SB0348

SENATE BILL 348

51st legislature - STATE OF NEW MEXICO - first session, 2013

INTRODUCED BY

Peter Wirth

AN ACT

RELATING TO CONTINUING CARE COMMUNITIES; AMENDING THE CONTINUING CARE ACT TO PROVIDE FOR CONCURRENT JURISDICTION OF THE AGING AND LONG-TERM SERVICES DEPARTMENT AND THE OFFICE OF SUPERINTENDENT OF INSURANCE; REQUIRING A PROVIDER TO HAVE A CERTIFICATE OF AUTHORITY TO ENTER INTO A CONTINUING CARE CONTRACT WITH A RESIDENT; GIVING THE OFFICE OF SUPERINTENDENT OF INSURANCE AUTHORITY TO OVERSEE, REGULATE AND ENFORCE FINANCIAL PROVISIONS OF THE CONTINUING CARE ACT; LIMITING THE JURISDICTION OF THE AGING AND LONG-TERM SERVICES DEPARTMENT TO NONFINANCIAL PROVISIONS OF THE CONTINUING CARE ACT; AUTHORIZING THE OFFICE OF SUPERINTENDENT OF INSURANCE TO SEEK INJUNCTIVE RELIEF AGAINST A PROVIDER FOR CERTAIN VIOLATIONS OF THE CONTINUING CARE ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 24-17-3 NMSA 1978 (being Laws 1985, Chapter 102, Section 3, as amended) is amended to read:

"24-17-3. DEFINITIONS.--As used in the Continuing Care Act:

A. "affiliate" means a person having a five percent or greater interest in a provider;

B. "community" means a retirement home, retirement community, home for the aged or other place that undertakes to provide continuing care;

C. "continuing care" means furnishing, pursuant to a contract that requires entrance or advance fees and service or periodic fees, independent-living and health or health-related services. Entrance or advanced fees do not include security or damage deposit fees that amount to less than three months' service or periodic fees. These services may be provided in the community, in the resident's independent living unit or in another setting, designated by the continuing care contract, to an individual not related by consanguinity or affinity to the provider furnishing the care. The services include, at a minimum, priority access to a nursing facility or hospital either on site or at a site designated by the continuing care contract;

D. "continuing care contract" means an agreement by a provider to furnish continuing care to a resident;

E. "department" means the aging and long-term services department;

[E.] F. "liquid reserves" means cash or other assets that are available within sixty days to satisfy a community's expenses and that do not include real property or interests in real property;

[F.] G. "net operating expenses" means the total costs of operating a community, including taxes and insurance but not including amortization, depreciation or long-term debt service;

[G.] H. "person" means an individual, corporation, partnership, trust, association or other legal entity;

[H.] I. "priority access to a nursing facility or hospital" means that a nursing facility or hospital services the residents of independent living units or that there is a promise of such health care or health-related services being available in the future;

[I.] J. "provider" means the owner or manager of a community that provides, or offers to provide, continuing care;

[J.] K. "resident" means, unless otherwise specified, an actual or prospective purchaser of, nominee of or subscriber to a continuing care contract;

L. "superintendent" means the office of superintendent of insurance;

[K.] M. "type A" agreement means an extensive

entrance-fee contract that includes housing, residential services, amenities and unlimited specific health-related services with little or no substantial increase in monthly payments, except to cover normal operating costs and inflation adjustments;

[L.] N. "type B" agreement means a modified

entrance-fee contract that includes housing, residential services, amenities and a specific amount of health care with no substantial increase in monthly payments, except to cover normal operating costs and inflation adjustments. After the specified amount of health care is used, persons served pay either a discounted rate or the full per diem rates for required health care services; and

[M.] O. "unit" means the living quarters that a resident buys, leases or has assigned as part of the continuing care contract."

