SECTIONS 1770-1778

1770.  The Legislature finds, declares, and intends all of thefollowing: (a) Continuing care retirement communities are an alternative forthe long-term residential, social, and health care needs ofCalifornia's elderly residents and seek to provide a continuum ofcare, minimize transfer trauma, and allow services to be provided inan appropriately licensed setting. (b) Because elderly residents often both expend a significantportion of their savings in order to purchase care in a continuingcare retirement community and expect to receive care at theircontinuing care retirement community for the rest of their lives,tragic consequences can result if a continuing care provider becomesinsolvent or unable to provide responsible care. (c) There is a need for disclosure concerning the terms ofagreements made between prospective residents and the continuing careprovider, and concerning the operations of the continuing careretirement community. (d) Providers of continuing care should be required to obtain acertificate of authority to enter into continuing care contracts andshould be monitored and regulated by the State Department of SocialServices. (e) This chapter applies equally to for-profit and nonprofitprovider entities. (f) This chapter states the minimum requirements to be imposedupon any entity offering or providing continuing care. (g) Because the authority to enter into continuing care contractsgranted by the State Department of Social Services is neither aguarantee of performance by the providers nor an endorsement of anycontinuing care contract provisions, prospective residents mustcarefully consider the risks, benefits, and costs before signing acontinuing care contract and should be encouraged to seek financialand legal advice before doing so.1771.  Unless the context otherwise requires, the definitions inthis section govern the interpretation of this chapter. (a) (1) "Affiliate" means any person, corporation, limitedliability company, business trust, trust, partnership, unincorporatedassociation, or other legal entity that directly or indirectlycontrols, is controlled by, or is under common control with, aprovider or applicant. (2) "Affinity group" means a grouping of entities sharing a commoninterest, philosophy, or connection (e.g., military officers,religion). (3) "Annual report" means the report each provider is required tofile annually with the department, as described in Section 1790. (4) "Applicant" means any entity, or combination of entities, thatsubmits and has pending an application to the department for apermit 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, includingdressing, feeding, toileting, bathing, grooming, mobility, andassociated tasks, to help provide for and maintain physical andpsychosocial comfort. (6) "Assisted living unit" means the living area or unit within acontinuing care retirement community that is specifically designed toprovide ongoing assisted living services. (7) "Audited financial statement" means financial statementsprepared in accordance with generally accepted accounting principlesincluding the opinion of an independent certified public accountant,and notes to the financial statements considered customary ornecessary to provide full disclosure and complete informationregarding the provider's financial statements, financial condition,and operation. (b) (reserved) (c) (1) "Cancel" means to destroy the force and effect of anagreement or continuing care contract. (2) "Cancellation period" means the 90-day period, beginning whenthe resident physically moves into the continuing care retirementcommunity, during which the resident may cancel the continuing carecontract, as provided in Section 1788.2. (3) "Care" means nursing, medical, or other health-relatedservices, protection or supervision, assistance with the personalactivities of daily living, or any combination of those services. (4) "Cash equivalent" means certificates of deposit and UnitedStates treasury securities with a maturity of five years or less. (5) "Certificate" or "certificate of authority" means thecertificate issued by the department, properly executed and bearingthe State Seal, authorizing a specified provider to enter into one ormore continuing care contracts at a single specified continuing careretirement community. (6) "Condition" means a restriction, specific action, or otherrequirement imposed by the department for the initial or continuingvalidity of a permit to accept deposits, a provisional certificate ofauthority, or a certificate of authority. A condition may limit thecircumstances under which the provider may enter into any new depositagreement or contract, or may be imposed as a condition precedent tothe issuance of a permit to accept deposits, a provisionalcertificate of authority, or a certificate of authority. (7) "Consideration" means some right, interest, profit, or benefitpaid, transferred, promised, or provided by one party to another asan inducement to contract. Consideration includes some forbearance,detriment, loss, or responsibility, that is given, suffered, orundertaken by a party as an inducement to another party to contract. (8) "Continuing care contract" means a contract that includes acontinuing care promise made, in exchange for an entrance fee, thepayment of periodic charges, or both types of payments. A continuingcare contract may consist of one agreement or a series of agreementsand other writings incorporated by reference. (9) "Continuing care advisory committee" means an advisory panelappointed pursuant to Section 1777. (10) "Continuing care promise" means a promise, expressed orimplied, by a provider to provide one or more elements of care to anelderly resident for the duration of his or her life or for a term inexcess of one year. Any such promise or representation, whether partof a continuing care contract, other agreement, or series ofagreements, or contained in any advertisement, brochure, or othermaterial, either written or oral, is a continuing care promise. (11) "Continuing care retirement community" means a facilitylocated within the State of California where services promised in acontinuing care contract are provided. A distinct phase ofdevelopment approved by the department may be considered to be thecontinuing care retirement community when a project is beingdeveloped in successive distinct phases over a period of time. Whenthe services are provided in residents' own homes, the homes intowhich the provider takes those services are considered part of thecontinuing care retirement community. (12) "Control" means directing or causing the direction of thefinancial management or the policies of another entity, including anoperator of a continuing care retirement community, whether by meansof the controlling entity's ownership interest, contract, or anyother involvement. A parent entity or sole member of an entitycontrols a subsidiary entity provider for a continuing careretirement community if its officers, directors, or agents directlyparticipate in the management of the subsidiary entity or in theinitiation or approval of policies that affect the continuing careretirement community's operations, including, but not limited to,approving budgets or the administrator for a continuing careretirement community. (d) (1) "Department" means the State Department of SocialServices. (2) "Deposit" means any transfer of consideration, including apromise to transfer money or property, made by a depositor to anyentity that promises or proposes to promise to provide continuingcare, but is not authorized to enter into a continuing care contractwith the potential depositor. (3) "Deposit agreement" means any agreement made between anyentity accepting a deposit and a depositor. Deposit agreements fordeposits received by an applicant prior