Florida Senate - 2008 SB 2698

By Senator Saunders

37-03749-08 20082698__

A bill to be entitled

An act relating to continuing care contracts; amending s.

651.026, F.S.; requiring continuing care providers to

provide additional information in annual reports to the

Office of Insurance Regulation; applying financial

viability assessment measures to an operator under certain

circumstances; amending s. 651.0261, F.S.; authorizing the

office to require providers to file quarterly financial

statements under certain circumstances; amending s.

651.051, F.S.; permitting the removal of certain assets

and records of a provider from the state if certain notice

is provided to the residents' council; amending ss.

651.081 and 651.083, F.S.; providing additional rights

relating to financial accountability by the provider for

residents of continuing care facilities; amending s.

651.085, F.S.; revising provisions relating to quarterly

meetings between residents and the governing body of the

provider; amending s. 651.091, F.S.; requiring continuing

care facilities to provide certain information to the

public; revising the time period within which the facility

is required to provide an annual report to the residents'

organization; amending s. 651.105, F.S.; authorizing the

office to require additional information from the provider

during examinations and inspections; amending s. 651.106,

F.S.; requiring the office to provide notice prior to

denying, suspending, or revoking certificates of authority

under certain circumstances; amending s. 651.1151, F.S.;

authorizing the office to require providers to submit

certain contracts for review; providing that actions

omitted by the office in response to petition by a

residents' organization or resident are subject to review

under ch. 120, F.S., under certain circumstances;

providing an effective date.

Be It Enacted by the Legislature of the State of Florida:

Section 1. Subsections (2) and (3) of section 651.026,

Florida Statutes, are amended to read:

651.026 Annual reports.--

(2) The annual report shall be in such form as the

commission prescribes and shall contain at least the following:

(a) Any change in status with respect to the information

required to be filed under s. 651.022(2).

(b) Financial statements audited by an independent

certified public accountant, which shall contain, for two or more

periods if the facility has been in existence that long, the

following:

1. An accountant's opinion and, in accordance with

generally accepted accounting principles:

a. A balance sheet;

b. A statement of income and expenses;

c. A statement of equity or fund balances; and

d. A statement of changes in cash flows; and

e. If the provider's financial statements are consolidated

with those of another entity, a consolidating balance sheet and

consolidating statements of income and expenses, equity or fund

balances, and cash flows, which report in separate columns the

separate data for each entity, the eliminations, and the

consolidated data.

2. Notes to the financial statements considered customary

or necessary to full disclosure or adequate understanding of the

financial statements, financial condition, and operation.

3. A supplemental statement of income and expenses

indicating by department cost center, pursuant to s. 651.085(4),

the income and expenses of each department in sufficient detail

to present to the residents a meaningful summary of operations

for each reporting period and with sufficient consistency to

permit period-to-period comparison by the residents.

1. A detailed listing of the assets maintained in the

liquid reserve as required in s. 651.035 and in accordance with

part II of chapter 625;

2. An itemized A schedule of giving additional information

relating to property, plant, and equipment having an original

cost of at least $25,000, so as to show in reasonable detail with

respect to each separate facility original costs, accumulated

depreciation, net book value, appraised value or insurable value

and date thereof, insurance coverage, encumbrances, and net

equity of appraised or insured value over encumbrances. Any

property not used in continuing care shall be shown separately

from property used in continuing care;

3. The level of participation in Medicare or Medicaid

programs, or both;

4. A statement of all fees required of residents,

including, but not limited to, a statement of the entrance fee

charged, the monthly service charges, the proposed application of

the proceeds of the entrance fee by the provider, and the plan by

which the amount of the entrance fee is determined if the

entrance fee is not the same in all cases; and

5. Any change or increase in fees and any change or

decrease in when the provider changes either the scope of, or the

rates for, care or services, regardless of whether the change in

fees involves the basic rates and services rate or only those

services available at additional costs to the resident.

6.a. If the provider has more than one certificated

facility, it shall submit a statement of operations for each

facility as supplemental information to the audited financial

statements required as part of the annual report.

b. If the provider has operations that are not Florida

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certificated facilities, the provider shall also submit as

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supplemental information to the audited financial statements,

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balance sheets, statements of changes in equity, and statements

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of cash flows for each Florida certificated facility.

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(d) Such other reasonable data, financial statements, and

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pertinent information as the commission or office may require

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with respect to the provider or the facility, or its directors,

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trustees, members, branches, subsidiaries, or affiliates, to

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determine the financial status of the facility, and the

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management capabilities of its managers and owners, and the

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provider's substantial compliance with the continuing care

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contract filed with the office pursuant to s. 651.091(3).

