H*3847 Session 108 (1989-1990)
H*3847(Rat #0154, Act #0097 of 1989) General Bill, By
House Medical, Military, Public and Municipal Affairs
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Chapter 11
to Title 37 so as to provide for the licensing and regulation of continuing
care retirement communities by setting forth related definitions, licensing
and regulating requirements, financial duties, disclosure requirements, the
establishment of a complaint system, billing requirements, examination of the
communities, exemptions, establishment of an escrow account, sanctions for
noncompliance, the appeal process, penalties for violations, a waiver of
requirements, and the effective date of Chapter requirements for certain
communities.
04/11/89 House Introduced, read first time, placed on calendar
without reference HJ-7
04/13/89 House Read second time HJ-28
04/18/89 House Read third time and sent to Senate HJ-29
04/19/89 Senate Introduced and read first time SJ-13
04/19/89 Senate Referred to Committee on Medical Affairs SJ-13
04/25/89 Senate Recalled from Committee on Medical Affairs SJ-8
04/27/89 Senate Read second time SJ-144
05/02/89 Senate Amended SJ-16
05/02/89 Senate Read third time and returned to House with
amendments SJ-16
05/10/89 House Concurred in Senate amendment and enrolled HJ-70
05/16/89 Ratified R 154
05/22/89 Signed By Governor
05/22/89 Effective date 07/01/90
05/22/89 Act No. 97
06/07/89 Copies available
(A97, R154, H3847)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 11
TO TITLE 37 SO AS TO PROVIDE FOR THE LICENSING AND REGULATION OF CONTINUING CARE
RETIREMENT COMMUNITIES BY SETTING FORTH RELATED DEFINITIONS, LICENSING AND
REGULATING REQUIREMENTS, FINANCIAL DUTIES, DISCLOSURE REQUIREMENTS, THE
ESTABLISHMENT OF A COMPLAINT SYSTEM, BILLING REQUIREMENTS, EXAMINATION OF THE
COMMUNITIES, EXEMPTIONS, ESTABLISHMENT OF AN ESCROW ACCOUNT, SANCTIONS FOR
NONCOMPLIANCE, THE APPEAL PROCESS, PENALTIES FOR VIOLATIONS, A WAIVER OF
REQUIREMENTS, AND THE EFFECTIVE DATE OF CHAPTER REQUIREMENTS FOR CERTAIN
COMMUNITIES.
Be it enacted by the General Assembly of the State of South Carolina:
State Continuing Care Retirement Community Act
SECTION 1. Title 37 of the 1976 Code is amended by adding:
"CHAPTER 11
Licensing and Regulation of
Continuing Care Retirement Communities
Section 37-11-10. This chapter may be cited as the 'State Continuing Care
Retirement Community Act'.
Section 37-11-20. As used in this chapter unless the context otherwise
requires:
(1) 'Department' means the South Carolina Department of Consumer Affairs.
(2) 'Continuing care retirement community' means a community in which there
is furnished, pursuant to a continuing care contract,to two or more persons not
related to the administrator or owner of the facility within the third degree of
consanguinity, board or lodging together with nursing, medical, or other
health-related services, regardless of whether the services or lodging are
provided at the same location or not. It does not include an institution
operating solely as a nursing home or community residential care facility
licensed by the South Carolina Department of Health and Environmental Control.
(3) 'Entrance fee' means a payment that assures a resident a place in a
facility.
(4) 'Facility' means the place in which an operator undertakes to provide
continuing care to a person.
(5) 'Health-related services' includes a degree of personal assistance in
feeding, dressing, or other essential daily living activities.
(6) 'Continuing care contract' means a contract to provide board or lodging
together with nursing, medical, or other health-related services:
(a) to a person sixty-five years of age or older at the time the contract
is signed or purchased; or
(b) which requires payment of an entrance fee or other fee in return for a
promise of future care; or
(c) which provides for services for the life of the person or for more than
one year, including mutually terminable contracts.
(7) 'Living unit' means a room, apartment, cottage, or other area within a
facility set aside for the exclusive use or control of one or more identified
residents.
(8) 'Operator' means the promoter, developer, or owner of a continuing care
retirement community or of an institution, building, residence, or other place,
whether operated for profit or not, or a person who solicits or undertakes to
provide continuing care under a continuing care facility contract.
(9) 'Resident' means a purchaser of, a nominee of, or a subscriber to, a
continuing care contract. It includes a person for whom an entrance fee has been
paid.
(10) 'Trust institution' means a state or national bank, state or federal
savings and loan association, or trust company authorized to act in a fiduciary
capacity in this State.
