The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Banking and Insurance
BILL: CS/SB 622
INTRODUCER: Banking and Insurance Committee and Senator Yarborough
SUBJECT: Continuing Care Contracts
DATE: April 5, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Johnson Knudson BI Fav/CS
2. AEG
3. FP
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 622 revises many provisions of ch. 651, F.S., of the Insurance Code governing continuing
care retirement communities (CCRC), which are regulated by the Office of Insurance Regulation
(OIR). The CCRCs provide lifelong housing, household assistance, and nursing care in exchange
for a significant entrance fee and monthly fees. A CCRC can include an independent living
apartment or house, as well as an assisted living facility or a nursing home. The CCRCs may also
offer at-home programs that provide residents CCRC services while continuing to live in their
own homes until they are ready to move to the CCRC. The CCRCs appeal to older Americans
because they offer an independent lifestyle for as long as possible but also provide the
reassurance that, as residents age or become unable to care for themselves, they will receive the
additional care they need. The bill provides the following changes relating to CCRCs:
Regulatory Oversight
Makes it easier for a provider to access escrowed resident fees as part of an expansion,
allowing access to the escrowed funds once 75 percent of the proposed units have been
reserved rather than once payment in full has been received for 50 percent of the units.
Reduces the time for OIR to approve or deny an expansion application from 45 days to 30
days from the date the application is deemed complete.
Specifies that when a provider is using an escrow account held pursuant to a trust indenture
or mortgage lien to meet its minimum liquid reserve requirement, the trust indenture, loan
agreement, or escrow agreement must require that the provider, trustee, lender, escrow agent,
or another person designated to act in their place notify OIR in writing at least 10 days before
REVISED: BILL: CS/SB 622 Page 2
the withdrawal of any portion of the debt service reserve funds required to meet the
provider's minimum liquid reserve requirement. Further, the notice must include an affidavit
sworn to by the provider, the trustee, or a person designated to act in their place which
includes the amount of the scheduled debt service payment, the payment due date, the
amount of the withdrawal, the accounts from which the withdrawal will be made, and a plan
with a schedule for replenishing the withdrawn funds.
Removes the requirement for a provider to obtain prior approval from OIR to withdraw funds
from a debt service reserve required to be escrowed pursuant to a trust indenture of mortgage
lien if the funds will be used to pay principal and interest payments.
Expands the types of financial institutions that can provide a letter of credit to a provider to
satisfy its minimum liquid reserve requirements by adding state-chartered financial
institutions as well as federally-chartered financial institutions.
Allows a provider to assess a cancellation penalty against a person who signs residency
contract and rescinds it within seven days if the person had previously signed a reservation
agreement and did not cancel it within 30 days.
Requires OIR examinations of CCRCs to be commenced within 12 months after the end of
the most recent fiscal year covered by the examination. Further, the scope of the examination
may include events subsequent to the end of the most recent fiscal year and the events of any
prior period, which affects the present financial condition of the provider.
Transparency for Residents
Clarifies that a resident is eligible to participate in residents’ council matter, including
elections, if the person meets the definition of a resident, as provided in s. 651.011, F.S.
Requires a provider that owns or operates more than one facility in Florida to have a
designated resident representative at each facility.
Requires that the designated resident representative be notified by the provider at least 14
days in advance of any meeting of the full governing body at which the annual budget and
proposed changes in resident fees or services are on the agenda or will be discussed so that
the resident can attend and participate in that portion of the meeting.
Requires each facility to provide written notice to the president or chair of the residents’
council within 10 business days after a change in management.
Requires each facility to provide a copy of the OIR final examination report and corrective
action plan, if applicable, to the president or chair of the residents’ council within 60 days
after issuance of the report.
II. Present Situation:
Continuing Care Retirement Communities (CCRC)
A provider
1
or a CCRC offers shelter and nursing care or personal services upon the payment of
an entrance fee.
2
The CCRCs offer a transitional approach to the aging process, accommodating
residents’ changing level of care. A CCRC can include an independent living apartment or a
house, as well as an assisted living facility or a nursing home. The CCRCs may also offer at-
1
Section 651.011(23), F.S., defines a provider as an owner or operator that provides continuing care.
2
Section 651.011(13), F.S. BILL: CS/SB 622 Page 3
home programs that provide residents CCRC services while continuing to live in their own
homes until they are ready to move to the CCRC.
3
A CCRC enters into contracts with seniors
(residents) to provide housing and medical care in exchange for an entrance fee and monthly
fees. Entrance fees are a significant commitment by the resident as entrance fees range from
around $100,000 to over $1 million.
