The Office of Insurance Regulation (Office) is updating Chapter 69O-193.

 

DEPARTMENT OF FINANCIAL SERVICES

OIR – Insurance Regulation

RULE NOS.:RULE TITLES:

69O-193.002Definitions

69O-193.003Applications

69O-193.005Required Financial Reports

69O-193.006Financial Viability

69O-193.012Phases

69O-193.023Escrow Agreements and Amendments

69O-193.030Updated Feasibility Study

69O-193.040Advertisement Enforcement Procedures

69O-193.050Calculation of the Minimum Liquid Reserve Requirement

69O-193.053Waiver of Minimum Liquid Reserves

69O-193.055Accreditation

69O-193.058Continuous Updates

PURPOSE AND EFFECT: The Office of Insurance Regulation (Office) is updating Chapter 69O-193.

SUMMARY: Chapter 2019-160, Laws of Florida, amended and created new sections in Chapter 651, F.S. The Office is amending Chapter 69O-193 to comply with these statutory changes, as well as amending and repealing existing rules. The Office is amending twelve rules in Chapter 69O-193.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: Agency personnel familiar with the subject matter of the rule amendment have performed an economic analysis of the rule amendment that shows that the rule amendment is unlikely to have an adverse impact on the State economy in excess of the criteria established in Section 120.541(2)(a), Florida Statutes.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 651.015(3), 651.021(2), 651.022(2), 651.0245(3), (5), (6), 651.0246(1), 651.026(2), (3), (9), 651.0261(1), (2), (4), 651.028, 651.034(7), 651.035(9), 651.043 FS.

LAW IMPLEMENTED: 651.011, 651.021, 651.0215, 651.022, 651.023, 651.0235, 651.024, 651.0245, 651.0246, 651.026, 651.0261, 651.028, 651.033, 651.034, 651.035, 651.055, 651.091, 651.095, 651.105, 651.1151, 651.118, 651.125, FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN THE FAR.

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Michael Lawrence, Jr., Assistant General Counsel, Office of Insurance Regulation, [e-mail], [phone].

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

69O-193.002 Definitions.

(1) through (2) No change.

(3) “Affiliate” means any person that exercises control over or is directly or indirectly controlled by the provider, directly or indirectly through:

(a) Equity ownership of voting interests or securities;

(b) Common managerial control; or

(c) Collusive participation by the management of the provider and affiliate in the management of the provider or the affiliate. ; or

(d) A party as defined by section 624.310, F.S.

(4) “Affiliated person” of another person means:

(a) The spouse of the other person;

(b) The parents of the other person and their lineal descendants, or the parents of the other person’s spouse and their lineal descendants;

(c) A person who directly or indirectly owns or controls, or holds with the power to vote, 10 percent or more of the outstanding voting interest or securities of the other person;

(d) A person, 10 percent or more of whose outstanding voting interests or securities are directly or indirectly owned or controlled, or held with power to vote, by the other person;

(e) A person or group of persons who directly or indirectly control, are controlled by, or are under common control with the other person;

(f) An officer, director, partner, copartner, or employee of the other person;

(g) If the other person is an investment company, an investment adviser of such company, or a member of an advisory board of such company;

(h) If the other person is an unincorporated investment company not having a board of directors, the depositor of such company; or

(i) A person who has entered into a written or unwritten agreement to act in concert with the other person in acquiring or limiting the disposition of ownership interest or voting securities of a provider or controlling company.

“Audited financial statements” means a statement prepared by an independent Certified Public Accountant, which includes:

(a) An audit opinion from the independent Certified Public Accountant concerning the financial statements;

(b) Balance sheet;

(c) Statement of operations;

(d) Statement of changes in cash flow; and,

(e) Notes to the financial statement prepared on the basis of generally accepted accounting principles on an accrual basis covering the latest annual reporting period.

(5) “Comparable unit” means a unit similar in floor plan, size or design to a unit vacated, but does not necessarily mean the same unit.

(5)(6) “Construction of a model residence unit” means and is limited to the actual construction of a structure containing not more than one unit of each floor plan to be offered to prospective residents of the proposed facility.

(6)(7) “Control,” including the terms “controlling,” “controlled by,” and “under common control with”, means the direct or indirect possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through ownership of voting interests or securities, by contract, or otherwise.  Control is presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing 10 percent or more of the voting interests or securities of another person.

