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CCRC News, Oct. 15, 2015 Vol 22 Issue 23
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CCRC/Retirement Communities News

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Vol. 22 Issue 23

 

 

California Governor Jerry Brown Vetoes Bill Requiring CCRCs to Pay Interest on Delayed Entrance Fee Refunds – A bill filed on behalf of continuing care retirement community (CCRC) residents (HB 475) passed the California Legislature but was vetoed by Governor Jerry Brown last week. In his veto message to the State Senate, Brown said “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. For these reasons, I am not signing this bill.” If HB 475 had become law, it would have done the following:

  • Require a CCRC to pay a refund that is conditioned upon resale of a unit within 14 days after the resale of a unit.
  • Require any refund balance not paid to a resident within 180 days to accrue interest at a rate of 4% until the full lump-sum payment is made and at a rate of 6 % if not paid to a resident within 240 days.
  • Authorize any resident whose contract calls for a refund conditioned upon resale of a unit to file a complaint with the department if the unit has not been resold for more than 12 months after a contract is terminated.
  • Require the provider to repay an entrance fee owed to a resident within 20 business days of the department’s final determination that the provider did not make a sufficient good-faith effort to reoccupy or resell the unit.
The bill applied to contracts sold beginning January 1, 2016 and thus was not retroactive. Projects financed prior to January 1, 2016 with feasibility studies that did not anticipate this refund/interest methodology, were exempt as long as they entered into their first resident contract before January 1, 2017. The bill did not differentiate between contract termination due to death and those that are terminated voluntarily when a resident moves out of the community.

Providers and investment bankers were concerned that HB 475 would have an adverse effect on the availability of financing and possibly decrease the use of refundable entrance fee contracts. If the bill had become law, it probably would have been regarded as a model by resident groups in other states that are also concerned about the timeliness of entrance fee refunds. 

 


Change in Office of Insurance Regulation (OIR) Personnel – Effective September 23, 2015, Becky Griffith, OIR Financial Examiner/Analyst Supervisor, moved to the Office of the Insurance Consumer Advocate. A replacement has not been named, but in the interim, OIR Senior CCRC Analyst. Desmond Wilson (Desmond.Wilson@floir.com, 850/413-2483) will be responding to questions along with Carolyn M. Morgan, OIR Director, Life & Health Financial Oversight (carolyn.morgan@floir.com, 850/413-5233).

Chris Struk, recently promoted to Programs and Policy Coordinator for Life and Health, is wearing two hats and, for now, is continuing to review submissions requesting approval of continuing care contract changes. Chris’ contact information has not changed. He may be contacted at 850/413-2480 or Christopher.Struk@floir.com.

OIR is in the process of creating a separate unit that will be dedicated specifically to the regulation of continuing care retirement communities. This is a change that we think will be beneficial.

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