4
Regulation of CCRCs
In Florida, regulatory oversight responsibility of CCRCs is shared between the Agency for
Health Care Administration (AHCA) and the Office of Insurance Regulation (OIR).
5
The OIR
regulates CCRC providers
6
as specialty insurers. The AHCA regulates aspects of CCRCs related
to the provision of health care, such as nursing facilities, assisted living facilities, home health
agencies, quality of care, and medical facilities.
7
There are currently 70 licensed continuing care
retirement communities in Florida.
8
Oversight by the Office of Insurance Regulation
The OIR has primary responsibility to license, regulate, and monitor the operation of CCRCs and
to determine facilities’ financial condition and the management capabilities of their managers
and owners.
9
Continuing care services are governed by a contract between the facility and the
resident of a CCRC, which is subject to approval by the OIR.
10
As part of the regulation of
CCRCs, OIR reviews applications for licensure, reviews expansion applications, conducts
solvency monitoring through the review of financial statements and other documents, monitors
minimum liquid reserve levels, and conducts examinations of each facility every three to five
years. It is a felony of the third degree for any person to maintain, enter into, or perform any
continuing care or continuing care at-home contract without actually having a valid provisional
COA (Certificate of Authority) or COA. One may not avoid such criminal liability by simply
being in pursuance of a COA.
11
In order to operate a CCRC in Florida, a provider must generally obtain from the OIR a
certificate of authority predicated upon first receiving a provisional certificate of authority.
12
A
provisional certificate of authority is issued once a provider meets the requirements prescribed in
s. 651.023, F.S. The application process for a provisional certificate of authority and a certificate
of authority involves submitting audited financial reports, feasibility studies, copies of contracts,
3
Sections 651.057 and 651.118, F.S.
4
Office of Insurance Regulation, Analysis of SB 622 (Feb. 15, 2023).
5
Chapter 651, F.S., and s. 20.121, F.S.
6
Section 651.011(12), F.S., a provider means an owner or operator.
7
Agency for Health Care Administration available at Consumer Guides | FloridaHealthFinder.gov (last viewed Mar. 21,
2023) and s. 651.118, F.S.
8
Office of Insurance Regulation, Summary and Comparison of CCRC Data (2022) Re-Open Florida Task Force Meeting:
Insurance (floir.com) last visited (Mar. 23, 2023).
9
See ss. 651.021, 651.22, and 651.023, F.S.
10
Sections 651.055 and 651.057, F.S.
11
Section 651.125, F.S,
12
Section 651.022, F.S. BILL: CS/SB 622 Page 4
and other information.
13
Further, the applicant must provide evidence that the applicant is
reputable and of responsible character.
14
The issuance of a provisional COA allows the applicant to collect entrance fees and reservation
deposits from prospective residents. All entrance fees and reservation deposits must be placed in
an escrow account or on deposit with Department of Financial Services (DFS).
15
The
requirements for a provisional COA application and a COA application
16
require that the
feasibility study must show projections for the first five years of operations. For a provisional
COA, the preparer of the feasibility study may be the provider or a contracted third party.
17
Like
the provisional COA application, an application for a COA requires the submission of various
information, such as an audited financial report. For a COA application, a feasibility study must
be prepared by an independent consultant. If the feasibility study is prepared by an independent
certified public accountant (CPA), it must contain an examination opinion
18
or a compilation
report
19
containing financial forecasts and projections.
A COA may not be issued until documentation evidencing that the project has a minimum of 50
percent of the units reserved for which the provider is charging an entrance fee is provided to the
OIR. For a COA application, in order for a unit to be considered reserved, the provider must
collect a minimum deposit of the lesser of $40,000 or 10 percent of the entrance fee.
20
Consolidated Application for a Provisional Certificate of Authority and a Certificate of
Authority Applications – Section 651.0215, F.S., provides a consolidated application process,
including requirements for handling escrowed funds, in order for an applicant to obtain a COA
without first obtaining a provisional COA. The applicant must provide a feasibility study
prepared by an independent consultant
21
as well as audited financial statements,
22
and other
specified information to the OIR. If the feasibility study is conducted by an independent certified
public accountant, it must contain an examination report, or a compilation report
23
acceptable to
the OIR.
13
See ss. 651.021-651.023, F.S.
14
Section 651.022(2)(c), F.S.
15
Section 651.023(5), F.S.
16
Section 651.023, F.S.
17
Section 651.022 (3)(j), F.S., provides that the preparer of the feasibility study for a provisional COA may be the provider
or a contracted third party.
18
This is undefined term in ch. 651, F.S.