(8) “Escrow account” means money physically located and deposited in a bank, savings and loan association, or trust company located within the State of Florida in an account governed by an escrow agreement which meets the requirements of section 651.033, F.S., and in the custody of a third party for delivery only upon the fulfillment of the conditions specified by chapter 651, F.S., and the escrow agreement.

(9) “Food” as used in section 651.011(2), F.S., means meals available or accessible to residents as a covered benefit or on a fee-for-service basis.

(10) “Furnishing” as used in section 651.011(2), F.S., means to make available, arrange, or provide through one or more intermediaries shelter, food, or health care as a covered benefit or on a fee-for-service basis.

(7)(11) “Independent consultant” means:

(a) A person who is not related by blood or marriage, employed, affiliated, or controlled by a provider; and,

(b) An independent actuary or independent Certified Public Accountant who in the regular practice of his profession is engaged by a provider to perform a specific function in accordance with professional standards and conduct required by that profession.

(8)(12) “Long-term financing or debt” means any debt with a duration of more than twelve (12) months.

(13) “Manager” or “management company” means a person who, pursuant to a written contract with a provider, agrees to administer the day-to-day business operations of a facility for a provider, subject to the policies, directives, and oversight of the provider.

(9)(14) “Material adverse deviation or change” means any change or extraordinary occurrence which creates or causes, or could create or cause, a provider or a facility to become insolvent or no longer financially viable.

(10)(15) “Nominee of” means:

(a) A person other than the resident who has been designated in writing by the resident to receive any notices given or required to be given to a resident, and who may participate on behalf of the resident in any meetings between the resident and the provider or its agent or employee concerning the resident, the facility, or the rights of the resident, or in any complaint proceeding or legal action on behalf of the resident; and,

(b) A person who is not a provider or any agent, employee, or affiliate of the provider.

(16) “Nursing care” as defined by section 651.011(2), F.S., means access to those services or acts that might be rendered to a resident by individuals as defined by chapter 464, F.S.

(17) “Occupancy” means a date certain on which a resident is notified by a provider in writing that a unit is ready for the resident to move into, or the date on which the resident actually takes possession of the unit, whichever occurs first.

(11) “Occupied” means a date certain on which a resident takes possession of a unit or begins paying monthly maintenance fees, whichever occurs first.

(12)(18) “Opening date or commencement of operations” means the day a certificate of occupancy is issued.

(13)(19) “Payment-in-full” means that 100 percent of the entrance fee charged by a provider to a resident for a residency agreement has been paid by the resident to the provider.

(14)(20) “Phase” means a planned incremental stage of construction in the development of a facility.

(15)(21) “Preparation of the construction site” means, and is limited to, the clearing and grading of land of a proposed facility site, except when additional work is required to comply with any city, county, state, or federal laws, rules or ordinances in connection with the clearing and grading of a proposed facility site. Site preparation does not include the pouring of foundations or the stubbing in of plumbing.

(16)(22) “Reservation agreement” means an agreement executed by a prospective resident or a nominee of a prospective resident for the purpose of reserving a specific unit in a facility.

(23) “Resident” as used in section 651.011(9), F.S., does not mean a provider or any agent, employee, or affiliate of the provider.

(17)(24) “Residency agreement” means an agreement executed by a resident or a nominee of a resident which gives the resident the right to occupy a unit and receive continuing care.

(25) “Shelter” as used in section 651.011(2), F.S., means an independent living unit, room, apartment, cottage, villa, personal care unit, nursing bed, or other living area within a facility set aside for the exclusive use of one or more identified residents.

(18)(26) “Total operating expenses” means all expenses incurred in the operations of a facility, net of depreciation and amortization.

(27) “Unincorporated association” as used in section 651.022, F.S., means a Florida limited or general partnership.

(19)(28) “Unit” means the shelter in which a resident may reside.

(20)(29) “Waiting list deposit” means any payment made by a prospective resident to a provider in return for a preferential right to subscribe to a continuing care agreement.

Rulemaking Authority 651.015(3) FS. Law Implemented 651.011, 651.021, 651.022, 651.022(2)(b)10., (7), 651.023, 651.026, 651.033, 651.035, 651.055, 651.091, 651.106, 651.1151, 651.118, 651.125 FS. History–New 7-16-92, Formerly 4-193.002, Amended, ____________.

 

69O-193.003 Applications and Management Change.

