at the discretion or by special permission of the provider.
(F)A statement of billing practices, procedures, and timelines. A provider shall allow a minimum of 14 days between the date a bill is sent and the date payment is due. A charge for a late payment may only be assessed if the amount and any condition for the penalty is stated on the bill.
(G)A statement that the provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
(22)All continuing care contracts that include monthly care fees shall address changes in monthly care fees by including either of the following provisions:
(A)For prepaid continuing care contracts, which include monthly care fees, one of the following methods:
(i)Fees shall not be subject to change during the lifetime of the agreement.
(ii)Fees shall not be increased by more than a specified number of dollars in any one year and not more than a specified number of dollars during the lifetime of the agreement.
(iii)Fees shall not be increased in excess of a specified percentage over the preceding year and not more than a specified percentage during the lifetime of the agreement.
(B)For monthly fee continuing care contracts, except prepaid contracts, changes in monthly care fees shall be based on projected costs, prior year per capita costs, and economic indicators.
(23)A provision requiring that the provider give written notice to the resident at least 30 days in advance of any change in the residents monthly care fees or in the price or scope of any component of care or other services.
(24)A provision indicating whether the residents rights under the continuing care contract include any proprietary interests in the assets of the provider or in the continuing care retirement community, or both. Any statement in a contract concerning an ownership interest shall appear in a large-sized font or print.
(25)If the continuing care retirement community property is encumbered by a security interest that is senior to any claims the residents may have to enforce continuing care contracts, a provision shall advise the residents that any claims they may have under the continuing care contract are subordinate to the rights of the secured lender. For equity projects, the continuing care contract shall specify the type and extent of the equity interest and whether any entity holds a security interest.
(26)Notice that the living units are part of a continuing care retirement community that is licensed as a residential care facility for the elderly and, as a result, any duly authorized agent of the department may, upon proper identification and upon stating the purpose of his or her visit, enter and inspect the entire premises at any time, without advance notice.
(27)A conspicuous statement, in at least 10-point boldface type in immediate proximity to the space reserved for the signatures of the resident and, if applicable, the transferor, that provides as follows: You, the resident or transferor, may cancel the transaction without cause at any time within 90 days from the date you first occupy your living unit. See the attached notice of cancellation form for an explanation of this right.
(28)Notice that during the cancellation period, the continuing care contract may be canceled upon 30 days written notice by the provider without cause, or that the provider waives this right.
(29)The terms and conditions under which the continuing care contract may be terminated after the cancellation period by either party, including any health or financial conditions.
(30)A statement that, after the cancellation period, a provider may unilaterally terminate the continuing care contract only if the provider has good and sufficient cause.
(A)Any continuing care contract containing a clause that provides for a continuing care contract to be terminated for just cause, good cause, or other similar provision, shall also include a provision that none of the following activities by the resident, or on behalf of the resident, constitutes just cause, good cause, or otherwise activates the termination provision:
(i)Filing or lodging a formal complaint with the department or other appropriate authority.
(ii)Participation in an organization or affiliation of residents, or other similar lawful activity.
(B)The provision required by this paragraph shall also state that the provider shall not discriminate or retaliate in any manner against any resident of a continuing care retirement community for contacting the department, or any other state, county, or city agency, or any elected or appointed government official to file a complaint or for any other reason, or for participation in a residents organization or association.
(C)Nothing in this paragraph diminishes the providers ability to terminate the continuing care contract for good and sufficient cause.
(31)A statement that at least 90 days written notice to the resident is required for a unilateral termination of the continuing care contract by the provider.
(32)A statement concerning the length of notice that a resident is required to give the provider to voluntarily terminate the continuing care contract after the cancellation period.
(33)The policy or terms for refunding or repaying a lump sum of any portion of the entrance fee, in the event of cancellation, termination, or death. Every continuing care contract that provides for a refund or repaying a lump sum of all or a part of the entrance fee shall also do all of the following:
(A)Specify the amount, if any, the resident has paid or will pay for upgrades, special features, or modifications to the residents unit.
(B)State that if the continuing care contract is canceled or terminated by the provider, the provider shall do both of the following:
(i)Amortize the specified amount at the same rate as the residents entrance fee.
(ii)Refund the unamortized balance to the resident at the same time the provider pays the residents entrance fee refund.
(C)State that the resident has a right to terminate his or her contract after 18 months of residential temporary relocation, as defined in paragraph (8) of subdivision (r) of Section 1771. Provisions for refunds due to cancellation pursuant to this subparagraph shall be set forth in the contract.
(D)State the provider shall make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit. No later than July 1, 2017, a provider shall provide notice to all current residents with contracts applicable to this subparagraph regarding the statement required by this subparagraph as a clarification of the residents existing contract.
(E)For all contracts with a repayment of all or a portion of the entrance fee conditioned upon the resale of the unit, the provider shall state the average and longest amount of time that it has taken to resell a unit within the last five calendar years.
(34)The following notice at the bottom of the signatory page:
NOTICE | (date) |
This is a continuing care contract as defined by paragraph (8) of subdivision (c), or subdivision (l) of Section 1771 of the California Health and Safety Code. This continuing care contract form has been approved by the State Department of Social Services as required by subdivision (b) of Section 1787 of the California Health and Safety Code. The basis for this approval was a determination that (provider name) has submitted a contract that complies with the minimum statutory requirements applicable to continuing care contracts. The department does not approve or disapprove any of the financial or health care coverage provisions in this contract. Approval by the department is NOT a guaranty of performance or an endorsement of any continuing care contract provisions. Prospective transferors and residents are strongly encouraged to carefully consider the benefits and risks of this continuing care contract and to seek financial and legal advice before signing.
(35)The provider may not attempt to absolve itself in the continuing care contract from liability for its negligence by any statement to that effect, and shall include the following statement in the contract: Nothing in this continuing care contract limits either the providers obligation to provide adequate care and supervision for the resident or any liability on the part of the provider which may result from the providers failure to provide this care and supervision.
(36)Provisions describing how the provider will proceed in the event of a closure, including an explanation of how the provider will comply with Sections 1793.80, 1793.81, 1793.82, and 1793.83.
(b)A life care contract shall also provide that:
(1)All levels of care, including acute care and physicians and surgeons services, will be provided to a resident.
(2)Care will be provided for the duration of the residents life unless the life care contract is canceled or terminated by the provider during the cancellation period or after the cancellation period for good cause.
(3)A comprehensive continuum of care will be provided to the resident, including skilled nursing, in a facility under the ownership and supervision of the provider on, or adjacent to, the continuing care retirement community premises.
(4)Monthly care fees will not be changed based on the residents level of care or service.
(5)A resident who becomes financially unable to pay his or her monthly care fees shall be subsidized provided the residents financial need does not arise from action by the resident to divest the resident of his or her assets.
(c)Continuing care contracts may include provisions that do any of the following:
(1)Subsidize a resident who becomes financially unable to pay for his or her monthly care fees at some future date. If a continuing care contract provides for subsidizing a resident, it may also provide for any of the following:
(A)The resident shall apply for any public assistance or other aid for which he or she is eligible and that the provider may apply for assistance on behalf of the resident.
(B)The providers decision shall be final and conclusive regarding any adjustments to be made or any action to be taken regarding any charitable consideration extended to any of its residents.
(C)The provider is entitled to payment for the actual costs of care out of any property acquired by the resident subsequent to any adjustment extended to the resident under this paragraph, or from any other property of the resident that the resident failed to disclose.
(D)The provider may pay the monthly premium of the residents health insurance coverage under Medicare to ensure that those payments will be made.
(E)The provider may receive an assignment from the resident of the right to apply for and to receive the benefits, for and on behalf of the resident.
(F)The provider is not responsible for the costs of furnishing the resident with any services, supplies, and medication, when reimbursement is reasonably available from any governmental agency, or any private insurance.
(G)Any refund due to the resident at the termination of the continuing care contract may be offset by any prior subsidy to the resident by the provider.
(2)Limit responsibility for costs associated with the treatment or medication of an ailment or illness existing prior to the date of admission. In these cases, the medical or surgical exceptions, as disclosed by the medical entrance examination, shall be listed in the continuing care contract or in a medical report attached to and made a part of the continuing care contract.
(3)Identify legal remedies that may be available to the provider if the resident makes any material misrepresentation or omission pertaining to the residents assets or health.
(4)Restrict transfer or assignments of the residents rights and privileges under a continuing care contract due to the personal nature of the continuing care contract.
(5)Protect the providers ability to waive a residents breach of the terms or provisions of the continuing care contract in specific instances without relinquishing its right to insist upon full compliance by the resident with all terms or provisions in the contract.
(6)Provide that the resident shall reimburse the provider for any uninsured loss or damage to the residents unit, beyond normal wear and tear, resulting from the residents carelessness or negligence.
(7)Provide that the resident agrees to observe the off-limit areas of the continuing care retirement community designated by the provider for safety reasons. The provider may not include any provision in a continuing care contract that absolves the provider from liability for its negligence.
(8)Provide for the subrogation to the provider of the residents rights in the case of injury to a resident caused by the acts or omissions of a third party, or for the assignment of the residents recovery or benefits in this case to the provider, to the extent of the value of the goods and services furnished by the provider to or on behalf of the resident as a result of the injury.
(9)Provide for a lien on any judgment, settlement, or recovery for any additional expense incurred by the provider in caring for the resident as a result of injury.
(10)Require the residents cooperation and assistance in the diligent prosecution of any claim or action against any third party.
(11)Provide for the appointment of a conservator or guardian by a court with jurisdiction in the event a resident becomes unable to handle his or her personal or financial affairs.
(12)Allow a provider, whose property is tax exempt, to charge the resident, on a pro rata basis, property taxes, or in-lieu taxes, that the provider is required to pay.
(13)Make any other provision approved by the department.
(d)A copy of the residents rights as described in Section 1771.7 shall be attached to every continuing care contract.
(e)A copy of the current audited financial statement of the provider shall be attached to every continuing care contract. For a provider whose current audited financial statement does not accurately reflect the financial ability of the provider to fulfill the continuing care contract obligations, the financial statement attached to the continuing care contract shall include all of the following:
(1)A disclosure that the reserve requirement has not yet been determined or met, and that entrance fees will not be held in escrow.
(2)A disclosure that the ability to provide the services promised in the continuing care contract will depend on successful compliance with the approved financial plan.
(3)A copy of the approved financial plan for meeting the reserve requirements.
(4)Any other supplemental statements or attachments necessary to accurately represent the providers financial ability to fulfill its continuing care contract obligations.
(f)A schedule of the average monthly care fees charged to residents for each type of residential living unit for each of the five years preceding execution of the continuing care contract shall be attached to every continuing care contract. The provider shall update this schedule annually at the end of each fiscal year. If the continuing care retirement community has not been in existence for five years, the information shall be provided for each of the years the continuing care retirement community has been in existence.
(g)If any continuing care contract provides for a health insurance policy for the benefit of the resident, the provider shall attach to the continuing care contract a binder complying with Sections 382 and 382.5 of the Insurance Code.
(h)The provider shall attach to every continuing care contract a completed form in duplicate, captioned Notice of Cancellation. The notice shall be easily detachable, and shall contain, in at least 10-point boldface type, the following statement:
NOTICE OF CANCELLATION | (date) |
Your first date of occupancy under this contract | |
is: _____________________________________________ | |
You may cancel this transaction, without any penalty within 90 calendar days from the above date.
If you cancel, any property transferred, any payments made by you under the contract, and any negotiable instrument executed by you will be returned within 14 calendar days after making possession of the living unit available to the provider. Any security interest arising out of the transaction will be canceled.
If you cancel, you are obligated to pay a reasonable processing fee to cover costs and to pay for the reasonable value of the services received by you from the provider up to the date you canceled or made available to the provider the possession of any living unit delivered to you under this contract, whichever is later.
If you cancel, you must return possession of any living unit delivered to you under this contract to the provider in substantially the same condition as when you took possession.
Possession of the living unit must be made available to the provider within 20 calendar days of your notice of cancellation. If you fail to make the possession of any living unit available to the provider, then you remain liable for performance of all obligations under the contract.
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram
to | |
(Name of provider) | |
|---|---|
at | |
(Address of providers place of business) | |
not later than midnight of_____________(date). | |
I hereby cancel this | |
(Residentsor | |
(a) During the cancellation period, the provider shall pay all refunds owed to a resident within 14 calendar days after a resident makes possession of the living unit available to the provider.
(b) After the cancellation period, any refunds due to a resident under a continuing care contract shall be paid within 14 calendar days after a resident makes possession of the living unit available to the provider or 90 calendar days after death or receipt of notice of termination, whichever is later.
(c) In nonequity projects, if the continuing care contract is canceled by either party during the cancellation period or terminated by the provider after the cancellation period, the resident shall be refunded the difference between the total amount of entrance, monthly, and optional fees paid and the amount used for care of the resident.
(d) If a resident has paid additional amounts for upgrades, special features, or modifications to the living unit and the provider terminates the residents continuing care contract, the provider shall amortize those additional amounts at the same rate as the entrance fee and shall refund the unamortized balance to the resident.
(e) A lump-sum payment to a resident after termination of a continuing care contract that is conditioned upon resale of the unit shall not be considered to be a refund and may not be characterized or advertised as a refund. The full lump-sum payment lump sum owed, including any interest accrued, shall be paid to the resident within 14 calendar days after resale of the unit.
(f)(1)For contracts signed on and after January 1, 2017, notwithstanding a providers documented good-faith effort to resell the unit, the resident is entitled to the repayment of a specified portion, pursuant to subparagraphs (A) and (B), of the full lump-sum payment lump sum owed if the unit remains vacant 120 days after the residents termination of the contract. This repayment shall not cause the contract in question to be deemed a refundable contract, as defined in paragraph (2) of subdivision (r) of Section 1771.
(A)When a continuing care contract is terminated by the death of a resident, at least 10 percent of the full lump-sum payment lump sum owed shall be paid to the residents estate within 120 days after the death of the resident.
(B)When a continuing care contract is terminated for a reason not described in subparagraph (A), at least 20 percent of the full lump-sum payment lump sum owed shall be paid to the resident within 120 days after the residents termination of the contract.