19
An audit is the highest level of assurance service that a CPA performs and is intended to provide a user comfort on the
accuracy of the financial statements. The CPA performs procedures in order to obtain “reasonable assurance” (defined as a
high but not absolute level of assurance) about whether the financial statements are free from material misstatement. In
contrast, the CPA does not obtain any assurance for a compilation because the CPA is not required to verify the accuracy or
completeness of the information provided or otherwise gather evidence for the purposes of expressing an audit opinion or a
review conclusion. The compilation report states that the CPA did not audit or review the financial statements and
accordingly does not express an opinion, a conclusion or provide any assurance on them. See American Institute of Certified
Public Accountants financial-statement-services-guide.pdf (aicpa.org) (last visited Mar. 18, 2023)
20
Section 651.023(4)(b), F.S.
21
Section 651.0215(2)(b), F.S.
22
Section 651.0215(2)(f), F.S.
23
Supra FN 19. BILL: CS/SB 622 Page 5
Expansion Applications – Section 651.0246, F.S., specifies the application process and
information required to obtain approval from OIR for expansion. This section also provides that
automatic approval is granted for expansions up to 35 percent of the existing units if the provider
exceeds the statewide median for days cash on hand, debt service coverage ratio, and total
facility occupancy for the most recent two consecutive reporting periods. In order to obtain this
automatic approval, the provider must submit a letter to the OIR indicating the planned number
of units, the proposed sources and uses of funds, and an attestation that they understand and will
comply with all minimum liquid reserve and escrow account requirements.
A feasibility study, prepared by an independent certified public accountant, is required to be
submitted as part of an expansion application. The study includes an independent evaluation and
examination opinion as to whether the assumptions contained in the study are reasonable and that
the project is feasible.
24
A minimum of 75 percent of the moneys paid for all or any part of an
initial entrance fee or reservation deposit collected for units in the expansion and 50 percent of
the moneys paid for all or any part of an initial fee collected for continuing care at-home
contracts in the expansion must be placed in an escrow account or on deposit with DFS, as
prescribed in s. 651.033, F.S.
25
The provider may secure release of the moneys held in escrow within 7 days after the receipt by
the OIR of an affidavit by the provider that the following conditions have been satisfied:
A certificate of occupancy has been issued.
The provider has received payment in full for at least 50 percent of the total units of a
phase or of the total of the combined phases constructed.
Documents evidencing that commitments have been secured or that the provider’s
long-term financing has been approved by the OIR.
Documents evidencing that the provider has sufficient funds to meet the minimum
liquid reserve requirements of s. 651.035, F.S., which may include funds deposited in
the initial entrance fee account.
26
Within 30 days after receipt of an application for expansion, the OIR must examine the
application and notify the applicant in writing, requesting any additional information.
27
Within
15 days after the OIR receives all the requested information, the OIR must notify the applicant in
writing that the requested information has been received.
28
If the OIR fails to notify the applicant
within the 15-day period, the application is deemed complete for purposes of the review.
29
Within 45 days of the OIR deeming the application complete, the OIR must complete its review
and approve or deny an expansion.
30
24
Section 651.0246(2)(a), F.S.
25
Section 651.0246(3), F.S.
26
Section 651.0246((4), F.S.
27
Section 651.0246(5)(a), F.S.
28
Id.
29
Id.
30
Section 651.0246(6), F.S. BILL: CS/SB 622 Page 6
Continuing Care Contracts
All CCRC contracts provide for a refund of a declining portion of the entrance fee if the contract
is cancelled for reasons other than the death of the resident during the first 4 years of occupancy
in the CCRC.
31
However, some contracts may exceed this requirement and contain minimum
refund provisions that guarantee a refund of a specified portion of the entrance fee upon the
death of the resident or termination of the contract regardless of the length of occupancy by the
resident.
32
The CCRC may assess a forfeiture fee equal to 2 percent of the entrance fee if the
resident cancels his or her reservation after 30 days for reasons that are within the control of the
resident.
33
Reserving and Escrow Requirements
Section 651.035, F.S., which contains minimum liquid reserve requirements, requires providers
that do not have a mortgage loan or other financing on the facility to deposit monthly in escrow
one-twelfth of their annual property tax liability and to pay property taxes out of such escrow.
Each facility is required to maintain a minimum liquid reserve for operations, debt service, and
facility upkeep based on the facility's expenses and debt service obligations. OIR approval is
required to be obtained prior to withdrawing all or a portion of the funds used to satisfy a
facility's minimum liquid reserve requirement. Facilities who want to use a letter of credit to
fund their minimum liquid reserve are limited to those institutions that participate in the State of
Florida Treasury Certificate of Deposit Program.