Substantial rewording of Rule 69O-193.003, F.A.C. follows.  See Florida Administrative Code for present text.

(1) Application for Certificate of Authority

(a) An application for a person applying for a certificate of authority for a continuing care provider consists of the following:

1. Form OIR-C1-473, “Application for Certificate of Authority for a Continuing Care Provider,” effective 9/19, hereby incorporated by reference and available at www.flrules.org/XXXXX;

2. Form OIR-C1-144, “Service of Process Consent & Agreement,” effective 6/04, hereby incorporated by reference and available at www.flrules.org/XXXXX;

3. Form OIR-C1-905, “Instructions for Furnishing Background Investigative Reports,” effective 11/19, hereby incorporated by reference and available at www.flrules.org/XXXXX;

4. Form OIR-C1-938, “Fingerprint Payment and Submission Procedures,” effective 11/19, hereby incorporated by reference and available at www.flrules.org/XXXXX;

5. Form OIR-C1-2221, “Management Information Form,” effective 11/19, hereby incorporated by reference and available at www.flrules.org/XXXXX; and

6. Form OIR-C1-1423, “Biographical Affidavit,” effective 4/19, hereby incorporated by reference and available at www.flrules.org/XXXXX.

(b) A person applying for a certificate of authority as a continuing care provider shall submit forms in paragraph (1)(a) as directed by the Office electronically at https://www.floir.com/iportal.

(2) Application for Provisional Certificate of Authority

(a) An application for a person applying for a provisional certificate of authority for a continuing care provider consists of the following:

1. Form OIR-C1-471, “Application for Provisional Certificate of Authority for a Continuing Care Provider,” effective 9/19, hereby incorporated by reference and available at www.flrules.org/XXXXX;

2. Form OIR-C1-144, incorporated by reference in paragraph (1)(a);

3. Form OIR-C1-905, incorporated by reference in paragraph (1)(a);

4. Form OIR-C1-938, incorporated by reference in paragraph (1)(a);

5. Form OIR-C1-2221, incorporated by reference in paragraph (1)(a); and

6. Form OIR-C1-1423, incorporated by reference in paragraph (1)(a).

(b) A person applying for a provisional certificate of authority as a continuing care provider shall submit forms in paragraph (2)(a) as directed by the Office electronically at https://www.floir.com/iportal.

(3) Consolidated Application for Provisional Certificate of Authority and Certificate of Authority

(a) A consolidated application for a provisional certificate of authority and certificate of authority for a continuing care provider consists of the following:

1. Form OIR-C1-2220, “Consolidated Application for Provisional Certificate of Authority and Certificate of Authority for a Continuing Care Provider,” effective 9/19, hereby incorporated by reference and available at www.flrules.org/XXXXX;

2. Form OIR-C1-144, incorporated by reference in paragraph (1)(a);

3. Form OIR-C1-905, incorporated by reference in paragraph (1)(a);

4. Form OIR-C1-938, incorporated by reference in paragraph (1)(a);

5. Form OIR-C1-2221, incorporated by reference in paragraph (1)(a); and

6. Form OIR-C1-1423, incorporated by reference in paragraph (1)(a).

(b) A person filing a consolidated application for provisional certificate of authority and certificate of authority for a continuing care provider shall submit forms in paragraph (3)(a) as directed by the Office electronically at https://www.floir.com/iportal.

(4) Application for Simultaneous Acquisition of a Continuing Care Facility and Issuance of a Certificate of Authority to a Provider

(a) An application for the simultaneous acquisition of a continuing care facility and issuance of a certificate of authority consists of the following:

1. Form OIR-C1-2219, “Application for Simultaneous Acquisition of a Continuing Care Facility and Issuance of a Certificate of Authority to a Provider,” effective 9/19, hereby incorporated by reference and available at www.flrules.org/XXXXX;

2. Form OIR-C1-144, incorporated by reference in paragraph (1)(a);

3. Form OIR-C1-905, incorporated by reference in paragraph (1)(a);

4. Form OIR-C1-938, incorporated by reference in paragraph (1)(a);

5. Form OIR-C1-2221, incorporated by reference in paragraph (1)(a); and

6. Form OIR-C1-1423, incorporated by reference in paragraph (1)(a).

(b) A person applying for simultaneous acquisition of a continuing care facility and issuance of a certificate of authority shall submit forms in paragraph (4)(a) as directed by the Office electronically at https://www.floir.com/iportal.

