Article 8 - Appointment of Administrators

California Health and Safety Code — §§ 1793.50-1793.62

Sections (9)

Amended by Stats. 2000, Ch. 820, Sec. 58. Effective January 1, 2001.

(a)An entity that accepts deposits and proposes to promise to provide care without having a current and valid permit to accept deposits is guilty of a misdemeanor.

(b)An entity that accepts deposits and fails to place any deposit received into an escrow account as required by this chapter is guilty of a misdemeanor.

(c)An entity that executes a continuing care contract without holding a current and valid provisional certificate of authority or certificate of authority is guilty of a misdemeanor.

(d)An entity that abandons a continuing care retirement community or its obligations under a continuing care contract is guilty of a misdemeanor. An entity that violates this section shall be liable to the injured resident for treble the amount of damages assessed in any civil action brought by or on behalf of the resident in any court having proper jurisdiction. The court may, in its discretion, award all costs and attorney fees to the injured resident, if that resident prevails in the action.

(e)Each violation of subdivision (a), (b), (c), or (d) is subject to a fine not to exceed ten thousand dollars ($10,000), or by imprisonment in the county jail for a period not to exceed one year, or by both.

(f)An entity that issues, delivers, or publishes, or as manager or officer or in any other administrative capacity, assists in the issuance, delivery, or publication of any printed matter, oral representation, or advertising material which does not comply with the requirements of this chapter is guilty of a misdemeanor.

(g)A violation of subdivision (f) by an entity will constitute cause for the suspension of all and any licenses, permits, provisional certificates of authority, and certificates of authority issued to that entity by any agency of the state.

(h)A violation under this section is an act of unfair competition as defined in Section 17200 of the Business and Professions Code.

§ 1793.6

Amended by Stats. 2000, Ch. 820, Sec. 59. Effective January 1, 2001.

(a)The department may issue citations pursuant to this section containing orders of abatement and assessing civil penalties against any entity that violates Section 1771.2 or 1793.5.

(b)If upon inspection or investigation, the department has probable cause to believe that an entity is violating Section 1771.2 or 1793.5, the department may issue a citation to that entity. Each citation shall be in writing and shall describe with particularity the basis of the citation. Each citation shall contain an order of abatement. In addition to the administrative fines imposed pursuant to Section 1793.27, an entity that violates the abatement order shall be liable for a civil penalty in the amount of two hundred dollars ($200) per day for violation of the abatement order.

(c)The civil penalty authorized in subdivision (b) shall be imposed if a continuing care retirement community is operated without a provisional certificate of authority or certificate of authority and the operator refuses to seek a certificate of authority or the operator seeks a certificate of authority and the application is denied and the operator continues to operate the continuing care retirement community without a provisional certificate of authority or certificate of authority, unless other remedies available to the department, including prosecution, are deemed more appropriate by the department.

(d)Service of a citation issued under this section may be made by certified mail at the last known business address or residence address of the entity cited.

(e)Within 15 days after service of a citation under this section, an entity may appeal in writing to the department with respect to the violations alleged, the scope of the order of abatement, or the amount of civil penalty assessed.

(f)If the entity cited fails without good cause to appeal in writing to the department within 15 business days after service of the citation, the citation shall become a final order of the department. The department may extend the 15-day period for good cause, to a maximum of 15 additional days.

(g)If the entity cited under this section makes a timely appeal of the citation, the department shall provide an opportunity for a hearing. The department shall thereafter issue a decision, based on findings of fact, affirming, modifying, or vacating the citation or directing other appropriate relief. The proceedings under this section shall be conducted in accordance with the provisions of Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the department shall have all the powers granted therein.

(h)After exhaustion of the review procedures specified in this section, the department may apply to the appropriate superior court for a judgment in the amount of the civil penalty and an order compelling the cited entity to comply with the order of abatement. The application, which shall include a certified copy of the final order of the department shall be served upon the cited entity who shall have five business days to file that entity’s response in writing in the superior court. This period may be extended for good cause. Failure on the part of the cited entity to respond shall constitute grounds for entry of a default judgment against that entity. In the event a response is timely filed in superior court, the action shall have priority for trial over all other civil matters.

