HB 1303

1	A bill to be entitled
2	An act relating to continuing care contracts; amending s.
3	651.026, F.S.; requiring continuing care providers to
4	provide additional information in annual reports to the
5	Office of Insurance Regulation; applying financial
6	viability assessment measures to an operator under certain
7	circumstances; amending s. 651.0261, F.S.; authorizing the
8	office to require providers to file quarterly financial
9	statements under certain circumstances; amending s.
10	651.051, F.S.; permitting the removal of certain assets
11	and records of a provider from the state if certain notice
12	is provided to the residents' council; amending ss.
13	651.081 and 651.083, F.S.; providing additional rights
14	relating to financial accountability by the provider for
15	residents of continuing care facilities; amending s.
16	651.085, F.S.; revising provisions relating to quarterly
17	meetings between residents and the governing body of the
18	provider; amending s. 651.091, F.S.; requiring continuing
19	care facilities to provide certain information to the
20	public; revising the time period within which the facility
21	is required to provide an annual report to the residents'
22	organization; amending s. 651.105, F.S.; authorizing the
23	office to require additional information from the provider
24	during examinations and inspections; amending s. 651.106,
25	F.S.; requiring the office to provide notice prior to
26	denying, suspending, or revoking certificates of authority
27	under certain circumstances; amending s. 651.1151, F.S.;
28	authorizing the office to require providers to submit
29	certain contracts for review; providing that actions
30	omitted by the office in response to petition by a
31	residents' organization or resident are subject to review
32	under ch. 120, F.S., under certain circumstances;
33	providing an effective date.
34
35	Be It Enacted by the Legislature of the State of Florida:
36
37	Section 1.  Subsections (2) and (3) of section 651.026,
38	Florida Statutes, are amended to read:
39	651.026  Annual reports.--
40	(2)  The annual report shall be in such form as the
41	commission prescribes and shall contain at least the following:
42	(a)  Any change in status with respect to the information
43	required to be filed under s. 651.022(2).
44	(b)  Financial statements audited by an independent
45	certified public accountant, which shall contain, for two or
46	more periods if the facility has been in existence that long,
47	the following:
48	1.  An accountant's opinion and, in accordance with
49	generally accepted accounting principles:
50	a.  A balance sheet;
51	b.  A statement of income and expenses;
52	c.  A statement of equity or fund balances; and
53	d.  A statement of changes in cash flows; and
54	e.  If the provider's financial statements are consolidated
55	with those of another entity, a consolidating balance sheet and
56	consolidating statements of income and expenses, equity or fund
57	balances, and cash flows, which report in separate columns the
58	separate data for each entity, the eliminations, and the
59	consolidated data.
60	2.  Notes to the financial statements considered customary
61	or necessary to full disclosure or adequate understanding of the
62	financial statements, financial condition, and operation.
63	3.  A supplemental statement of income and expenses
64	indicating by department cost center, pursuant to s. 651.085(4),
65	the income and expenses of each department in sufficient detail
66	to present to the residents a meaningful summary of operations
67	for each reporting period and with sufficient consistency to
68	permit period-to-period comparison by the residents.
69	(c)  The following financial information:
70	1.  A detailed listing of the assets maintained in the
71	liquid reserve as required in s. 651.035 and in accordance with
72	part II of chapter 625;
73	2.  An itemized A schedule of giving additional information
74	relating to property, plant, and equipment having an original
75	cost of at least $25,000, so as to show in reasonable detail
76	with respect to each separate facility original costs,
77	accumulated depreciation, net book value, appraised value or
78	insurable value and date thereof, insurance coverage,
79	encumbrances, and net equity of appraised or insured value over
80	encumbrances. Any property not used in continuing care shall be
81	shown separately from property used in continuing care;
82	3.  The level of participation in Medicare or Medicaid
83	programs, or both;
84	4.  A statement of all fees required of residents,
85	including, but not limited to, a statement of the entrance fee
86	charged, the monthly service charges, the proposed application
87	of the proceeds of the entrance fee by the provider, and the
88	plan by which the amount of the entrance fee is determined if
89	the entrance fee is not the same in all cases; and
90	5.  Any change or increase in fees and any change or
91	decrease in when the provider changes either the scope of, or
92	the rates for, care or services, regardless of whether the
93	change in fees involves the basic rates and services rate or
94	only those services available at additional costs to the
95	resident.