Section 37-11-30. (A) A continuing care retirement community must not be
operated and an entrance fee must not be collected unless a license is obtained
first from the department as provided in this chapter. The department shall
establish reasonable licensing fees not to exceed the cost of administering this
chapter. Licenses issued under this chapter expire one year after the date of
issuance or annually upon dates as the department may prescribe by regulation.
Licenses may be issued only for the premises and persons named in the application
and are not transferable or assignable.
(B) Applications for licenses must be in a form and under conditions as may
be prescribed by the department and must set forth the following:
(1) the name and business address of the operator and a statement of
whether the operator is a partnership, corporation, or other type of legal
entity;
(2) the names and business addresses of the officers, directors, trustees,
managing or general partners, any person having a five percent or greater equity
or beneficial interest in the continuing care retirement community, and any
person who will be managing the facility on a day-to-day basis, and a description
of these persons' interests in or occupations with the operator.
The following information on all persons named in response to this item is
required:
(a) a description of the business experience of the person, if any, in the
operation or management of similar facilities;
(b) the name and address of any professional service, firm, association,
trust, partnership, or corporation in which this person has, or which has in this
person, a five percent or greater interest and which is providing or in the
future shall provide goods, leases, or services to the facility or to residents
of the facility of an aggregate value determined by regulation within any year,
including a description of the goods, leases, or services and their probable or
anticipated cost to the facility, operator, or residents, or a statement that
this cost presently cannot be estimated;
(c) a description of any matter in which the person:
( i) has been convicted of a felony or pleaded nolo contendere to a
felony charge, or been held liable or enjoined in a civil action by final
judgment, if the felony or civil action involved fraud, embezzlement, fraudulent
conversion, or misappropriation of property; or
(ii) is subject to a currently effective injunctive or restrictive court
order, or within the past five years, had a state or federal license or permit
suspended or revoked as a result of an action brought by a governmental agency
or department;
(3) a statement as to the operator's affiliation with a religious,
charitable, or other nonprofit organization, the extent of the affiliation, if
any, the extent to which the affiliate organization is responsible for the
financial and contractual obligations of the operator, and the provision of the
Federal Internal Revenue Code, if any, under which the operator or affiliate is
exempt from the payment of income tax;
(4) the location and description of the physical property of the facility,
existing or proposed, and to the extent proposed, the estimated completion date,
whether construction has begun, and the contingencies subject to which
construction may be deferred;
(5) the services provided or proposed to be provided pursuant to contracts
for continuing care at the facility, including the extent to which medical care
is furnished, and a clear statement of which services are included for specified
basic fees for continuing care and which services are made available at or by the
facility at extra charge;
(6) a description of all fees required of residents, including the entrance
fee and periodic charges, if any. The description must include:
(a) a statement of the fees charged if the resident marries while at the
facility and a statement of the terms concerning the entry of a spouse to the
facility and the consequences if the spouse does not meet the requirements for
entry;
(b) the circumstances under which the resident is permitted to remain in
the facility if he has financial difficulties;
(c) the terms and conditions under which a contract for continuing care
at the facility may be canceled by the operator or by the resident, and the
conditions, if any, under which all or a portion of the entrance fee is refunded
if the contract is canceled by the operator or by the resident if the resident
dies before or following occupancy of a living unit;
(d) the conditions under which a living unit occupied by a resident may
be made available by the facility to a different or new resident;
(e) the manner by which the operator may adjust periodic charges or other
recurring fees and the limitations on these adjustments, if any. If the facility
is already in operation or if the operator or manager operates one or more
similar continuing care locations within this State, tables must be included
showing the frequency and average dollar amount of each increase in periodic
charges, or other recurring fees at each facility or location for the previous
five years, or for all of the years in operation if less than five years;
(7) the health and financial conditions required for a person to be
accepted as a resident and to continue as a resident once accepted, including the
effect of a change in the health or financial condition of a person between the
date of entering a contract for continuing care and the date or initial occupancy
of a living unit by that person;
(8) the provisions that have been made or will be made, if any, to provide
reserve funding or security to enable the operator to perform its obligations
fully under contracts to provide continuing care at the facility, including the
establishment of escrow accounts, trust, or reserve funds, together with the
manner in which these funds will be invested and the names and experience of
individuals in the direct employment of the operator who will make the investment
decisions;
(9) certified financial statements of the operator, including a balance
sheet as of the end of the most recent fiscal year and income statements for the
three most recent fiscal years of the operator or for all of the years in
existence if less than three years. If the operator's fiscal year ended more
than one hundred twenty days before the date the disclosure statement is
recorded, interim financial statements as of a date not more than ninety days
before the date of recording the statement must be included, but need not be
certified;
(10) if the continuing care contract provides for services for a fixed fee
for the life of the person or for more than one year, a summary of a report of
an actuary, updated every two years, that estimates the capacity of the operator
to meet its contractual obligation to the residents;
(11) if the facility has not begun operations, documentation by the operator
that the proposed project is economically feasible, both immediately and
long-term, and can be accommodated in the patient charge structure without
unreasonable increases;
(12) the estimated number of residents of the facility to be provided
services by the operator pursuant to the contract for continuing care;
(13) a copy of the standard form of contract for continuing care used by the
operator must be attached to each disclosure statement;
(14) other material information concerning the facility or the operator as
the operator wishes to include.