(2)Any payment balance of the lump sum owed that has not been paid to the resident within 180 days shall accrue interest at a rate calculated pursuant to paragraph (3). Any payment balance of the lump sum owed that has not been paid to the resident within 240 days shall accrue interest at a rate calculated pursuant to paragraph (4). Interest shall continue to accrue annually pursuant to paragraph (5) until the date the full lump-sum payment lump sum owed is paid to the resident. This paragraph shall apply only to continuing care contracts entered into on or after January 1, 2017.
(3)Any payments amount owed that are is not paid to the resident within the 180-day period pursuant to paragraph (2) shall accrue simple interest, to be compounded annually, interest at a rate of 4 percent. percent of the amount owed.
(4)Any payments amount owed that are is not paid to the resident within the 240-day period pursuant to paragraph (2) shall accrue simple interest, to be compounded annually, interest at a rate of 6 percent. percent of the amount owed.
(5)Any amount owed that is not paid to the resident within one year after the 240-day period pursuant to paragraph (4) shall accrue compound interest annually at a rate of 6 percent.
(5)
(6)Until January 1, 2018, this subdivision shall not apply to a project that is in development prior to January 1, 2017, including current repayable agreements, current deposit agreements that contemplate repayable entrance fees, and other projects that have received department approval to market units pursuant to Section 1771.4, or have received issuer, lender, or bond insurer approval to obtain bond financing, or other governmental approval based on a repayable entrance fee option, if the initial contract for the project is entered into on or before January 1, 2018.
(g)(1)After the death of a resident, a lump-sum payment lump sum owed that is conditioned upon resale of a unit shall be subject to subdivision (f) and the payment and interest, if any, lump sum owed shall include any interest accrued and shall be payable to the residents estate.
(2)Until January 1, 2018, this subdivision shall not apply to a project that is in development prior to January 1, 2017, including current repayable agreements, current deposit agreements that contemplate repayable entrance fees, and other projects that have received department approval to market units pursuant to Section 1771.4, or have received issuer, lender, or bond insurer approval to obtain bond financing, or other governmental approval based on a repayable entrance fee option, if the initial contract for the project is entered into on or before January 1, 2018.
(h)Except as otherwise obligated by an equity interest contract, once the unit has been vacated and made available to the provider, the provider shall not make any further charges to the resident or his or her estate or charges against the lump-sum payment that is due lump sum owed to the resident for purposes of continued monthly payments to the provider or for maintenance or housekeeping on the vacated unit.
(i)Nothing in this section shall be construed to limit or alter any legal remedies otherwise available to a resident or his or her estate.
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 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 providers 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 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.
(10)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.
(11)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 entitys 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 communitys 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 departments 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 Farmers Farmers 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 institutions 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)Bankers 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 Moodys Investors Service, or the equivalent rating by Standard and Poors 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 Moodys Investors Service or AA by Standard and Poors 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 A change may shall not 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 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 communitys 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 providers 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 providers 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 homeowners 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 applicants application.
(q)(reserved)
(r)(1)Refund reserve means the reserve a provider is required to maintain, as provided in Section 1792.6.
(2)(A)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 transferors 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 residents 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.
(B)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. A provider may repay all or a portion of an entrance fee that is conditioned upon resale of the unit before the resale of the unit. The repayment of an entrance fee before the resale of the unit shall not cause any other entrance fee to be subject to the refund reserve requirements of Section 1792.6, provided that the provider does not promise, at the time of contracting or thereafter, to make this type of early repayment, represent that the provider intends to make this type of early repayment, or indicate that the provider has a practice of making this type of early repayment.
(3)Resale fee means a levy by the provider against the proceeds from the sale of a transferors 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 providers 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 9 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. 2.Section 1788 of the Health and Safety Code is amended to read:1788.(a)A continuing care contract shall contain all of the following:
(1)The legal name and address of each provider.
(2)The name and address of the continuing care retirement community.
(3)The residents name and the identity of the unit the resident will occupy.
(4)If there is a transferor other than the resident, the transferor shall be a party to the contract and the transferors name and address shall be specified.
(5)If the provider has used the name of any charitable or religious or nonprofit organization in its title before January 1, 1979, and continues to use that name, and that organization is not responsible for the financial and contractual obligations of the provider or the obligations specified in the continuing care contract, the provider shall include in every continuing care contract a conspicuous statement that clearly informs the resident that the organization is not financially responsible.
(6)The date the continuing care contract is signed by the resident and, where applicable, any other transferor.
(7)The duration of the continuing care contract.
(8)A list of the services that will be made available to the resident as required to provide the appropriate level of care. The list of services shall include the services required as a condition for licensure as a residential care facility for the elderly, including all of the following:
(A)Regular observation of the residents health status to ensure that his or her dietary needs, social needs, and needs for special services are satisfied.
(B)Safe and healthful living accommodations, including housekeeping services and utilities.
(C)Maintenance of house rules for the protection of residents.
(D)A planned activities program, which includes social and recreational activities appropriate to the interests and capabilities of the resident.
(E)Three balanced, nutritious meals and snacks made available daily, including special diets prescribed by a physician as a medical necessity.
(F)Assisted living services.
(G)Assistance with taking medications.
(H)Central storing and distribution of medications.
(I)Arrangements to meet health needs, including arranging transportation.
(9)An itemization of the services that are included in the monthly fee and the services that are available at an extra charge. The provider shall attach a current fee schedule to the continuing care contract. The schedule shall state that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
(10)The procedures and conditions under which a resident may be voluntarily and involuntarily transferred from a designated living unit. The transfer procedures, at a minimum, shall include provisions addressing all of the following circumstances under which a transfer may be authorized:
(A)A continuing care retirement community may transfer a resident under the following conditions, taking into account the appropriateness and necessity of the transfer and the goal of promoting resident independence:
(i)The resident is nonambulatory. The definition of nonambulatory, as provided in Section 13131, shall either be stated in full in the continuing care contract or be cited. If Section 13131 is cited, a copy of the statute shall be made available to the resident, either as an attachment to the continuing care contract or by specifying that it will be provided upon request. If a nonambulatory resident occupies a room that has a fire clearance for nonambulatory residents, transfer shall not be necessary.
(ii)The resident develops a physical or mental condition that endangers the health, safety, or well-being of the resident or another person.
(iii)The residents condition or needs require the residents transfer to an assisted living care unit or skilled nursing facility, because the level of care required by the resident exceeds that which may be lawfully provided in the living unit.
(iv)The residents condition or needs require the residents transfer to a nursing facility, hospital, or other facility, and the provider has no facilities available to provide that level of care.
(B)Before the continuing care retirement community transfers a resident under any of the conditions set forth in subparagraph (A), the community shall satisfy all of the following requirements:
(i)Involve the resident and the residents responsible person, as defined in paragraph (6) of subdivision (r) of Section 87101 of Title 22 of the California Code of Regulations, and upon the residents or responsible persons request, family members, or the residents physician or other appropriate health professional, in the assessment process that forms the basis for the level of care transfer decision by the provider. The provider shall offer an explanation of the assessment process. If an assessment tool or tools, including scoring and evaluating criteria, are used in the determination of the appropriateness of the transfer, the provider shall make copies of the completed assessment available upon the request of the resident or the residents responsible person.
(ii)Prior to sending a formal notification of transfer, the provider shall conduct a care conference with the resident and the residents responsible person, and upon the residents or responsible persons request, family members, and the residents health care professionals, to explain the reasons for transfer.
(iii)Notify the resident and the residents responsible person of the reasons for the transfer in writing.
(iv)Notwithstanding any other provision of this subparagraph, if the resident does not have impairment of cognitive abilities, the resident may request that his or her responsible person not be involved in the transfer process.
(v)The notice of transfer shall be made at least 30 days before the transfer is expected to occur, except when the health or safety of the resident or other residents is in danger, or the transfer is required by the residents urgent medical needs. Under those circumstances, the written notice shall be made as soon as practicable before the transfer.
(vi)The written notice shall contain the reasons for the transfer, the effective date, the designated level of care or location to which the resident will be transferred, a statement of the residents right to a review of the transfer decision at a care conference, as provided for in subparagraph (C), and for disputed transfer decisions, the right to review by the Continuing Care Contracts Branch of the State Department of Social Services, as provided for in subparagraph (D). The notice shall also contain the name, address, and telephone number of the departments Continuing Care Contracts Branch.
(vii)The continuing care retirement community shall provide sufficient preparation and orientation to the resident to ensure a safe and orderly transfer and to minimize trauma.
(C)The resident has the right to review the transfer decision at a subsequent care conference that shall include the resident, the residents responsible person, and upon the residents or responsible persons request, family members, the residents physician or other appropriate health care professional, and members of the providers interdisciplinary team. The local ombudsperson may also be included in the care conference, upon the request of the resident, the residents responsible person, or the provider.
(D)For disputed transfer decisions, the resident or the residents responsible person has the right to a prompt and timely review of the transfer process by the Continuing Care Contracts Branch of the State Department of Social Services.
(E)The decision of the departments Continuing Care Contracts Branch shall be in writing and shall determine whether the provider failed to comply with the transfer process pursuant to subparagraphs (A) to (C), inclusive. Pending the decision of the Continuing Care Contracts Branch, the provider shall specify any additional care the provider believes is necessary in order for the resident to remain in his or her unit. The resident may be required to pay for the extra care, as provided in the contract.
(F)Transfer of a second resident when a shared accommodation arrangement is terminated.
(11)Provisions describing any changes in the residents monthly fee and any changes in the entrance fee refund payable to the resident that will occur if the resident transfers from any unit, including, but not limited to, terminating his or her contract after 18 months of residential temporary relocation, as defined in paragraph (8) of subdivision (r) of Section 1771. Unless the fee is part of an equity interest contract, a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident.
(12)The providers continuing obligations, if any, in the event a resident is transferred from the continuing care retirement community to another facility.
(13)The providers obligations, if any, to resume care upon the residents return after a transfer from the continuing care retirement community.
(14)The providers obligations to provide services to the resident while the resident is absent from the continuing care retirement community.
(15)The conditions under which the resident must permanently release his or her living unit.
(16)If real or personal properties are transferred in lieu of cash, a statement specifying each items value at the time of transfer, and how the value was ascertained.
(A)An itemized receipt that includes the information described above is acceptable if incorporated as a part of the continuing care contract.
(B)When real property is or will be transferred, the continuing care contract shall include a statement that the deed or other instrument of conveyance shall specify that the real property is conveyed pursuant to a continuing care contract and may be subject to rescission by the transferor within 90 days from the date that the resident first occupies the residential unit.
(C)The failure to comply with this paragraph shall not affect the validity of title to real property transferred pursuant to this chapter.
(17)The amount of the entrance fee.
(18)In the event two parties have jointly paid the entrance fee or other payment that allows them to occupy the unit, the continuing care contract shall describe how any refund of entrance fees is allocated.
(19)The amount of any processing fee.
(20)The amount of any monthly care fee.
(21)For continuing care contracts that require a monthly care fee or other periodic payment, the continuing care contract shall include the following:
(A)A statement that the occupancy and use of the accommodations by the resident is contingent upon the regular payment of the fee.
(B)The regular rate of payment agreed upon (per day, week, or month).
(C)A provision specifying whether payment will be made in advance or after services have been provided.
(D)A provision specifying the provider will adjust monthly care fees for the residents support, maintenance, board, or lodging, when a resident requires medical attention while away from the continuing care retirement community.
(E)A provision specifying whether a credit or allowance will be given to a resident who is absent from the continuing care retirement community or from meals. This provision shall also state, when applicable, that the credit may be permitted at the discretion or by special permission of the provider.
(F)A statement of billing practices, procedures, and timelines. A provider shall allow a minimum of 14 days between the date a bill is sent and the date payment is due. A charge for a late payment may only be assessed if the amount and any condition for the penalty is stated on the bill.
(G)A statement that the provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
(22)All continuing care contracts that include monthly care fees shall address changes in monthly care fees by including either of the following provisions:
(A)For prepaid continuing care contracts, which include monthly care fees, one of the following methods:
(i)Fees shall not be subject to change during the lifetime of the agreement.
(ii)Fees shall not be increased by more than a specified number of dollars in any one year and not more than a specified number of dollars during the lifetime of the agreement.
(iii)Fees shall not be increased in excess of a specified percentage over the preceding year and not more than a specified percentage during the lifetime of the agreement.
(B)For monthly fee continuing care contracts, except prepaid contracts, changes in monthly care fees shall be based on projected costs, prior year per capita costs, and economic indicators.
(23)A provision requiring that the provider give written notice to the resident at least 30 days in advance of any change in the residents monthly care fees or in the price or scope of any component of care or other services.
(24)A provision indicating whether the residents rights under the continuing care contract include any proprietary interests in the assets of the provider or in the continuing care retirement community, or both. Any statement in a contract concerning an ownership interest shall appear in a large-sized font or print.
(25)If the continuing care retirement community property is encumbered by a security interest that is senior to any claims the residents may have to enforce continuing care contracts, a provision shall advise the residents that any claims they may have under the continuing care contract are subordinate to the rights of the secured lender. For equity projects, the continuing care contract shall specify the type and extent of the equity interest and whether any entity holds a security interest.
(26)Notice that the living units are part of a continuing care retirement community that is licensed as a residential care facility for the elderly and, as a result, any duly authorized agent of the department may, upon proper identification and upon stating the purpose of his or her visit, enter and inspect the entire premises at any time, without advance notice.
(27)A conspicuous statement, in at least 10-point boldface type in immediate proximity to the space reserved for the signatures of the resident and, if applicable, the transferor, that provides as follows: You, the resident or transferor, may cancel the transaction without cause at any time within 90 days from the date you first occupy your living unit. See the attached notice of cancellation form for an explanation of this right.
(28)Notice that during the cancellation period, the continuing care contract may be canceled upon 30 days written notice by the provider without cause, or that the provider waives this right.
(29)The terms and conditions under which the continuing care contract may be terminated after the cancellation period by either party, including any health or financial conditions.
(30)A statement that, after the cancellation period, a provider may unilaterally terminate the continuing care contract only if the provider has good and sufficient cause.