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(e) Each facility shall file with the office annually,

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together with the annual report required by this section, a

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computation of its minimum liquid reserve calculated in

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accordance with s. 651.035 on a form prescribed by the

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commission.

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(3) The commission shall adopt by rule meaningful measures

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of assessing the financial viability of a provider and, if a

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separate entity, an operator. The rule may include the following

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factors:

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(a) Debt service coverage ratios.

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(b) Current ratios.

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(d) Cash flows.

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(e) Occupancy rates.

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(f) Other measures, ratios, or trends.

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(g) Other factors as may be appropriate.

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Section 2. Section 651.0261, Florida Statutes, is amended

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to read:

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651.0261 Quarterly statements.--If the office finds,

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pursuant to rules of the commission, that such information is

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needed to properly monitor the financial condition of a provider

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or facility or is otherwise needed to protect the interests of

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the facility's residents or the public interest, the office shall

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may require the provider to file, within 45 days after the end of

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each fiscal quarter, a quarterly unaudited financial statement of

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the provider or of the facility in the form prescribed by the

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commission by rule. The commission may by rule require all or

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part of the statements or filings required under this section to

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be submitted by electronic means in a computer-readable form

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compatible with the electronic data format specified by the

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commission. The provider shall deliver to the president or chair

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of the residents' organization a complete copy of each such

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quarterly statement within 10 days after the statement is filed

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with the office.

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Section 3. Section 651.051, Florida Statutes, is amended to

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read:

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651.051 Maintenance of assets and records in state.--No

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records or assets may be removed from this state by a provider

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unless the office consents to such removal in writing before such

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removal. Such consent shall be based upon the provider's

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submitting satisfactory evidence that the removal will facilitate

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and make more economical the operations of the provider and will

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not diminish the service or protection thereafter to be given the

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provider's residents in this state. Prior to such removal, the

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provider shall give notice to the president or chair of the

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facility's residents' council. If such removal is part of a cash

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management system which has been approved by the office,

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disclosure of the system to the residents' council shall meet the

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notification requirements.

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Section 4. Subsection (2) of section 651.081, Florida

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Statutes, is renumbered as subsection (3), and a new subsection

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(2) is added to that section to read:

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651.081 Continuing care facilities residents'

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organizations.--

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(2) Residents have the right, exercisable through a

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residents' organization, to full accountability by the provider

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and operator for the finances of the facility, including all uses

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of residents' monthly maintenance fees. If the facility has a

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residents' organization, the provider and operator shall provide

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the residents' organization with the following:

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(a) At least quarterly, an accounting of receipts,

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expenses, and other uses of funds, by department cost center, as

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required under s. 651.085(4).

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(b) Any accounting or financial information and an

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explanation thereof requested by the residents' organization for

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a specified account or item.

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examination by the residents' organization or by such individuals

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or firms as the residents' organization may choose to make such

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examinations on its behalf.

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Section 5. Paragraph (c) of subsection (1) of section

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651.083, Florida Statutes, is amended, and paragraphs (h) and (i)

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are added to subsection (1) of that section, to read:

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651.083 Residents' rights.--

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(1) No resident of any facility shall be deprived of any

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civil or legal rights, benefits, or privileges guaranteed by law,

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by the State Constitution, or by the United States Constitution

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solely by reason of status as a resident of a facility. Each

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resident of a facility has the right to:

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and sending unopened correspondence by electronic and all other

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means.

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(h) Full accountability for the finances of the facility,

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recognizing that monthly maintenance fees are resident funds to

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be used only for the benefit of residents and accounted for as

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such in a consistent format that allows residents to make period-

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to-period comparisons.

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(i) Receive advance notice of all proposed changes in fees,

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services, procedures, and policies that may affect the finances

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or welfare of residents.

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Section 6. Section 651.085, Florida Statutes, is amended to

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read:

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651.085 Quarterly meetings between residents and the

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governing body of the provider; resident representation before

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the governing body of the provider.--

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(1) The governing body of a provider, or the designated

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representative of the provider, shall hold quarterly meetings

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with the residents of the continuing care facility for the

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purpose of free discussion of subjects including, but not limited

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to, income, expenditures, and financial trends and problems as

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they apply to the facility, as well as disclosure and a

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discussion of all on proposed changes in policies, programs, and

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services. Upon request of the residents' organization, a member

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of the governing body of the provider, such as a board member, a

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general partner, or a principal owner shall attend such meetings.