Section 37-11-35. A continuing care contract must be in writing and must meet
minimum standards for readability established by the department. Standards must
include, but are not limited to, standards on general organization of text, text
readability, type size, type style, type spacing, and general appearance of the
contract.
A contract clearly must state what portion, if any, of the entrance fee is
refundable and nonrefundable. A contract must include a statement that the
resident has a right to cancel the contract within thirty days after signing.
If the resident cancels within thirty days, all money or property paid or
transferred by the resident must be refunded fully, less those costs incurred by
the community. If the living unit was available for occupancy, the community may
charge a daily rate based on the usual monthly charge for that unit beginning on
the eighth day after signing and ending on the day notice of cancellation is
given to the community.
Section 37-11-40. Within sixty days of the receipt of a completed application
for a license, the department shall determine whether the continuing care
retirement community is financially responsible and can meet its obligations to
residents. In making this determination, the department may consider, but is not
limited to, the following:
(1) the financial soundness of the arrangements for board, lodging, or
medical, nursing, or health-related services and the schedule of charges used in
connection with them;
(2) the adequacy of working capital;
(3) if the continuing care contract provides for services for a fixed fee for
the life of the person or for more than one year, a surety bond, financial
reserves, letter of credit, or other financial arrangement to guarantee the
performance of contractual obligations;
(4) an agreement with providers for the provision of health care or
health-related services.
Section 37-11-50. The department shall issue a license to a person filing an
application pursuant to Section 37-11-30 if, upon payment of the application fee,
the department is satisfied that:
(1) The persons responsible for the conduct of the affairs of the applicant
are competent and trustworthy and possess good reputations.
(2) The continuing care retirement community is financially responsible and
can meet its obligations to residents.
(3) The operator has demonstrated the willingness and potential ability to
assure that the health care or health-related services will be provided in a
manner to assure both availability and accessibility of adequate personnel and
facilities and in a manner assuring availability, accessibility, and continuity
of service.
(4) The operator has complied with all requirements of the Department of
Health and Environmental Control concerning the furnishing of nursing, medical,
or other health-related services.
Section 37-11-60. At the time of, or before, the execution of a contract to
provide continuing care, or at the time of, or before, the transfer of money or
other property to an operator by or on behalf of a prospective resident,
whichever occurs first, the operator shall deliver a current disclosure statement
to the person with whom the contract is to be entered into, the text of which
must contain at least the information required by the department. The department
may require a disclosure of all or part of the information submitted pursuant to
Section 37-11-30(B) or a summary of the information.
Every continuing care retirement community shall establish and maintain a
complaint system which is approved by the department to provide reasonable
procedures for the resolution of written complaints initiated by residents. A
complaint system established pursuant to other governmental requirements
satisfies the requirements of this section if all residents are aware of and may
use the system. A copy of all written complaints handled through this system and
the average time taken to resolve a complaint must accompany an application to
renew a license.
Section 37-11-70. A continuing care retirement community subject to the
provisions of this chapter is required to furnish an item-by-item billing for all
charges to the resident or the person paying the bill upon his request unless the
items and charges are included in the continuing care contract. Items which
remain unpaid are not required to be itemized again. A request for itemized
billing remains in effect until further notification by the resident or person
paying the bill.
Section 37-11-80. The department shall promulgate regulations in accordance
with the Administrative Procedures Act as it considers necessary to carry out the
purposes of this chapter.
The department may make an examination of the affairs of a continuing care
retirement community and the health care and health-related services providers
with whom the organization has contracts, agreements, or other arrangements as
often as reasonably is necessary to ensure that the operator can meet his
obligations to residents and otherwise meets the requirements of this chapter.
Continuing care retirement communities and health care providers examined
pursuant to this section shall submit books and records needed to determine the
continuing care retirement community's financial soundness. The department is
responsible for the expenses of examinations under this section.
