HOUSE BILL REPORT

SSB 5854

As Amended by the House

BYSenate Committee on Financial Institutions (originally sponsored by Senators Kreidler, Moore, Metcalf and Deccio)

Providing for regulation of retirement care communities.

House Committe on Financial Institutions & Insurance

Majority Report:  Do pass with amendment.  (10)

      Signed by Representatives Lux, Chair; Zellinsky, Vice Chair; Crane, Day, Dellwo, Ferguson, Meyers, Niemi, Nutley and Winsley.

Minority Report:  Do not pass.  (2)

      Signed by Representatives Betrozoff and Chandler.

House Staff:John Conniff (786-7119)

Rereferred House Committee on Ways & Means/Appropriations

Majority Report:  Do pass with amendment by Committee on Financial Institutions & Insurance as further amended by Committee on Ways & Means/Appropriations.  (15)

      Signed by Representatives Locke, Chair; Allen, Belcher, Braddock, Brekke, Bristow, Grant, Grimm, Hine, McMullen, Niemi, Peery, Sayan, H. Sommers and Sprenkle.

Minority Report:  Do not pass.  (2)

      Signed by Representatives McLean and Silver.

House Staff:      Susan Kavanaugh (786-7145)

AS PASSED HOUSE APRIL 16, 1987

BACKGROUND:

Continuing care retirement communities (CCRC) are typically residential communities offering a complete range of housing and health care in one setting.  Continuing care contracts are usually life-long contracts that involve a significant investment by prospective residents. 

During the fall and winter of 1985-86 a CCRC advisory group was jointly appointed by the State Council on Aging and the State Health Coordinating Council.  The advisory group developed recommendations for legislation to protect CCRC consumers from some of the risks inherent in long-term residential and health service contracts.

SUMMARY:

The Continuing Care Retirement Community Act provides for extensive regulation of and disclosure by those persons seeking to provide continuing care contracts.  Providers offering continuing care contracts must be certified by the Department of Social and Health Services (DSHS) prior to marketing the contracts and prior to commencing construction of a new facility.  The Insurance Commissioner provides actuarial and rule-making advice when necessary.

DSHS has the authority to make and enforce rules; issue, revoke and suspend licenses and permits; and examine and audit all records and disclosure statements.  The form and contents of continuing care contracts must be approved by DSHS.  Approved disclosure documents must be available at the continuing care retirement community (CCRC) for public inspection.  Elements of the disclosure statements are enumerated in the act.

Any provider seeking to market contracts must submit information to DSHS dealing with actuarial, demographic and financial circumstances indicating the feasibility of the project.  An escrow plan, a model continuing care contract and other documents available to the consumer must be approved.  The provider must file annually a disclosure statement containing any material changes in the information required.  The disclosure statement available to the public must be continually updated to correct errors, misstatements, or omissions.  A transitional period is provided for existing CCRCs not in compliance with the act on its effective date.

Residents in CCRCs have the right to organize a resident council and to meet with administration as a council at least quarterly.  The CCRC must offer an approved group long-term care supplementary insurance plan to residents involved in certain types of continuing care contracts.

The unencumbered fair market value in real property may be used to satisfy the requirement that reserves be maintained by CCRCs in an amount sufficient to secure future obligations.

Civil and criminal penalties are established for those who function outside the rules set forth in the act.

All costs of regulation must be covered by fees charged continuing care retirement communities and applicants for continuing care retirement community licenses.

Fiscal Note:      Requested April 6, 1987.

Effective Date:This bill takes effect on July 1, 1988, but applies after December 30, 1988.

House Committee ‑ Testified For:    (Financial Institutions & Insurance)  Dan Rubin, State Health Coordinating Council; Dr. Ward Miles, Charles Reese, Department of Social and Health Services; Denny Allen, Department of Social Health Services; and Archie Knowles, attorney and resident of Panorama City.

(Ways & Means/Appropriations)  Dan Rubin, Acting Executive Director, State Health Coordinated Board.

House Committee - Testified Against:      (Financial Institutions & Insurance)  Bruce Roberts, Panorama Corporation.

(Ways & Means/Appropriations)  None Presented.

House Committee - Testimony For:    (Financial Institutions & Insurance)  Consumers have lost thousands of dollars because of fraud in the sale of CCRC contracts or because of the poor financing of CCRCs.  This measure not only affords consumers a remedy against unfair business practices, but also provides a review of the financial conditions of CCRCs to prevent insolvencies that harm senior residents of CCRCs.

(Ways & Means/Appropriations)  Bill protects seniors against unfair business practices and financial risk.

House Committee - Testimony Against:      (Financial Institutions & Insurance)  Some provisions of this act harm existing CCRCs.  Without further amendment, the act will unfairly burden CCRCs.

(Ways & Means/Appropriations)  None Presented.