Here is what Elderlaw expert Katherine Pearson said in 2011:
"Pennsylvania, as with many states that regulate CCRCs, mandates that residents
have a right to “self-organization.”65 Pennsylvania further requires that the board of
directors or a “designated representative” of the CCRC’s governing body must meet
with the residents on at least a quarterly basis for “free discussion of subjects which
may include income, expenditures and financial matters.”66 During meetings by the
authors with residents in Pennsylvania and other states between August 2010 and
April 2011, however, one of the most frequent inquiries was about whether residents
can and should be represented “on” the governing boards of CCRCs. Residents
point to this opportunity as among the most important ways for residents to develop
trust for the information and decisions coming from their communities’ leadership,
whether that leadership is connected to nonprofit or for-profit organizations.
New Jersey is among the leaders in the country in requiring a role for residents
on boards of directors. New Jersey law provides that the governing bodies of their
CCRCs must include “at least one resident as a full voting member.”67 The procedure
mandated by New Jersey law for selection of a representative allays the concerns
expressed by some governing bodies about hostile or disruptive members, by providing
that the resident members “shall be nominated by the elected representatives
of the residents and selected by the board of directors.”68 During a meeting
with more than 150 CCRC residents at the state-wide meeting of ORANJ in April,
2011, the authors heard from a number of attendees who spoke eloquently about
their experiences as resident members on CCRC governing boards in New Jersey.
New Jersey’s adoption of the resident-board member law in October 2007 was the
direct result of advocacy by the state-wide residents’ organization, ORANJ.69 The
recent transparency study by ORANJ also demonstrated that the longer residents
serve on boards, the greater the acceptance by the nonresident members, often
resulting in increasingly active roles for resident-members.70 Other jurisdictions
that require residents to be represented on governing boards of CCRCs include
Maryland,71Washington D.C.,72 California,73 Ohio,74 and Oregon75 although in the
latter three states, the residents have non-voting positions.
One objection sometimes raised to resident membership on boards of directors is
a concern for conflict of interest, pointing out that board members have a fiduciary
duty to the “organization,” rather than to fellow residents who are merely customers.
However, Pennsylvania already recognizes that members of boards of directors
for corporations are permitted to consider the “effects” of any corporation
decision on “any or all groups affected by such action, including . . . customers” when
determining what is in the best interest of the corporation, and board members may
do so without breaching their duty to the corporation.76 For CCRCs, there is a close
alliance with the mission of the organization and the interests of the residents,
although resident-members will need to understand that their fiduciary duties to
the organization may trump individual interests or short-sighted concerns of fellow
residents.
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65. 40 PA. STAT. ANN. §3215 (“Right of Organization”).
66. Id.
67. N.J. STAT. ANN. §52:27D-345 (e).
68. Id.
69. Success in Trenton – Residents Inclusion On Boards of Trustees Has Graduated From a Hope to a Reality,
http://oranjccrc.org/action.htm.
70. ORANJ Transparency Study Report, supra note 63.
71. Md. CODE ANN., HUM. SERV., §10-427 (mandating inclusion of “subscribers” as “full and regular”
members of governing bodies).
72. D.C. CODE §44-151.10(d).
73. CAL. HEALTH & SAFETY CODE §117.8(i).
74. OHIO REV. CODE ANN. §173.13(B).
75. OR. REV. STAT. §101.112(6).
Electronic copy available at: https://ssrn.com/abstract=2019705
80 PENNSYLVANIA BAR ASSOCIATION QUARTERLY | April 2011
Richmond Shreve
NaCCRA Board Member
Forum Moderator