96	6.a.  If the provider has more than one certificated
97	facility, it shall submit a statement of operations for each
98	facility as supplemental information to the audited financial
99	statements required as part of the annual report.
100	b.  If the provider has operations that are not Florida
101	certificated facilities, the provider shall also submit as
102	supplemental information to the audited financial statements,
103	balance sheets, statements of changes in equity, and statements
104	of cash flows for each Florida certificated facility.
105	(d)  Such other reasonable data, financial statements, and
106	pertinent information as the commission or office may require
107	with respect to the provider or the facility, or its directors,
108	trustees, members, branches, subsidiaries, or affiliates, to
109	determine the financial status of the facility, and the
110	management capabilities of its managers and owners, and the
111	provider's substantial compliance with the continuing care
112	contract filed with the office pursuant to s. 651.091(3).
113	(e)  Each facility shall file with the office annually,
114	together with the annual report required by this section, a
115	computation of its minimum liquid reserve calculated in
116	accordance with s. 651.035 on a form prescribed by the
117	commission.
118	(3)  The commission shall adopt by rule meaningful measures
119	of assessing the financial viability of a provider and, if a
120	separate entity, an operator. The rule may include the following
121	factors:
122	(a)  Debt service coverage ratios.
123	(b)  Current ratios.
124	(c)  Adjusted current ratios.
125	(d)  Cash flows.
126	(e)  Occupancy rates.
127	(f)  Other measures, ratios, or trends.
128	(g)  Other factors as may be appropriate.
129	Section 2.  Section 651.0261, Florida Statutes, is amended
130	to read:
131	651.0261  Quarterly statements.--If the office finds,
132	pursuant to rules of the commission, that such information is
133	needed to properly monitor the financial condition of a provider
134	or facility or is otherwise needed to protect the interests of
135	the facility's residents or the public interest, the office
136	shall may require the provider to file, within 45 days after the
137	end of each fiscal quarter, a quarterly unaudited financial
138	statement of the provider or of the facility in the form
139	prescribed by the commission by rule. The commission may by rule
140	require all or part of the statements or filings required under
141	this section to be submitted by electronic means in a computer-
142	readable form compatible with the electronic data format
143	specified by the commission. The provider shall deliver to the
144	president or chair of the residents' organization a complete
145	copy of each such quarterly statement within 10 days after the
146	statement is filed with the office.
147	Section 3.  Section 651.051, Florida Statutes, is amended
148	to read:
149	651.051  Maintenance of assets and records in state.--No
150	records or assets may be removed from this state by a provider
151	unless the office consents to such removal in writing before
152	such removal. Such consent shall be based upon the provider's
153	submitting satisfactory evidence that the removal will
154	facilitate and make more economical the operations of the
155	provider and will not diminish the service or protection
156	thereafter to be given the provider's residents in this state.
157	Prior to such removal, the provider shall give notice to the
158	president or chair of the facility's residents' council. If such
159	removal is part of a cash management system which has been
160	approved by the office, disclosure of the system to the
161	residents' council shall meet the notification requirements.
162	Section 4.  Subsection (2) of section 651.081, Florida
163	Statutes, is renumbered as subsection (3), and a new subsection
164	(2) is added to that section to read:
165	651.081  Continuing care facilities residents'
166	organizations.--
167	(2)  Residents have the right, exercisable through a
168	residents' organization, to full accountability by the provider
169	and operator for the finances of the facility, including all
170	uses of residents' monthly maintenance fees. If the facility has
171	a residents' organization, the provider and operator shall
172	provide the residents' organization with the following:
173	(a)  At least quarterly, an accounting of receipts,
174	expenses, and other uses of funds, by department cost center, as
175	required under s. 651.085(4).
176	(b)  Any accounting or financial information and an
177	explanation thereof requested by the residents' organization for
178	a specified account or item.
179	(c)  The accounts and records of the facility, for
180	examination by the residents' organization or by such
181	individuals or firms as the residents' organization may choose
182	to make such examinations on its behalf.
