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The Florida Senate

2017 Florida Statutes

Title XXXVII INSURANCE
Chapter 651 CONTINUING CARE CONTRACTS Entire Chapter
SECTION 023
Certificate of authority; application.
F.S. 651.023
651.023 Certificate of authority; application.—
(1) After issuance of a provisional certificate of authority, the office shall issue to the holder of such provisional certificate a certificate of authority if the holder of the provisional certificate provides the office with the following information:
(a) Any material change in status with respect to the information required to be filed under s. 651.022(2) in the application for the provisional certificate.
(b) A feasibility study prepared by an independent consultant which contains all of the information required by s. 651.022(3) and financial forecasts or projections prepared in accordance with standards adopted by the American Institute of Certified Public Accountants or in accordance with standards for feasibility studies or continuing care retirement communities adopted by the Actuarial Standards Board.
1. The study must also contain an independent evaluation and examination opinion, or a comparable opinion acceptable to the office, by the consultant who prepared the study, of the underlying assumptions used as a basis for the forecasts or projections in the study and that the assumptions are reasonable and proper and the project as proposed is feasible.
2. The study must take into account project costs, actual marketing results to date and marketing projections, resident fees and charges, competition, resident contract provisions, and any other factors which affect the feasibility of operating the facility.
3. If the study is prepared by an independent certified public accountant, it must contain an examination opinion for the first 3 years of operations and financial projections having a compilation opinion for the next 3 years. If the study is prepared by an independent consulting actuary, it must contain mortality and morbidity data and an actuary’s signed opinion that the project as proposed is feasible and that the study has been prepared in accordance with standards adopted by the American Academy of Actuaries.
(c) Subject to subsection (4), a provider may submit an application for a certificate of authority and any required exhibits upon submission of proof that the project has a minimum of 30 percent of the units reserved for which the provider is charging an entrance fee. This does not apply to an application for a certificate of authority for the acquisition of a facility for which a certificate of authority was issued before October 1, 1983, to a provider who subsequently becomes a debtor in a case under the United States Bankruptcy Code, 11 U.S.C. ss. 101 et seq., or to a provider for which the department has been appointed receiver pursuant to part II of chapter 631.
(d) Proof that commitments have been secured for both construction financing and long-term financing or a documented plan acceptable to the office has been adopted by the applicant for long-term financing.
(e) Proof that all conditions of the lender have been satisfied to activate the commitment to disburse funds other than the obtaining of the certificate of authority, the completion of construction, or the closing of the purchase of realty or buildings for the facility.
(f) Proof that the aggregate amount of entrance fees received by or pledged to the applicant, plus anticipated proceeds from any long-term financing commitment, plus funds from all other sources in the actual possession of the applicant, equal at least 100 percent of the aggregate cost of constructing or purchasing, equipping, and furnishing the facility plus 100 percent of the anticipated startup losses of the facility.
(g) Complete audited financial statements of the applicant, prepared by an independent certified public accountant in accordance with generally accepted accounting principles, as of the date the applicant commenced business operations or for the fiscal year that ended immediately preceding the date of application, whichever is later, and complete unaudited quarterly financial statements attested to by the applicant after the date of the last audit.
(h) Proof that the applicant has complied with the escrow requirements of subsection (5) or subsection (7) and will be able to comply with s. 651.035.
(i) Such other reasonable data, financial statements, and pertinent information as the commission or office may require with respect to the applicant or the facility, to determine the financial status of the facility and the management capabilities of its managers and owners.
(2) Within 30 days after receipt of the information required under subsection (1), the office shall examine such information and notify the provider in writing, specifically requesting any additional information the office is permitted by law to require. Within 15 days after receipt of all of the requested additional information, the office shall notify the provider in writing that all of the requested information has been received and the application is deemed to be complete as of the date of the notice. Failure to notify the applicant in writing within the 15-day period constitutes acknowledgment by the office that it has received all requested additional information, and the application shall be deemed complete for purposes of review on the date of filing all of the required additional information.
(3) Within 45 days after an application is deemed complete as set forth in subsection (2), and upon completion of the remaining requirements of this section, the office shall complete its review and issue or deny a certificate of authority to the holder of a provisional certificate of authority. If a certificate of authority is denied, the office must notify the holder of the provisional certificate in writing, citing the specific failures to satisfy the provisions of this chapter. If denied, the holder of the provisional certificate is entitled to an administrative hearing pursuant to chapter 120.
(4) The office shall issue a certificate of authority upon determining that the applicant meets all requirements of law and has submitted all of the information required by this section, that all escrow requirements have been satisfied, and that the fees prescribed in s. 651.015(2) have been paid.
(a) Notwithstanding satisfaction of the 30-percent minimum reservation requirement of paragraph (1)(c), no certificate of authority shall be issued until the project has a minimum of 50 percent of the units reserved for which the provider is charging an entrance fee, and proof is provided to the office. If a provider offering continuing care at-home is applying for a certificate of authority or approval of an expansion pursuant to s. 651.021(2), the same minimum reservation requirements must be met for the continuing care and continuing care at-home contracts, independently of each other.
(b) In order for a unit to be considered reserved under this section, the provider must collect a minimum deposit of 10 percent of the then-current entrance fee for that unit, and assess a forfeiture penalty of 2 percent of the entrance fee due to termination of the reservation contract after 30 days for any reason other than the death or serious illness of the resident, the failure of the provider to meet its obligations under the reservation contract, or other circumstances beyond the control of the resident that equitably entitle the resident to a refund of the resident’s deposit. The reservation contract must state the cancellation policy and the terms of the continuing care or continuing care at-home contract to be entered into.
(5) Up to 25 percent of the moneys paid for all or any part of an initial entrance fee may be included or pledged for the construction or purchase of the facility or as security for long-term financing. The term “initial entrance fee” means the total entrance fee charged by the facility to the first occupant of a unit.
(a) A minimum of 75 percent of the moneys paid for all or any part of an initial entrance fee collected for continuing care or continuing care at-home shall be placed in an escrow account or on deposit with the department as prescribed in s. 651.033.
(b) For an expansion as provided in s. 651.021(2), a minimum of 75 percent of the moneys paid for all or any part of an initial entrance fee collected for continuing care and 50 percent of the moneys paid for all or any part of an initial fee collected for continuing care at-home shall be placed in an escrow account or on deposit with the department as prescribed in s. 651.033.
(6) The provider is entitled to secure release of the moneys held in escrow within 7 days after receipt by the office of an affidavit from the provider, along with appropriate copies to verify, and notification to the escrow agent by certified mail, that the following conditions have been satisfied:
(a) A certificate of occupancy has been issued.
(b) Payment in full has been received for at least 70 percent of the total units of a phase or of the total of the combined phases constructed. If a provider offering continuing care at-home is applying for a release of escrowed entrance fees, the same minimum requirement must be met for the continuing care and continuing care at-home contracts, independently of each other.
(c) The consultant who prepared the feasibility study required by this section or a substitute approved by the office certifies within 12 months before the date of filing for office approval that there has been no material adverse change in status with regard to the feasibility study. If a material adverse change exists at the time of submission, sufficient information acceptable to the office and the feasibility consultant must be submitted which remedies the adverse condition.
(d) Proof that commitments have been secured or a documented plan adopted by the applicant has been approved by the office for long-term financing.
(e) Proof that the provider has sufficient funds to meet the requirements of s. 651.035, which may include funds deposited in the initial entrance fee account.
(f) Proof as to the intended application of the proceeds upon release and proof that the entrance fees when released will be applied as represented to the office.

