As we've reported in a previous blog posts (here and here), a case challenging the practice of assisted living facilities charging a "community fee" on entering the facility has been wending it's way through the Massachusetts court system over the last several years. Now, the Supreme Judicial Court has ruled in James M. Ryan v. Mary Ann Morse Healthcare Corp. (SJC-12708, Dec. 5, 2019), that assisted living facilities are subject to landlord-tenant law including its security deposit regulations. The assisted living facility industry had been arguing that the landlord-tenant laws were preempted by assisted living statutes and regulations.
While the assisted living industry has lost this battle, it has not entirely lost the war because the SJC finds that the security deposit law
allows for additional upfront charges for the distinctive services assisted living facilities provide that are not applicable to traditional landlord-tenant relationships. Indeed, the ALR statute and corresponding regulations expressly provide for the payment of particular fees related to initial assessments of residents to determine their suitability for placement in an assisted living facility.
Accordingly, the SJC remands the case back to the superior court to determine the use of the "community fee" that was charged.
In coming to its decision, the SJC observes that the assisted living statute is ambiguous about how it interacts with other consumer protection laws, but finds that the legislature did not intend it to supersede the normal protections provided tenants. However, it also recognizes the unique nature of assisted living facilities and the need those facilities have to evaluate potential residents before moving in to make sure that they can provide the necessary assistance:
Because the provision of services is at the core of what an ALR does for its residents, it is crucial that the services be tailored for each individual resident, and that the ALR have the ability to appropriately furnish such services. An ALR would not be able to adequately "provide for the health, safety, and welfare" of residents in accordance with the ALR statute's purpose if it admitted an individual that the ALR was ill equipped to care for.
As a result, the SJC finds that the assisted living statute contemplated facilities charging for pre-admission screening and assessment. However,
To be permissible, the purpose and the use of the community fee must correspond to
either the on-boarding services enumerated in [the assisted living statute], or other services designed specifically for ALRs. In other words, the permissibility of the community fee will hinge on a determination of (1) the actual purpose and use of the fee, and (2) whether such purpose and use are for distinctive ALR specific services, rather than general maintenance or other aspects of a generic residential tenancy.
This analysis will be conducted by the superior court on remand.
What Does This Mean for Assisted Living Facility Residents?
As I pointed out in a recent post, Assisted Living and Wishful Thinking, the dilemma played out in this litigation reflects the fact that assisted living facilities are neither fish nor foul. They are basically apartments with services and those services are only adequate for residents who need a minimum of care. While the facilities can screen out potential residents who need too much care at the outset, they can't prevent the normal process of aging. Difficulties for the facilities, their residents and the families of residents often develop when residents deteriorate and need additional care that the facility does not provide or provides at a cost the resident and her family cannot afford.
For future assisted living residents, this decision probably will make little difference. Assisted living facilities will tighten up their residency agreements to make sure they do not run afoul of this decision. That said, the decision is not limited to security deposits and it may be that landlord-tenant law provides other protections that assisted living residency agreements habitually violate.
Either way, current and past assisted living residents may well have claims for damages for having paid "community fees" that violate the security deposit statute. Several potential class actions are in the works. Anyone who feels that they or a family member may have paid a "community fee" that could not be justified under the Ryan decision may contact me by email at firstname.lastname@example.org and I will connect them with the attorneys litigating these cases.