183	Section 5.  Paragraph (c) of subsection (1) of section
184	651.083, Florida Statutes, is amended, and paragraphs (h) and
185	(i) are added to subsection (1) of that section, to read:
186	651.083  Residents' rights.--
187	(1)  No resident of any facility shall be deprived of any
188	civil or legal rights, benefits, or privileges guaranteed by
189	law, by the State Constitution, or by the United States
190	Constitution solely by reason of status as a resident of a
191	facility. Each resident of a facility has the right to:
192	(c)  Unrestricted private communication, including
193	receiving and sending unopened correspondence by electronic and
194	all other means.
195	(h)  Full accountability for the finances of the facility,
196	recognizing that monthly maintenance fees are resident funds to
197	be used only for the benefit of residents and accounted for as
198	such in a consistent format that allows residents to make
199	period-to-period comparisons.
200	(i)  Receive advance notice of all proposed changes in
201	fees, services, procedures, and policies that may affect the
202	finances or welfare of residents.
203	Section 6.  Section 651.085, Florida Statutes, is amended
204	to read:
205	651.085  Quarterly meetings between residents and the
206	governing body of the provider; resident representation before
207	the governing body of the provider.--
208	(1)  The governing body of a provider, or the designated
209	representative of the provider, shall hold quarterly meetings
210	with the residents of the continuing care facility for the
211	purpose of free discussion of subjects including, but not
212	limited to, income, expenditures, and financial trends and
213	problems as they apply to the facility, as well as disclosure
214	and a discussion of all on proposed changes in policies,
215	programs, and services. Upon request of the residents'
216	organization, a member of the governing body of the provider,
217	such as a board member, a general partner, or a principal owner
218	shall attend such meetings. Residents shall be entitled to at
219	least 7 days' advance notice of each quarterly meeting. During
220	the advance notice period, the An agenda and any materials that
221	will be distributed by the governing body or representative of
222	the provider shall be posted in a conspicuous place at the
223	facility and shall be available upon request to residents of the
224	facility. The office shall request verification from a facility
225	that quarterly meetings are held and open to all residents when
226	it receives a complaint from the residents' council that a
227	facility is not in compliance with the provisions of this
228	subsection. In addition, a facility shall report to the office
229	in the annual report required under s. 651.026 the dates on
230	which quarterly meetings were held during the reporting period.
231	(2)  A residents' organization formed pursuant to s.
232	651.081, members of which are elected by the residents, may
233	designate a resident to represent them before the governing body
234	of the provider or organize a meeting or ballot election of the
235	residents of the facility to determine whether to elect a
236	resident to represent them before the governing body of the
237	provider. If a residents' organization as described in s.
238	651.081 does not exist, any resident may organize a meeting or
239	ballot election of the residents of the facility to determine
240	whether to elect a resident to represent them before the
241	governing body and, if applicable, elect the representative. The
242	residents' organization, or the resident that organizes a
243	meeting or ballot election to elect a representative, shall give
244	all residents of the facility notice at least 10 business days
245	before the meeting or election. Notice may be given through
246	internal mailboxes, communitywide newsletters, bulletin boards,
247	in-house television stations, and other similar means of
248	communication. An election of the representative is valid if at
249	least 40 percent of the total resident population participates
250	in the election and a majority of the participants vote
251	affirmatively for the representative. The initial designated
252	representative elected under this section shall be elected to
253	serve for a period of at least 12 months.
254	(3)  If the provider holding the certificate of authority
255	for a facility and the operator of the facility are different
256	individuals or entities, the residents' organization is
257	entitled, upon request, to designate a majority of the voting
258	members of the governing body of the operator. The designated
259	voting members representative shall be notified at least 14 days
260	in advance of all meetings any meeting of the full governing
261	body and at which proposed changes in resident fees or services
262	will be discussed. The representative shall be entitled invited
263	to attend the entire meeting and participate in discussions of
264	all matters considered during the meeting that portion of the
265	meeting designated for the discussion of such changes. Minutes
266	of all meetings of the operator of the facility shall be
267	available to the residents for inspection in the facility's
268	office and copies shall be furnished to residents upon request
269	and payment of a reasonable charge to cover copying costs.