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Residents shall be entitled to at least 7 days' advance notice of

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each quarterly meeting. During the advance notice period, the An

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agenda and any materials that will be distributed by the

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governing body or representative of the provider shall be posted

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in a conspicuous place at the facility and shall be available

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upon request to residents of the facility. The office shall

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request verification from a facility that quarterly meetings are

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held and open to all residents when it receives a complaint from

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the residents' council that a facility is not in compliance with

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the provisions of this subsection. In addition, a facility shall

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report to the office in the annual report required under s.

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651.026 the dates on which quarterly meetings were held during

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the reporting period.

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(2) A residents' organization formed pursuant to s.

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651.081, members of which are elected by the residents, may

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designate a resident to represent them before the governing body

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of the provider or organize a meeting or ballot election of the

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residents of the facility to determine whether to elect a

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resident to represent them before the governing body of the

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provider. If a residents' organization as described in s. 651.081

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does not exist, any resident may organize a meeting or ballot

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election of the residents of the facility to determine whether to

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elect a resident to represent them before the governing body and,

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if applicable, elect the representative. The residents'

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organization, or the resident that organizes a meeting or ballot

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election to elect a representative, shall give all residents of

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the facility notice at least 10 business days before the meeting

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or election. Notice may be given through internal mailboxes,

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communitywide newsletters, bulletin boards, in-house television

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stations, and other similar means of communication. An election

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of the representative is valid if at least 40 percent of the

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total resident population participates in the election and a

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majority of the participants vote affirmatively for the

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representative. The initial designated representative elected

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under this section shall be elected to serve for a period of at

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least 12 months.

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(3) If the provider holding the certificate of authority

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for a facility and the operator of the facility are different

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individuals or entities, the residents' organization is entitled,

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upon request, to designate a majority of the voting members of

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the governing body of the operator. The designated voting members

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representative shall be notified at least 14 days in advance of

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all meetings any meeting of the full governing body and at which

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proposed changes in resident fees or services will be discussed.

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The representative shall be entitled invited to attend the entire

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meeting and participate in discussions of all matters considered

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during the meeting that portion of the meeting designated for the

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discussion of such changes. Minutes of all meetings of the

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operator of the facility shall be available to the residents for

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inspection in the facility's office and copies shall be furnished

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to residents upon request and payment of a reasonable charge to

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cover copying costs.

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(4) At a quarterly meeting prior to the implementation of

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any increase in the monthly maintenance fee, the designated

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representative of the provider must provide the reasons, by

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department cost centers, for any increase in the fee that exceeds

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the most recently published Consumer Price Index for all Urban

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Consumers, all items, Class A Areas of the Southern Region.

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Nothing in this subsection shall be construed as placing a cap or

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limitation on the amount of any increase in the monthly

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maintenance fee, establishing a presumption of the

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appropriateness of the Consumer Price Index as the basis for any

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increase in the monthly maintenance fee, or limiting or

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restricting the right of a provider to establish or set monthly

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maintenance fee increases, provided the proposed increases and

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the reasons for the increases are fully and accurately disclosed

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to the residents in advance.

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Section 7. Section 651.091, Florida Statutes, is amended to

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read:

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651.091 Availability, distribution, and posting of reports

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and records; requirement of full disclosure.--

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(1) Each continuing care facility shall maintain as public

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information, available upon request, records of all cost and

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inspection reports pertaining to that facility that have been

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filed with or issued by any governmental agency. A copy of each

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such report shall be retained in such records for not less than 5

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years from the date the provider notifies the residents'

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organization in writing that the report has been is filed or

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issued. Each facility shall also maintain as public information,

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available upon request, all annual reports statements that have

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been filed with the office.

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(2) Every continuing care facility shall:

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(a) Display the certificate of authority in a conspicuous

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place inside the facility.

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(b) Post in a prominent position in the facility so as to

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be accessible to all residents and to the general public a

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concise summary of the last examination report issued by the

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office, with references to the page numbers of the full report

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noting any deficiencies found by the office, and the actions

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taken by the provider to rectify such deficiencies, indicating in

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such summary where the full report may be inspected in the

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facility.

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be accessible to all residents and to the general public a

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summary of the latest annual report statement, indicating in the

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summary where the full annual report statement may be inspected

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in the facility. Listings, with summaries, A listing of any

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proposed changes in policies, programs, and services shall also

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be posted at least 30 days before the changes are effective.

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(d) Distribute a copy of the full annual report statement

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to the president or chair of the residents' council within 10 30

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days after the filing of the annual report with the office, and

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designate a staff person to provide explanation thereof.