(A)Any continuing care contract containing a clause that provides for a continuing care contract to be terminated for just cause, good cause, or other similar provision, shall also include a provision that none of the following activities by the resident, or on behalf of the resident, constitutes just cause, good cause, or otherwise activates the termination provision:
(i)Filing or lodging a formal complaint with the department or other appropriate authority.
(ii)Participation in an organization or affiliation of residents, or other similar lawful activity.
(B)The provision required by this paragraph shall also state that the provider shall not discriminate or retaliate in any manner against any resident of a continuing care retirement community for contacting the department, or any other state, county, or city agency, or any elected or appointed government official to file a complaint or for any other reason, or for participation in a residents organization or association.
(C)Nothing in this paragraph diminishes the providers ability to terminate the continuing care contract for good and sufficient cause.
(31)A statement that at least 90 days written notice to the resident is required for a unilateral termination of the continuing care contract by the provider.
(32)A statement concerning the length of notice that a resident is required to give the provider to voluntarily terminate the continuing care contract after the cancellation period.
(33)The policy or terms for refunding or repaying a lump sum of any portion of the entrance fee, in the event of cancellation, termination, or death. Every continuing care contract that provides for a refund or repaying a lump sum of all or a part of the entrance fee shall also do all of the following:
(A)Specify the amount, if any, the resident has paid or will pay for upgrades, special features, or modifications to the residents unit.
(B)State that if the continuing care contract is canceled or terminated by the provider, the provider shall do both of the following:
(i)Amortize the specified amount at the same rate as the residents entrance fee.
(ii)Refund the unamortized balance to the resident at the same time the provider pays the residents entrance fee refund.
(C)State that the resident has a right to terminate his or her contract after 18 months of residential temporary relocation, as defined in paragraph (8) of subdivision (r) of Section 1771. Provisions for refunds due to cancellation pursuant to this subparagraph shall be set forth in the contract.
(D)State the provider shall make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit. No later than July 1, 2017, a provider shall provide notice to all current residents with contracts applicable to this subparagraph regarding the statement required by this subparagraph as a clarification of the residents existing contract.
(E)For all contracts with a repayment of all or a portion of the entrance fee conditioned upon the resale of the unit, the provider shall state the average and longest amount of time that it has taken to resell a unit within the last five calendar years.
(34)The following notice at the bottom of the signatory page:
NOTICE | (date) |
This is a continuing care contract as defined by paragraph (8) of subdivision (c), or subdivision (l) of Section 1771 of the California Health and Safety Code. This continuing care contract form has been approved by the State Department of Social Services as required by subdivision (b) of Section 1787 of the California Health and Safety Code. The basis for this approval was a determination that (provider name) has submitted a contract that complies with the minimum statutory requirements applicable to continuing care contracts. The department does not approve or disapprove any of the financial or health care coverage provisions in this contract. Approval by the department is NOT a guaranty of performance or an endorsement of any continuing care contract provisions. Prospective transferors and residents are strongly encouraged to carefully consider the benefits and risks of this continuing care contract and to seek financial and legal advice before signing.
(35)The provider may not attempt to absolve itself in the continuing care contract from liability for its negligence by any statement to that effect, and shall include the following statement in the contract: Nothing in this continuing care contract limits either the providers obligation to provide adequate care and supervision for the resident or any liability on the part of the provider which may result from the providers failure to provide this care and supervision.
(36)Provisions describing how the provider will proceed in the event of a closure, including an explanation of how the provider will comply with Sections 1793.80, 1793.81, 1793.82, and 1793.83.
(b)A life care contract shall also provide that:
(1)All levels of care, including acute care and physicians and surgeons services, will be provided to a resident.
(2)Care will be provided for the duration of the residents life unless the life care contract is canceled or terminated by the provider during the cancellation period or after the cancellation period for good cause.
(3)A comprehensive continuum of care will be provided to the resident, including skilled nursing, in a facility under the ownership and supervision of the provider on, or adjacent to, the continuing care retirement community premises.
(4)Monthly care fees will not be changed based on the residents level of care or service.
(5)A resident who becomes financially unable to pay his or her monthly care fees shall be subsidized provided the residents financial need does not arise from action by the resident to divest the resident of his or her assets.
(c)Continuing care contracts may include provisions that do any of the following:
(1)Subsidize a resident who becomes financially unable to pay for his or her monthly care fees at some future date. If a continuing care contract provides for subsidizing a resident, it may also provide for any of the following:
(A)The resident shall apply for any public assistance or other aid for which he or she is eligible and that the provider may apply for assistance on behalf of the resident.
(B)The providers decision shall be final and conclusive regarding any adjustments to be made or any action to be taken regarding any charitable consideration extended to any of its residents.
(C)The provider is entitled to payment for the actual costs of care out of any property acquired by the resident subsequent to any adjustment extended to the resident under this paragraph, or from any other property of the resident that the resident failed to disclose.
(D)The provider may pay the monthly premium of the residents health insurance coverage under Medicare to ensure that those payments will be made.
(E)The provider may receive an assignment from the resident of the right to apply for and to receive the benefits, for and on behalf of the resident.
(F)The provider is not responsible for the costs of furnishing the resident with any services, supplies, and medication, when reimbursement is reasonably available from any governmental agency, or any private insurance.
(G)Any refund due to the resident at the termination of the continuing care contract may be offset by any prior subsidy to the resident by the provider.
(2)Limit responsibility for costs associated with the treatment or medication of an ailment or illness existing prior to the date of admission. In these cases, the medical or surgical exceptions, as disclosed by the medical entrance examination, shall be listed in the continuing care contract or in a medical report attached to and made a part of the continuing care contract.
(3)Identify legal remedies that may be available to the provider if the resident makes any material misrepresentation or omission pertaining to the residents assets or health.
(4)Restrict transfer or assignments of the residents rights and privileges under a continuing care contract due to the personal nature of the continuing care contract.
(5)Protect the providers ability to waive a residents breach of the terms or provisions of the continuing care contract in specific instances without relinquishing its right to insist upon full compliance by the resident with all terms or provisions in the contract.
(6)Provide that the resident shall reimburse the provider for any uninsured loss or damage to the residents unit, beyond normal wear and tear, resulting from the residents carelessness or negligence.
(7)Provide that the resident agrees to observe the off-limit areas of the continuing care retirement community designated by the provider for safety reasons. The provider may not include any provision in a continuing care contract that absolves the provider from liability for its negligence.
(8)Provide for the subrogation to the provider of the residents rights in the case of injury to a resident caused by the acts or omissions of a third party, or for the assignment of the residents recovery or benefits in this case to the provider, to the extent of the value of the goods and services furnished by the provider to or on behalf of the resident as a result of the injury.
(9)Provide for a lien on any judgment, settlement, or recovery for any additional expense incurred by the provider in caring for the resident as a result of injury.
(10)Require the residents cooperation and assistance in the diligent prosecution of any claim or action against any third party.
(11)Provide for the appointment of a conservator or guardian by a court with jurisdiction in the event a resident becomes unable to handle his or her personal or financial affairs.
(12)Allow a provider, whose property is tax exempt, to charge the resident, on a pro rata basis, property taxes, or in-lieu taxes, that the provider is required to pay.
(13)Make any other provision approved by the department.
(d)A copy of the residents rights as described in Section 1771.7 shall be attached to every continuing care contract.
(e)A copy of the current audited financial statement of the provider shall be attached to every continuing care contract. For a provider whose current audited financial statement does not accurately reflect the financial ability of the provider to fulfill the continuing care contract obligations, the financial statement attached to the continuing care contract shall include all of the following:
(1)A disclosure that the reserve requirement has not yet been determined or met, and that entrance fees will not be held in escrow.
(2)A disclosure that the ability to provide the services promised in the continuing care contract will depend on successful compliance with the approved financial plan.
(3)A copy of the approved financial plan for meeting the reserve requirements.
(4)Any other supplemental statements or attachments necessary to accurately represent the providers financial ability to fulfill its continuing care contract obligations.
(f)A schedule of the average monthly care fees charged to residents for each type of residential living unit for each of the five years preceding execution of the continuing care contract shall be attached to every continuing care contract. The provider shall update this schedule annually at the end of each fiscal year. If the continuing care retirement community has not been in existence for five years, the information shall be provided for each of the years the continuing care retirement community has been in existence.
(g)If any continuing care contract provides for a health insurance policy for the benefit of the resident, the provider shall attach to the continuing care contract a binder complying with Sections 382 and 382.5 of the Insurance Code.
(h)The provider shall attach to every continuing care contract a completed form in duplicate, captioned Notice of Cancellation. The notice shall be easily detachable, and shall contain, in at least 10-point boldface type, the following statement:
NOTICE OF CANCELLATION | (date) |
Your first date of occupancy under this contract | |
is: _____________________________________________ | |
You may cancel this transaction, without any penalty within 90 calendar days from the above date.
If you cancel, any property transferred, any payments made by you under the contract, and any negotiable instrument executed by you will be returned within 14 calendar days after making possession of the living unit available to the provider. Any security interest arising out of the transaction will be canceled.
If you cancel, you are obligated to pay a reasonable processing fee to cover costs and to pay for the reasonable value of the services received by you from the provider up to the date you canceled or made available to the provider the possession of any living unit delivered to you under this contract, whichever is later.
If you cancel, you must return possession of any living unit delivered to you under this contract to the provider in substantially the same condition as when you took possession.
Possession of the living unit must be made available to the provider within 20 calendar days of your notice of cancellation. If you fail to make the possession of any living unit available to the provider, then you remain liable for performance of all obligations under the contract.
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram
to | |
(Name of provider) | |
|---|---|
at | |
(Address of providers place of business) | |
not later than midnight
of_____________(date). | |
I hereby cancel this | |
(Residentsor | |
(a) During the cancellation period, the provider shall pay all refunds owed to a resident within 14 calendar days after a resident makes possession of the living unit available to the provider.
(b) After the cancellation period, any refunds due to a resident under a continuing care contract shall be paid within 14 calendar days after a resident makes possession of the living unit available to the provider or 90 calendar days after death or receipt of notice of termination, whichever is later.
(c) In nonequity projects, if the continuing care contract is canceled by either party during the cancellation period or terminated by the provider after the cancellation period, the resident shall be refunded the difference between the total amount of entrance, monthly, and optional fees paid and the amount used for care of the resident.
(d) If a resident has paid additional amounts for upgrades, special features, or modifications to the living unit and the provider terminates the residents continuing care contract, the provider shall amortize those additional amounts at the same rate as the entrance fee and shall refund the unamortized balance to the resident.
(e) A lump-sum payment to a resident after termination of a continuing care contract that is conditioned upon resale of a the unit shall not be considered to be a refund and may not be characterized or advertised as a refund. The lump sum full lump-sum payment shall be paid to the resident within 14 calendar days after resale of the unit.
(f)(1)For contracts signed on and after January 1, 2017, notwithstanding a providers documented good-faith effort to resell the unit, the resident is entitled to the repayment of a specified portion, pursuant to subparagraphs (A) and (B), of the full lump-sum payment if the unit remains vacant 120 days after the residents termination of the contract. This repayment shall not cause the contract in question to be deemed a refundable contract, as defined in paragraph (2) of subdivision (r) of Section 1771.
(A)When a continuing care contract is terminated by the death of a resident, at least 10 percent of the full lump-sum payment shall be paid to the residents estate within 120 days after the death of the resident.
(B)When a continuing care contract is terminated for a reason not described in subparagraph (A), at least 20 percent of the full lump-sum payment shall be paid to the resident within 120 days after the residents termination of the contract.
(2)Any payment balance that has not been paid to the resident within 180 days shall accrue interest at a rate calculated pursuant to paragraph (3). Any payment balance that has not been paid to the resident within 240 days shall accrue interest at a rate calculated pursuant to paragraph (4). Interest shall continue to accrue until the date the full lump-sum payment is paid to the resident. This paragraph shall apply only to continuing care contracts entered into on or after January 1, 2017.
(3)Any payments that are not paid to the resident within the 180-day period pursuant to paragraph (2) shall accrue simple interest, to be compounded annually, at a rate of 4 percent.
(4)Any payments that are not paid to the resident within the 240-day period pursuant to paragraph (2) shall accrue simple interest, to be compounded annually, at a rate of 6 percent.
(5)Until January 1, 2018, this subdivision shall not apply to a project that is in development prior to January 1, 2017, including current repayable agreements, current deposit agreements that contemplate repayable entrance fees, and other projects that have received department approval to market units pursuant to Section 1771.4, or have received issuer, lender, or bond insurer approval to obtain bond financing, or other governmental approval based on a repayable entrance fee option, if the initial contract for the project is entered into on or before January 1, 2018.
(g)(1)After the death of a resident, a lump-sum payment that is conditioned upon resale of a unit shall be subject to subdivision (f) and the payment and interest, if any, shall be payable to the residents estate.
(2)Until January 1, 2018, this subdivision shall not apply to a project that is in development prior to January 1, 2017, including current repayable agreements, current deposit agreements that contemplate repayable entrance fees, and other projects that have received department approval to market units pursuant to Section 1771.4, or have received issuer, lender, or bond insurer approval to obtain bond financing, or other governmental approval based on a repayable entrance fee option, if the initial contract for the project is entered into on or before January 1, 2018.
(h)Except as otherwise obligated by an equity interest contract, once the unit has been vacated and made available to the provider, the provider shall not make any further charges to the resident or his or her estate or charges against the lump-sum payment that is due to the resident for purposes of continued monthly payments to the provider or for maintenance or housekeeping on the vacated unit.
