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Legal Resources

    Relevant Cases

  • Rogue Valley Manor (RVM) v. Pacific Retirement Services (PRS), August 2012: Residents sued PRS provider for failed development, and exorbitant management fees used to finance the development of other facilities. The case was settled with a freeze on management fee increases for 3 years; restructuring of the RVM board with resident and community representatives but no PRS representatives; and the establishment of a fiduciary duty by the boards of both RVM and PRS. The site contains all pertinent documents, press and pleadings for this important case at
    http://rvm.closereach.com/rvm-prs.html.

     

  • Herriot v. Channing House, Case No. C 06-6323 JF (RS), Westlaw citation at 2009 WL 225418 (N.D. Cal. 2009). In this unofficial reported ruling, the U.S. District Court granted summary judgment in favor of the CCRC defendant (Channing House) by refusing to allow the 90 year-old resident to remain in the independent living unit even though she was receiving 24 hour care. The plaintiff alleged her rights not to be forced to transfer to a more restrictive care setting by citing the Fair Housing Act and the Americans with Disabilities Act as the basis for relief.

     

  • Short v. CC-La Jolla, Inc. (Classic Residence) et al., Case No. GIC87707, filed in 2006 in the Superior Court of the State of California, County of San Diego. Resident filed a class action suit against the for-profit CCRC, and on October 3, 2008 the suit was subject to a court-approved settlement consisting of a one-time payment of $2,700,000 to class members and to cover legal fees; policies and procedures for the future operation of the Wellness Center; a series of maximum caps on increases in monthly fees and lasting for 10 years.

  • Barr v. United Methodist Church, 90 Cal. App.3d 259 (Cal.Ct.App. 1979). Residents from 14 nonprofit CCRCs in California, Hawaii, and Arizona filed a class action suit against the provider entity Pacific Homes Corporation. The provider argued that the church was not a legal entity and therefore was immune from the suit and financial liability. However, the California Court of Appeals held that the church was an unincorporated association that could be held legally liable, and that constitutional theories of due process and religious freedom did not prohibit the suit. The case was settled for 21 million in cash, some of which went to residents and some to the reorganization of the CCRCs and to provide supplemental medical and convalescent care for residents; honor fee schedules in original contracts; establish a resident assistance fund; and the right of residents to have representation on the provider’s board of directors.

    Federal IRS Rulings

  • Revenue Ruling 72-124, 1972-IRB 145, published in 1972. States requirements for CCRCs to qualify for federal income tax exemption as a 501(c)(3) non-profit organization. Note: Refer to case of Miriam Osborn Memorial Home Ass’n v. Assessor of City of Rye, 909 N.Y.S. 2d 493, New York Supreme Court, Appellate Division, 2010). Court denied exclusion from state property taxes on “charitable use” grounds by citing Rev. Rul. 72-124 above and noting that the CCRC did not meet the criteria for tax exemption as the facility was “largely limited to wealthy seniors.”

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  • I.R.S. Private Letter Ruling 20122040, 2010 WL 1961450, issued June 1, 2012. Although Private Letter Rulings are only binding on the parties involved, they provide usefulinsights into key issues. This ruling granted tax exemption to a parent company providing “oversight, supervision, management and strategic planning” to individual non-profit communities under its jurisdiction, termed “supported organizations” under IRC Section 509(a)(3).

    Other Key Resources

  • Legal Rights & Responsibilities in California’s CCRCs  (March 21, 2013), McGeorge School of Law, Institute for Administrative Justice/Legal Rights: Resident, provider, attorney, and regulatory perspectives on finances and rights issues as well as legislative directions: Legal Rights and Responsibilities in California Continuing Care Retirement Communities

  • Bart, Andrew I. The CCRC Conundrum, Legal Advisor. Provider Magazine, August 2012.  Summary of current legal challenges in CCRCs. The CCRC Conundrum

  • Pearson, Katherine C. & Wilkins, Joshua R. Symposium on the Future of Elder Law in Pennsylvania: Will Continuing Care Retirement Communities Continue? A Pennsylvania Law Update, Pennsylvania Bar Association Quarterly, April 2011, pp. 69-80. Excellent overview of CCRCs full of valuable resources and citations. (pdf)

  • Pearson, Katherine C., The Importance of Resident Voices in Regulation of Continuing Care Retirement Communities, Testimony at U.S. Senate Special Committee on Aging, July 16, 2010: Useful chart by state of relevant CCRC statutes and lawsuits.

  • National Senior Citizens Law Center. Questions to Consider When Evaluation Continuing Care Contracts.

  • Carlson, Eric M. Chapter 6 – Continuing Care Retirement Communities, Long Term Care Advocacy, September 2005.