SECTION 2. Section 24-17-4 NMSA 1978 (being Laws 1985, Chapter 102, Section 4, as amended) is amended to read:

"24-17-4. DISCLOSURE.--

A. A provider shall furnish a current annual disclosure statement that meets the requirements set forth in Subsection B of this section and the [aging and long-term services] department's and attorney general's consumer's guide to continuing care communities to each actual resident and to a prospective resident at least seven days before the provider enters into a continuing care contract with the prospective resident, or prior to the prospective resident's first payment, whichever occurs first. For the purposes of this subsection, the obligation to furnish information to each actual resident shall be deemed satisfied if a copy of the disclosure statement and the consumer's guide is given to the residents' association, if there is one, and a written message has been delivered to each actual resident, stating that personal copies are available upon request.

B. The disclosure statement provided pursuant to Subsection A of this section shall include:

(1) a brief narrative summary of the contents of the disclosure statement written in plain language;

(2) the name and business address of the provider;

(3) if the provider is a partnership, corporation or association, the names, addresses and duties of its officers, directors, trustees, partners or managers;

(4) the name and business address of each of the provider's affiliates;

(5) a statement as to whether the provider or any of its officers, directors, trustees, partners, managers or affiliates, within ten years prior to the date of application:

(a) was convicted of a felony, a crime that if committed in New Mexico would be a felony or any crime having to do with the provision of continuing care;

(b) has been held liable or enjoined in a civil action by final judgment, if the civil action involved fraud, embezzlement, fraudulent conversion or misappropriation of property;

(d) had a state or federal license or permit suspended or revoked or had any state, federal or industry self-regulatory agency commence an action against the provider or any of its officers, directors, trustees, partners, managers or affiliates and the result of such action;

(6) the name and address of any person whose name is required to be provided in the disclosure statement who owns any interest in or receives any remuneration from, either directly or indirectly, any other person providing or expected to provide to the community goods, leases or services with a real or anticipated value of five hundred dollars ($500) or more and the name and address of the person in which such interest is held. The disclosure shall describe such goods, leases or services and the actual or probable cost to the community or provider and shall describe why such goods, leases or services should not be purchased from an independent entity;

(7) the name and address of any person owning land or property leased to the community and a statement of what land or property is leased;

(8) a statement as to whether the provider is, or is associated with, a religious, charitable or other organization and the extent to which the associate organization is responsible for the financial and contractual obligations of the provider or community;

(9) the location and description of real property being used or proposed to be used in connection with the community's contracts to furnish care;

(10) a statement as to the community's or corporation's liquid reserves to assure payment of debt obligations and an ongoing ability to provide services to residents. The statement shall also include a description of the community's or corporation's reserves, including a specific explanation as to how the community or corporation intends to comply with the requirements of Section 24-17-6 NMSA 1978;

(11) for communities that provide type A and type B agreements, a summary of an actuarial analysis within the last five years and an annual future-service obligation calculation by an actuary who is a member of the American academy of actuaries and who is experienced in analyzing continuing care communities;

(12) an audited financial statement and an audit report prepared in accordance with generally accepted accounting principles applied on a consistent basis and certified by a certified public accountant, including an income statement or statement of activities, a cash-flow statement or sources and application of funds statement and a balance sheet as of the end of the provider's last fiscal year. The balance sheet should accurately reflect the deferred revenue balance, including entrance fees and any other prepaid services, and should include notes describing the community's long-term obligations and identifying all the holders of mortgages and notes;

(13) a sample copy of the contract used by the provider; and

(14) a list of documents and other information available upon request, including:

(a) a copy of the Continuing Care Act;

(b) if the provider is a corporation, a copy of the articles of incorporation; if the provider is a partnership or other unincorporated association, a copy of the partnership agreement, articles of association or other membership agreement; and if the provider is a trust, a copy of the trust agreement or instruments;

(d) a copy of lease agreements between the community and any person owning land or property leased to the community;

(e) information concerning the location and description of other properties, both existing and proposed, of the provider in which the provider owns any interest and on which communities are or are intended to be located and the identity of previously owned or operated communities;

(f) a copy of the community's policies and procedures; and

(g) other data, financial statements and pertinent information with respect to the provider or community, or its directors, trustees, members, managers, branches, subsidiaries or affiliates, that a resident requests and that is reasonably necessary in order for the resident to determine the financial status of the provider and community and the management capabilities of the managers and owners, including the most recent audited financial statements of comparable communities owned, managed or developed by the provider or its principal.