(i)Nothing in this section shall be construed to limit or alter any legal remedies otherwise available to a resident or his or her estate.
|
Date
|
Status
|
|---|---|
| Jun 15, 2016 | From committee: Do pass as amended and re-refer to Com. on AGING & L.T.C. (Ayes 6. Noes 1.) (June 14). |
| Jul 25, 2016 | Chaptered by Secretary of State. Chapter 112, Statutes of 2016. |
| Jul 25, 2016 | Approved by the Governor. |
| Jul 13, 2016 | Enrolled and presented to the Governor at 4 p.m. |
| Jun 30, 2016 | Assembly amendments concurred in. (Ayes 37. Noes 0.) Ordered to engrossing and enrolling. |
| Jun 30, 2016 | Assembly amendments concurred in. (Ayes 37. Noes 0. Page 4637.) Ordered to engrossing and enrolling. |
| Jun 27, 2016 | Read third time. Passed. (Ayes 50. Noes 23. Page 5517.) Ordered to the Senate. |
| Jun 27, 2016 | Read third time. Passed. Ordered to the Senate. |
| Jun 27, 2016 | In Senate. Concurrence in Assembly amendments pending. |
| Jun 23, 2016 | Read second time. Ordered to third reading. |
| Jun 22, 2016 | From committee: Do pass. (Ayes 4. Noes 2.) (June 21). |
| Jun 16, 2016 | Read second time and amended. Re-referred to Com. on AGING & L.T.C. |
| Feb 3, 2016 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
| Jun 8, 2016 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on HUM. S. |
| May 12, 2016 | Referred to Coms. on HUM. S. and AGING & L.T.C. |
| Apr 18, 2016 | Read third time. Passed. (Ayes 34. Noes 0.) Ordered to the Assembly. |
| Apr 18, 2016 | Read third time. Passed. (Ayes 34. Noes 0. Page 3576.) Ordered to the Assembly. |
| Apr 18, 2016 | In Assembly. Read first time. Held at Desk. |
| Apr 14, 2016 | Read second time and amended. Ordered to third reading. |
| Apr 13, 2016 | From committee: Do pass as amended. (Ayes 3. Noes 0.) (April 12). |
| Apr 13, 2016 | From committee: Do pass as amended. (Ayes 3. Noes 0. Page 3518.) (April 12). |
| Mar 31, 2016 | Set for hearing April 12. |
| Feb 18, 2016 | Referred to Com. on HUMAN S. |
| Feb 4, 2016 | From printer. May be acted upon on or after March 5. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Jun 30, 2016 | Unfinished Business SB939 Monning Concurrence | Senate Floor |
Passed |
|
| Jun 27, 2016 | SB 939 Monning Senate Third Reading By BROWN | Assembly Floor |
Passed |
|
| Jun 21, 2016 | Do pass. | Assembly Standing Committee on Aging and Long-Term Care |
Passed |
|
| Jun 14, 2016 | Do pass as amended and be re-referred to the Committee on [Aging and Long-Term Care] | Assembly Standing Committee on Human Services |
Passed |
|
| Apr 18, 2016 | Senate 3rd Reading SB939 Monning | Senate Floor |
Passed |
|
| Apr 12, 2016 | Do pass as amended | Senate Standing Committee on Human Services |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| AARP | ** Support | Jun 30, 2016 |
| American Seniors Housing Association | ** Against | Jun 21, 2016 |
| California Advocates for Nursing Home Reform | ** Support | Jun 30, 2016 |
| California Alliance For Retired Americans | ** Support | Jun 21, 2016 |
| California Assisted Living Association | * Against | Jun 21, 2016 |
| California Assisted Living Association | * Against Unless Amend | Jun 21, 2016 |
| California Commission on Aging | ** Support | Jun 30, 2016 |
| California Continuing Care Residence Association | * Support | Jun 21, 2016 |
| California Continuing Care Residents Associations | ** Support | Jun 30, 2016 |
| California Long Term-Care Ombudsman Association | * Support | Jun 21, 2016 |
| Consumer Attorneys Of California | ** Support | Jun 21, 2016 |
| Consumer Federation Of California | ** Support | Jun 30, 2016 |
| Erickson Living | ** Against | Jun 30, 2016 |
| Erickson Living - Oppose Unless Amended | ** Against | Jun 21, 2016 |
| Erickson Living Management, LLC | * Against | Jun 21, 2016 |
| General Public | * Support | Jun 21, 2016 |
| Hanson Bridgett | * Against Unless Amend | Jun 21, 2016 |
| Hanson Bridgett | * Against | Jun 21, 2016 |
| National Association of Social Workers | * Support | Jun 21, 2016 |
| National Association Of Social Workers, California Chapter | ** Support | Jun 21, 2016 |
| National Association of Social Workers-California Chapter | ** Support | Jun 21, 2016 |
| Office of the State Long-Term Care Ombudsman | ** Support | Jun 21, 2016 |
| San Mateo Ombudsman Program | * Support | Jun 21, 2016 |
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB |
UNFINISHED BUSINESS
Bill No: SB 939
:
SENATE HUMAN SERVICES COMMITTEE: 3-0, 4/12/16
AYES: McGuire, Hancock, Liu
NO VOTE RECORDED: Berryhill, Nguyen
SENATE FLOOR: 34-0, 4/18/16
AYES: Allen, Anderson, Bates, Beall, Block, Cannella, De León, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Nguyen, Pan, Pavley, Roth, Stone, Vidak, Wieckowski, Wolk
NO VOTE RECORDED: Berryhill, Fuller, Huff, Morrell, Nielsen, Runner
ASSEMBLY FLOOR: 50-23, 6/27/16 - See last page for vote
SOURCE: California Continuing Care Residents Association
DIGEST: This bill requires that continuing care contracts that contain lump sum contract termination payments conditioned on resale of the unit must meet a series of requirements and timelines, must pay interest after a specified period of vacancy, and must meet other requirements.
Assembly Amendments:
- Delete requirement that a continuing care retirement facility pay the full lump-sum payment that is conditioned upon resale of a unit to a resident, including any interest accrued, within 14 days after resale of a unit.
- Delete the requirement that a continuing care retirement facility, for contracts signed after January 1, 2017, pay a resident or his or her estate a specified portion of the full lump sum owed, notwithstanding a provider’s documented good-faith effort to resell the unit, if the unit remains vacant 120 days after the resident’s termination.
- Define a repayable contract as a continuing care contract that includes a promise to repay all or a portion of an entrance fee that is conditioned upon re-occupancy or resale of the unit previously occupied by the resident.
- Require any amount owed that is not paid to a resident or the resident’s estate within specified period of time after termination of a repayable contract to accrue simple interest, as defined, until the full amount owed is paid.
Existing law:
- Provides for the licensure and regulation of Continuing Care Retirement Communities (CCRCs) by the California Department of Social Services (CDSS) to enact minimum requirements to protect the wellbeing and financial security of residents of CCRCs. (HSC 1770 et seq.)
- Establishes the Residential Care Facilities for the Elderly Act (RCFE), which requires CDSS to license and regulate RCFEs as a separate category within the existing community care licensing structure of CDSS. (HSC 1569 et seq.)
- Requires a CCRC provider to hold a certificate of authority from CDSS permitting the provider to contract for the provision of continuing care, including medical care, in which a resident over the age of 60 has paid in advance for more than one year for that care. (HSC 1771.2)
- Provides that the components of care provided by the facility must be separately licensed as otherwise required by state law, including Residential Care Facilities for the Elderly and Skilled Nursing care. (HSC 1771.5)
- Requires a CCRC to pay refunds owed to a resident within 14 calendar days after a resident makes possession of the living unit available to the provider or 90 calendar days after death or receipt of notice of termination, whichever is later. (HSC 1788.4(a))
- Prohibits characterizing as a refund, a lump sum payment following termination of a continuing care contract that is conditioned upon resale of the unit, and requires the payment to be made within 90 days following resale of the unit. (HSC 1788.4(e))
This bill:
- Clarifies the definition of "repayable contract" by explicitly defining it to mean a continuing care contract that includes a promise to repay all or a portion of an entrance fee that is conditioned upon re-occupancy or resale of the unit previously occupied by the resident. Further, specifies within this definition that a provider may repay all or a portion of an entrance fee before the resale of the unit, as specified.
- Prohibits a provider from charging a resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless that fee is part of an equity interest contract. Further requires providers to supply statements that describe this prohibition, as specified.
- Requires a continuing care contract to contain the policy or terms for repaying a lump sum of any portion of the entrance fee, alongside other information, as specified. Further, requires, for all contracts with a repayment of all or a portion of the entrance fee conditioned upon resale of the unit, to do the following:
- State that the provider shall make a good-faith effort to reoccupy or resell the unit; and
- State the average and longest amount of time that a provider has taken to resell a unit within the last five calendar years.
- Requires, by July 1, 2017, a provider to supply notice to all current residents who have contracts with a repayment of all or a portion of the entrance fee conditioned upon resale of the unit with clarification of the resident's existing contract that specifies that the provider shall make a good-faith effort to reoccupy or resell a unit, as specified.
- Requires any balance of the lump sum due a resident or resident's estate per a repayable contract entered into on or after January 1, 2017, to accrue interest as follows:
- Any amount owed a resident or resident's estate that is not paid within 180 days after the termination of the repayable contract shall accrue simple interest at a rate of 4% of the amount owed;
- Any amount owed a resident or resident's estate that is not paid within 240 days after the termination of the repayable contract shall accrue simple interest at a rate of 6% of the amount owed; and
- Any amount owed a resident or resident's estate that is not paid within one year after the initial 240-day period after the termination of the repayable contract shall accrue interest at a rate of 6%, compounded annually.
- Requires any interest accrued to be paid to the resident or the resident's estate within 14 calendar days after resale of the unit, as part of the currently-required repayment of the lump sum within that same time period.
- Provides for a one-year delay in application of lump-sum interest requirements to projects in development prior to January 1, 2017, as specified.
- Prohibits a provider from making any further charges to a resident or his/her estate or charges against the lump sum owed to the resident or the resident's estate, as specified, except as otherwise obligated by an equity interest contract.
- States that nothing in this bill shall be construed to limit or alter any legal remedies otherwise available to a resident or his/her estate.
Background
Continuing Care Retirement Communities (CCRCs). CCRCs offer people 60 years old and up a long-term continuing care option that pairs their current health and resources with an individualized contract that provides community life and a range of levels-of-care. Typically this is offered in a campus-like community setting, and usually for a resident’s lifetime, and always for at least one year. Most CCRCs require substantial entrance fees, along with monthly fees. Entrance fees can range from $50,000 to more than $2 million.
A CCRC is defined in statute (HSC 1771) as a facility where services promised in a “continuing care contract” are provided. A continuing care contract includes a continuing care promise made, in exchange for an entrance fee, the payment of periodic charges, or both. A continuing care contract may consist of one agreement for continuous care, or a series of agreements describing care, conditions for that care, and payment of it, if and when it becomes necessary.
Continuing care contracts vary. Each potential consumer has different health and long-term care risks and needs, financial risks and needs, and other factors that require contract flexibility, and each CCRC offers differing provisions on costs, payment methods, services provided, and other elements. Continuing care contracts typically require an individual to pay an entrance fee and monthly fees. Entrance fees can vary significantly from one community to the next, and monthly fees vary depending on the level of services included in the contract and other factors associated with location, exclusivity, business plan variations, and more.
Continuing care contracts may be refundable or non-refundable. Refundable contracts refund a portion of the entrance fees, sometimes on a scale that decreases over time. These types of contracts require a CCRC to maintain a reserve for refunds (in addition to other reserves required for the operation of a CCRC), and generally, this is not the contract type which SB 939 is focused upon. Many CCRC providers choose instead to offer a repayment of a designated portion of the entrance fee - a “lump-sum payment” - that is conditioned upon resale of the unit. A reserve is not required in this case, as it is assumed that the resale of the unit will result in the new resident’s entrance fee covering the cost of repaying a portion of the former resident’s entrance fee. In California, there are currently no requirements that resale and/or repayment of entrance fees take place within a certain period of time.
Prior Legislation
SB 475 (Monning, 2015) was similar to this bill but contained additional provisions, including imposing early repayment of a portion of the lump-sum payment and requiring complaint investigation duties of DSS. SB 475 was vetoed by Governor.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
California Continuing Care Residents Associations (source)
AARP
California Advocates for Nursing Home Reform
California Commission on Aging
Consumer Federation of California
National association of Social Workers
Office of the State Long-Term Care Ombudsmam
249 individuals
OPPOSITION: (Verified 6/27/16)
Erickson Living
ARGUMENTS IN SUPPORT: According to the author, there have been documented cases where CCRC residents, and/or their heirs, have experienced significant delays in receiving their lump-sum payments from entrance fees that are conditioned upon resale of their CCRC unit. The author states that this popular contract model conditions repayment -- which is typically 70 to 90 percent of the resident’s entrance fee -- upon resale of the unit only works when the unit is resold quickly. According to the author, if the CCRC provider has a disincentive to resell in a timely manner or the unit is unable to sell, then the resident or their estate is forced to wait with no definitive timeline for when repayment must be made.
The author additionally states that these conditional refunds can create an incentive for CCRC providers to fill empty units prior to filling units that have repayment requirements. In some cases, a unit might go unsold until a neighboring unit is unoccupied because the provider wants to make renovations. The problem of delayed repayment can prevent an elder resident from moving or tie up an estate. Ironically, one reason why this contract model is popular is it provides the resident assurance that this lump-sum payment will be available to them should something happen or they pass away, the author states. In addition, some contract provisions allow the provider to continue to charge a monthly maintenance fee that is deducted from the resident’s entrance fee months after the CCRC is vacated.
ARGUMENTS IN OPPOSITION: Erickson Living (a CCRC provider that currently does not operate in the state of California) opposes SB 939 unless it is amended to give CCRCs greater flexibility in providing seniors a retirement housing option that better suits their needs and ensures timely repayment of a portion of the entrance fee to estates. According to Erickson Living, the mechanics of SB 939 require that repayments to estates take precedence over ensuring the financial stability for more than 2100 communities and tens-of-thousands of senior living in CCRCs. Per the opposition, this requirement has more potential to harm frail, elderly consumers in California than it does to help estates expedite asset recovery and that it will slow down investment in CCRCs at a time when there is clear need for more investment in senior housing and care options.
ASSEMBLY FLOOR: 50-23, 6/27/16
AYES: Alejo, Arambula, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Roger Hernández, Holden, Irwin, Jones-Sawyer, Levine, Linder, Lopez, Low, McCarty, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Mark Stone, Ting, Weber, Wilk, Williams, Wood
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Hadley, Harper, Jones, Kim, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Steinorth, Wagner
NO VOTE RECORDED: Atkins, Medina, Patterson, Santiago, Thurmond, Waldron, Rendon
6/29/16 15:56:18
SENATE THIRD READING
STR Bill Id:SB 939
Author:()
As Amended Ver:June 16, 2016
Majority vote
SENATE VOTE: 34-0
Committee | Votes | Ayes | Noes |
Human Services | 6-1 | Bonilla, Grove, Arambula, Lopez, Mark Stone, Thurmond | Maienschein |
Aging | 4-2 | Brown, Gray, Levine, Lopez | Hadley, Dahle |
SUMMARY: Imposes additional requirements on certain continuing care contracts and continuing care retirement community providers.