(c) Disclaimer of Control

1. A person may attempt to rebut a presumption of control pursuant to section 651.0245, F.S., by electronically filing at https://www.floir.com/iportal one of the following forms with the Office:

a. Form OIR-C1-1467, “Disclaimer of Control Affidavit – Individual”, effective 08/18, hereby incorporated by reference and available at www.flrules.org/XXXXX;

b. Form OIR-C1-1468, “Disclaimer of Control Affidavit – Entity”, effective 08/18, hereby incorporated by reference and available at www.flrules.org/XXXXX;

c. Form OIR-C1-2211, “Disclaimer of Control Affidavit – Investment Companies,” effective 08/18, hereby incorporated by reference and available at www.flrules.org/XXXXX.

2. A person may attempt to rebut a presumption of control pursuant to section 651.0245, F.S., by filing a copy of a Schedule 13G filed with the Securities and Exchange Commission pursuant to Rule 13d-1(b) or (c), 17 C.F.R. s. 240.13d-1, under the Securities Exchange Act of 1934, as amended, to the Office electronically at https://www.floir.com/iportal.

3. Pursuant to section 651.0245(6), F.S., the Office is authorized to disallow a disclaimer of control filed pursuant to subparagraphs (4)(c)1. and (4)(c)2.

(5) Application for Expansion

(a) An application for a person applying for expansion of a certificated continuing care facility consists of the following:

1. Form OIR-C1-2218, “Application for Expansion of a Certificated Continuing Care Facility,” effective 9/19, hereby incorporated by reference and available at www.flrules.org/XXXXX;

2. Form OIR-C1-905, incorporated by reference in paragraph (1)(a);

3. Form OIR-C1-938, incorporated by reference in paragraph (1)(a);

4. Form OIR-C1-2221, incorporated by reference in paragraph (1)(a); and

5. Form OIR-C1-1423, incorporated by reference in paragraph (1)(a).

(b) A person applying for expansion of a certificated continuing care facility shall submit forms in paragraph (5)(a) as directed by the Office electronically at https://www.floir.com/iportal.

(6) Manager or Management Company

(a) To comply with the filing requirements of section 651.043(2), F.S., for each new management company or manager not employed by a management company within 10 business days of a change in management, the provider shall submit the following:

1. Form OIR-C1-905, “Instructions for Furnishing Background Investigative Reports,” effective 2/15, hereby incorporated by reference and available at www.flrules.org/XXXXX;

2. Form OIR-C1-938, “Fingerprint Payment and Submission Procedures,” effective 10/18, hereby incorporated by reference and available at www.flrules.org/XXXXX; and

3. Form OIR-C1-1423, “Biographical Affidavit,” effective 4/19, hereby incorporated by reference and available at www.flrules.org/XXXXX.

4. A copy of the written management contract, if applicable.

(b) The documents in paragraph (6)(a) shall be submitted to the Office electronically at https://www.floir.com/iportal.

Rulemaking Authority 651.015(3), 651.021(2), 651.022(2), 651.0245(3), (5), (6), 651.0246(1), 651.043 FS. Law Implemented 651.0215, 651.022, 651.023, 651.024, 651.0245, 651.0246 FS. History–New 7-16-92, Formerly 4-193.003, Amended, ____________.

 

69O-193.005 Monthly, Quarterly, and Annual Required Financial Reports.

Substantial rewording of Rule 69O-193.005, F.A.C. follows.  See Florida Administrative Code for present text.

(1) Monthly Statements

If required by the Office pursuant to section 651.0261(3), F.S., a provider shall file Form OIR-A3-973 within 25 days after the end of each month.  Form OIR-A3-973, “Monthly Financial Report,” effective 11/19, is hereby incorporated by reference and available at www.flrules.org/XXXXX.  The filing shall be submitted electronically via the Office’s system at https://www.floir.com/iportal.

(2) Quarterly Statements

(a) As required by section 651.0261(2), F.S., a provider shall file Form OIR-A3-974 within 45 days after the end of the fiscal quarter.  Form OIR-A3-974, “Quarterly Financial Report,” effective 11/19, is hereby incorporated by reference and available at www.flrules.org/XXXXX.  The filing shall be submitted electronically via the Office’s system at https://www.floir.com/iportal.