C. Each year, within one hundred eighty days after the end of the community's fiscal year, the provider shall furnish to actual residents the disclosure statement as outlined in this section. For purposes of this subsection, the obligation to furnish the required information to residents shall be deemed satisfied if the information is given to the residents' association, if there is one, and a written message has been delivered to each resident, stating that personal copies of the information are available upon request."

SECTION 3. A new section of the Continuing Care Act is enacted to read:

"[NEW MATERIAL] PROVIDER REQUIRED TO HAVE CERTIFICATE OF AUTHORITY--JURISDICTION, POWERS AND DUTIES OF SUPERINTENDENT.--

A. A provider must have a certificate of authority from the superintendent prior to entering into a continuing care contract with a resident.

B. The superintendent may:

(1) issue, deny or revoke a certificate of authority to a provider to enter into a continuing care contract with a resident; and

(2) promulgate rules to implement the provisions of this section.

C. A provider shall apply for a certificate of authority in a form and manner required by the superintendent and shall provide the financial and other information required by the superintendent.

D. The superintendent shall:

(1) conduct an annual review of the financial condition of each provider;

(2) require annual proof of financial responsibility from each provider; and

(3) conduct such examinations and investigations as the superintendent may deem proper to:

(a) determine whether a provider has misrepresented any information required to be disclosed pursuant to Section 24-17-4 NMSA 1978;

(b) determine whether a provider has violated any of the provisions of Section 24-17-6 NMSA 1978;

(c) determine whether a provider has violated any rule adopted by the superintendent pursuant to the Continuing Care Act; and

(d) obtain information useful in the administration or enforcement of any provision of the Continuing Care Act.

E. Jurisdiction to ensure that a provider that enters into a continuing care contract with a resident is solvent and remains financially able to fulfill its obligations to the resident over the course of the contract shall be exclusive to the superintendent.

F. Except as otherwise provided in the Continuing Care Act, nothing in this section shall be construed to interfere with the jurisdiction of the department or any other regulatory body exercising authority over providers regulated pursuant to the Continuing Care Act."

SECTION 4. Section 24-17-7 NMSA 1978 (being Laws 1985, Chapter 102, Section 7) is amended to read:

"24-17-7. DISCLOSURE STATEMENTS FILED WITH THE [STATE AGENCY ON AGING] SUPERINTENDENT AND THE DEPARTMENT FOR PUBLIC INSPECTION.--A provider shall file a copy of the disclosure statement and any amendments to that statement:

A. with the superintendent; and

B. with the [state agency on aging] department for public inspection during regular working hours."

SECTION 5. Section 24-17-16 NMSA 1978 (being Laws 1991, Chapter 263, Section 5) is amended to read:

"24-17-16. IDENTIFICATION AND PROCEDURES FOR CORRECTION OF VIOLATIONS UNDER THE JURISDICTION OF THE DEPARTMENT.--

A. If the [state agency on aging] department determines that a person [or an organization] has engaged in or is about to engage in an act or practice constituting a violation of the Continuing Care Act, other than a misrepresentation of information required to be disclosed pursuant to Section 24-17-4 NMSA 1978 or a violation pursuant to Section 24-17-6 NMSA 1978, or of any rule adopted by the department pursuant to that act, the [state agency on aging] department shall issue a notice of violation in writing to that person [or organization] and send copies to the resident association of any facility affected by the notice.