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(e) Notify the residents' council of any plans filed with

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the office to obtain new financing, additional financing, or

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refinancing for the facility and of any applications to the

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office for any expansion of the facility. If the new financing,

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additional financing, or refinancing will or may increase

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residents' financial obligations or otherwise be detrimental to

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their interests, the provider shall also deliver to the

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residents' council, within 10 days after submitting any

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information to the office pursuant to s. 651.019, a full and

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accurate summary of the information submitted.

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(3) Before entering into a contract to furnish continuing

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care, the provider undertaking to furnish the care, or the agent

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of the provider, shall make full disclosure, and provide copies

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of all the disclosure documents to the prospective resident or

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his or her legal representative, including, but not limited to,

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the then-current versions of the following information:

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(a) The contract to furnish continuing care.

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(b) The summary listed in paragraph (2)(b).

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every other agreement between the provider and a person or entity

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related to the provider pursuant to s. 651.1151(1), including

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information specified in s. 651.022(2)(b)8.

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(d) In keeping with the intent of this subsection relating

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to disclosure, the provider shall make available for review,

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master plans approved by the provider's governing board and any

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plans for expansion or phased development, to the extent that the

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availability of such plans will not put at risk real estate,

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financing, acquisition, negotiations, or other implementation of

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operational plans and thus jeopardize the success of

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negotiations, operations, and development.

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(e) Copies of the rules and regulations of the facility and

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an explanation of the responsibilities of the resident.

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(f) The policy of the facility with respect to admission to

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and discharge from the various levels of health care offered by

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the facility.

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(g) The amount and location of any reserve funds required

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by this chapter, and the name of the person or entity having a

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claim to such funds in the event of a bankruptcy, foreclosure, or

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rehabilitation proceeding.

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(h) A copy of the resident's rights as described in s.

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651.083.

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A true and complete copy of the full initial, revised, or amended

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disclosure document to be used shall be filed with and reviewed

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by the office prior to its use. Within 45 days after receipt of

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the disclosure document, the office shall notify the provider in

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writing of its acceptance of the disclosure document or notify

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the provider in writing of its objections to the document. A

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resident or prospective resident or his or her legal

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representative shall be permitted to inspect the full reports

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referred to in paragraph (2)(b); the charter or other agreement

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or instrument required to be filed with the office pursuant to s.

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651.022(2), together with all amendments thereto; and the bylaws

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of the corporation or association, if any. Upon request, copies

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of the reports and information shall be provided to the

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individual requesting them if the individual agrees to pay a

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reasonable charge to cover copying costs.

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Section 8. Subsection (1) of section 651.105, Florida

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Statutes, is amended, subsections (2) through (4) are renumbered

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as subsections (3) through (5), respectively, and a new

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subsection (2) is added to that section, to read:

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651.105 Examination and inspections.--

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(1) The office may at any time, and shall at least once

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every 3 years, examine the business of any applicant for a

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certificate of authority and any provider engaged in the

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execution of care contracts or engaged in the performance of

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obligations under such contracts, in the same manner as is

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provided for examination of insurance companies pursuant to s.

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624.316. Such examinations shall be made by a representative or

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examiner designated by the office, whose compensation will be

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fixed by the office pursuant to s. 624.320. Routine examinations

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may be made by having the necessary documents submitted to the

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office; and, for this purpose, financial documents and records

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conforming to generally commonly accepted accounting principles

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and practices, as required under s. 651.026, will be deemed

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adequate. The final written report of each such examination shall

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be filed with the office and, when so filed, will constitute a

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public record. Any provider being examined shall, upon request,

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give reasonable and timely access to all of its records. The

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representative or examiner designated by the office may at any

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time examine the records and affairs and inspect the physical

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property of any provider, whether in connection with a formal

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examination or not.

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(2) The office shall issue and require examiners to follow

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a comprehensive checklist to use when evaluating continuing care

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retirement communities. The checklist shall include, but not be

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limited to, a statement verifying that the provider has made all

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required disclosures and that all required documents have been

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submitted to the office.

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Section 9. Section 651.106, Florida Statutes, is amended to

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read:

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651.106 Grounds for discretionary refusal, suspension, or

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revocation of certificate of authority.--The office, in its

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discretion, after giving notice, may deny, suspend, or revoke the

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provisional certificate of authority or the certificate of

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authority of any applicant or provider if it finds that any one

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or more of the following grounds applicable to the applicant or

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provider exist:

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(1) Failure by the provider to continue to meet the

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requirements for the authority originally granted.

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(2) Failure by the provider to meet one or more of the

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qualifications for the authority specified by this chapter.

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(3) Material misstatement, misrepresentation, or fraud in

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obtaining the authority, or in attempting to obtain the same.

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(4) Demonstrated lack of fitness or trustworthiness.