(b) In addition to Form OIR-A3-974, a provider shall submit Form OIR-A3-1245, “Sales and Financial Report for a Non-Operational Facility,” effective 9/19, for any facility for which a certificate of occupancy has not yet been issued. 

(3) Annual Report

An Annual Report shall be filed with the Office, on or before May 1 of each year if the provider’s fiscal year end is December 31 or within 120 days of the last day of the fiscal year of the provider if the provider has declared a fiscal year other than the calendar year, on Form OIR-A3-470, “Annual Financial Report,” effective 9/19, hereby incorporated by reference and available at www.flrules.org/XXXXX.  The filings shall be submitted electronically via the Office’s system at https://www.floir.com/iportal.

Rulemaking Authority 651.015(3), 651.026(2), (9), 651.0261(1), (2), (4) FS. Law Implemented 651.026, 651.0261 FS. History–New 7-16-92, Formerly 4-193.005, Amended, ____________.

 

69O-193.006 Financial Viability.

(1) In addition to days cash on hand, debt service coverage ratio, and occupancy as defined in section 651.011, F.S., the Office may utilize measures set forth in this rule to assess the financial viability of a provider. In order to determine the financial viability of a Florida facility or a provider, the Office shall utilize one or more of the factors set forth in this rule to evaluate the financial condition of the facility or provider by comparing the financial information submitted by the provider with prior reports.

(2) The information derived from the factors set forth in this rule shall be used for the purpose set forth in subsection (1), through an evaluation of financial trends of a facility or provider. Due to the diversity in ownership structure, operation, debt structure, and economic models, the information obtained shall not be used as a basis of comparison to other facilities or providers.

(2)(3) The Office may shall analyze the trends in performance of a provider or facility using the information filed pursuant to rule 69O-193.005, F.A.C., and any other relevant information available to the Office pursuant to chapter 651, F.S., chapter 69O-193, F.A.C., or an order of the Office. and shall consider the effects that any unusual occurrence may have on the outcome of the calculations specified in subsection (6) prior to making a determination regarding the financial condition of a facility or provider.

(3) Prior to making a determination regarding the financial viability of a facility or provider, the Office shall consider the impact of any extraordinary or unusual occurrences affecting the facility or provider.

(4) The Office may seek the assistance of members of the Continuing Care Advisory Council or other experts in reviewing and evaluating the information regarding a obtained from any facility or provider.

(5) In the event that additional information is necessary to assess further evaluate the financial viability condition of a that facility or provider, the Office may shall request and consider such additional information. Additional information includes information, reports, data, and documentation related to the following: to further evaluate the condition of that facility or provider, and shall consider such factors as:

(a) The governing body of the provider, and its financial policy statements, and its financial policies;

(b) The management Management or management company;

(c) The organization’s financial plans;

(d) Financial feasibility studies, projections, examinations, professional studies, opinions, reports, or other similar documents prepared by or on behalf of a provider;

(e) Compliance with local, state and federal laws, rules, or ordinances;

(f) Marketing plans;

(g) Continuing care contract benefits and services;

(h) Pricing;

(i) Commitment of financial support from other organizations; and,

(j) Other financial information;

(6) The Office may consider Net Operating Margin – Adjusted Ratio set forth in this subsection in assessing the financial viability of a provider.  In calculating the ratio, the Office may use data pertaining to either the facility or provider, as appropriate, based upon the debt and operating structure of a provider. In addition to calculating the ratio, the Office will consider the relevance of the ratio to a provider based on the provider’s debt and operating structure. The ratio will be calculated using corresponding line items in the reports adopted pursuant to rule 69O-193.005, F.A.C., and calculations which shall be utilized by the Office to determine the financial viability as provided in subsection (1) are defined below, and are based on Generally Accepted Accounting Principles (GAAP) using the accrual method (unless otherwise defined) except that ratios related to revenue are adjusted and calculated on a basis excluding amortized entrance fees as revenue and including actual entrance fees received net of refunds paid during the period under review. The calculations are divided into four categories: Profitability, Leverage, Liquidity, and Occupancy Ratios.

(a) NET OPERATING MARGIN – ADJUSTED RATIO – The Net Operating Margin – Adjusted Ratio is a measure of the operating performance calculated by dividing operating revenue plus net proceeds from entrance fees minus operating expenses by operating revenue plus net proceeds from entrance fees.