Specifically, this bill:
- Clarifies the definition of "repayable contract" by explicitly defining it to mean 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. Further, specifies within this definition that a provider may repay all or a portion of an entrance fee before the resale of the unit, as specified.
- Prohibits a provider from charging a resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless that fee is part of an equity interest contract. Further requires providers to supply statements that describe this prohibition, as specified.
- Requires a continuing care contract to contain the policy or terms for repaying a lump sum of any portion of the entrance fee, alongside other information, as specified. Further, requires, for all contracts with a repayment of all or a portion of the entrance fee conditioned upon resale of the unit, to do the following:
- State that the provider shall make a good-faith effort to reoccupy or resell the unit; and
- State the average and longest amount of time that a provider has taken to resell a unit within the last five calendar years.
- Requires, by July 1, 2017, a provider to supply notice to all current residents who have contracts with a repayment of all or a portion of the entrance fee conditioned upon resale of the unit with clarification of the resident's existing contract that specifies that the provider shall make a good-faith effort to reoccupy or resell a unit, as specified.
- Requires any balance of the lump sum due a resident or resident's estate per a repayable contract entered into on or after January 1, 2017, to accrue interest as follows:
- Any amount owed a resident or resident's estate that is not paid within 180 days after the termination of the repayable contract shall accrue simple interest at a rate of 4% of the amount owed;
- Any amount owed a resident or resident's estate that is not paid within 240 days after the termination of the repayable contract shall accrue simple interest at a rate of 6% of the amount owed; and
- Any amount owed a resident or resident's estate that is not paid within one year after the initial 240-day period after the termination of the repayable contract shall accrue interest at a rate of 6%, compounded annually.
- Requires any interest accrued to be paid to the resident or the resident's estate within 14 calendar days after resale of the unit, as part of the currently-required repayment of the lump sum within that same time period.
- Provides for a one-year delay in application of lump-sum interest requirements to projects in development prior to January 1, 2017, as specified.
- Prohibits a provider from making any further charges to a resident or his/her estate or charges against the lump sum owed to the resident or the resident's estate, as specified, except as otherwise obligated by an equity interest contract.
- States that nothing in this bill shall be construed to limit or alter any legal remedies otherwise available to a resident or his/her estate.
EXISTING LAW:
- Establishes the California Residential Care Facilities for the Elderly Act to provide for the licensure and regulation of Residential Care Facilities for the Elderly (RCFEs) as a separate category within the existing licensing structure of the Department of Social Services (DSS). (Health and Safety Code Section (HSC) 1569 et seq.)
- Provides for the licensure and regulation of Skilled Nursing Facilities (SNFs) by the Department of Public Health. (HSC 1250 et seq.)
- Defines a "continuing care contract" to mean a contract that includes a promise by a provider to provide one or more elements of care to an elderly resident, as specified, in exchange for an entrance fee and/or the payment of periodic charges. (HSC 1771(c)(8) and (9))
- Defines a "continuing care retirement community" (CCRC) to mean a facility located in the state where services promised in a continuing care contract are provided. Further allows that, when services are provided in residents' own homes, the homes into which the provider takes those services are to be considered a part of the CCRC. (HSC 1771(c)(10))
- Provides for the certification and regulation of CCRCs by DSS. (HSC 1770 et seq.)
- Requires an applicant for a certificate of authority to operate a CCRC to obtain appropriate licenses for the entire CCRC as otherwise required by law, including RCFE and/or SNF licenses. (HSC 1771.5)
- Requires a continuing care contract to contain numerous specified elements including, but not limited to, the duration of the contract, the list of services that will be made available to the resident as required to provide the appropriate level of care, an itemization of the services included in the monthly fee and services available for an extra charge, and others. Further requires additional information and disclosures to be attached to the continuing care contract. (HSC 1788(a), (d) through (h))
- Establishes requirements regarding the cancellation of a continuing care contract. (HSC 1788.2)
- Requires a lump-sum payment that is conditioned upon resale of a unit to be paid to the resident within 14 calendar days after resale of the unit. Futher requires that this payment not be considered, characterized, or advertised as a refund. (HSC 1788.4(e))
FISCAL EFFECT: None.
COMMENTS:
Continuing Care Retirement Communities: One long-term care option for older Californians is a CCRC, which offers individuals ages 60 and older housing and long-term care services, typically for the lifetime of the resident. Residents sign a long-term continuing care contract, which is an agreement between a provider and a resident promising that a range of services will be provided to the resident at the CCRC (sometimes at an additional cost, depending on the type of contract). These services include housing, residential services, and nursing care.
CCRCs can offer a variety of continuing care contracts with differing provisions on costs, payment methods, services provided, and other elements. Typically, these contracts require a prospective resident to pay an entrance fee and monthly fees. Entrance fees can range widely, often from $100,000 to $1 million, and monthly fees vary depending in part on the level of services included in the contract. Continuing care contracts are sometimes referred to by three "types": Type A contracts (also known as life care contracts), are the most expensive and are all-inclusive agreements wherein all housing, services and healthcare are covered by the entrance fee and monthly fees; Type B contracts typically offer discounted healthcare services for limited amounts of time, after which services can be purchased; and Type C contracts can offer the lowest entrance and monthly fees, but may require residents to be responsible for paying for healthcare services at market rates.
Continuing care contracts may be refundable or non-refundable. Refundable contracts refund a portion of the entrance fees, sometimes on a scale that decreases over time the percentage of the entrance fee that is refunded. These types of contracts require a CCRC to maintain a reserve for refunds (in addition to other reserves required for the operation of a CCRC). However, many CCRC providers choose instead to offer a repayment of a designated portion of the entrance fee – a "lump-sum payment" – that is conditioned upon resale of the unit; these contracts are sometimes referred to as "repayable" versus refundable. A reserve is not required in this case, as it is assumed that the resale of the unit will result in the new resident's entrance fee covering the cost of repaying a portion of the former resident's entrance fee. In California, there are currently no requirements that resale and/or repayment of entrance fees take place within a certain period of time.
As of June 2015, there were nearly 100 CCRCs in California, with the capacity to serve close to 30,000 residents. The Community Care Licensing Division of DSS oversees CCRCs by: 1) ensuring that licensing laws and regulations are followed (CCRCs are required to obtain a certificate of authority and an RCFE license; they must also obtain a SNF license through the Department of Public Health (DPH) if offering skilled nursing services), and 2) reviewing and approving CCRC applications and monitoring CCRCs' financial condition and their ability to uphold their contractual obligations to residents.
Need for this bill: Proponents of this bill argue that it is necessary because instances exist where years pass before individuals or their estates receive their repayment, and there is nothing in statute to prohibit this from occurring. According to the author:
Under current law, Continuing Care Retirement Community (CCRC) contracts that base the repayment of the resident's entrance fee, also referred to as the lump-sum payment owed, upon the resale of the unit are unfair arrangements for consumers and in some cases there is little incentive to resell those units in a timely manner. In these cases the CCRC provider is able to take advantage of this type of contract, which can lead to seniors or the family members of the deceased resident experiencing significant delays in the repayment of lump-sum payment owed.
These lump-sum payments can range from $100,000 to sometimes a million dollars, and it is often a resident's entire "nest egg" they want to pass on. However, they did not intend to experience long delays or passing on years of waiting to their family members on the lump-sum payment owed. For example, a CCRC in Pacific Grove had not paid $530,600 to the estate of a resident who died more than three years ago because the repayment was conditioned upon resale of the unit. [This bill] levels the playing field for the CCRC resident in a manner that will result in more timely repayments and adds an incentive for a CCRC to resell a unit in the form of interest on the unpaid remaining balance. The resident safeguards in the bill balance the need for steadfast repayment while ensuring the CCRC can remain fiscally solvent so the current residents are not adversely impacted.
The sponsors of this bill, the California Continuing Care Residents Association (CALCRA), add that, "[This bill] provides a much needed incentive for CCRC providers to repay entrance fees within a reasonable time and ensures that CCRCs make a good faith effort to meet the terms of the contract and re-sell vacant units…[Imposing] interest increases the likelihood that the CCRC, who has entered into a repayment contract, has some obligation and incentive to work in good faith to get a resident's unit resold and to refund the senior or their estate within a reasonable time after their termination or death. Under the current law, there are no safeguards to protect against CCRC providers who may take advantage of the 'conditioned upon resale' contract and simply not re-sell a unit in order to delay their obligation to repay an entrance fee."
Opposition: Writing in opposition to this bill, Erickson Living (a CCRC provider that currently does not operate in the state of California) argues that the requirement to pay accrued interest "will be paid for by the senior consumers living in the CCRCs, raising the price on them and jeopardizing the economics of the CCRC, particularly, challenging in middle-income geographies…The cost of these new payments to estates and trusts would be born solely by the existing and future residents of CCRCs, who would derive no benefit whatsoever from this mandate."
Staff comments: Last year, a similar but more expansive version of this bill, SB 475 (Monning) of 2015, was vetoed. The Governor's veto message stated that, "While it is important that residents who buy into these communities be treated fairly, this bill would change the terms of contracts entered into by willing participants. It would also insert the department into the resolution of contract disputes." Provisions contained in SB 475 relating to early repayment of a portion of lump-sum payments and DSS investigation of complaints are not included in the current version of this bill.
The sponsors state that, during the process of developing SB 475 last year, a variety of stakeholders were consulted and provisions of the bill were negotiated; this included determining the proper timeframe after which interest would be charged, and the amount of interest to be charged (originally, interest was set at the United States Prime Lending Rate, but the sponsors report that some CCRC providers with whom they worked on the bill preferred a set, predictable rate).
PRIOR LEGISLATION:
SB 475 (Monning), of 2015, was similar to this bill but contained additional provisions, including imposing early repayment of a portion of the lump-sum payment and requiring complaint investigation duties of DSS.
Analysis Prepared by: Daphne Hunt / HUM. S. / (916) 319-2089 FN: 0003526
Date of Hearing: June 21, 2016
ASSEMBLY COMMITTEE ON AGING AND LONG-TERM CARE
Cheryl Brown, Chair
SBPCA Bill Id:SB 939
Author:(Monning) – As Amended Ver:June 16, 2016
SENATE VOTE: 34-0
SUBJECT: Continuing care contracts: cancellation: payments.
SUMMARY: This bill requires continuing care contracts which contain repayable contracts conditioned on resale of the unit to meet a series of requirements and timelines, and to pay interest after a specified period a unit remains vacant. Specifically, this bill:
- Clarifies the definition of “repayable contract” by explicitly defining it to mean a continuing care contract that includes a promise to repay all or a portion of an entrance fee that is conditioned upon re-occupancy or resale of the unit previously occupied by the resident.
- Allows a provider to repay all or a portion of an entrance fee before the resale of the unit.
- Prohibits a provider from charging a resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless that fee is part of an equity interest contract.
- Requires any balance of the lump sum due a resident per a repayable contract entered into on or after January 1, 2017, to accrue interest as follows:
a) Any amount owed a resident that is not paid within 180 days after the resident’s termination of the repayable contract shall accrue simple interest at a rate of 4% of the amount owed.
b) Any amount owed a resident that is not paid within 240 days after the resident’s termination of the repayable contract shall accrue simple interest at a rate of 6% of the amount owed.
c) Any amount owed a resident that is not paid within one year after the initial 240-day period after the resident’s termination of the repayable contract shall accrue compound interest annually at a rate of 6%.
- Requires a continuing care contract to contain the policy or terms for repaying a lump sum of any portion of the entrance fee and requires, for all contracts with a repayment of all or a portion of the entrance fee conditioned upon resale of the unit, to do the following:
a) States that the provider shall make a good-faith effort to reoccupy or resell the unit; and,
b) State the average and longest amount of time that a provider has taken to resell a unit within the last five calendar years.
- Provides for a one-year delay in application of the requirement that, after the death of a resident, the lump sum owed, including any interest accrued, be made payable to the resident’s estate projects in development prior to January 1, 2017.
- Prohibits a provider from making any further charges to a resident or his/her estate or charges against the lump sum owed to the resident, as specified, except as otherwise obligated by an equity interest contract.
- States that nothing in this bill shall be construed to limit or alter any legal remedies otherwise available to a resident or his/her estate.
EXISTING LAW:
- Establishes the California Residential Care Facilities for the Elderly Act to provide for the licensure and regulation of Residential Care Facilities for the Elderly (RCFEs) as a separate category within the existing licensing structure of the Department of Social Services (DSS). (Health and Safety Code (HSC) 1569 et seq.)
- Provides for the licensure and regulation of Skilled Nursing Facilities (SNFs) by the Department of Public Health. (HSC 1250 et seq.)
- Defines a “continuing care contract” to mean a contract that includes a promise by a provider to provide one or more elements of care to an elderly resident, as specified, in exchange for an entrance fee and/or the payment of periodic charges. (HSC 1771(c)(8) and (9))
- Defines a “continuing care retirement community” (CCRC) to mean a facility located in the state where services promised in a continuing care contract are provided. Further allows that, when services are provided in residents’ own homes, the homes into which the provider takes those services are to be considered a part of the CCRC. (HSC 1771(c)(10))
- Provides for the certification and regulation of CCRCs by DSS. (HSC 1770 et seq.)
- Requires an applicant for a certificate of authority to operate a CCRC to obtain appropriate licenses for the entire CCRC as otherwise required by law, including RCFE and/or SNF licenses. (HSC 1771.5)
- Requires a continuing care contract to contain numerous specified elements including, but not limited to, the duration of the contract, the list of services that will be made available to the resident as required to provide the appropriate level of care, an itemization of the services included in the monthly fee and services available for an extra charge, and others. Further requires additional information and disclosures to be attached to the continuing care contract. (HSC 1788(a), (d) through (h))
- Establishes requirements regarding the cancellation of a continuing care contract. (HSC 1788.2)
- Requires a lump-sum payment that is conditioned upon resale of a unit to be paid to the resident within 14 calendar days after resale of the unit. Further requires that this payment not be considered, characterized, or advertised as a refund. (HSC 1788.4(e))
FISCAL EFFECT: None.