270	(4)  At a quarterly meeting prior to the implementation of
271	any increase in the monthly maintenance fee, the designated
272	representative of the provider must provide the reasons, by
273	department cost centers, for any increase in the fee that
274	exceeds the most recently published Consumer Price Index for all
275	Urban Consumers, all items, Class A Areas of the Southern
276	Region. Nothing in this subsection shall be construed as placing
277	a cap or limitation on the amount of any increase in the monthly
278	maintenance fee, establishing a presumption of the
279	appropriateness of the Consumer Price Index as the basis for any
280	increase in the monthly maintenance fee, or limiting or
281	restricting the right of a provider to establish or set monthly
282	maintenance fee increases, provided the proposed increases and
283	the reasons for the increases are fully and accurately disclosed
284	to the residents in advance.
285	Section 7.  Section 651.091, Florida Statutes, is amended
286	to read:
287	651.091  Availability, distribution, and posting of reports
288	and records; requirement of full disclosure.--
289	(1)  Each continuing care facility shall maintain as public
290	information, available upon request, records of all cost and
291	inspection reports pertaining to that facility that have been
292	filed with or issued by any governmental agency. A copy of each
293	such report shall be retained in such records for not less than
294	5 years from the date the provider notifies the residents'
295	organization in writing that the report has been is filed or
296	issued. Each facility shall also maintain as public information,
297	available upon request, all annual reports statements that have
298	been filed with the office.
299	(2)  Every continuing care facility shall:
300	(a)  Display the certificate of authority in a conspicuous
301	place inside the facility.
302	(b)  Post in a prominent position in the facility so as to
303	be accessible to all residents and to the general public a
304	concise summary of the last examination report issued by the
305	office, with references to the page numbers of the full report
306	noting any deficiencies found by the office, and the actions
307	taken by the provider to rectify such deficiencies, indicating
308	in such summary where the full report may be inspected in the
309	facility.
310	(c)  Post in a prominent position in the facility so as to
311	be accessible to all residents and to the general public a
312	summary of the latest annual report statement, indicating in the
313	summary where the full annual report statement may be inspected
314	in the facility. Listings, with summaries, A listing of any
315	proposed changes in policies, programs, and services shall also
316	be posted at least 30 days before the changes are effective.
317	(d)  Distribute a copy of the full annual report statement
318	to the president or chair of the residents' council within 10 30
319	days after the filing of the annual report with the office, and
320	designate a staff person to provide explanation thereof.
321	(e)  Notify the residents' council of any plans filed with
322	the office to obtain new financing, additional financing, or
323	refinancing for the facility and of any applications to the
324	office for any expansion of the facility. If the new financing,
325	additional financing, or refinancing will or may increase
326	residents' financial obligations or otherwise be detrimental to
327	their interests, the provider shall also deliver to the
328	residents' council, within 10 days after submitting any
329	information to the office pursuant to s. 651.019, a full and
330	accurate summary of the information submitted.
331	(3)  Before entering into a contract to furnish continuing
332	care, the provider undertaking to furnish the care, or the agent
333	of the provider, shall make full disclosure, and provide copies
334	of all the disclosure documents to the prospective resident or
335	his or her legal representative, including, but not limited to,
336	the then-current versions of the following information:
337	(a)  The contract to furnish continuing care.
338	(b)  The summary listed in paragraph (2)(b).
339	(c)  All ownership interests, and lease agreements, and
340	every other agreement between the provider and a person or
341	entity related to the provider pursuant to s. 651.1151(1),
342	including information specified in s. 651.022(2)(b)8.
343	(d)  In keeping with the intent of this subsection relating
344	to disclosure, the provider shall make available for review,
345	master plans approved by the provider's governing board and any
346	plans for expansion or phased development, to the extent that
347	the availability of such plans will not put at risk real estate,
348	financing, acquisition, negotiations, or other implementation of
349	operational plans and thus jeopardize the success of
350	negotiations, operations, and development.
351	(e)  Copies of the rules and regulations of the facility
352	and an explanation of the responsibilities of the resident.
353	(f)  The policy of the facility with respect to admission
354	to and discharge from the various levels of health care offered
355	by the facility.
356	(g)  The amount and location of any reserve funds required
357	by this chapter, and the name of the person or entity having a
358	claim to such funds in the event of a bankruptcy, foreclosure,
359	or rehabilitation proceeding.