34
A provider may withdraw funds held in escrow without the approval of the OIR if the amount
held in escrow exceeds the requirements of s. 651.035, F.S., and if the withdrawal will not affect
compliance with this section.
35
Any other proposed withdrawals are subject to approval by the
OIR. Within 30 days after a filing for such a request for withdrawal is deemed complete, the OIR
must notify the provider of its approval or disapproval of the request.
36
Any increase in the minimum liquid reserve must be funded no later than 61 days after the
minimum liquid reserve calculation is due to be filed.
37
If the minimum liquid reserve is less than
the required minimum amount at the end of any fiscal quarter due to a change in the market
value of the invested funds, the provider must fund the shortfall within 10 business days.
38
Further, the section authorizes OIR authority to require the transfer of reserve funds into the
custody of the DFS Bureau of Collateral Management if OIR finds that the provider is impaired
or insolvent in order to ensure the safety of those assets.
39
Section 651.033, F.S., contains requirements for a provider’s escrow account and the duties that
apply to escrow agents, including the prohibition that an escrow agent may not release or
31
Section 651.055, F.S.
32
Supra FN 4.
33
Id.
34
Section 651.035(5), F.S.
35
Section 651.035(7)(a), F.S.
36
Section 651.035(7)(b), F.S.
37
Section 651.035(10), F.S.
38
Section 651.035(11), F.S.
39
Section 651.035(8), F.S. BILL: CS/SB 622 Page 7
otherwise allow the transfer of funds without the written approval of the OIR, unless the
withdrawal is from funds in excess of specified statutory requirements.
Financial Reporting
Section 651.026, F.S., requires the provider to submit annually the management’s calculation of
the provider’s debt service coverage ratio, occupancy, and days cash on hand. The OIR is
required to publish on its website by August 1 of each year an industry report for the preceding
calendar year that contains the median days cash on hand for all providers, median debt service
coverage ratio for all providers, and median occupancy rate for all providers by setting
(independent living, assisted living, skilled nursing, and the entire facility).
Section 651.0261, F.S., requires that each provider must submit a quarterly unaudited financial
statement of the provider or of the facility, days cash on hand, occupancy, debt service coverage
ratio, and a detailed listing of the assets maintained in the liquid reserves within 45 days after the
end of each fiscal quarter.
40
This information is intended for the OIR to use for monitoring the
financial condition of a provider or facility on an ongoing basis. If a CCRC falls below the
thresholds set for two or more of the key indicators (days cash on hand, debt service coverage
ratio, or occupancy) at the time of the quarterly report, the CCRC must submit to the OIR an
explanation of the circumstances and a description of the actions the CCRC will take to meet the
requirements. The last quarterly statement for a fiscal year is not required if a provider does not
have pending a regulatory action level event, an impairment, or a corrective action plan.
Section 651.0261, F.S., authorizes the OIR to require monthly reporting of certain information if
it finds that such information is needed to properly monitor the financial condition of a provider
or facility, or is otherwise needed to protect the public interest.
41
The section also specifies
certain circumstances under which monthly filings may be required, such as a provider being
subject to delinquency, receivership, or bankruptcy proceedings.
42
Financial Indicators and Solvency Framework
Regulatory Action Level Event
43
– Section 651.034, F.S., provides a framework of required
actions if a provider falls below specified levels of three key indicators at the time of the annual
report: occupancy, days cash on hand, and the debt service coverage ratio. The key indicators
were selected based on their tendency to highlight problematic financial developments. If the
provider’s performance falls below the specified levels on two of the following three key
indicators at the time of the annual report, it is considered a “regulatory action level event”:
The provider's debt service coverage ratio is less than the greater of the minimum ratio
specified in the provider's bond covenants or lending agreement for long-term financing or
1.20:1 as of the most recent annual report filed with the OIR; or, if the provider does not have
a debt service coverage ratio required by its lending institution, the provider's debt service
coverage ratio is less than 1.20:1 as of the most recent annual report filed with the OIR;
The provider's days cash on hand is less than the greater of the minimum number of days
cash on hand specified in the provider's bond covenants or lending agreement for long-term
40
Section 651.0261(1), F.S.
41
Section 651.0261(2), F.S.
42
Section 651.0261(3), F.S.
43
Section 651.011(25), F.S., defines “regulatory action level event.” BILL: CS/SB 622 Page 8
financing or 100 days. If the provider does not have a days cash on hand required by its
lending institution, the days cash on hand may not be less than 100 as of the most recent
annual report filed with the OIR; or,
The occupancy of the provider's facility is less than 80 percent averaged over the 12-month
period immediately preceding the annual report filed with the OIR.
