THE EMPTY BAG: RCFEs and Liability Insurance

The Scenario: Let’s suppose your Mom, in her 80s, frail, and suffering from dementia, is a resident in an assisted living facility. One night she wanders away from the facility. Perhaps because the facility didn’t have sufficient night staff to care for her needs, or the alarm system wasn’t working, or staff forgot to close doors, or the alarm system wasn’t activated. She wanders out into the night, into oncoming headlights, and gets hit by a car. Maybe she’s severely injured, or maybe she dies as a result of her injuries. In either case, I’m guessing that you’ll want to make sure the Licensee responsible for your Mom’s 24/7 care and supervision is held accountable.

The Facts: Carrying liability insurance is not a prerequisite for obtaining an RCFE license from the state of California. Let me restate: California’s legislature does not think enough of your Mom (aged, frail, and demented) to require that people who care for her 24 hours a day, 7 days a week, carry liability insurance.

So What? When we consumers contract with RCFE owners to provide 24/7 care and supervision, we give them the control, care and custody of our loved ones. By contract, we make the Licensee the de facto guardian of our resident. Yet he isn’t required to demonstrate (either through posting a bond, or having liability insurance) that he could take financial responsibility for harm, injury, sickness or death to your Mom caused by the actions of him or his employees. Nor is he required to disclose to you that he doesn’t carry liability insurance. In a sample of 299 San Diego County facilities that have 6 beds or less, fewer than one in five had, or planned on carrying liability insurance.

Let’s assume your Mom lived in one of the many facilities not carrying liability insurance. How does your Mom, or the estate hold the Licensee accountable for the injury, harm, sickness or death your Mom suffered at the hands of the Licensee? Your Mom, or the estate can sue for damages in tort, end up in arbitration or, less likely, a jury trial, and maybe receive a judgment against the Licensee. But, here’s the news: the Licensee may have few assets to pay the judgment. In many cases, the Licensee doesn’t even own the facility – he rents or leases it. And because he didn’t carry a liability policy, there is no underwriter to satisfy the judgment on his behalf. Depending on how vigorous the resident or her estate is, they might be able to force liquidation of any assets the Licensee may have, but the more likely outcome is that the Licensee declares bankruptcy. With the Licensee uninsured for his wrongful or negligent acts, bankrupt and out of business, your Mom (or her estate) will discover too late that she’s holding an empty bag: No accountability. No compensation.

Public Policy: As a matter of both public policy and morality, the outcome for your Mom  is wrong.

The legislature has dealt with the issue of liability insurance in a different, albeit convoluted, manner in the Family Child Care Provider arena. Child Care is licensed and regulated under the Community Care Licensing umbrella just as RCFEs/assisting living facilities are, but the rules regarding liability insurance are decidedly more pro-consumer. According to the Child Care Law Center (, Family Child Care Providers are not required to have liability insurance but as a condition of licensure, must opt for one of three alternatives: 1) the facility must purchase liability insurance in the regulation-stipulated amounts, 2) the facility must purchase a bond in the amount of $300,000, or 3) the facility must notify the parents of the child, on a CCL-provided affidavit, that the facility maintains neither liability insurance nor a bond. The parent has to sign the form acknowledging that she has been so informed, or choose to move the child to an insured provider. The interesting twist is that if the provider does not own the premises used for care, the parent must also be informed in writing and must acknowledge that the property owner’s insurance “. . .may not cover losses related to the family child care.”  It’s not a perfect solution, but at least if the parent knows the extent of the care provider's liability, the parent can weigh the risks and decide whether to take his child to an insured provider.  But the key here is that It's all in the open. 

No California regulation provides the same transparency to your Mom, or another 200,000 like her, living in California's 8,000 RCFEs entrusted with their 24/7 care and supervision.  There is no mandatory requirement for liability insurance, and no requirement for mandatory disclosure that no liability insurance is carried.  

The state and the Licensees have swept this issue under the rug; that's why, for now, the onus is on you, or your Mom, as a consumer of long-term care.

What can you do? Two things: be a prudent consumer, and contact your legislator. The prudent consumer asks the Licensee a direct question:  Do you carry liability insurance?  He might tell you he does. Make sure he’s talking about liability insurance, not property damage/loss insurance. If the Licensee owns the property and carries a mortgage, the lender likely requires an active policy for property damage or loss. Even if the mortgage is paid off, the owner may still carry coverage for earthquake, fire and property damage and loss; the owner’s assets are protected by those policies, but offer no resident protections. If he asserts he has liability insurance, ask for proof. If the policy is legitimate, the broker or underwriter will be able to produce documentation within a day.  If your Mom lives in the facility for more than a year, ask for proof of insurance annually, on the anniversary of move in.  

Then contact your legislator. Demand reform of Title 22’s RCFE regulations. Surely,  our fathers, mothers, spouses, and others living in a residential care facility for the elderly are equally entitled to the same basic consumer protections of accountability and compensation that California gives to children and their families, and for that matter, gives to individuals harmed, injured or killed by a California motorist. (In California, any vehicle operated in the state must carry evidence of 3rd party financial responsibility at all times.)

And if you think CCL will provide accountability for the acts or failures to act of the Licensee, think again. The maximum penalty CCL may assess the Licensee is $150 for placing your Mom in harm’s way resulting in illness, injury or death. $150. That’s it.  At most, you will only get $150 worth of vicarious accountability from the state, and in most cases, the state won’t even collect the civil penalty. But that’s another blog.   

~ C. Murphy, TheAdvocate