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(5) Fraudulent or dishonest practices of management in the

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conduct of business, including misrepresentation of any reason

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for an increase in monthly maintenance fees.

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(6) Misappropriation, conversion, or withholding of moneys.

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(7) Failure to comply with, or violation of, any proper

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order or rule of the office or commission or violation of any

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provision of this chapter.

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(8) The insolvent condition of the provider or the

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provider's being in such condition or using such methods and

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practices in the conduct of its business as to render its further

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transactions in this state hazardous or injurious to the public.

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(9) Refusal by the provider to be examined or to produce

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its accounts, records, and files for examination, or refusal by

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any of its officers to give information with respect to its

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affairs or to perform any other legal obligation under this

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chapter when required by the office.

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(10) Failure by the provider to comply with the

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requirements of s. 651.026 or s. 651.033.

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(11) Failure by the provider to maintain escrow accounts or

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funds as required by this chapter.

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(12) Failure by the provider to meet the requirements of

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this chapter for disclosure of information to residents

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concerning the facility, its ownership, any agreement, including

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a lease, between the provider or operator and a person or entity

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related to the provider pursuant to s. 651.1151(1), its

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management, its development, or its financial condition or

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failure to honor its continuing care contracts.

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(13) Any cause for which issuance of the license could have

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been refused had it then existed and been known to the office.

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(14) Having been found guilty of, or having pleaded guilty

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or nolo contendere to, a felony in this state or any other state,

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without regard to whether a judgment or conviction has been

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entered by the court having jurisdiction of such cases.

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(15) In the conduct of business under the license, engaging

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in unfair methods of competition or in unfair or deceptive acts

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or practices prohibited under part IX of chapter 626.

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(16) A pattern of bankrupt enterprises.

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Revocation of a certificate of authority under this section does

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not relieve a provider from the provider's obligation to

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residents under the terms and conditions of any continuing care

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contract between the provider and residents or the provisions of

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this chapter. The provider shall continue to file its annual

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statement and pay license fees to the office as required under

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this chapter as if the certificate of authority had continued in

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full force, but the provider shall not issue any new continuing

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care contracts. The office may seek an action in the circuit

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court of Leon County to enforce the office's order and the

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provisions of this section.

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Section 10. Section 651.1151, Florida Statutes, is amended

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to read:

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651.1151 Administrative, vendor, and management

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contracts.--

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(1) The office shall may require a provider to submit for

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review any contract for administrative, vendor, or management

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services if the office has information or believes that any party

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to a contract is and belief that a provider has entered into a

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contract with an affiliate of the provider, an entity controlled

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by the provider, or an entity controlled by an affiliate of the

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provider, or is otherwise related to the provider, if that

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relationship or the contract itself, including any renewals or

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extensions thereof, has not been disclosed to the office and to

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the residents of the facility. The office shall determine whether

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or not the contract creates or fosters a conflict of interest or

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imposes direct or indirect payment and other obligations

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detrimental to the facility or its residents which has not been

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disclosed to the office or which contract requires the provider

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to pay a fee that is unreasonably high in relation to the service

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provided.

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(2) If the contract has not been disclosed to the office,

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or the residents' organization confirms to the office that the

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contract has not been disclosed to the residents After review of

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the contract, the office shall may order the provider to cancel

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the contract in accordance with the terms of the contract and

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applicable law if it determines that the fees to be paid are so

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unreasonably high as compared with similar contracts entered into

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by other providers in similar circumstances that the contract is

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detrimental to the facility or its residents.

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(3) If, after reviewing a contract, the office determines

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that the contract does not create or foster a conflict of

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interest or impose obligations detrimental to the facility or its

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residents, the office shall issue an order approving the

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contract, stating the reasons for its action, and shall promptly

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notify the facility's residents' organization of its order.

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However, if the office determines that the contract creates or

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fosters a conflict of interest or imposes obligations detrimental

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to the facility or its residents, the office shall order the

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provider to cancel the contract and promptly notify the

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facility's residents' organization of its order.

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(4)(3) Any contract with an affiliate, an entity controlled

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by the provider, or an entity controlled by an affiliate of the

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provider for administrative, vendor, or management services

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entered into or renewed after October 1, 1991, shall contain a

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provision that the contract shall be canceled upon issuance of an

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order by the office pursuant to this section. A copy of the

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current management services contract, pursuant to this section,

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if any, must be on file in the marketing office or other

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accessible area to residents and the appropriate resident

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organizations.

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(5)(4) Any action of the office under this section,

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including failure to act when petitioned by the residents'

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organization or a resident of the facility, is subject to review

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pursuant to the procedures provided in chapter 120.

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Section 11. This act shall take effect July 1, 2008.

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