If the provider is a member of an obligated group having cross-collateralized debt, the obligated
group's debt service coverage ratio and days cash on hand must be used to determine if a
regulatory action level event has occurred. In the event that a regulatory action level event
occurs, the provider is required to submit a corrective action plan; the OIR is required to perform
an examination or analysis of the provider; and the OIR is required to issue a corrective order
specifying any corrective actions that the OIR determines are required. For new CCRCs, the OIR
may exempt a provider from the consequences of a regulatory action level event or impairment
until the earlier of the CCRC reaching stabilized occupancy, the time projected to achieve
stabilized occupancy, or five years from the date of issuance of the COA.
Impairment – The bill creates a definition for “impaired” or impairment” to allow for earlier
intervention by the OIR in an effort to prevent harm to Florida consumers. The impairment
framework has been an effective tool in preventing, or minimizing the impact of, insurer
insolvencies. The current intervention framework for CCRCs is triggered only after a provider
becomes insolvent, meaning it is unable to pay its obligations as they come due in the normal
course of business. The establishment of the impairment framework will allow the OIR to begin
partnering with a provider much sooner in order to mitigate or resolve any potential issues that
would put resident interests in jeopardy. A provider is considered impaired if it fails to hold the
minimum liquid reserve.
44
Additionally, a provider without mortgage or bond financing would
be considered impaired if it does not maintain the specified level of days cash on hand, and a
provider with mortgage or bond financing would be considered impaired if it does not maintain
specified levels of days cash on hand and debt service coverage ratio.
45
If the provider is a
member of an obligated group having cross-collateralized debt, the obligated group's debt service
coverage ratio and days cash on hand must be used to determine if the provider is impaired.
46
The OIR may forego taking action for up to 180 days after an impairment occurs if the OIR finds
there is a reasonable expectation that the impairment may be eliminated within the 180-day
period.
Sections 651.022 and 651.023, F.S., prohibit the OIR from approving an application for a
provisional COA or COA if it includes in the financing plan any encumbrance on renewal or
replacement reserves required by ch. 651, F.S.
Section 651.114, F.S., requires that a provider, determined by the OIR to not be in compliance
with ch. 651, F.S., must submit to the OIR and the Continuing Care Advisory Council a plan for
obtaining compliance with ch. 651, F.S., and solvency. The OIR is not prohibited from taking
other regulatory action while a plan for obtaining compliance or solvency is under review.
44
Section 651.011(15)(a), F.S.
45
Section 651.011(15)(b), F.S.
46
Section 651.011(15), F.S. BILL: CS/SB 622 Page 9
Section 651.114, F.S., provides circumstances under which OIR’s remedial rights are not
subordinate to the rights of a trustee or lender. Those circumstances include the following:
The provider engaged in the misappropriation, conversion, or illegal commitment or
withdrawal of minimum liquid reserve or required escrowed funds;
The provider refused to be examined by the OIR; or
The provider refused to produce any relevant accounts, records, and files requested as part of
an examination.
Even if the OIR’s remedial rights are suspended, an impaired provider must make available to
the OIR copies of any corrective action plan approved by the trustee or lender to cure the
impairment.
Section 651.1065, F.S., requires an impaired or insolvent provider to receive prior approval of
the OIR before writing new contracts if its proprietor, general partner, member, officer, director,
trustee, or manager knows, or reasonably should know, that the CCRC is impaired or insolvent,
even if the provider’s COA has not been formally suspended. This is intended to help protect
potential residents who may be considering investing substantial funds to enter into a CCRC
contract. The OIR will have discretion to allow the issuance of new contracts where safeguards
are adequate. Violating this section is a felony of the third degree.
Examinations of Providers
Section 651.105, F.S., requires OIR to examine at least once every 3 years any applicant for a
COA and any provider engaged in the execution of care contracts or engaged in the performance
of obligations under such contracts. If a provider is accredited under s. 651.028, F.S., such
examinations must occur at least once every 5 years. Further, any duly authorized officer,
employee, or agent of the office may have access to, and examine any records, with or without
advance notice, to secure compliance with, or to prevent a violation of, any provision of this
chapter.
47
Rights of Residents; Transparency
Rights of Residents – The OIR is also authorized to discipline a facility for violations of
residents’ rights.
48
These rights include: a right to live in a safe and decent living environment,
free from abuse and neglect; freedom to participate in and benefit from community services and
activities and to achieve the highest possible level of independence, autonomy, and interaction
within the community; and present grievances and recommend changes in policies, procedures,
and services to the staff of the facility, governing officials, or any other person without restraint,
interference, coercion, discrimination, or reprisal.