Net Operating Margin – Adjusted Ratio	=	Operating Revenue +  Net Proceeds from Entrance Fees - Operating Expenses
		Operating Revenue + Net Proceeds from Entrance Fees

(a) PROFITABILITY RATIO:

OPERATING RATIO – The Operating Ratio is a measure of the percentage of expenses incurred based on generated revenue and is defined as cash operating revenues divided by cash operating expenses.

Operating Ratio	=	Cash Operating Revenues
		Cash Operating Expenses

(b) LIQUIDITY RATIOS:

1. ADJUSTED CURRENT RATIO – The Adjusted Current Ratio is a measure of liquidity and is defined as the number of dollars held in current assets plus cash and investments that are available for operations without violating loan agreements, contracts, chapter 651, F.S., or any rule promulgated pursuant thereto, per dollar of current liabilities. (Current means occurring within one year.)

Adjusted Current Ratio	=	Current Assets
		Current Liabilities

2. DAYS CASH ON HAND – The Days Cash On Hand Ratio reflects the number of days that a facility maintains adequate cash and/or readily marketable securities to cover average cash expenditures.

Cash Expenses per Day	=	Cash Operating Expenses
		# of Days in Period
Days Cash on Hand	=	Unrestricted Cash +
		Unrestricted Investments
		Cash Expenses Per Day

(c) LEVERAGE RATIO:

DEBT SERVICE COVERAGE RATIO – The Debt Service Coverage Ratio is a measure of a facility’s ability to pay its debt service payments through operations and is calculated on a cash flow basis. It is defined as the number of times net revenue is available for total debt service.  

Debt Service Coverage Ratio	=	Cash Operating Revenues –
		Cash Operating Expenses
		Total Debt Service

(d) OCCUPANCY RATIOS:

OCCUPANCY is defined as the total number of occupied units in a facility divided by the total number of units in that facility. Occupancy shall be tracked by each level of care.  

1.Occupancy of Independent	=	Occupied ILU’s
Living Units (ILU’s)		Total ILU’s
2.Occupancy of Assisted	=	Occupied ALU’s
Living Units (ALU’s)		Total ALU’s
3.Occupancy of Skilled	=	Occupied SNF
Nursing Beds (SNF)		Total SNF
4.Occupancy of Rental	=	Occupied Rentals
Units (Rentals)		Total Rentals

Notwithstanding the foregoing, the Office shall utilize such other information, criteria, ratios or other factors as necessary in assessing or determining the financial viability of a facility or provider whose financial viability is in question.

(b)(e) DEFINITIONS:

As used in this rule, the following terms shall have the following meanings:

1. NET PROCEEDS FROM ENTRANCE FEES means actual entrance fees received under the period under review less actual entrance fees refunded during the same period. CASH OPERATING EXPENSES means total expenses less interest, depreciation and amortization expense.

2. OPERATING EXPENSES means all expenses for the period under review less interest expense, depreciation, amortization, and other non-cash expenses including a change in the future service obligation. CASH OPERATING REVENUE means all revenue excluding amortized entrance fees and including actual entrance fees received during the period under review.

3. OPERATING REVENUE means all revenues for the period under review excluding earned/amortized entrance fees, non-cash revenue, and a change in the future service obligation. TOTAL DEBT SERVICE is defined as the total principal and interest expense that is due or paid on the facility within the audited period.

4. TOTAL UNITS means the sum of independent living units (ILU’s), assisted living units (ALU’s) and skilled nursing beds (SNF’s) in a facility.

(7) DEFINITIONS: As used in this rule, the following terms shall have the following meanings:

(a) CASH OPERATING EXPENSES means total expenses less interest, depreciation and amortization expense.

(b) CASH OPERATING REVENUE means all revenue excluding amortized entrance fees and including actual entrance fees received during the period under review.

(c) TOTAL DEBT SERVICE is defined as the total principal and interest expense that is due or paid on the facility within the audited period.

(d) TOTAL UNITS means the sum of independent living units (ILU’s), assisted living units (ALU’s) and skilled nursing beds (SNF’s) in a facility.

Rulemaking Authority 651.015(3), 651.026(3) FS. Law Implemented 651.026 FS. History–New 1-5-93, Amended 5-10-94, Formerly 4-193.006, Amended, ____________.

 

69O-193.012 Phases.

(1)(a) No change.