B. The notice of violation shall state the following:

(1) a description of a violation at issue;

(2) the action that, in the judgment of the [state agency on aging] department, the provider should take to conform to the law or the assurances that the [state agency on aging] department requires to establish that no violation is about to occur;

(3) the compliance date by which the provider shall correct any violation or submit assurances;

(4) the requirements for filing a report of compliance; and

(5) the applicable sanctions for failure to correct the violation or failure to file the report of compliance according to the terms of the notice of violation.

C. At any time after receipt of a notice of violation, the person [or organization] to which the notice is addressed or the [state agency on aging] department may request a conference. The [state agency on aging] department shall schedule a conference within seven days of a request.

D. The purpose of the conference is to discuss [the contents of] the notice of violation and to assist the addressee to comply with the requirements of the Continuing Care Act. Subject to rules that the [state agency on aging] department may promulgate, a representative of the resident association at any facility affected by the notice shall have a right to attend the conference.

E. A person receiving a notice of violation shall submit a signed report of compliance as provided by the notice. The [state agency on aging] department shall send a copy to the resident association of any facility affected by the notice.

F. Upon receipt of the report of compliance, the [state agency on aging] department shall take steps to determine that compliance has been achieved."

SECTION 6. Section 24-17-17 NMSA 1978 (being Laws 1991, Chapter 263, Section 6, as amended) is amended to read:

"24-17-17. RULES [AND REGULATIONS] AUTHORIZED.--The [aging and long-term services] department shall promulgate [all] rules [and regulations] necessary or appropriate to administer the nonfinancial provisions of the Continuing Care Act [including, but not limited to, requirements regarding financial reserves, disclosure and actuarial studies]."

SECTION 7. Section 24-17-18 NMSA 1978 (being Laws 1991, Chapter 263, Section 7) is amended to read:

"24-17-18. DEPARTMENT REPORT TO ATTORNEY GENERAL--CIVIL ACTION--CIVIL PENALTIES.--Any time after the [state agency on aging] department issues a notice of violation, the [state agency on aging] department may send the attorney general a written report alleging a possible nonfinancial violation of the Continuing Care Act or of any rule adopted by the department pursuant to that act. Upon receipt of that report, the attorney general shall promptly conduct an investigation to determine whether grounds exist for formally finding a violation. If the attorney general makes that finding, [he] the attorney general shall file an appropriate action against the alleged violator in a court of competent jurisdiction. Upon finding violations of any provisions of the Continuing Care Act or any rule adopted by the department pursuant to that act, the court may impose a civil penalty in the amount of five dollars ($5.00) per resident or up to five hundred dollars ($500), in the discretion of the court, for each day that the violation remains uncorrected after the compliance date stipulated in a notice of violation issued pursuant to the Continuing Care Act."

SECTION 8. A new section of the Continuing Care Act is enacted to read:

"[NEW MATERIAL] SUPERINTENDENT REPORT TO ATTORNEY GENERAL--CIVIL ACTION--INJUNCTIVE RELIEF--REQUIREMENT TO POST SECURITY.--

A. The superintendent may send the attorney general a written report if the superintendent determines that a provider has:

(1) entered into a continuing care contract without a certificate of authority from the superintendent;

(2) misrepresented any information required to be disclosed pursuant to Section 24-17-4 NMSA 1978;

(3) violated any of the provisions of Section 24-17-6 NMSA 1978; or

(4) violated any rule adopted by the superintendent pursuant to the Continuing Care Act.

B. Upon receipt of that report, the attorney general shall promptly conduct an investigation to determine whether grounds exist to file an action in a court of competent jurisdiction against the provider for injunctive relief, including the requirement that the provider post security to guarantee performance of its obligations under a continuing care contract."

SECTION 9. A new section of the Continuing Care Act is enacted to read:

"[NEW MATERIAL] GRACE PERIOD.--Providers in operation as of July 1, 2013 may continue to operate without a certificate of authority until thirty days after the rules applicable to the certificate of authority are promulgated by the superintendent."

SECTION 10. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2013.

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