COMMENTS:
According to the author : “Under current law, Continuing Care Retirement Community (CCRC) contracts that base the repayment of the resident’s entrance fee, also referred to as the lump-sum payment owed, upon the resale of the unit are unfair arrangements for consumers and in some cases there is little incentive to resell those units in a timely manner. In these cases the CCRC provider is able to take advantage of this type of contract, which can lead to seniors or the family members of the deceased resident experiencing significant delays in the repayment of lump-sum payment owed.
“These lump-sum payments can range from $100,000 to sometimes a million dollars, and it is often a resident’s entire “nest egg” they want to pass on. However, they did not intend to experience long delays or passing on years of waiting to their family members on the lump-sum payment owed.”
Continuing Care Retirement Communities: CCRCs offer people 60 years of age and up a long-term continuing care option that pairs their current health and resources with an individualized contract that provides community life and a range of levels-of-care. Typically this is offered in a campus-like community setting, and usually for a resident’s lifetime. Continuing care contracts typically require an individual to pay an entrance fee and monthly fees. Entrance fees can vary significantly from one community to the next and can range from $50,000 to more than $2 million. Monthly fees vary depending on the level of services included in the contract and other factors associated with location, exclusivity, and business plan variations.
Continuing care contracts are sometimes referred to by three “types”: Type A contracts (also known as life care contracts), are the most expensive and are all-inclusive agreements wherein all housing, services and healthcare are covered by the entrance fee and monthly fees; Type B contracts typically offer discounted healthcare services for limited amounts of time, after which services can be purchased; and Type C contracts can offer the lowest entrance and monthly fees, but may require residents to be responsible for paying for healthcare services at market rates.
Continuing care contracts may be refundable or non-refundable. Refundable contracts refund a portion of the entrance fees, sometimes on a scale that decreases over time. These types of contracts require a CCRC to maintain a reserve for refunds (in addition to other reserves required for the operation of a CCRC).
Many CCRC providers choose instead to offer a repayment of a designated portion of the entrance fee - a “lump-sum payment” - that is conditioned upon resale of the unit. A reserve is not required in this case, as it is assumed that the resale of the unit will result in the new resident’s entrance fee covering the cost of repaying a portion of the former resident’s entrance fee. In California, there are currently no requirements that resale and/or repayment of entrance fees take place within a certain period of time. This is the contract type which SB 939 is focused on.
As of June 2015, there were nearly 100 CCRCs in California, with the capacity to serve close to 30,000 residents. The Community Care Licensing Division of DSS oversees CCRCs by:
a) ensuring that licensing laws and regulations are followed (CCRCs are required to obtain a certificate of authority and an RCFE license; they must also obtain a SNF license through the Department of Public Health (DPH) if offering skilled nursing services), and b) reviewing and approving CCRC applications and monitoring CCRCs’ financial condition and their ability to uphold their contractual obligations to residents.
Support: The sponsors of this bill, the California Continuing Care Residents Association (CALCRA), add that, “The progressive interest accrual increases the likelihood that the CCRC provider, who has entered into a repayment contract, has some incentive to work in good faith to get a resident’s unit resold and to refund the senior or their estate within a reasonable time after their termination or death. Under the current law, there are no safeguards to protect against CCRC providers who may take advantage of the “conditioned up resale” contract and simply not re-sell a unit in order to delay their obligation to repay an entrance fee. For example, in Pacific Grove’s Forest Manor, one family waited more than three years to receive their loved one’s entrance fee refund of more than $530,000. In Carmichael, at Eskaton Village, one family member has fought to receive his deceased father’s entrance fee refund since May of 2014. In this case, the father’s entrance fee refund has been deducted by nearly $20,000 as Eskaton has continued to charge the estate monthly maintenance fees of over $4,000 until the unit, which is vacant, is resold.”
Opposition: Erickson Living opposes the bill unless it is amended to give CCRCs greater flexibility in providing seniors a retirement housing that better suits their needs and ensures timely repayment of a portion of the entrance fee to estates.
According to American Seniors Housing Association, “This change will be extremely problematic because existing CCRCs’ financial models have not been designed to support the repayment of entrance fees and accrual of interest before they are due and before funding is available to make the payments. If sales proceeds are not available when the early repayment schedule defined in this bill is triggered, funds will have to come from the community’s operating funds which are generated by the monthly rents of existing residents. The intended use of these funds is to maintain the community and services for the benefit of the current residents and not for the repayment of entrance fees. This disruption to the financial assumptions underlying California CCRC operations may jeopardize their overall stability. Importantly, adding a statutory requirement to make an early refund before resale may also inadvertently create a new and excessive reserve requirement. Additionally, the 4% and 6% interest rates imposed on unpaid balances are well above most investment yields in today’s market.”
Previous Legislation: SB 475 (Monning) of 2015 was substantially similar to this bill and would have required prospective and future CCRC contracts which condition lump sum contract termination payments on resale of the unit to meet a series of requirements and timelines, to pay interest after a specified period of vacancy, and to meet other requirements. SB 475 was vetoed by the Governor. The Governor’s veto message stated that, “While it is important that residents who buy into these communities be treated fairly, this bill would change the terms of contracts entered into by willing participants. It would also insert the department into the resolution of contract disputes.”
REGISTERED SUPPORT / OPPOSITION:
Support
California Continuing Care Residents Association - Sponsor
AARP
California Advocates for Nursing Home Reform (CANHR)
California Alliance for Retired Americans (CARA)
California Commission on Aging
California Long-Term Care Ombudsman Association (CLTCOA)
Consumer Attorneys of California
Consumer Federation of California (CFC)
National Association of Social Workers-California Chapter (NASW-CA)
Office of the State Long-Term Care Ombudsman
Opposition
American Seniors Housing Association
Erickson Living – Oppose Unless Amended
Analysis Prepared by: Barry Brewer / AGING & L.T.C. / (916) 319-3990
Date of Hearing: June 14, 2016
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Susan Bonilla, Chair
SBPCA Bill Id:SB 939
Author:(Monning) – As Amended Ver:June 8, 2016
SENATE VOTE: 34-0
SUBJECT: Continuing care contracts: cancellation: payments
SUMMARY: Imposes additional requirements on certain continuing care contracts and continuing care retirement community providers.
Specifically, this bill:
- Clarifies the definition of “repayable contract” by explicitly defining it to mean 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. Further, specifies within this definition that a provider may repay all or a portion of an entrance fee before the resale of the unit, as specified.
- Prohibits a provider from charging a resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless that fee is part of an equity interest contract. Further requires providers to supply statements that describe this prohibition, as specified.
- Requires a continuing care contract to contain the policy or terms for repaying a lump sum of any portion of the entrance fee, alongside other information, as specified. Further, requires, for all contracts with a repayment of all or a portion of the entrance fee conditioned upon resale of the unit, to do the following:
- State that the provider shall make a good-faith effort to reoccupy or resell the unit; and
- State the average and longest amount of time that a provider has taken to resell a unit within the last five calendar years.
- Requires, by July 1, 2017, a provider to supply notice to all current residents who have contracts with a repayment of all or a portion of the entrance fee conditioned upon resale of the unit with clarification of the resident’s existing contract that specifies that the provider shall make a good-faith effort to reoccupy or resell a unit, as specified.
- Requires any balance of the lump sum due a resident per a repayable contract entered into on or after January 1, 2017, to accrue interest as follows:
- Any amount owed a resident that is not paid within 180 days after the resident’s termination of the repayable contract shall accrue simple interest at a rate of 4% of the amount owed;
- Any amount owed a resident that is not paid within 240 days after the resident’s termination of the repayable contract shall accrue simple interest at a rate of 6% of the amount owed; and
- Any amount owed a resident that is not paid within one year after the initial 240-day period after the resident’s termination of the repayable contract shall accrue compound interest annually at a rate of 6%.
- Any amount owed a resident that is not paid within 180 days after the resident’s termination of the repayable contract shall accrue simple interest at a rate of 4% of the amount owed;
- Requires any interest accrued to be paid to the resident within 14 calendar days after resale of the unit, as part of the currently-required repayment of the lump sum within that same time period.
- Requires that, after the death of a resident, the lump sum owed, including any interest accrued, be made payable to the resident’s estate, and further provides for a one-year delay in application of this requirement to projects in development prior to January 1, 2017, as specified.
- Prohibits a provider from making any further charges to a resident or his/her estate or charges against the lump sum owed to the resident, as specified, except as otherwise obligated by an equity interest contract.
- States that nothing in this bill shall be construed to limit or alter any legal remedies otherwise available to a resident or his/her estate.
EXISTING LAW:
- Establishes the California Residential Care Facilities for the Elderly Act to provide for the licensure and regulation of Residential Care Facilities for the Elderly (RCFEs) as a separate category within the existing licensing structure of the Department of Social Services (DSS). (HSC 1569 et seq.)
- Provides for the licensure and regulation of Skilled Nursing Facilities (SNFs) by the Department of Public Health. (HSC 1250 et seq.)
- Defines a “continuing care contract” to mean a contract that includes a promise by a provider to provide one or more elements of care to an elderly resident, as specified, in exchange for an entrance fee and/or the payment of periodic charges. (HSC 1771(c)(8) and (9))
- Defines a “continuing care retirement community” (CCRC) to mean a facility located in the state where services promised in a continuing care contract are provided. Further allows that, when services are provided in residents’ own homes, the homes into which the provider takes those services are to be considered a part of the CCRC. (HSC 1771(c)(10))
- Provides for the certification and regulation of CCRCs by DSS. (HSC 1770 et seq.)
- Requires an applicant for a certificate of authority to operate a CCRC to obtain appropriate licenses for the entire CCRC as otherwise required by law, including RCFE and/or SNF licenses. (HSC 1771.5)
- Requires a continuing care contract to contain numerous specified elements including, but not limited to, the duration of the contract, the list of services that will be made available to the resident as required to provide the appropriate level of care, an itemization of the services included in the monthly fee and services available for an extra charge, and others. Further requires additional information and disclosures to be attached to the continuing care contract. (HSC 1788(a), (d) through (h))
- Establishes requirements regarding the cancellation of a continuing care contract. (HSC 1788.2)
- Requires a lump-sum payment that is conditioned upon resale of a unit to be paid to the resident within 14 calendar days after resale of the unit. Futher requires that this payment not be considered, characterized, or advertised as a refund. (HSC 1788.4(e))
FISCAL EFFECT: None.
COMMENTS:
Continuing Care Retirement Communities: One long-term care option for older Californians is a CCRC, which offers individuals ages 60 and older housing and long-term care services, typically for the lifetime of the resident. Residents sign a long-term continuing care contract, which is an agreement between a provider and a resident promising that a range of services will be provided to the resident at the CCRC (sometimes at an additional cost, depending on the type of contract). These services include housing, residential services, and nursing care.
CCRCs can offer a variety of continuing care contracts with differing provisions on costs, payment methods, services provided, and other elements. Typically, these contracts require a prospective resident to pay an entrance fee and monthly fees. Entrance fees can range widely, often from $100,000 to $1 million, and monthly fees vary depending in part on the level of services included in the contract. Continuing care contracts are sometimes referred to by three “types”: Type A contracts (also known as life care contracts), are the most expensive and are all-inclusive agreements wherein all housing, services and healthcare are covered by the entrance fee and monthly fees; Type B contracts typically offer discounted healthcare services for limited amounts of time, after which services can be purchased; and Type C contracts can offer the lowest entrance and monthly fees, but may require residents to be responsible for paying for healthcare services at market rates.
Continuing care contracts may be refundable or non-refundable. Refundable contracts refund a portion of the entrance fees, sometimes on a scale that decreases over time the percentage of the entrance fee that is refunded. These types of contracts require a CCRC to maintain a reserve for refunds (in addition to other reserves required for the operation of a CCRC). However, many CCRC providers choose instead to offer a repayment of a designated portion of the entrance fee – a “lump-sum payment” – that is conditioned upon resale of the unit; these contracts are sometimes referred to as “repayable” versus refundable. A reserve is not required in this case, as it is assumed that the resale of the unit will result in the new resident’s entrance fee covering the cost of repaying a portion of the former resident’s entrance fee. In California, there are currently no requirements that resale and/or repayment of entrance fees take place within a certain period of time.
As of June 2015, there were nearly 100 CCRCs in California, with the capacity to serve close to 30,000 residents. The Community Care Licensing Division of DSS oversees CCRCs by: a) ensuring that licensing laws and regulations are followed (CCRCs are required to obtain a certificate of authority and an RCFE license; they must also obtain a SNF license through the Department of Public Health (DPH) if offering skilled nursing services), and b) reviewing and approving CCRC applications and monitoring CCRCs’ financial condition and their ability to uphold their contractual obligations to residents.
Need for this bill: Proponents of this bill argue that it is necessary because instances exist where years pass before individuals or their estates receive their repayment, and there is nothing in statute to prohibit this from occurring. According to the author:
“Under current law, Continuing Care Retirement Community (CCRC) contracts that base the repayment of the resident’s entrance fee, also referred to as the lump-sum payment owed, upon the resale of the unit are unfair arrangements for consumers and in some cases there is little incentive to resell those units in a timely manner. In these cases the CCRC provider is able to take advantage of this type of contract, which can lead to seniors or the family members of the deceased resident experiencing significant delays in the repayment of lump-sum payment owed.
These lump-sum payments can range from $100,000 to sometimes a million dollars, and it is often a resident’s entire “nest egg” they want to pass on. However, they did not intend to experience long delays or passing on years of waiting to their family members on the lump-sum payment owed. For example, a CCRC in Pacific Grove had not paid $530,600 to the estate of a resident who died more than 3 years ago because the repayment was conditioned upon resale of the unit. [This bill] levels the playing field for the CCRC resident in a manner that will result in more timely repayments and adds an incentive for a CCRC to resell a unit in the form of interest on the unpaid remaining balance. The resident safeguards in the bill balance the need for steadfast repayment while ensuring the CCRC can remain fiscally solvent so the current residents are not adversely impacted.”