to the department's releaseof funds from the deposit escrow account shall be subject to therequirements described in Section 1780.4. (4) "Depository" means a bank or institution that is a member ofthe Federal Deposit Insurance Corporation or a comparable depositinsurance program. (5) "Depositor" means any prospective resident who pays a deposit.Where any portion of the consideration transferred to an applicantas a deposit or to a provider as consideration for a continuing carecontract is transferred by a person other than the prospectiveresident or a resident, that third-party transferor shall have thesame cancellation or refund rights as the prospective resident orresident 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 orolder. (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, ordeferred transfer of consideration made or promised to be made by, oron behalf of, a person entering into a continuing care contract forthe purpose of ensuring care or related services pursuant to thatcontinuing care contract or as full or partial payment for thepromise 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 ofcontinuing care. An initial, amortized, or deferred transfer ofconsideration that is greater in value than 12 times the monthly carefee shall be presumed to be an entrance fee. (4) "Equity" means the value of real property in excess of theaggregate amount of all liabilities secured by the property. (5) "Equity interest" means an interest held by a resident in acontinuing care retirement community that consists of either anownership interest in any part of the continuing care retirementcommunity property or a transferable membership that entitles theholder to reside at the continuing care retirement community. (6) "Equity project" means a continuing care retirement communitywhere residents receive an equity interest in the continuing careretirement community property. (7) "Equity securities" shall refer generally to large andmidcapitalization corporate stocks that are publicly traded andreadily liquidated for cash, and shall include shares in mutual fundsthat hold portfolios consisting predominantly of these stocks andother qualifying assets, as defined by Section 1792.2. Equitysecurities shall also include other similar securities that arespecifically approved by the department. (8) "Escrow agent" means a bank or institution, including, but notlimited to, a title insurance company, approved by the department tohold and render accountings for deposits of cash or cashequivalents. (f) "Facility" means any place or accommodation where a providerprovides 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 certificatethat has been terminated under Section 1793.8. (2) "Investment securities" means any of the following: (A) Direct obligations of the United States, including obligationsissued or held in book-entry form on the books of the United StatesDepartment of the Treasury or obligations the timely payment of theprincipal of, and the interest on, which are fully guaranteed by theUnited States. (B) Obligations, debentures, notes, or other evidences ofindebtedness issued or guaranteed by any of the following: (i) The Federal Home Loan Bank System. (ii) The Export-Import Bank of the United States. (iii) The Federal Financing Bank. (iv) The Government National Mortgage Association. (v) The Farmer's Home Administration. (vi) The Federal Home Loan Mortgage Corporation of the FederalHousing Administration. (vii) Any agency, department, or other instrumentality of theUnited States if the obligations are rated in one of the two highestrating categories of each rating agency rating those obligations. (C) Bonds of the State of California or of any county, city andcounty, or city in this state, if rated in one of the two highestrating categories of each rating agency rating those bonds. (D) Commercial paper of finance companies and banking institutionsrated in one of the two highest categories of each rating agencyrating those instruments. (E) Repurchase agreements fully secured by collateral securitydescribed in subparagraph (A) or (B), as evidenced by an opinion ofcounsel, if the collateral is held by the provider or a third partyduring the term of the repurchase agreement, pursuant to the terms ofthe agreement, subject to liens or claims of third parties, and hasa market value, which is determined at least every 14 days, at leastequal to the amount so invested. (F) Long-term investment agreements, which have maturity dates inexcess of one year, with financial institutions, including, but notlimited to, banks and insurance companies or their affiliates, if thefinancial institution's paying ability for debt obligations orlong-term claims or the paying ability of a related guarantor of thefinancial institution for these obligations or claims, is rated inone of the two highest rating categories of each rating agency ratingthose instruments, or if the short-term investment agreements arewith the financial institution or the related guarantor of thefinancial institution, the long-term or short-term debt obligations,whichever is applicable, of which are rated in one of the two highestlong-term or short-term rating categories, of each rating agencyrating the bonds of the financial institution or the relatedguarantor, provided that if the rating falls below the two highestrating categories, the investment agreement shall allow the providerthe option to replace the financial institution or the relatedguarantor of the financial institution or shall provide for theinvestment securities to be fully collateralized by investmentsdescribed in subparagraph (A), and, provided further, if socollateralized, that the provider has a perfected first security lienon the collateral, as evidenced by an opinion of counsel and thecollateral is held by the provider. (G) Banker's acceptances or certificates of deposit of, or timedeposits in, any savings and loan association that meets any of thefollowing criteria: (i) The debt obligations of the savings and loan association, orin the case of a principal bank, of the bank holding company, arerated in one of the two highest rating categories of each ratingagency rating those instruments. (ii) The certificates of deposit or time deposits are fullyinsured by the Federal Deposit Insurance Corporation. (iii) The certificates of deposit or time deposits are secured atall times, in the manner and to the extent provided by law, bycollateral security described in subparagraph (A) or (B) with amarket value, valued at least quarterly, of no less than the originalamount of moneys so invested. (H) Taxable money market government portfolios restricted toobligations issued or guaranteed as to payment of principal andinterest by the full faith and credit of the United States. (I) Obligations the interest on which is excluded from grossincome for federal income tax purposes and money market mutual fundswhose portfolios are restricted to these obligations, if theobligations or mutual funds are rated in one of the two highestrating categories by each rating agency rating those obligations. (J) Bonds that are not issued by the United States or any federalagency, but that are listed on a national exchange and that are ratedat least "A" by Moody's Investors Service, or the equivalent ratingby Standard and Poor's Corporation or Fitch Investors Service. (K) Bonds not listed on a national exchange that are traded on anover-the-counter basis, and that are rated at least "Aa" by Moody'sInvestors Service or "AA" by Standard and Poor's Corporation or FitchInvestors Service. (j) (reserved) (k) (reserved) (l) "Life care contract" means a continuing care contract thatincludes a promise, expressed or implied, by a provider to provide orpay for routine services at all levels of care, including acute careand