(i)Notwithstanding any other provision of law, the department may waive part or all of the civil penalty if the entity against whom the civil penalty is assessed satisfactorily completes all the requirements for, and is issued, a provisional certificate of authority or certificate of authority.

(j)Civil penalties recovered pursuant to this section shall be deposited into the Continuing Care Provider Fee Fund.

§ 1793.50

Amended by Stats. 2011, Ch. 32, Sec. 15. (AB 106) Effective June 29, 2011. Operative January 1, 2012, by Sec. 73 of Stats. 2011, Ch. 32.

(a)The department may petition the superior court for an order appointing a qualified administrator to operate a continuing care retirement community, and thereby mitigate imminent crisis situations where elderly residents could lose support services or be moved without proper preparation, in any of the following circumstances:

(1)The provider is insolvent or in imminent danger of becoming insolvent.

(2)The provider is in a financially unsound or unsafe condition.

(3)The provider has failed to establish or has substantially depleted the reserves

required by this chapter.

(4)The provider has failed to submit a plan, as specified in Section 1793.13, the department has not approved the plan submitted by the provider, the provider has not fully implemented the plan, or the plan has not been successful.

(5)The provider is unable to fully perform its obligations pursuant to continuing care contracts.

(6)The residents are otherwise placed in serious jeopardy.

(b)The administrator may only assume the operation of the continuing care retirement community in order to accomplish one or more of the following: rehabilitate the provider to enable it fully to perform its continuing care contract obligations; implement a plan of reorganization acceptable to the department; facilitate the transition where

another provider assumes continuing care contract obligations; or facilitate an orderly liquidation of the provider.

(c)With each petition, the department shall include a request for a temporary restraining order to prevent the provider from disposing of or transferring assets pending the hearing on the petition.

(d)The provider shall be served with a copy of the petition, together with an order to appear and show cause why management and possession of the provider’s continuing care retirement community or assets should not be vested in an administrator.

(e)The order to show cause shall specify a hearing date, which shall be not less than five nor more than 10 days following service of the petition and order to show cause on the provider.

(f)Petitions to appoint an administrator shall have precedence over all matters, except criminal matters, in the court.

(g)At the time of the hearing, the department shall advise the provider and the court of the name of the proposed administrator.

(h)If, at the conclusion of the hearing, including such oral evidence as the court may consider, the court finds that any of the circumstances specified in subdivision (a) exist, the court shall issue an order appointing an administrator to take possession of the property of the provider and to conduct the business thereof, enjoining the provider from interfering with the administrator in the conduct of the rehabilitation, and directing the administrator to take steps toward removal of the causes and conditions which have made rehabilitation necessary, as the court may direct.

(i)The order shall include a provision directing the issuance of a notice of the rehabilitation proceedings to the residents at the continuing care retirement community and to other interested persons as the court may direct.

(j)The court may permit the provider to participate in the continued operation of the continuing care retirement community during the pendency of any appointments ordered pursuant to this section and shall specify in the order the nature and scope of the participation.

(k)The court shall retain jurisdiction throughout the rehabilitation proceeding and may issue further orders as it deems necessary to accomplish the rehabilitation or orderly liquidation of the continuing care retirement community in order to protect the residents of the continuing care retirement

community.

§ 1793.52

Amended by Stats. 1995, Ch. 920, Sec. 66. Effective January 1, 1996.

The court-appointed administrator shall immediately notify the residents of that appointment and of the status of the continuing care retirement community management.

§ 1793.54

Amended by Stats. 1995, Ch. 920, Sec. 67. Effective January 1, 1996.

If an administrator is appointed to rehabilitate a provider, the administrator may do any of the following:

(a)Take possession of and preserve, protect and recover any assets, books, records, or property of the provider, including, but not limited to, claims or causes of action belonging to, or which may be asserted by, the provider.

(b)Deal with the property in the administrator’s name in the capacity as administrator, and purchase at any sale any real estate or other asset upon which the provider may hold any lien or encumbrance or in which the provider may have an interest.