360	(h)  A copy of the resident's rights as described in s.
361	651.083.
362
363	A true and complete copy of the full initial, revised, or
364	amended disclosure document to be used shall be filed with and
365	reviewed by the office prior to its use. Within 45 days after
366	receipt of the disclosure document, the office shall notify the
367	provider in writing of its acceptance of the disclosure document
368	or notify the provider in writing of its objections to the
369	document. A resident or prospective resident or his or her legal
370	representative shall be permitted to inspect the full reports
371	referred to in paragraph (2)(b); the charter or other agreement
372	or instrument required to be filed with the office pursuant to
373	s. 651.022(2), together with all amendments thereto; and the
374	bylaws of the corporation or association, if any. Upon request,
375	copies of the reports and information shall be provided to the
376	individual requesting them if the individual agrees to pay a
377	reasonable charge to cover copying costs.
378	Section 8.  Subsection (1) of section 651.105, Florida
379	Statutes, is amended, subsections (2) through (4) are renumbered
380	as subsections (3) through (5), respectively, and a new
381	subsection (2) is added to that section, to read:
382	651.105  Examination and inspections.--
383	(1)  The office may at any time, and shall at least once
384	every 3 years, examine the business of any applicant for a
385	certificate of authority and any provider engaged in the
386	execution of care contracts or engaged in the performance of
387	obligations under such contracts, in the same manner as is
388	provided for examination of insurance companies pursuant to s.
389	624.316. Such examinations shall be made by a representative or
390	examiner designated by the office, whose compensation will be
391	fixed by the office pursuant to s. 624.320. Routine examinations
392	may be made by having the necessary documents submitted to the
393	office; and, for this purpose, financial documents and records
394	conforming to generally commonly accepted accounting principles
395	and practices, as required under s. 651.026, will be deemed
396	adequate. The final written report of each such examination
397	shall be filed with the office and, when so filed, will
398	constitute a public record. Any provider being examined shall,
399	upon request, give reasonable and timely access to all of its
400	records. The representative or examiner designated by the office
401	may at any time examine the records and affairs and inspect the
402	physical property of any provider, whether in connection with a
403	formal examination or not.
404	(2)  The office shall issue and require examiners to follow
405	a comprehensive checklist to use when evaluating continuing care
406	retirement communities. The checklist shall include, but not be
407	limited to, a statement verifying that the provider has made all
408	required disclosures and that all required documents have been
409	submitted to the office.
410	Section 9.  Section 651.106, Florida Statutes, is amended
411	to read:
412	651.106  Grounds for discretionary refusal, suspension, or
413	revocation of certificate of authority.--The office, in its
414	discretion, after giving notice, may deny, suspend, or revoke
415	the provisional certificate of authority or the certificate of
416	authority of any applicant or provider if it finds that any one
417	or more of the following grounds applicable to the applicant or
418	provider exist:
419	(1)  Failure by the provider to continue to meet the
420	requirements for the authority originally granted.
421	(2)  Failure by the provider to meet one or more of the
422	qualifications for the authority specified by this chapter.
423	(3)  Material misstatement, misrepresentation, or fraud in
424	obtaining the authority, or in attempting to obtain the same.
425	(4)  Demonstrated lack of fitness or trustworthiness.
426	(5)  Fraudulent or dishonest practices of management in the
427	conduct of business, including misrepresentation of any reason
428	for an increase in monthly maintenance fees.
429	(6)  Misappropriation, conversion, or withholding of
430	moneys.
431	(7)  Failure to comply with, or violation of, any proper
432	order or rule of the office or commission or violation of any
433	provision of this chapter.
434	(8)  The insolvent condition of the provider or the
435	provider's being in such condition or using such methods and
436	practices in the conduct of its business as to render its
437	further transactions in this state hazardous or injurious to the
438	public.
439	(9)  Refusal by the provider to be examined or to produce
440	its accounts, records, and files for examination, or refusal by
441	any of its officers to give information with respect to its
442	affairs or to perform any other legal obligation under this
443	chapter when required by the office.
444	(10)  Failure by the provider to comply with the
445	requirements of s. 651.026 or s. 651.033.