49
Each CCRC must establish a resident’s council to provide a forum for residents’ input on issues
that affect the general residential quality of life, such as the facility’s financial trends, and
problems, as well as proposed changes in policies, programs, and services.
50
CCRCs are required
47
Section 651.105(2), F.S.
48
Section 651.083, F.S.
49
Id.
50
Section 651.081, F.S. BILL: CS/SB 622 Page 10
to maintain and make available certain public information and records, such as records of all cost
and inspection reports pertaining to that facility, a concise summary of the last examination
report issued by the OIR, and a summary of the most recent annual statement.
51
Disclosures and Notices – Chapter 651 requires provider to give many types of notices to the
residents or residents’ council. These assists residents and prospective residents to remain
apprised of the status and stability of the provider and to take action to protect their interests.
A provider is required to furnish the following information to the chair of the residents’ council:
a notice of the issuance of any examination reports, a notice of the initiation of any legal or
administrative proceedings by the OIR or the DFS, a notice of any change in ownership filing
submitted to the OIR, and any master plans approved by the provider’s governing board and any
plans for expansion or phased development.
52
Additionally, a provider must post in a prominent
place in the facility a notice that contains the OIR’s website and phone number and the website
and toll-free consumer helpline for the DFS Division of Consumer Services.
53
The notice must
also state that either the OIR or DFS Division of Consumer Services may be contacted for the
submission of inquiries and complaints with respect to potential violations of law.
Section 651.091(3), F.S., requires the following disclosures to prospective residents: a notice of
the issuance of any examination reports; a notice of the initiation of any legal or administrative
proceedings by the OIR or the DFS; notice that, if the resident does not exercise the right to
rescind a continuing care contract within seven days after executing the contract, the resident's
funds held in escrow will be released to the provider; a statement that distribution of the
provider’s assets or income may occur or a statement that such distribution will not occur; and a
disclosure of any holding company system or obligated group of which the provider is a member.
Additionally, the provider must obtain written acknowledgment that the prospective resident or
his or her legal representative received the disclosures required by s. 651.091(3), F.S.
Section 651.055(3), F.S., requires that contracts with a resident disclose that CCRC facilities in
Florida are regulated by the OIR. Additionally, the contract disclosure must state that “[t]he
financial structure of a continuing care provider can be complex, and the decision to enter into a
contract for continuing care is a long-term commitment between a resident and the continuing
care provider. You may wish to consult an attorney or financial advisor before entering into such
contract.”
Section 651.111, F.S., provides for the handling of resident complaints against providers,
including a requirement that the OIR provide a written acknowledgement of any complaint
within 15 days of receipt of the complaint and a written statement to the complainant specifying
any violations of law and any actions taken. Such additional procedures will keep residents better
informed as to the status and outcome of a complaint.
51
Section 651.091, F.S.
52
Section 651.091(2), F.S.
53
Section 651.091, F.S. BILL: CS/SB 622 Page 11
Continuing Care Advisory Council
Section 651.121, F.S., creates the council and provides membership and duties of the ten
members comprising the council is an advisory contains requirements for membership of the
Continuing Care Advisory Council. The members include three members representing facilities
with active COAs, one representative of the business community, one representative of the
financial community, a certified public accountant, and four residents who hold continuing care
contracts with a facility certified in Florida.
Department of Financial Services’ Oversight of CCRCs
The DFS may become involved with a resident after a CCRC contractual agreement has been
signed by both parties or during a mediation or arbitration process.
54
Typically, residents will
contact the DFS Division of Consumer Services, which receives and resolves complaints
involving products and persons regulated by the OIR or the DFS.
55
Chapter 631, F.S., governs the rehabilitation and liquidation process for insurers in Florida.
Federal law provides that insurance companies are not eligible to be a debtor in federal
bankruptcy proceedings and are instead subject to state laws regarding receivership.
56
In Florida,
the Division of Rehabilitation and Liquidation within the DFS is responsible for managing
insurance companies placed into receivership. The goal of rehabilitation is to return the insurer to
solvency. The goal of liquidation, however, is to liquidate the business of the insurer and use the
proceeds to pay claims, including those of policyholders, creditors, and employees.
III. Effect of Proposed Changes:
Section 1 amends s. 651.011, F.S., to create definitions for the following terms:
“Designated resident representative” means a resident elected by the residents’ council to
represent residents on matters related to changes in fees or services as specified in s.
651.085(2) and (3).
“Residents’ council” means an organized body representing the resident population of a
certified facility. A residents’ council shall serve as a liaison between residents and the
appropriate representative of the provider.
Section 2 amends s. 651.0246, F.S., relating to expansions. Subsection (2)(a) is amended to
clarify that the certified public accountant is responsible for preparing an independent evaluation
and examination opinion for the first 5 years.