the services of physicians and surgeons, to the extent notcovered by other public or private insurance benefits, to a residentfor the duration of his or her life. Care shall be provided under alife care contract in a continuing care retirement community having acomprehensive continuum of care, including a skilled nursingfacility, under the ownership and supervision of the provider on oradjacent to the premises. No change may be made in the monthly feebased on level of care. A life care contract shall also includeprovisions to subsidize residents who become financially unable topay their monthly care fees. (m) (1) "Monthly care fee" means the fee charged to a resident ina continuing care contract on a monthly or other periodic basis forcurrent accommodations and services including care, board, orlodging. Periodic entrance fee payments or other prepayments shallnot be monthly care fees. (2) "Monthly fee contract" means a continuing care contract thatrequires residents to pay monthly care fees. (n) "Nonambulatory person" means a person who is unable to leave abuilding unassisted under emergency conditions in the mannerdescribed by Section 13131. (o) (reserved) (p) (1) "Per capita cost" means a continuing care retirementcommunity's operating expenses, excluding depreciation, divided bythe average number of residents. (2) "Periodic charges" means fees paid by a resident on a periodicbasis. (3) "Permanent closure" means the voluntary or involuntarytermination or forfeiture, as specified in subdivisions (a), (b),(g), (h), and (i) of Section 1793.7, of a provider's certificate ofauthority or license, or another action that results in the permanentrelocation of residents. Permanent closure does not apply in thecase of a natural disaster or other event out of the provider'scontrol. (4) "Permit to accept deposits" means a written authorization bythe department permitting an applicant to enter into depositagreements regarding a single specified continuing care retirementcommunity. (5) "Prepaid contract" means a continuing care contract in whichthe monthly care fee, if any, may not be adjusted to cover the actualcost of care and services. (6) "Preferred access" means that residents who have previouslyoccupied a residential living unit have a right over other persons toany assisted living or skilled nursing beds that are available atthe community. (7) "Processing fee" means a payment to cover administrative costsof processing the application of a depositor or prospectiveresident. (8) "Promise to provide one or more elements of care" means anyexpressed or implied representation that one or more elements of carewill be provided or will be available, such as by preferred access. (9) "Proposes" means a representation that an applicant orprovider will or intends to make a future promise to provide care,including a promise that is subject to a condition, such as theconstruction of a continuing care retirement community or theacquisition of a certificate of authority. (10) "Provider" means an entity that provides continuing care,makes a continuing care promise, or proposes to promise to providecontinuing care. "Provider" also includes any entity that controls anentity that provides continuing care, makes a continuing carepromise, or proposes to promise to provide continuing care. Thedepartment shall determine whether an entity controls another entityfor purposes of this article. No homeowner's association,cooperative, or condominium association may be a provider. (11) "Provisional certificate of authority" means the certificateissued by the department, properly executed and bearing the StateSeal, under Section 1786. A provisional certificate of authorityshall be limited to the specific continuing care retirement communityand number of units identified in the applicant's application. (q) (reserved) (r) (1) "Refund reserve" means the reserve a provider is requiredto maintain, as provided in Section 1792.6. (2) "Refundable contract" means a continuing care contract thatincludes a promise, expressed or implied, by the provider to pay anentrance fee refund or to repurchase the transferor's unit,membership, stock, or other interest in the continuing careretirement community when the promise to refund some or all of theinitial entrance fee extends beyond the resident's sixth year ofresidency. Providers that enter into refundable contracts shall besubject to the refund reserve requirements of Section 1792.6. Acontinuing care contract that includes a promise to repay all or aportion of an entrance fee that is conditioned upon reoccupancy orresale of the unit previously occupied by the resident shall not beconsidered a refundable contract for purposes of the refund reserverequirements of Section 1792.6, provided that this conditionalpromise of repayment is not referred to by the applicant or provideras a "refund." (3) "Resale fee" means a levy by the provider against the proceedsfrom the sale of a transferor's equity interest. (4) "Reservation fee" refers to consideration collected by anentity that has made a continuing care promise or is proposing tomake this promise and has complied with Section 1771.4. (5) "Resident" means a person who enters into a continuing carecontract with a provider, or who is designated in a continuing carecontract 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 housingarrangement as defined by Section 1569.2. (7) "Residential living unit" means a living unit in a continuingcare retirement community that is not used exclusively for assistedliving services or nursing services. (8) "Residential temporary relocation" means the relocation of oneor more residents, except in the case of a natural disaster that isout of the provider's control, from one or more residential livingunits, assisted living units, skilled nursing units, or a wing,floor, or entire continuing care retirement community building, dueto a change of use or major repairs or renovations. A residentialtemporary relocation shall mean a relocation pursuant to thissubdivision that lasts for a period of at least nine months but thatdoes not exceed 18 months without the written agreement of theresident. (s) (reserved) (t) (1) "Termination" means the ending of a continuing carecontract as provided for in the terms of the continuing carecontract. (2) "Transfer trauma" means death, depression, or regressivebehavior, that is caused by the abrupt and involuntary transfer of anelderly resident from one home to another and results from a loss offamiliar physical environment, loss of well-known neighbors,attendants, nurses and medical personnel, the stress of an abruptbreak in the small routines of daily life, or the loss of visits fromfriends and relatives who may be unable to reach the new facility. (3) "Transferor" means a person who transfers, or promises totransfer, consideration in exchange for care and related servicesunder a continuing care contract or proposed continuing carecontract, for the benefit of another. A transferor shall have thesame rights to cancel and obtain a refund as the depositor under thedeposit agreement or the resident under a continuing care contract.1771.2.  (a) An entity shall apply for and hold a currently validpermit to accept deposits before it may enter into a depositagreement or accept a deposit. (b) A provider shall hold a currently valid provisionalcertificate of authority or certificate of authority before it mayenter into a continuing care contract. (c) Before a provider subcontracts or assigns to another entitythe responsibility to provide continuing care, that other entityshall have a current and valid certificate of authority. A providerholding a certificate of authority may contract for the provision ofa particular aspect of continuing care, such as medical care, withanother entity that does not possess a certificate of authority, ifthat other entity is appropriately licensed under laws of this stateto provide that care, and the provider has not paid in advance formore than one year for that care. (d) If an entity enters into an agreement to provide care for lifeor for more than one year to a person under 60 years of age inreturn for consideration, and the agreement includes the provision ofservices to that person after age 60, when the person turns 60 yearsof age, the promising entity shall comply with all the requirementsimposed by this chapter.1771.3.  (a) This chapter shall not apply to either of thefollowing: (1) An arrangement for the care of a person by a relative. (2) An arrangement for the care of a person or persons from onlyone family by a friend. (b) This chapter shall not apply to any admission or residenceagreements offered by residential communities for the elderly orresidential care facilities for the elderly that promise residentspreferred access to assisted living services or nursing care, wheneach of the following conditions is satisfied: (1) Residents pay on a fee-for-service basis for availableassisted living services and nursing care. (2) The fees paid for available assisted living services andnursing care are the same for residents who have previously occupieda residential living unit as for residents who have not previouslyoccupied a residential living unit. (3) No entrance fee or prepayment for future care or access, otherthan monthly care fees, is paid by, or charged to, any resident atthe community or facility. For purposes of this paragraph, the termentrance fee shall not include initial, deferred, or amortizedpayments that cumulatively do not exceed seven thousand five hundreddollars ($7,500). (4) The provider has not made a continuing care promise ofpreferred access, other than a promise as described in paragraph (5). (5) The admission or residence agreement states: (A) "This agreement does not guarantee that an assisted living ornursing bed will be available for residents, but, instead, promisespreferred access to any assisted living or nursing beds that areavailable at the community or facility. The promise of preferredaccess gives residents who have previously occupied a residentialliving unit a right over other persons to such beds." (B) "A continuing care contract promises that care will beprovided to residents for life or for a term in excess of a year.(Name of community or facility) is not a continuing care retirementcommunity and (name of provider) does not hold a certificate ofauthority to enter into continuing care contracts and is not requiredto have the same fiscal reserves as a continuing care provider. Thisagreement is not a continuing care contract and is exempted from thecontinuing care statutes under subdivision (b) of Section 1771.3 ofthe Health and Safety Code so long as the conditions set forth inthat section are met." (6) The admission or residence agreement also states the policiesand procedures regarding transfers to higher levels of care withinthe community or facility. (c) Any entity may apply to the department for a Letter ofExemption stating that the requesting entity satisfies therequirements for an exemption under this section. (d) The department shall issue a Letter of Exemption to arequesting entity if the department determines either of thefollowing: (1) The requesting entity satisfies each of the requirements foran exemption under subdivision (b). (2) The requesting entity satisfies each of the requirements foran exemption under subdivision (b) other than the requirements ofparagraph (2) of subdivision (b), and there is no substantialdifference between the following: (A) The fees for available assisted living services and skillednursing care paid by residents who have previously occupied aresidential living unit. (B) The fees for available assisted living services and skillednursing care paid by residents who have not previously occupied aresidential living unit. (e) An application to the department for a Letter of Exemptionshall include all of the following: (1) A nonrefundable one thousand dollar ($1,000) application fee. (2) The name and business address of the applicant. (3) A description of the services and care available or providedto residents of the community or facility. (4) Documentation establishing that the requesting entitysatisfies the requirements for an exemption under this section,including all of the following: (A) A schedule showing all fees for assisted living services andskilled nursing care charged to residents at the facility orcommunity who have previously occupied a residential living unit. (B) A schedule showing all fees for assisted living services andskilled nursing care charged to residents at the facility orcommunity who have not previously occupied a residential living unit. (C) A description of the differences between the fees for assistedliving services and skilled nursing care charged to residents whohave not previously occupied a residential unit and the fees forassisted living services and skilled nursing care charged toresidents who have previously occupied a residential unit. (D) A schedule showing any other fees charged to residents of thecommunity or facility. (E) Copies of all admission and residence agreement forms thathave been entered into, or will be entered into, with residents atthe community or facility. (5) Any other information reasonably requested by the department. (f) If at any time any of the conditions stated in this sectionare not satisfied, then the requirements of this chapter apply, andthe department may impose appropriate remedies and penalties setforth in Article 7 (commencing with Section 1793.5).1771.4.  An entity may conduct a market test for a proposedcontinuing care retirement community and collect reservation feesfrom persons interested in residing at the proposed continuing careretirement community without violating this chapter if all of thefollowing conditions are met: (a) The entity has filed with the department an application for apermit to accept deposits and a certificate of authority for theproject. (b) The entity's application includes the proposed reservationagreement form and a proposed escrow agreement that provide all ofthe following: (1) All fees shall be deposited in escrow. (2) Refunds shall be made within 10 calendar days after the payer's or proposed resident's request or 10 days after denial of theapplication for a permit to accept deposits. (3) All reservation fees shall be converted to deposits within 15days after a permit to accept deposits is issued. (c) The department has acknowledged in writing its receipt of theentity's application and its approval of the entity's proposedreservation agreement between the payer and the entity and the escrowagreement between the escrow holder and the entity. (d) The amount of any reservation fee collected by the entity doesnot exceed one thousand dollars ($1,000) or 1 percent of the averageentrance fee amount as determined from the entity's application,whichever is greater. (e) The entity places all reservation fees collected by the entityinto an escrow under the terms of the approved reservation agreementand escrow agreement.1771.5.  The department shall not issue a provisional certificate ofauthority or a certificate of authority to an applicant until theapplicant has obtained licenses for the entire continuing careretirement community, including a license to operate the residentialliving and assisted living units, pursuant to Chapter 3.2 (commencingwith Section 1569) and if a skilled nursing facility is on thepremises, a license for the facility pursuant to Chapter 2(commencing with Section 1250).1771.6.  (a) Any entity may apply to the department for a Letter ofNonapplicability for reasons other than those specified in Section1771.3, which states that the provisions of this chapter do not applyto its community, project, or proposed project. (b) Applications for Letters of Nonapplicability shall be made tothe department in writing and include the following: (1) A nonrefundable one thousand dollar ($1,000) application fee. (2) A list of the reasons why the existing or proposed project maynot be subject to this chapter. (3) A copy of the existing or proposed contract between the entityand residents. (4) Copies of all advertising material. (5) Any other information reasonably requested by the department. (c) The department shall do both of the following: (1) Within seven calendar days, acknowledge receipt of the requestfor a Letter of Nonapplicability. (2) Within 30 calendar days after all materials are received,either issue the Letter of Nonapplicability or notify the entity ofthe department's reasons for denial of the request. (d) (1) If the department determines that the entity does notqualify for a Letter of Nonapplicability, the entity shall refrainfrom, or immediately cease, entering into continuing care contracts. (2) If an entity to which this subdivision applies intends toprovide continuing care, an application for a certificate ofauthority shall be required to be filed with the department pursuantto this chapter. (3) If an entity to which this subdivision applies does not intendto provide continuing care, it shall alter its plan of operation sothat the project is not subject to this chapter. To obtain a Letterof Nonapplicability for the revised project, the entity shall submita new application and fee.1771.7.  (a) No resident of a continuing care retirement communityshall be deprived of any civil or legal right, benefit, or privilegeguaranteed by law, by the California Constitution, or by the UnitedStates Constitution, solely by reason of status as a resident of acommunity. In addition, because of the discretely different characterof residential living unit programs that are a part of continuingcare retirement communities, this section shall augment Chapter 3.9(commencing with Section 1599), Sections 72527 and 87572 of Title 22of the California Code of Regulations, and other applicable state andfederal law and regulations. (b) A prospective resident shall have the right to visit each ofthe different care levels and to inspect assisted living and skillednursing home licensing reports including, but not limited to, themost recent inspection reports and findings of complaintinvestigations covering a period of no less than two years, prior tosigning a continuing care contract. (c) All residents in residential living units shall have all ofthe following rights: (1) To live in an attractive, safe, and well maintained physicalenvironment. (2) To live in an environment that enhances personal dignity,maintains independence, and encourages self-determination. (3) To participate in activities that meet individual physical,intellectual, social, and spiritual needs. (4) To expect effective channels of communication betweenresidents and staff, and between residents and the administration orprovider's governing body. (5) To receive a clear and complete written contract thatestablishes the mutual rights and obligations of the resident and thecontinuing care retirement community. (6) To manage his or her financial affairs. (7) To be assured that all donations, contributions, gifts, orpurchases of provider-sponsored financial products shall bevoluntary, and may not be a condition of acceptance or of ongoingeligibility for services. (8) To maintain and establish ties to the local community. (9) To organize and participate freely in the operation ofindependent resident organizations and associations. (d) A continuing care retirement community shall maintain anenvironment that enhances the residents' self-determination andindependence. The provider shall do both of the following: (1)  Encourage the formation of a resident association byinterested residents who may elect a governing body. The providershall provide space and post notices for meetings, and provideassistance in attending meetings for those residents who request it.In order to promote a free exchange of ideas, at least part of eachmeeting shall be conducted without the presence of any continuingcare retirement community personnel. The association may, among otherthings, make recommendations to management regarding resident issuesthat impact the residents' quality of life, quality of care,exercise of rights, safety and quality of the physical environment,concerns about the contract, fiscal matters, or other issues ofconcern to residents. The management shall respond, in writing, to awritten request or concern of the resident association within 20working days of receiving the written request or concern. Meetingsshall be open to all residents to attend as well as to presentissues. Executive sessions of the governing body shall be attendedonly by the governing body. (2) Establish policies and procedures that promote the sharing ofinformation, dialogue between residents and management, and access tothe provider's governing body. The provider shall biennially conducta resident satisfaction survey that shall be made available to theresident association or its governing body, or, if neither exists, toa committee of residents at least 14 days prior to the nextsemiannual meeting of residents and the governing board of theprovider required by subdivision (c) of Section 1771.8. A copy of thesurvey shall be posted in a conspicuous location at each facility. (e) In addition to any statutory or regulatory bill of rightsrequired to be provided to residents of residential care facilitiesfor the elderly or skilled nursing facilities, the provider shallprovide a copy of the bill of rights prescribed by this section toeach resident at the time or before the resident signs a continuingcare contract, and at any time when the resident is proposed to bemoved to a different level of care. (f) Each continuing care retirement community shall prominentlypost in areas accessible to the residents and visitors a notice thata copy of rights applicable to residents pursuant to this section andany governing regulation issued by the Continuing Care ContractsBranch of the State Department of Social Services is available uponrequest from the provider. The notice shall also state that theresidents have a right to file a complaint with the Continuing CareContracts Branch for any violation of those rights and shall containinformation explaining how a complaint may be filed, including thetelephone number and address of the Continuing Care Contracts Branch. (g) The resident has the right to freely exercise all rightspursuant to this section, in addition to political rights, withoutretaliation by the provider. (h) The department may, upon receiving a complaint of a violationof this section, request a copy of the policies and procedures alongwith documentation on the conduct and findings of anyself-evaluations and consult with the Continuing Care AdvisoryCommittee for determination of compliance. (i) Failure to comply with this section shall be grounds for theimposition of conditions on, suspension of, or revocation of theprovisional certificate of authority or certificate of authoritypursuant to Section 1793.21. (j) Failure to comply with this section constitutes a violation ofresidents' rights. Pursuant to Section 1569.49 of the Health andSafety Code, the department shall impose and collect a civil penaltyof not more than one hundred fifty dollars ($150) per violation upona continuing care retirement community that violates a rightguaranteed by this section.1771.8.  (a) The Legislature finds and declares all of thefollowing: (1) The residents of continuing care retirement communities have aunique and valuable perspective on the operations of and servicesprovided in the community in which they live. (2) Resident input into decisions made by the provider is animportant factor in creating an environment of cooperation, reducingconflict, and ensuring timely response and resolution to issues thatmay arise. (3) Continuing care retirement communities are strengthened whenresidents know that their views are heard and respected. (b) The Legislature encourages continuing care retirementcommunities to exceed the minimum resident participation requirementsestablished by this section by, among other things, the following: (1) Encouraging residents to form a resident association, andassisting the residents, the resident association, and its governingbody to keep informed about the operation of the continuing careretirement community. (2) Encouraging residents of a continuing care retirementcommunity or their elected representatives to select residents toparticipate as board members of the governing body of the provider. (3) Quickly and fairly resolving any dispute, claim, or grievancearising between a resident and the continuing care retirementcommunity. (c) The governing body of a provider, or the designatedrepresentative of the provider, shall hold, at a minimum, semiannualmeetings with the residents of the continuing care retirementcommunity, or the resident association or its governing body, for thepurpose of the free discussion of subjects including, but notlimited to, income, expenditures, and financial trends and issues asthey apply to the continuing care retirement community and proposedchanges in policies, programs, and services. Nothing in this sectionprecludes a provider from taking action or making a decision at anytime, without regard to the meetings required under this subdivision. (d) At least 30 days prior to the implementation of any increasein the monthly care fee, the designated representative of theprovider shall convene a meeting, to which all residents shall beinvited, for the purpose of discussing the reasons for the increase,the basis for determining the amount of the increase, and the dataused for calculating the increase. This meeting may coincide with thesemiannual meetings provided for in subdivision (c). At least 14days prior to the meeting to discuss any increase in the monthly carefee, the provider shall make available to each resident or residenthousehold comparative data showing the budget for the upcoming year,the current year's budget, and actual and projected expenses for thecurrent year, and a copy shall be posted in a conspicuous location ateach facility. (e) The governing body of a provider or the designatedrepresentative of the provider shall provide residents with at least14 days' advance notice of each meeting provided for in subdivisions(c) and (d), and shall permit residents attending the meeting topresent issues orally and in writing. The governing body of aprovider or the designated representative of the provider shall postthe notice of, and the agenda for, the meeting in a conspicuous placein the continuing care retirement community at least 14 days priorto the meeting. The governing body of a provider or the designatedrepresentative of the provider shall make available to residents ofthe continuing care retirement community upon request the agenda andaccompanying materials at least seven days prior to the meeting. (f) Each provider shall make available to the resident associationor its governing body, or if neither exists, to a committee ofresidents, a financial statement of activities for that facilitycomparing actual costs to budgeted costs broken down by expensecategory, not less than semiannually, and shall consult with theresident association or its governing body, or, if neither exists,with a committee of residents, during the annual budget planningprocess. The effectiveness of consultations during the annual budgetplanning process shall be evaluated at a minimum every two years bythe continuing care retirement community administration. Theevaluation, including any policies adopted relating to cooperationwith residents, shall be made available to the resident associationor its governing body, or, if neither exists, to a committee ofresidents at least 14 days prior to the next semiannual meeting ofresidents and the provider's governing body provided for insubdivision (c), and a copy of the evaluation shall be posted in aconspicuous location at each facility. (g) Each provider shall, within 10 days after the annual reportrequired pursuant to Section 1790 is submitted to the department,provide, at a central and conspicuous location in the community, acopy of the annual report, including the multifacility statement ofactivities, and including a copy of the annual audited financialstatement, but excluding personal confidential information. (h) Each provider shall maintain, as public information, availableupon request to residents, prospective residents, and the public,minutes of the board of director's meetings and shall retain theserecords for at least three years from the date the records were filedor issued. (i) The governing body of a provider that is not part of amultifacility organization with more than one continuing careretirement community in the state shall accept at least one residentof the continuing care retirement community it operates toparticipate as a nonvoting resident representative to the provider'sgoverning body. (j) In a multifacility organization having more than onecontinuing care retirement community in the state, the governing bodyof the multifacility organization shall elect either to have atleast one nonvoting resident representative to the provider'sgoverning body for each California-based continuing care retirementcommunity the provider operates or to have a resident-electedcommittee composed of representatives of the residents of eachCalifornia-based continuing care retirement community that theprovider operates select or nominate at least one nonvoting residentrepresentative to the provider's governing body for every threeCalifornia-based continuing care retirement communities or fractionthereof that the provider operates. If a multifacility organizationelects to have one representative for every three communities thatthe provider operates, the provider shall provide to the president ofthe residents association of each of the communities that do nothave a resident representative, the same notice of board meetings,board packets, minutes, and other materials as the residentrepresentative. At the reasonable discretion of the provider,information related to litigation, personnel, competitive advantage,or confidential information that is not appropriate to disclose, maybe withheld. (k) In order to encourage innovative and alternative models ofresident involvement, a resident selected pursuant to subdivision (i)to participate as a resident representative to the provider'sgoverning body may, at the option of the resident association, beselected in any one of the following ways: (1) By a majority vote of the resident association of a provideror by a majority vote of a resident-elected committee of residents ofa multifacility organization. (2) If no resident association exists, any resident may organize ameeting of the majority of the residents of the continuing careretirement community to select or nominate residents to representthem before the governing body. (3) Any other method designated by the resident association. ( l) The resident association, or organizing resident, or in thecase of a multifacility organization, the resident-elected committeeof residents, shall give residents of the continuing care retirementcommunity at least 30 days' advance notice of the meeting to select aresident