446	(11)  Failure by the provider to maintain escrow accounts
447	or funds as required by this chapter.
448	(12)  Failure by the provider to meet the requirements of
449	this chapter for disclosure of information to residents
450	concerning the facility, its ownership, any agreement, including
451	a lease, between the provider or operator and a person or entity
452	related to the provider pursuant to s. 651.1151(1), its
453	management, its development, or its financial condition or
454	failure to honor its continuing care contracts.
455	(13)  Any cause for which issuance of the license could
456	have been refused had it then existed and been known to the
457	office.
458	(14)  Having been found guilty of, or having pleaded guilty
459	or nolo contendere to, a felony in this state or any other
460	state, without regard to whether a judgment or conviction has
461	been entered by the court having jurisdiction of such cases.
462	(15)  In the conduct of business under the license,
463	engaging in unfair methods of competition or in unfair or
464	deceptive acts or practices prohibited under part IX of chapter
465	626.
466	(16)  A pattern of bankrupt enterprises.
467
468	Revocation of a certificate of authority under this section does
469	not relieve a provider from the provider's obligation to
470	residents under the terms and conditions of any continuing care
471	contract between the provider and residents or the provisions of
472	this chapter. The provider shall continue to file its annual
473	statement and pay license fees to the office as required under
474	this chapter as if the certificate of authority had continued in
475	full force, but the provider shall not issue any new continuing
476	care contracts. The office may seek an action in the circuit
477	court of Leon County to enforce the office's order and the
478	provisions of this section.
479	Section 10.  Section 651.1151, Florida Statutes, is amended
480	to read:
481	651.1151  Administrative, vendor, and management
482	contracts.--
483	(1)  The office shall may require a provider to submit for
484	review any contract for administrative, vendor, or management
485	services if the office has information or believes that any
486	party to a contract is and belief that a provider has entered
487	into a contract with an affiliate of the provider, an entity
488	controlled by the provider, or an entity controlled by an
489	affiliate of the provider, or is otherwise related to the
490	provider, if that relationship or the contract itself, including
491	any renewals or extensions thereof, has not been disclosed to
492	the office and to the residents of the facility. The office
493	shall determine whether or not the contract creates or fosters a
494	conflict of interest or imposes direct or indirect payment and
495	other obligations detrimental to the facility or its residents
496	which has not been disclosed to the office or which contract
497	requires the provider to pay a fee that is unreasonably high in
498	relation to the service provided.
499	(2)  If the contract has not been disclosed to the office,
500	or the residents' organization confirms to the office that the
501	contract has not been disclosed to the residents After review of
502	the contract, the office shall may order the provider to cancel
503	the contract in accordance with the terms of the contract and
504	applicable law if it determines that the fees to be paid are so
505	unreasonably high as compared with similar contracts entered
506	into by other providers in similar circumstances that the
507	contract is detrimental to the facility or its residents.
508	(3)  If, after reviewing a contract, the office determines
509	that the contract does not create or foster a conflict of
510	interest or impose obligations detrimental to the facility or
511	its residents, the office shall issue an order approving the
512	contract, stating the reasons for its action, and shall promptly
513	notify the facility's residents' organization of its order.
514	However, if the office determines that the contract creates or
515	fosters a conflict of interest or imposes obligations
516	detrimental to the facility or its residents, the office shall
517	order the provider to cancel the contract and promptly notify
518	the facility's residents' organization of its order.
519	(4)(3)  Any contract with an affiliate, an entity
520	controlled by the provider, or an entity controlled by an
521	affiliate of the provider for administrative, vendor, or
522	management services entered into or renewed after October 1,
523	1991, shall contain a provision that the contract shall be
524	canceled upon issuance of an order by the office pursuant to
525	this section. A copy of the current management services
526	contract, pursuant to this section, if any, must be on file in
527	the marketing office or other accessible area to residents and
528	the appropriate resident organizations.
529	(5)(4)  Any action of the office under this section,
530	including failure to act when petitioned by the residents'
531	organization or a resident of the facility, is subject to review
532	pursuant to the procedures provided in chapter 120.
533	Section 11.  This act shall take effect July 1, 2008.

CODING: Words stricken are deletions; words underlined are additions.