sb0316jus

SENATE JUDICIARY COMMITTEE SUBSTITUTE FOR

SENATE PUBLIC AFFAIRS COMMITTEE SUBSTITUTE FOR

SENATE BILL 316

54th legislature - STATE OF NEW MEXICO - first session, 2019

AN ACT

RELATING TO AGING; REQUIRING THE OFFICE OF SUPERINTENDENT OF INSURANCE TO REVIEW FINANCIAL AND ACTUARIAL DISCLOSURES TO THE AGING AND LONG-TERM SERVICES DEPARTMENT AND REPORT VIOLATIONS OF THE CONTINUING CARE ACT; REQUIRING THE ATTORNEY GENERAL TO ACCEPT AND REVIEW ALLEGED VIOLATIONS OF THE CONTINUING CARE ACT REPORTED FROM ANY SOURCE.

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

SECTION 1. 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) a summary of an actuarial analysis within the last five years; [and]

(b) 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; and

(c) a certification by the actuary who performs the future-service obligation calculation affirming that the community is solvent;

(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 2. 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 AND LONG-TERM SERVICES DEPARTMENT FOR PUBLIC INSPECTION.--No later than July 1, 2020 and annually thereafter, a provider shall [file] provide a copy of the disclosure statement and any amendments to that statement [with] to the [state agency on] aging and long-term services department for public inspection during regular working hours. The aging and long-term services department shall provide a copy of the disclosure statement to the office of superintendent of insurance."

SECTION 3. 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.--

A. The aging and long-term services department shall review all disclosure statements received to ensure that providers operate in accordance with the Continuing Care Act.

B. The office of superintendent of insurance shall:

(1) review the financial documents, actuarial projections and audits received pursuant to Paragraphs (10) through (12) of Subsection B of Section 24-17-4 NMSA 1978; and

(2) after the review pursuant to this subsection or an examination pursuant to Subsection C of this section, report financial violations of the Continuing Care Act, if any, to the aging and long-term services department.

C. Upon finding an irregularity in the financial reports, audit or actuarial reports provided by a community, the office of superintendent of insurance may contract for an independent audit or actuarial examination that shall be conducted at the expense of the community.

[A.] D. If the [state agency on] aging and long-term services 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 or any rule adopted pursuant to that act, the [state agency on] aging and long-term services 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.] E. 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 and long-term services department, the provider should take to conform to the law or the assurances that the [state agency on] aging and long-term services 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.] F. 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 and long-term services department may request a conference. The [state agency on] aging and long-term services department shall schedule a conference within [seven] thirty days of a request.

[D.] G. 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 and long-term services 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.] H. A person receiving a notice of violation shall submit a signed report of compliance as provided by the notice. The [state agency on] aging and long-term services department shall send a copy to the resident association of any facility affected by the notice.

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

SECTION 4. 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] may promulgate all rules and regulations necessary or appropriate to administer the provisions of the Continuing Care Act, including [but not limited to] requirements regarding financial reserves, disclosure and actuarial studies."

SECTION 5. Section 24-17-18 NMSA 1978 (being Laws 1991, Chapter 263, Section 7) is amended to read:

"24-17-18. REPORT TO ATTORNEY GENERAL--CIVIL ACTION--CIVIL PENALTIES.--

A. A person may report an alleged violation of the Continuing Care Act or rules promulgated pursuant to that act to the attorney general or to the aging and long-term services department.

B. Any time after the [state agency on] aging and long-term services department issues a notice of violation, the [state agency on aging] department may send the attorney general a written report alleging a possible violation of the Continuing Care Act or any rule adopted pursuant to that act.

C. Upon receipt of [that] a report from any source alleging a violation of the Continuing Care Act or rules promulgated pursuant to that act, 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] review the allegation. Upon finding that an allegation received pursuant to this subsection is credible, the attorney general shall file an appropriate action against the alleged violator in a court of competent jurisdiction.

D. Upon finding violations of any provisions of the Continuing Care Act or any rule adopted 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."

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