representative and shall post the notice in a conspicuousplace at the continuing care retirement community. (m) (1) Except as provided in subdivision (n), the residentrepresentative shall receive the same notice of board meetings, boardpackets, minutes, and other materials as members and shall bepermitted to attend, speak, and participate in all meetings of theboard. (2) Resident representatives may share information from boardmeetings with other residents, unless the information is confidentialor doing so would violate fiduciary duties to the provider. Inaddition, a resident representative shall be permitted to attendmeetings of the board committee or committees that review the annualbudget of the facility or facilities and recommend increases inmonthly care fees. The resident shall receive the same notice ofcommittee meetings, information packets, minutes, and other materialsas committee members, and shall be permitted to attend, speak at,and participate in, committee meetings. Resident representativesshall perform their duties in good faith and with such care,including reasonable inquiry, as an ordinarily prudent person in alike position would use under similar circumstances. (n) Notwithstanding subdivision (m), the governing body mayexclude resident representatives from its executive sessions and fromreceiving board materials to be discussed during executive session.However, resident representatives shall be included in executivesessions and shall receive all board materials to be discussed duringexecutive sessions related to discussions of the annual budgets,increases in monthly care fees, indebtedness, and expansion of newand existing continuing care retirement communities. (o) The provider shall pay all reasonable travel costs for theresident representative. (p) The provider shall disclose in writing the extent of residentinvolvement with the board to prospective residents. (q) Nothing in this section prohibits a provider from exceedingthe minimum resident participation requirements of this section by,for example, having more resident meetings or more residentrepresentatives to the board than required or by having one or moreresidents on the provider's governing body who are selected with theactive involvement of residents. (r) On or before April 1, 2003, the department, with input fromthe Continuing Care Advisory Committee of the department establishedpursuant to Section 1777, shall do all of the following: (1) Make recommendations to the Legislature as to whether anychanges in current law regarding resident representation to the boardis needed. (2) Provide written guidelines available to residents andproviders that address issues related to board participation,including rights and responsibilities, and that provide guidance onthe extent to which resident representatives who are not votingmembers of the board have a duty of care, loyalty, and obedience tothe provider and the extent to which providers can classifyinformation as confidential and not subject to disclosure by residentrepresentatives to other residents.1771.10.  Each provider shall adopt a comprehensive disasterpreparedness plan specifying policies for evacuation, relocation,continued services, reconstruction, organizational structure,insurance coverage, resident education, and plant replacement.1772.  (a) No report, circular, public announcement, certificate,financial statement, or any other printed matter or advertisingmaterial, or oral representation, that states or implies that anentity sponsors, guarantees, or assures the performance of anycontinuing care contract, shall be published or presented to anyprospective resident unless both of the following have been met: (1) Paragraph (5) of subdivision (a) of Section 1788 applies andthe requirements of that paragraph have been satisfied. (2) The entity files with the department a duly authorized andexecuted written declaration that it accepts full financialresponsibility for each continuing care contract. The filing entityshall be subject to the application requirements set forth in Article2 (commencing with Section 1779), shall be a coobligor for thesubject contracts, and shall be a coprovider on the applicableprovisional certificate of authority and certificate of authority. (b) Implied sponsorship includes the use of the entity's name forthe purpose of implying that the entity's reputation may be reliedupon to ensure the performance of the continuing care contract. (c) Any implication that the entity may be financially responsiblefor these contracts may be rebutted by a conspicuous statement, inall continuing care contracts and marketing materials, that clearlydiscloses to prospective residents and all transferors that theentity is not financially responsible. (d) On written appeal to the department, and for good cause shown,the department may, in its discretion, allow an affinity groupexemption from this section. If an exemption is granted, everycontinuing care contract shall include a conspicuous statement whichclearly discloses to prospective residents and all transferors thatthe affinity group entity is not financially responsible. (e) If the name of an entity, including, but not limited to, areligion, is used in connection with the development, marketing, orcontinued operation of a continuing care retirement community, butthat entity does not actually own, control, manage, or otherwiseoperate the continuing care retirement community, the provider shallclearly disclose the absence of that affiliation, involvement, orassociation with the continuing care retirement community in thecontinuing care contract.1772.2.  (a) All printed advertising materials, including brochures,circulars, public announcements, and similar publications pertainingto continuing care or a continuing care retirement community shallspecify the number on the provider's provisional certificate ofauthority or certificate of authority. (b) If the provider has not been issued a certificate ofauthority, all advertising materials shall specify both of thefollowing: (1) Whether an application has been filed. (2) If applicable, that a permit to accept deposits or aprovisional certificate of authority has been issued.1773.  (a) A provisional certificate of authority or certificate ofauthority may not be sold, transferred, or exchanged in any manner. Aprovider may not sell or transfer ownership of the continuing careretirement community without the approval of the department. Anyviolation of this section shall cause the applicable provisionalcertificate of authority or certificate of authority to be forfeitedby operation of law pursuant to subdivision (c) of Section 1793.7. (b) A provider may not enter into a contract with a third partyfor overall management of the continuing care retirement communitywithout the approval of the department. The department shall reviewthe transaction for consistency with this chapter. (c) Any violation of this section shall be grounds for revocationfor the provider's provisional certificate of authority orcertificate of authority under Section 1793.21.1774.  No arrangement allowed by a permit to accept deposits, aprovisional certificate or authority, or a certificate of authorityissued by the department under this chapter may be deemed a securityfor any purpose.1775.  (a) To the extent that this chapter, as interpreted by thedepartment, conflicts with the statutes, regulations, orinterpretations governing the sale or hire of real property, thischapter shall prevail. (b) Notwithstanding any law or regulation to the contrary, aprovider for a continuing care retirement community may restrict orabridge the right of any resident, whether or not the resident ownsan equity interest, to sell, lease, encumber, or otherwise convey anyinterest in the resident's unit, and may require that the residentonly sell, lease, or otherwise convey the interest to personsapproved by the provider. Provider approval may be based on factorswhich include, but are not limited to, age, health status, insurancerisk, financial status, or burden on the provider's personnel,resources, or physical facility. The provider shall record anyrestrictions on a real property interest. (c) To the extent that this chapter conflicts with Sections 51.2and 51.3 of the Civil Code, this chapter shall have precedence. Acontinuing care provider, at its discretion, may limit entrance basedon age. (d) This chapter imposes minimum requirements upon any entitypromising to provide, proposing to promise to provide, or providingcontinuing care. (e) This chapter shall be liberally construed for the protectionof persons attempting to obtain or receiving continuing care. (f) A resident's entry into a continuing care contract describedin this chapter shall be presumptive evidence of the resident'sintent not to return to his or her prior residence to live forpurposes of qualifying for Medi-Cal coverage under Sections 14000 etseq. of the Welfare and Institutions Code and Section 50425 of Title22 of the California Code of Regulations.1776.  The department shall adopt, amend, or repeal, in accordancewith Chapter 3.5 (commencing with Section 11340) of Part 1 ofDivision 3 of Title 2 of the Government Code, reasonable regulationsas may be necessary or proper to carry out the purposes and intent ofthis chapter and to protect the rights of the elderly.1776.2.  The department may, by any duly authorized representative,inspect and examine any continuing care retirement community,including the books and records thereof, or the performance of anyservice required by the continuing care contracts.1776.3.  (a) The Continuing Care Contracts Branch of the departmentshall enter and review each continuing care retirement community inthe state at least once every three years to augment the branch'sassessment of the provider's financial soundness. (b) During its facility visits, the branch shall consider thecondition of the facility, whether the facility is operating incompliance with applicable state law, and whether the provider isperforming the services it has specified in its continuing carecontracts. (c) The branch shall issue guidelines that require each providerto adopt a comprehensive disaster preparedness plan, update that planat least every three years, submit a copy to the department, andmake copies available to residents in a prominent location in eachcontinuing care retirement community facility. (d) (1) The branch shall respond within 15 business days toresidents' rights, service-related, and financially relatedcomplaints by residents, and shall furnish to residents upon requestand within 15 business days any document or report filed with thedepartment by a continuing care provider, except documents protectedby privacy laws. (2) The branch shall provide the Continuing Care ContractsAdvisory Committee with a summary of all residents' rights,service-related, and financially related complaints by residents. Theprovider shall disclose any citation issued by the departmentpursuant to Section 1793.6 in its disclosure statement to residentsas updated annually, and shall post a notice of the citation in aconspicuous location in the facility. The notice shall include astatement indicating that residents may obtain additional informationregarding the citation from the provider and the department. (e) The branch shall annually review, summarize, and report to thedirector on the work of the Continuing Care Contracts AdvisoryCommittee, including any issues arising from its review of thecondition of any continuing care retirement community or anycontinuing care retirement community provider, and including anyrecommendations for actions by the committee, the department, or theLegislature to improve oversight of continuing care retirementcommunity.1776.4.  The department may contract with any entity to provideconsultation services. In providing the services, the entity shallconform to the requirements of this chapter and to the rules,regulations, and standards of the department. The department shallreimburse an entity for services performed pursuant to this section.1776.6.  (a) Pursuant to the California Public Records Act (Chapter3.5 (commencing with Section 6250) of Division 7 of Title 1 of theGovernment Code) and the Information Practices Act of 1977 (Chapter 1(commencing with Section 1798) of Title 1.8 of Part 4 of Division 3of the Civil Code), the following documents are public informationand shall be provided by the department upon request: auditedfinancial statements, annual reports and accompanying documents,compliance or noncompliance with reserve requirements, whether anapplication for a permit to accept deposits and certificate ofauthority has been filed, whether a permit or certificate has beengranted or denied, and the type of care offered by the provider. (b) The department shall regard resident data used in thecalculation of reserves as confidential.1777.  (a) The Continuing Care Advisory Committee of the departmentshall act in an advisory capacity to the department on mattersrelating to continuing care contracts. (b) The members of the committee shall include: (1) Three representatives of nonprofit continuing care providerspursuant to this chapter, each of whom shall have offered continuingcare services for at least five years prior to appointment. Onemember shall represent a multifacility provider and shall beappointed by the Governor in even years. One member shall beappointed by the Senate Committee on Rules in odd years. One membershall be appointed by the Speaker of the Assembly in odd years. (2) Three senior citizens who are not eligible for appointmentpursuant to paragraphs (1) and (4) who shall represent consumers ofcontinuing care services, all of whom shall be residents ofcontinuing care retirement communities but not residents of the sameprovider. One senior citizen member shall be appointed by theGovernor in even years. One senior citizen member shall be appointedby the Senate Committee on Rules in odd years. One senior citizenmember shall be appointed by the Speaker of the Assembly in oddyears. (3) A certified public accountant with experience in thecontinuing care industry, who is not a provider of continuing careservices. This member shall be appointed by the Governor in evenyears. (4) A representative of a for-profit provider of continuing carecontracts pursuant to this chapter. This member shall be appointed bythe Governor in even years. (5) An actuary. This member shall be appointed by the Governor ineven years. (6) One representative of residents of continuing care retirementcommunities appointed by the senior citizen representatives on thecommittee. (7) One representative of either nonprofit or for-profit providersappointed by the representatives of nonprofit and for-providerproviders on the committee. (c) Commencing January 1, 1997, all members shall serve two-yearterms and be appointed based on their interest and expertise in thesubject area. The Governor shall designate the chairperson for thecommittee with the advice and consent of the Senate. A member may bereappointed at the pleasure of the appointing power. The appointingpower shall fill all vacancies on the committee within 60 days. Allmembers shall continue to serve until their successors are appointedand qualified. (d) The members of the committee shall serve without compensation,except that each member shall be paid from the Continuing CareProvider Fee Fund a per diem of twenty-five dollars ($25) for eachday's attendance at a meeting of the committee not to exceed six daysin any month. The members of the committee shall also receive theiractual and n