Section 37-11-90. (A) A continuing care retirement community is exempt from
the provisions of this section if:
(1) It has been operating for at least five years;
(2) For the previous six months it has maintained at least the minimum
occupancy rate estimated in its financial feasibility study to achieve a break
even cash flow operating level or seventy-five percent occupancy, whichever is
less.
(B) If an entrance fee is received by the operator before the date the
resident is permitted to occupy a living unit in the facility, the total amount
must be placed in an escrow account with a trust institution. These funds may
be released only as follows:
(1) If the entrance fee applies to a living unit that previously has been
occupied in the facility, the entrance fee must be released to the operator when
the living unit becomes available for occupancy by the new resident.
(2) If the entrance fee applies to a living unit which previously has not
been occupied by a resident, the nonrefundable portion, if any, of the entrance
fee must be released to the operator when the living unit becomes available for
occupancy. The refundable portion, if any, of the entrance fee must be released
to the operator when the escrow agent is satisfied that:
(a) Construction or purchase of the living unit has been completed, and
an occupancy permit, if applicable, covering the living unit has been issued by
the local government having authority to issue the permit.
(b) A commitment has been received by the operator for a permanent
mortgage loan or other long-term financing, and conditions of the commitment
before disbursement of funds have been satisfied substantially.
(c) Aggregate entrance fees received or receivable by the operator
pursuant to binding continuing care retirement community contracts, plus the
anticipated proceeds of any first mortgage loan or other long-term financing
commitment, are equal to not less than ninety percent of the aggregate cost of
constructing or purchasing, equipping, and furnishing the facility plus not less
than ninety percent of the funds estimated in the financial feasibility study
required by Section 37-11-30 to be necessary to fund cash shortages during
start-up and assure full performance of the obligations of the operator pursuant
to continuing care retirement community contracts.
(C) Upon receipt by the escrow agent of a request by the operator for the
release of the escrow funds, the escrow agent shall approve release of the funds
within five working days unless the escrow agent finds that the requirements of
subsection (B) have not been met and notifies the operator of the basis for this
finding. The request for release of the escrow funds must be accompanied by
documentation the trust institution requires.
If the operator fails to meet the requirements for release of funds held in
this escrow account within a time period the escrow agent considers reasonable,
the funds must be returned by the escrow agent to the persons who have made
payment to the operator. The escrow agent shall notify the operator of the
length of this time period when the operator requests release of the funds.
An entrance fee held in escrow may be returned by the escrow agent to the
person who made payment to the operator at any time upon receipt by the escrow
agent of notice from the operator that this person is entitled to a refund of the
entrance fee.
Section 37-11-100. The department, upon proper notice and hearing in
accordance with the Administrative Procedures Act and department regulations, may
deny, suspend, or revoke licenses issued under this chapter or assess a monetary
penalty for violations of provisions under this chapter or the regulations
promulgated under this chapter.
Section 37-11-110. An applicant or licensee who is dissatisfied with a
decision of the department as a result of the hearing provided for by Section
37-11-100 may appeal to the appropriate court for judicial review pursuant to the
Administrative Procedures Act.
Section 37-11-120. The department, in accordance with the laws of the State
governing injunctions and other processes, may maintain an action in the name of
the State against a person for establishing, conducting, managing, or operating
a facility without obtaining a license as provided in this chapter. In charging
a defendant in a complaint in the action, it is sufficient to charge that the
defendant, upon a certain day and in a certain county, established, conducted,
managed, or operated the facility or program without a license without asserting
further or more particular facts concerning the charge.
A person violating the provisions of this chapter or regulations promulgated
under this chapter is guilty of a misdemeanor and, upon conviction, must be fined
not more than ten thousand dollars or imprisoned for not more than one year for
each offense. Each day the facility or program operates without a license is
considered a separate offense.
Section 37-11-130. The department may waive any of the requirements of Section
37-11-30(B) for a continuing care retirement community in operation as of the
effective date of this chapter.
Section 37-11-140. (A) A continuing care retirement community in operation,
or for which binding financial commitments have been made, as of the effective
date of this chapter is not required to meet the criteria established by the
department pursuant to Section 37-11-40(1), (2), and (3) and Section 37-11-50(2)
and (3) until July 1, 1992.
(B) A continuing care retirement community in operation, or for which binding
financial commitments have been made, as of the effective date of this chapter
is exempt from the requirements of Section 37-11-90(B)(2) until July 1, 1994.
(C) The provisions of Section 37-11-35 do not apply to a continuing care
contract entered into before the effective date of this chapter.
(D) The provisions of subsections (A), (B), and (C) do not limit the
department's authority to deny, suspend, or revoke a license or assess a monetary
penalty if it finds fraud or gross financial mismanagement."
Time effective
SECTION 2. This act takes effect July 1, 1990. |