Subsection (4) is revised to allow a provider to have access to escrowed resident fees when the
provider has collected a reservation deposit for at least 75 percent of the proposed units for
which an entrance fee is to be charged. Further, a provider must use the funds for the sole
purpose of paying secured indebtedness as specified in the feasibility study. The minimum
reservation deposit must be the lessor of $40,000 or 10 percent of the then-current entrance fee
54
Rules 69O-193.062 and 69O-193.063, F.A.C.
55
Section 624.307, F.S.
56
The Bankruptcy Code expressly provides that "a domestic insurance company" may not be the subject of a federal
bankruptcy proceeding. 11 U.S.C. s. 109(b)(2). The exclusion of insurers from the federal bankruptcy court process is
consistent with federal policy generally allowing states to regulate the business of insurance. See 15 U.S.C. s. 1012
(McCarran-Ferguson Act). BILL: CS/SB 622 Page 12
for the unit being reserved. If the expansion is to be completed in multiple phases, the 75 percent
reservation requirement applies separately to each phase of the expansion.
Currently the provider may have access to the escrowed funds if payment in full has been
received for 50 percent of the units of a phase or of the total of the combined phases constructed.
Subsection (6) is revised to reduce the time for OIR to approve or deny an expansion application
from 45 days to 30 days from the date the application is deemed complete.
Section 3 amends s. 651.026, F.S., relating to annual reports, to clarify that if a provider’s
financial statements are consolidated or combined with the financial statements of additional
entities owned or controlled by the provider, the financial report must include as supplemental
information a separate balance sheet, statement of income and expenses, statement of equity or
fund balance, and statement of changes in cash flow for the individual provider and each
additional entity comprising the consolidated or combined financial report. A similar
supplemental presentation and reporting requirement is created for a provider that is a member of
an obligated group.
Section 4 amends s. 651.033, F.S., relating to escrow accounts, to expand the number of eligible
escrow agents by removing the requirement that a federal financial institution must have a
branch in Florida. The section also provides technical changes. The section also authorizes a
provider to hold a resident’s check for a 7-day rescission period without receiving a request from
the resident.
Section 5 amends s. 651.034, F.S., relating to financial and operating requirements. Subsection
(6) extends the time OIR may exempt a provider from certain regulatory actions, such as the
submission of a corrective action plan, when the provider's financial results, do not meet certain
levels. The change in time frame is extended from 5 years from the date the provider received its
certificate of occupancy to 5 years after the end of the provider's fiscal year in which the
certificate of occupancy was issued.
Section 6 amends s. 651. 035, F.S., relating to minimum liquid reserves. The section eliminates
the requirement for a provider to obtain prior approval from OIR to withdraw funds from a debt
service reserve that required to be escrowed pursuant to a trust indenture of mortgage lien if the
funds will be used to pay principal and interest payments.
Subsection (1) requires that when a provider is using an escrow account held pursuant to a trust
indenture or mortgage lien to meet its minimum liquid reserve requirement, the trust indenture,
loan agreement, or escrow agreement must require that the provider, trustee, lender, escrow
agent, or another person designated to act in their place must notify OIR in writing at least 10
days before the withdrawal of any portion of the debt service reserve funds required to meet the
provider's minimum liquid reserve requirement. The notice must include an affidavit sworn to by
the provider, the trustee, or a person designated to act in their place which includes the amount of
the scheduled debt service payment, the payment due date, the amount of the withdrawal, the
accounts from which the withdrawal will be made, and a plan with a schedule for replenishing
the withdrawn funds. If the plan is revised by a consultant that is retained as prescribed in the
provider's financing documents, the revised plan must be submitted to OIR within 10 days after
approval by the lender or trustee. BILL: CS/SB 622 Page 13
Subsection (5) also expands the types of financial institutions that can provide a letter of credit to
a provider, and can be used to satisfy its minimum liquid reserve requirement by adding Florida
state-chartered financial institutions and specified federal financial institutions
Section 7 amends s. 651.055, F.S., relating to continuing care contracts; right to rescind. The
section is amended to authorize a provider to assess a cancellation penalty against a person who
signs residency contract and rescinds it within 7 days, if the person had previously signed a
reservation agreement and did not cancel it within 30 days. A prospective resident who has
signed a reservation agreement and cancels their agreement after 30 days is generally subject to a
cancelation penalty. Currently, a person who rescinds a residency contract receives a full refund.
As a result, a resident who wants to avoid the reservation agreement cancellation penalty may
sign a residency contract and then rescind the contract within 7 days, and receive a full refund.
The change in this section would not allow this type of transaction to avoid the cancellation
penalty.