(c)File, prosecute, and defend or compromise any suit or suits which have been filed, or which may thereafter be filed, by or against the provider as necessary to protect the provider or the residents or any property affected thereby.

(d)Deposit and invest any of the provider’s available funds.

(e)Pay all expenses of the rehabilitation.

(f)Perform all duties of the provider in the provision of care and services to residents in the continuing care retirement community at the time the administrator takes possession.

(g)Facilitate the orderly transfer of residents should the provider ultimately fail.

(h)Exercise any other powers and duties as may be authorized by law or provided by order of the court.

§ 1793.56

Amended by Stats. 2000, Ch. 820, Sec. 74. Effective January 1, 2001.

(a)The appointed administrator is entitled to reasonable compensation.

(b)The costs compensating the administrator may be charged against the assets of the provider. When the provider’s assets and assets from the continuing care retirement community are insufficient, the department, in its discretion, may compensate the administrator from the Continuing Care Provider Fee Fund.

(c)Any individual appointed administrator, pursuant to Section 1793.50, shall be held harmless for any negligence in the performance of his or her duties and the provider shall indemnify the administrator for all costs of defending actions brought against him or her in his or her capacity as administrator.

§ 1793.58

Amended by Stats. 2000, Ch. 820, Sec. 75. Effective January 1, 2001.

(a)The department, administrator, or any interested person, upon due notice to the administrator, at any time, may apply to the court for an order terminating the rehabilitation proceedings and permitting the provider to resume possession of the provider’s property and the conduct of the provider’s business.

(b)The court shall not issue the order requested pursuant to subdivision (a) unless, after a full hearing, the court has determined that the purposes of the proceeding have been fully and successfully accomplished and that the continuing care retirement community can be returned to the provider’s management without further jeopardy to the residents of the continuing care retirement community, creditors, owners of the continuing care retirement community, and to the public.

(c)Before issuing any order terminating the rehabilitation proceeding the court shall consider a full report and accounting by the administrator regarding the provider’s affairs, including the conduct of the provider’s officers, employees, and business during the rehabilitation and the provider’s current financial condition.

(d)Upon issuance of an order terminating the rehabilitation, the department shall reinstate the provisional certificate of authority or certificate of authority. The department may condition, suspend, or revoke the reinstated certificate only upon a change in the conditions existing at the time of the order or upon the discovery of facts which the department determines would have resulted in a denial of the request for an order terminating the rehabilitation had the court been aware of these facts.

§ 1793.60

Amended by Stats. 2011, Ch. 32, Sec. 16. (AB 106) Effective June 29, 2011. Operative January 1, 2012, by Sec. 73 of Stats. 2011, Ch. 32.

(a)If at any time the department determines that further efforts to rehabilitate the provider would not be in the best interest of the residents or prospective residents, or would not be economically feasible, the department may apply to the court for an order of liquidation and dissolution or may apply for other appropriate relief for dissolving the property and bringing to conclusion its business affairs.

(b)Upon issuance of an order directing the liquidation or dissolution of the provider, the department shall revoke the provider’s provisional certificate of authority or certificate of authority.

§ 1793.62

Amended by Stats. 2009, Ch. 500, Sec. 49. (AB 1059) Effective January 1, 2010.

(a)The department, administrator, or any interested person, upon due notice to the parties, may petition the court for an order terminating the rehabilitation proceedings when the rehabilitation efforts have not been successful, the continuing care retirement community has been sold at foreclosure sale, the provider is the subject of an order for relief in bankruptcy, or the provider has otherwise been shown to be unable to perform its obligations under the continuing care contracts.

(b)The court shall not issue the order requested pursuant to subdivision (a) unless all of the following have occurred:

(1)There has been a full hearing and the court has

determined that the provider is unable to perform its contractual obligations.

(2)The administrator has given the court a full and complete report and financial accounting signed by the administrator as being a full and complete report and accounting.

(3)The court has determined that the residents of the continuing care retirement community have been protected to the extent possible and has made such orders in this regard as the court deems proper.