The sponsors of this bill, the California Continuing Care Residents Association (CALCRA), add that, “[This bill] provides a much needed incentive for CCRC providers to repay entrance fees within a reasonable time and ensures that CCRCs make a good faith effort to meet the terms of the contract and re-sell vacant units…[Imposing] interest increases the likelihood that the CCRC, who has entered into a repayment contract, has some obligation and incentive to work in good faith to get a resident’s unit resold and to refund the senior or their estate within a reasonable time after their termination or death. Under the current law, there are no safeguards to protect against CCRC providers who may take advantage of the ‘conditioned upon resale’ contract and simply not re-sell a unit in order to delay their obligation to repay an entrance fee.”
Opposition: Writing in opposition to this bill, Erickson Living (a CCRC provider that currently does not operate in the state of California) argues that the requirement to pay accrued interest “will be paid for by the senior consumers living in the CCRCs, raising the price on them and jeopardizing the economics of the CCRC, particularly, challenging in middle-income geographies…The cost of these new payments to estates and trusts would be born solely by the existing and future residents of CCRCs, who would derive no benefit whatsoever from this mandate.”
Staff comments: Last year, a similar but more expansive version of this bill, SB 475 (Monning), was vetoed. The Governor’s veto message stated that, “While it is important that residents who buy into these communities be treated fairly, this bill would change the terms of contracts entered into by willing participants. It would also insert the department into the resolution of contract disputes.” Provisions contained in SB 475 relating to early repayment of a portion of lump-sum payments and DSS investigation of complaints are not included in the current version of this bill.
The sponsors state that, during the process of developing SB 475 last year, a variety of stakeholders were consulted and provisions of the bill were negotiated; this included determining the proper timeframe after which interest would be charged, and the amount of interest to be charged (originally, interest was set at the U.S. Prime Lending Rate, but the sponsors report that some CCRC providers with whom they worked on the bill preferred a set, predictable rate).
Recommended amendments: In order to make clear that lump-sum and interest payments are due not only to residents upon termination of a contract, but also to residents’ estates in cases where the resident passes away while living in the CCRC, and to make other clarifying technical changes, committee staff recommends the following amendments:
- Beginning on line 7 of page 27, committee staff recommends the following amendments:
7
(e) A lump-sum payment to a resident after termination of a
8
continuing care repayable contract, as defined in paragraph (3) of subdivision (r) of Section 1771, that is conditioned upon resale
9
of the unit shall not be considered to be a refund and may not be
10
characterized or advertised as a refund. The full lump sum owed,
11
including any interest accrued, shall be paid to the resident or the resident’s estate within
12
14 calendar days after resale of the unit.
- Beginning on line 30 of page 27, committee staff recommends the following amendments:
30
(f) (1) Any balance of the lump sum owed that has not been
31
paid to the resident or the resident’s estate within 180 days after the resident’s termination
32
of a repayable contract shall accrue interest at a rate calculated
33
pursuant to paragraph (3). (2). Any balance of the lump sum owed
34
that has not been paid to the resident or the resident’s estate within 240 days after the
35
resident’s termination of a repayable contract shall accrue interest
36
at a rate calculated pursuant to paragraph (4). (3). Interest shall
37
continue to accrue annually pursuant to paragraph (5) (4) until the
38
date the full lump sum owed is paid to the resident or the resident’s estate. This paragraph
39
subdivision shall apply only to continuing care repayable contracts
40
entered into on or after January 1, 2017.
P28 1
(3)
2
(2) Any amount owed that is not paid to the resident or the resident’s estate within the
3
180-day period pursuant to paragraph (2) (1) shall accrue simple
4
interest at a rate of 4 percent of the amount owed.
5
(4)
6
(3) Any amount owed that is not paid to the resident or the resident’s estate within the
7
240-day period pursuant to paragraph (2) (1) shall accrue simple
8
interest at a rate of 6 percent of the amount owed.
9
(5)
10
(4) Any amount owed that is not paid to the resident or the resident’s estate within one
11
year after the 240-day period pursuant to paragraph (4) (3) shall
12
accrue compound interest annually at a rate of 6 percent, compounded annually.
13
(5) Until January 1, 2018, this subdivision shall not apply to a
14
project that is in development prior to January 1, 2017, including
15
current repayable agreements, current deposit agreements that
16
contemplate repayable entrance fees, and other projects that have
17
received department approval to market units pursuant to Section
18
1771.4, or have received issuer, lender, or bond insurer approval
19
to obtain bond financing, or other governmental approval based
20
on a repayable entrance fee option, if the initial contract for the
21
project is entered into on or before January 1, 2018.
22
(g) (1) After the death of a resident, a lump sum owed that is
23
conditioned upon resale of a unit shall be subject to subdivision
24
(f) and the lump sum owed shall include any interest accrued and
25
shall be payable to the resident’s estate.
26
(2) Until January 1, 2018, this subdivision shall not apply to a
27
project that is in development prior to January 1, 2017, including
28
current repayable agreements, current deposit agreements that
29
contemplate repayable entrance fees, and other projects that have
30
received department approval to market units pursuant to Section
31
1771.4, or have received issuer, lender, or bond insurer approval
32
to obtain bond financing, or other governmental approval based
33
on a repayable entrance fee option, if the initial contract for the
34
project is entered into on or before January 1, 2018.
35
(h) Except as otherwise obligated by an equity interest contract,
36
once the unit has been vacated and made available to the provider,
37
the provider shall not make any further charges to the resident or
38
his or her estate or charges against the lump sum owed to the
39
resident or the resident’s estate for purposes of continued monthly payments to the
40
provider or for maintenance or housekeeping on the vacated unit.
DOUBLE REFERRAL. This bill has been double-referred. Should this bill pass out of this committee, it will be referred to the Assembly Aging and Long Term Care Committee.
PRIOR LEGISLATION:
SB 475 (Monning), 2015, was similar to this bill but contained additional provisions, including imposing early repayment of a portion of the lump-sum payment and requiring complaint investigation duties of DSS.
REGISTERED SUPPORT / OPPOSITION:
Support
California Continuing Care Residents Association (CALCRA) – Sponsor
AARP
California Advocates for Nursing Home Reform
California Alliance for Retired Americans
California Commission on Aging
California Long-Term Care Ombudsman Association
Consumer Attorneys of California
Consumer Federation of California
National Association of Social Workers, California Chapter
Office of the State Long-Term Care Ombudsman
22 Individuals
Opposition
Erickson Living
Analysis Prepared by: Daphne Hunt / HUM. S. / (916) 319-2089
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 939 |
THIRD READING
Bill No: SB 939
Amended: 4/14/16
SENATE HUMAN SERVICES COMMITTEE: 3-0, 4/12/16
AYES: McGuire, Hancock, Liu
NO VOTE RECORDED: Berryhill, Nguyen
SUBJECT: Continuing care contracts: cancellation: payments
SOURCE: California Continuing Care Residents Association
DIGEST: This bill requires that continuing care contracts that contain lump sum contract termination payments conditioned on resale of the unit must meet a series of requirements and timelines, must pay interest after a specified period of vacancy, and must meet other requirements.
Existing law:
- Provides for the licensure and regulation of Continuing Care Retirement Communities (CCRCs) by the California Department of Social Services (CDSS) to enact minimum requirements to protect the wellbeing and financial security of residents of CCRCs. (HSC 1770 et seq.)
- Establishes the Residential Care Facilities for the Elderly Act, which requires CDSS to license and regulate RCFEs as a separate category within the existing community care licensing structure of CDSS. (HSC 1569 et seq.)
- Provides for the regulation and licensure of skilled nursing facilities by the California Department of Public Health (CDPH). (HSC 1250 et seq.)
- Requires a CCRC provider to hold a certificate of authority from CDSS permitting the provider to contract for the provision of continuing care, including medical care, in which a resident over the age of 60 has paid in advance for more than one year for that care. (HSC 1771.2)
- Provides that the components of care provided by the facility must be separately licensed as otherwise required by state law, including Residential Care Facilities for the Elderly and Skilled Nursing care. (HSC 1771.5)
- Requires a CCRC to pay refunds owed to a resident within 14 calendar days after a resident makes possession of the living unit available to the provider or 90 calendar days after death or receipt of notice of termination, whichever is later. (HSC 1788.4 (a))
- Prohibits characterizing as a refund, a lump sum payment following termination of a continuing care contract that is conditioned upon resale of the unit, and requires the payment to be made within 90 days following resale of the unit. (HSC 1788.4 (e))
This bill:
- Requires that a continuing care contract that includes a promise to repay all or a portion of an entrance fee that is conditioned upon re-occupancy or resale of the unit previously occupied by the resident shall not be considered a refundable contract, provided that this conditional promise of repayment is not referred to by the applicant or provider as a “refund.”
- Requires that, in addition to existing contract requirements, a continuing care contract shall contain certain defined disclosures including, but not limited to, provisions describing changes in monthly fees, the policy or terms for refunds or repayments, and a statement regarding the average and longest amount of time that it has taken to resell a unit within the last five calendar years.
- Requires that the full lump-sum owed, including any interest accrued, shall be paid to the resident within 14 calendar days after resale of the unit.
- Requires that the resident is entitled to the repayment of a specified portion of the full lump-sum owed if the unit remains vacant 120 days after the resident’s termination of the contract, as specified.
- Requires that, when a continuing care contract is terminated by the death of a resident, at least 10 percent of the full lump-sum owed shall be paid to the resident’s estate within 120 days after the death of the resident.
- Requires that, when a continuing care contract is terminated for reasons other than death of a resident, at least 20 percent of the full lump-sum owed shall be paid to the resident within 120 days after the resident’s termination of the contract.
- Requires any payments that are not paid to the resident within the 180-day period shall accrue simple interest, at a rate of 4 percent.
- Requires any payments that are not paid to the resident within the 240-day period shall accrue simple interest, at a rate of 6 percent.
- Requires that any amount owed that is not paid to the resident a year after the 240-day period shall accrue compounded interested annually, at a rate of 6 percent.
- Exempts projects in development prior to January 1, 2017, from certain provisions of the bill, as specified.
- Prohibits the provider from making any charges to the resident or the resident’s estate for purposes of maintenance or housekeeping of the vacated unit, as specified.
- Makes other technical clean up changes.
Background
According to the author, there have been documented cases where Continuing Care Retirement Communities (CCRC) residents, and/or their heirs, have experienced significant delays in receiving their lump-sum payments from entrance fees that are conditioned upon resale of their CCRC unit. The author states that this popular contract model conditions repayment -- which is typically 70 to 90 percent of the resident’s entrance fee -- upon resale of the unit only works when the unit is resold quickly. According to the author, if the CCRC provider has a disincentive to resell in a timely manner or the unit is unable to sell, then the resident or their estate is forced to wait with no definitive timeline for when repayment must be made.
The author additionally states that these conditional refunds can create an incentive for CCRC providers to fill empty units prior to filling units that have repayment requirements. In some cases, a unit might go unsold until a neighboring unit is unoccupied because the provider wants to make renovations. The problem of delayed repayment can prevent an elder resident from moving or tie up an estate. Ironically, one reason why this contract model is popular is it provides the resident assurance that this lump-sum payment will be available to them should something happen or they pass away, the author states. In addition, some contract provisions allow the provider to continue to charge a monthly maintenance fee that is deducted from the resident’s entrance fee months after the CCRC is vacated.
Continuing Care Retirement Communities
CCRCs offer people 60 years old and up a long-term continuing care option that pairs their current health and resources with an individualized contract that provides community life and a range of levels-of-care. Typically this is offered in a campus-like community setting, and usually for a resident’s lifetime, and always for at least one year. Most CCRCs require substantial entrance fees, along with monthly fees. Entrance fees can range from $50,000 to more than $2 million.
A CCRC is defined in statute (HSC 1771) as a facility where services promised in a “continuing care contract” are provided. A continuing care contract includes a continuing care promise made, in exchange for an entrance fee, the payment of periodic charges, or both. A continuing care contract may consist of one agreement for continuous care, or a series of agreements describing care, conditions for that care, and payment of it, if and when it becomes necessary.
Continuing care contracts vary. Each potential consumer has different health and long-term care risks and needs, financial risks and needs, and other factors that require contract flexibility, and each CCRC offers differing provisions on costs, payment methods, services provided, and other elements. Continuing care contracts typically require an individual to pay an entrance fee and monthly fees. Entrance fees can vary significantly from one community to the next, and monthly fees vary depending on the level of services included in the contract and other factors associated with location, exclusivity, business plan variations, and more.
Continuing care contracts may be refundable or non-refundable. Refundable contracts refund a portion of the entrance fees, sometimes on a scale that decreases over time. These types of contracts require a CCRC to maintain a reserve for refunds (in addition to other reserves required for the operation of a CCRC), and generally, this is not the contract type which SB 939 is focused upon. Many CCRC providers choose instead to offer a repayment of a designated portion of the entrance fee - a “lump-sum payment” - that is conditioned upon resale of the unit. A reserve is not required in this case, as it is assumed that the resale of the unit will result in the new resident’s entrance fee covering the cost of repaying a portion of the former resident’s entrance fee. In California, there are currently no requirements that resale and/or repayment of entrance fees take place within a certain period of time.
Related/Prior Legislation
AB 2661 (Burke, 2016) allows for CCRC contracts that condition lump-sum payments based upon resale of “any” unit – as opposed to the unit previously occupied by the resident - to not be considered a “refundable contract,” making the refund reserve requirements inapplicable in such circumstances. This bill is scheduled to be heard in Assembly Human Services Committee April 26, 2016.
SB 475 (Monning, 2015) was substantially similar to this bill and would have required prospective and future CCRC contracts which condition lump sum contract termination payments on resale of the unit to meet a series of requirements and timelines, to pay interest after a specified period of vacancy, and to meet other requirements. SB 475 was vetoed by the Governor.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
California Continuing Care Residents Associations (source)
AARP
California Advocates for Nursing Home Reform
California Commission on Aging
Consumer Federation of California
National Association of Social Workers
Office of the State Long-Term Care Ombudsman
266 individuals
OPPOSITION: (Verified 4/14/16)
Erickson Living
ARGUMENTS IN SUPPORT: The California Continuing Care Residents Association (CALCRA), which is the bill’s source, states that residents and families have been left waiting years to receive payments from CCRCs across the state. CALCRA also states that SB 939 would provide a much-needed incentive for CCRC providers to repay entrance fees within a reasonable amount of time and ensures that CCRCs make a good faith effort to meet the terms of the contract and re-sell vacant units.