Section 8 amends s. 651.081, relating to residents’ council, to clarify that a residents' council can
establish and maintain its own governance documents, such as bylaws or operating agreements,
policies, and operating procedures, which may include establishment of committees. It also gives
a resident the right to participate in residents’ council matters including elections. The section
removes the provision that the residents must allow for open meetings when appropriate.
Section 9 amends s. 651.083, F.S., relating to residents’ rights, to clarify that residents have
access to ombudsman staff.
Section 10 amends s. 651.085, F.S., relating to quarterly meetings between residents and the
governing body of the provider, to require that each CCRC have its own designated resident
representative and to clarify that the designated resident representative must be a resident and is
to be nominated and elected by the residents' council. This section also clarifies that a
representative of a provider must notify the designated resident representative at least 14 days in
advance of any meeting of the full governing body at which the annual budget and proposed
changes in resident fees or services are on the agenda or will be discussed so that the resident can
attend and participate in that portion of the meeting. The section also requires that any resident
who serves as a member of a board or governing body of the facility perform their duties in a
fiduciary manner, including the duty of confidentiality, duty of care, duty of loyalty, and duty of
obedience, as required of any individual serving on the board or governing body.
Section 11 amends s. 651.091, F.S., relating to availability of reports and records, to require each
facility to provide a copy of the final examination report and corrective action plans, if
applicable, to the executive officer of the governing body of the provider and the president or
chair of the residents' council within 60 days after issuance of the report. It also requires the
CCRC to notify the president or chair of the residents' council in writing of a change in
management within 10 business days after the change, and to disclose to prospective residents
whether the provider has one or more residents serving on its board or governing body and
whether that individual has a vote or is serving in a nonvoting, ex officio capacity.
BILL: CS/SB 622 Page 14
Section 12 amends s. 651.105, F.S, relating to examinations, to require the OIR that each
examination must cover the preceding 3 or 5 years of the provider, whichever is applicable, and
must be commenced with 12 months after the end of the most fiscal year covered by the
examination. The section provides that the scope of OIR’s examination may include events
subsequent to the end of the most recent fiscal year and the events of any prior period which
relate to possible violations of this chapter or which affect the present financial condition of the
provider. Further, the OIR is required to conduct an interview with the current president or chair
of the residents’ council or their designee, as part of the examination.
Sections 13 and 14 (ss. 651.012 and 651.0261, F.S.) provide conforming changes.
Section 15 provides this act takes effect July 1, 2023.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
Providers will have access to escrowed resident fees as part of expansion sooner since
the provider can access the escrowed funds once 75 percent of the proposed units have
been reserved rather than only allowing access if payment in full has been received for 50
percent of the units.
BILL: CS/SB 622 Page 15
The bill expands the number of eligible escrow agents by removing the requirement that
the financial institution must have a branch in Florida.
The bill expands the types of financial institutions that can provide a letter of credit to a
provider to use to satisfy its minimum liquid reserve requirement by adding Florida state-
chartered financial institutions and specified federal, financial institutions..
C. Government Sector Impact:
The OIR will need one additional Financial Control Analyst for CCRC examinations and
investigations of consumer inquiries and complaints. For this position, OIR will require
an additional $90,000 in salaries and benefits ($60,000 in rate) as well as $11,051 in
expense with $4,682 nonrecurring to fill this new position. OIR needs an additional
$15,000 in salaries and benefits ($10,000 in rate) to address vacancies, retain current
employees, and reduce attrition.
57
VI. Related Issues:
The term, “office,” refers to the Office of Financial Regulation. However, the term, “office,” is
not defined in ch. 651.011, F.S. The term is used throughout ch. 651, F.S.
The term, “examination opinion,” is not defined in ch. 651, F.S. The term is used in sections
651.023 and 651.0246, F.S.
VII. Statutes Affected:
This bill amends sections 651.011, 651.0246, 651.026, 651.033, 651.034, 651.035, 651.055,
651.081, 651.083, 651.085, 651.091, 651.105, 651.012, and 651.0261 of the Florida Statutes.
VIII. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS by Banking and Insurance on April 5, 2023:
The CS:
Removes provisions allowing the Office of Insurance Regulation to waive financial
reporting requirements under specified circumstances.
Removes provision revising criteria for conducting feasibility study required as part
of an expansion application.
Revises financial reporting requirements as it related to consolidated or combined
financial statements and an obligated group.
Provides technical, conforming changes.
57
Office of Insurance Regulation, email from Kevin Jacobs (Apr. 4, 2023) On file with Banking and Insurance Committee. BILL: CS/SB 622 Page 16
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.