Notwithstanding chapter 120, no person, other than the provider, the escrow agent, and the office, may have a substantial interest in any office decision regarding release of escrow funds in any proceedings under chapter 120 or this chapter regarding release of escrow funds.

(7) In lieu of the provider fulfilling the requirements in subsection (5) and paragraphs (6)(b) and (d), the office may authorize the release of escrowed funds to retire all outstanding debts on the facility and equipment upon application of the provider and upon the provider’s showing that the provider will grant to the residents a first mortgage on the land, buildings, and equipment that constitute the facility, and that the provider has satisfied paragraphs (6)(a), (c), and (e). Such mortgage shall secure the refund of the entrance fee in the amount required by this chapter. The granting of such mortgage is subject to the following:
(a) The first mortgage is granted to an independent trust that is beneficially held by the residents. The document creating the trust must include a provision that agrees to an annual audit and will furnish to the office all information the office may reasonably require. The mortgage may secure payment on bonds issued to the residents or trustee. Such bonds are redeemable after termination of the residency contract in the amount and manner required by this chapter for the refund of an entrance fee.
(b) Before granting a first mortgage to the residents, all construction must be substantially completed and substantially all equipment must be purchased. No part of the entrance fees may be pledged as security for a construction loan or otherwise used for construction expenses before the completion of construction.
(c) If the provider is leasing the land or buildings used by the facility, the leasehold interest must be for a term of at least 30 years.
(8) The timeframes provided under s. 651.022(5) and (6) apply to applications submitted under s. 651.021(2). The office may not issue a certificate of authority to a facility that does not have a component that is to be licensed pursuant to part II of chapter 400 or to part I of chapter 429 or that does not offer personal services or nursing services through written contractual agreement. A written contractual agreement must be disclosed in the contract for continuing care or continuing care at-home and is subject to the provisions of s. 651.1151, relating to administrative, vendor, and management contracts.
(9) The office may not approve an application that includes in the plan of financing any encumbrance of the operating reserves required by this chapter.
History.—ss. 5, 33, ch. 83-328; s. 36, ch. 85-62; s. 43, ch. 85-321; s. 2, ch. 86-209; s. 3, ch. 87-136; s. 3, ch. 89-363; s. 4, ch. 91-98; s. 3, ch. 92-56; ss. 2, 12, ch. 93-22; s. 508, ch. 97-102; s. 5, ch. 97-229; s. 1671, ch. 2003-261; s. 101, ch. 2006-197; s. 6, ch. 2011-193.