ARGUMENTS IN OPPOSITION: Erickson Living opposes the bill unless it is amended to give CCRCs greater flexibility in providing seniors a retirement housing that better suits their needs and ensures timely repayment of a portion of the entrance fee to estates. The mechanics of SB 939 require that repayments to estates take precedence over ensuring the financial stability of more than 100 communities and tens-of-thousands of senior living in California CCRCs. Erickson believes this requirement has more to potential harm
4/15/16 14:10:39
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SENATE COMMITTEE ON HUMAN SERVICES
Senator McGuire, Chair
2015 - 2016 Regular
Bill No: SB 939
Author: | Monning | ||
Version: | February 3, 2016 | Hearing Date: | April 12, 2016 |
Urgency: | No | Fiscal: | No |
Consultant: | Taryn Smith | ||
Subject: Continuing care contracts: cancellation: payments
SUMMARY
This bill requires that continuing care contracts that contain lump sum contract termination payments conditioned on resale of the unit must meet a series of requirements and timelines, must pay interest after a specified period of vacancy, and must meet other requirements.
ABSTRACT
Existing law:
- Provides for the licensure and regulation of Continuing Care Retirement Communities (CCRCs) by the California Department of Social Services (CDSS) to enact minimum requirements to protect the wellbeing and financial security of residents of CCRCs. (HSC 1770 et seq.)
- Establishes the Residential Care Facilities for the Elderly Act, which requires CDSS to license and regulate RCFEs as a separate category within the existing community care licensing structure of CDSS. (HSC 1569 et seq.)
- Provides for the regulation and licensure of skilled nursing facilities by the California Department of Public Health (CDPH). (HSC 1250 et seq.)
- Requires a CCRC provider to hold a certificate of authority from CDSS permitting the provider to contract for the provision of continuing care, including medical care, in which a resident over the age of 60 has paid in advance for more than one year for that care. (HSC 1771.2)
- Provides that the components of care provided by the facility must be separately licensed as otherwise required by state law, including Residential Care Facilities for the Elderly and Skilled Nursing care. (HSC 1771.5)
- Requires a CCRC to pay refunds owed to a resident within 14 calendar days after a resident makes possession of the living unit available to the provider or 90 calendar days after death or receipt of notice of termination, whichever is later. (HSC 1788.4 (a))
- Prohibits characterizing as a refund, a lump sum payment following termination of a continuing care contract that is conditioned upon resale of the unit, and requires the payment to be made within 90 days following resale of the unit. (HSC 1788.4 (e))
This bill:
- Requires that a continuing care contract that includes a promise to repay all or a portion of an entrance fee that is conditioned upon re-occupancy or resale of the unit previously occupied by the resident shall not be considered a refundable contract, provided that this conditional promise of repayment is not referred to by the applicant or provider as a “refund.”
- States that a provider may repay all or a portion of an entrance fee that is conditioned upon resale of the unit before the resale of the unit. Requires that the repayment of an entrance fee before the resale of the unit shall not cause any other entrance fee to be subject to the refund reserve requirements, provided that the provider does not promise, at the time of contracting or thereafter, to make this type of early repayment, represent that the provider intends to make this type of early repayment, or indicate that the provider has a practice of making this type of early repayment.
- Requires that, in addition to existing contract requirements, a continuing care contract shall contain all of the following:
- A statement that the provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract.
- Provisions describing any changes in the resident’s monthly fee and any changes in the entrance fee refund payable to the resident that will occur if the resident transfers from any unit, including, but not limited to, terminating his or her contract after 18 months of residential temporary relocation, as specified.
- The policy or terms for refunding or repaying a lump sum of any portion of the entrance fee, in the event of cancellation, termination, or death. Every continuing care contract that provides for a refund or repaying a lump sum of all or a part of the entrance fee shall include, among other items required by existing law, the following:
- State the provider shall make a good-faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit. No later than July 1, 2017, a provider shall provide notice to all current residents with contracts applicable to this subparagraph regarding the statement required by this subparagraph as a clarification of the resident’s existing contract.
- For all contracts with a repayment of all or a portion of the entrance fee conditioned upon the resale of the unit, the provider shall state the average and longest amount of time that it has taken to resell a unit within the last five calendar years.
- Requires that a lump-sum payment to a resident after termination of a continuing care contract that is conditioned upon resale of the unit shall not be considered to be a refund and may not be characterized or advertised as a refund.
- Requires that the full lump-sum payment shall be paid to the resident within 14 calendar days after resale of the unit.
- Requires that the resident is entitled to the repayment of a specified portion of the full lump-sum payment if the unit remains vacant 120 days after the resident’s termination of the contract, as specified. Requires that this repayment shall not cause the contract in question to be deemed a refundable contract.
- Requires that, when a continuing care contract is terminated by the death of a resident, at least 10 percent of the full lump-sum payment shall be paid to the resident’s estate within 120 days after the death of the resident.
- Requires that, when a continuing care contract is terminated for reasons other than death of a resident, at least 20 percent of the full lump-sum payment shall be paid to the resident within 120 days after the resident’s termination of the contract.
- Requires any payments that are not paid to the resident within the 180-day period shall accrue simple interest, to be compounded annually, at a rate of 4 percent.
- Requires any payments that are not paid to the resident within the 240-day period shall accrue simple interest, to be compounded annually, at a rate of 6 percent.
- Clarifies that, after the death of a resident, a lump-sum payment that is conditioned upon resale of a unit shall include the re-payment and interest, if any, and shall be payable to the resident’s estate.
- Exempts, until January 1, 2018, projects in development prior to January 1, 2017, for which contracts were entered into on or before January 1, 2018, from certain requirements regarding refunds, lump-sum charges and repayment, and interest payments, as specified.
- Prohibits the provider from making any charges to the resident or the resident’s estate against the lump-sum payment that is due to the resident for purposes maintenance or housekeeping of the vacated unit, except as otherwise obligated by an equity interest contract, once the unit has been vacated.
- Requires that nothing in the bill shall be construed to limit or alter any legal remedies otherwise available to a resident or his or her estate.
- Makes other technical clean up changes.
FISCAL IMPACT
This bill has not yet been analyzed by a fiscal committee.
BACKGROUND AND DISCUSSION
Purpose of the bill:
According to the author, there have been documented cases where Continuing Care Retirement Communities (CCRC) residents, and/or their heirs, have experienced significant delays in receiving their lump-sum payments from entrance fees that are conditioned upon resale of their CCRC unit. The author states this popular type of contract model that conditions repayment, which is typically 70 to 90 percent of the resident’s entrance fee, upon resale of the unit only works when the unit is resold quickly. According to the author, if the CCRC provider has a disincentive to resell in a timely manner or the unit is unable to sell, then the moving resident or their estate is forced to wait with no definitive timeline for when repayment must be made.
The author additionally states that these conditional refunds can create an incentive for CCRC providers to fill empty units prior to filling units that have repayment requirements. Or, in some cases, a unit might go unsold until a neighboring unit is unoccupied because the provider wants to make renovations. The problem of delayed repayment can prevent an elder resident from moving or tie up an estate. Ironically, one reason why this contract model is popular is it provides the resident assurance that this lump-sum payment will be available to them should something happen or they pass away, the author states. In addition, some contract provisions allow the provider to continue to charge a monthly maintenance fee that is deducted from the resident’s entrance fee months after the CCRC is vacated.
Continuing Care Retirement Communities
CCRCs offer people 60 years old and up a long-term continuing care option that pairs their current health and resources with an individualized contract that provides community life and a range of levels-of-care, typically in a campus-like community setting, and usually for a resident’s lifetime, and always for at least one year. Most CCRCs require substantial entrance fees, along with monthly fees. Entrance fees can range from $50,000 to more than $2 million.
According to Health and Safety Code Section 1771, a CCRC is defined as a facility where services promised in a “continuing care contract” are provided. A continuing care contract includes a continuing care promise made, in exchange for an entrance fee, the payment of periodic charges, or both. A continuing care contract may consist of one agreement for continuous care, or a series of agreements describing care, conditions for that care, and payment of it, if and when it becomes necessary.
Continuing care contracts vary. There is no standardized contract, though there are elements that must be in place in order to be approved by CDSS. Rather than overseeing or approving each resident’s contract, CDSS approves basic elements of the contract and the CCRC facility uses that structure to create more individualized contracts with residents. Each potential consumer has different health and long-term care risks and needs, financial risks and needs, and other factors that require contract flexibility, and each CCRC offers differing provisions on costs, payment methods, services provided, and other elements. Continuing care contracts typically require an individual to pay an entrance fee and monthly fees. Entrance fees can vary significantly from one community to the next, and monthly fees vary depending on the level of services included in the contract and other factors associated with location, exclusivity, business plan variations, and more.
Continuing care contracts may be refundable or non-refundable. Refundable contracts refund a portion of the entrance fees, sometimes on a scale that decreases over time. These types of contracts require a CCRC to maintain a reserve for refunds (in addition to other reserves required for the operation of a CCRC), and generally, this is not the contract type which SB 939 is focused upon. Many CCRC providers choose instead to offer a repayment of a designated portion of the entrance fee - a “lump-sum payment” - that is conditioned upon resale of the unit. A reserve is not required in this case, as it is assumed that the resale of the unit will result in the new resident’s entrance fee covering the cost of repaying a portion of the former resident’s entrance fee. In California, there are currently no requirements that resale and/or repayment of entrance fees take place within a certain period of time.
Related legislation:
AB 2661 (Burke, 2016) allows for CCRC contracts that condition lump-sum payments based upon resale of “any” unit – as opposed to the unit previously occupied by the resident - to not be considered a “refundable contract,” making the refund reserve requirements inapplicable in such circumstances. This bill is scheduled to be heard in Assembly Human Services Committee April 26, 2016.
SB 475 (Monning, 2015) was substantially similar to this bill and would have required prospective and future CCRC contracts which condition lump sum contract termination payments on resale of the unit to meet a series of requirements and timelines, to pay interest after a specified period of vacancy, and to meet other requirements. SB 475 was vetoed by the Governor.
COMMENTS
SB 939 contains many of the provisions in SB 475 (Monning, 2015), which was vetoed by the Governor. According to the Governor’s veto message for SB 475, “this bill would change the terms of contract entered into by willing participants. It would also insert the department into the resolution of contract disputes.” SB 939 does not contain the language referenced in the Governor’s veto message.
For purposes of clarity, the committee recommends the following amendments:
Amendment #1:
1788.4. (e) A lump-sum payment to a resident after termination of a continuing care contract that is conditioned upon resale of the unit shall not be considered to be a refund and may not be characterized or advertised as a refund. The full lump-sum payment owed, including any interest accrued, shall be paid to the resident within 14 calendar days after resale of the unit.
Amendment #2:
1788.4 (f) (1) For contracts signed on and after January 1, 2017, notwithstanding a provider’s documented good-faith effort to resell the unit, the resident is entitled to the repayment of a specified portion, pursuant to subparagraphs (A) and (B), of the full lump-sum payment owed if the unit remains vacant 120 days after the resident’s termination of the contract. This repayment shall not cause the contract in question to be deemed a refundable contract, as defined in paragraph (2) of subdivision (r) of Section 1771.
(A) When a continuing care contract is terminated by the death of a resident, at least 10 percent of the full lump-sum payment owed shall be paid to the resident’s estate within 120 days after the death of the resident.
(B) When a continuing care contract is terminated for a reason not described in subparagraph (A), at least 20 percent of the full lump-sum payment owed shall be paid to the resident within 120 days after the resident’s termination of the contract.
(2) Any payment balance of the lump sum owed that has not been paid to the resident within 180 days shall accrue interest at a rate calculated pursuant to paragraph (3). Any payment balance of the lump sum owed that has not been paid to the resident within 240 days shall accrue interest at a rate calculated pursuant to paragraph (4). Interest shall continue to accrue annually pursuant to paragraph (5) until the date the full lump-sum payment owed is paid to the resident. This paragraph shall apply only to continuing care contracts entered into on or after January 1, 2017.
(3) Any payments amount owed that are is not paid to the resident within the 180-day period pursuant to paragraph (2) shall accrue simple interest , to be compounded annually, at a rate of 4 percent of the amount owed.
(4) Any payments amount owed that are is not paid to the resident within the 240-day period pursuant to paragraph (2) shall accrue simple interest, to be compounded annually, at a rate of 6 percent of the amount owed.
(5) Any amount owed that is not paid to the resident a year after the 240-day period pursuant to paragraph (4) shall accrue compounded interest annually, at a rate of 6 percent.
(5) (6) Until January 1, 2018, this subdivision shall not apply to a project that is in development prior to January 1, 2017, including current repayable agreements, current deposit agreements that contemplate repayable entrance fees, and other projects that have received department approval to market units pursuant to Section 1771.4, or have received issuer, lender, or bond insurer approval to obtain bond financing, or other governmental approval based on a repayable entrance fee option, if the initial contract for the project is entered into on or before January 1, 2018.
Amendment #3:
(g) (1) After the death of a resident, a lump-sum payment owed that is conditioned upon resale of a unit shall be subject to subdivision (f) and the lump-sum owed shall include payment and any interest accrued, if any, and shall be payable to the resident’s estate.
POSITIONS
Support:
California Continuing Care Residents Associations (Sponsor)
AARP
California Advocates for Nursing Home Reform
California Commission on Aging
Consumer Federation of California
National association of Social Workers
Office of the State Long-Term Care Ombudsman
249 individuals
Oppose:
Erickson Living
-- END --
Discussed in Hearing
2MIN
Senate Floor
21MIN
Assembly Floor
26MIN
Assembly Standing Committee on Aging and Long-Term Care
4MIN
Senate Floor
Bill Author
Bill Co-Author(s):