(b) Subsequent to the Office’s approval of an application containing a feasibility study providing for a facility to be developed in phases, a provider must notify the Office in writing within 10 business days of becoming aware of a material adverse deviation or change. Within 60 days of the provider becoming aware of the material adverse deviation or change, the provider must also submit any necessary revisions or amendments to the feasibility study required to account for the material adverse deviation or change. Any material adverse changes or deviations subsequent to approval by the Office must be immediately reported in writing to the Office and necessary adjustments or corrections made. 

(2) The Office shall not deem feasible any project proposed to be built in phases if the initial phase does not include the ability to deliver all contract benefits promised to the residents. Contract benefits may be delivered pursuant to a written contractual agreement, which must be disclosed in the contract for continuing care, until the additional phases are completed. Note that pursuant to section 651.118(6), F.S., the provider must construct the non-nursing home portion of the facility and the nursing home portion of the facility at the same time unless the provider already has a component that is to be a part of the continuing care facility and that is licensed under chapter 395, part II of chapter 400, or part I of chapter 429 at the time of construction of the continuing care facility.

(3) The provider must comply with the reservation and entrance fee The escrow requirements of section 651.0215, 651.023(5), or 651.0246, section 651.023(4) F.S., which shall apply to each phase in the development of a facility. , The funds for each phase should be escrowed separately as evidenced by a separate escrow accounts or sub-accounts agreement for each phase. The escrow agreement(s) establishing the accounts or sub-accounts for each phase must meet which meets the requirements of section 651.033, F.S.

Rulemaking Authority 651.015(3) FS. Law Implemented 651.023, 651.091 FS. History–New 7-16-92, Formerly 4-193.012, Amended, ____________.

 

69O-193.023 Escrow Agreements and Amendments.

(1) Each escrow agreement or amendment required by chapter 651, F.S., shall be filed and approved by the Office Department prior to its use in this state.

(2) Each escrow agreement or amendment must be signed by:

(a) No change.

(b) The escrow agent, which must be a Florida financial institution or trust acceptable to the Office Department.

(3) Each escrow agreement, in addition to all other requirements of law, must contain:

(a) The escrow account number, which may be added to the agreement after the form of the agreement has been approved by the Office;

(b) A The physical location in Florida where the funds may be accessed; and of each escrow account governed by the escrow agreement;

(c) A statement citing the specific provision of chapter 651, F.S., for which the escrow agreement is drawn and for which the escrow account is established.; and

(d) A statement that the provider and the escrow agent will notify the Department in writing at least ten (10) days prior to any change in any of the terms and conditions of the escrow agreement, escrow account numbers, or location of the escrow accounts.

Rulemaking Authority 651.015(3) FS. Law Implemented 651.022, 651.023, 651.033 FS. History–New 7-16-92, Formerly 4-193.023, Amended 9-15-05, Amended, ____________.

 

69O-193.030 Updated Feasibility Study.

Substantial rewording of Rule 69O-193.030, F.A.C. follows.  See Florida Administrative Code for present text.

(1) Definitions of terms as used in this rule.

(a) An “extraordinary or unusual change” means a material change to the market conditions upon which the feasibility study was based that may cause an adverse impact to the facility.

(b) A “material deviation” includes, but is not limited to, the following: 

1. A change to the type or value of the health care benefits provided in the continuing care contracts to be offered by the facility;

2. A change regarding whether entrance fees will amortize to 0% refundability or if a portion of the entrance fee will be refundable regardless of how long the resident resides at the unit;

3. A change or deviation from the projected financial statements provided in the feasibility study that does or will result in a decrease in the days cash on hand or debt service coverage ratio projected in the provider’s application filing;

4. A change of 15% or more in:

a. The number of units at a particular level of care, i.e., independent living units, assisted living units, or skilled nursing units; or

b. The total number of units at the facility; or

5. A change in the healthcare delivery system available at the facility.

(2) If the Office has exempted a provider from sections 651.034(1) or 651.034(2), F.S., pursuant to section 651.034(6), F.S., the Office may require a provider to submit an amended or updated feasibility study when:

(a) An extraordinary or unusual change affecting the viability of the provider’s business plan as approved in an application filing occurs; or

(b) The provider requests in writing to make a material deviation from the feasibility study filed with the Office as part of an application filing under sections 651.0215, 651.023, 651.024, or 651.0246, F.S.

(3) The amended or updated feasibility study must be submitted to the Office:

(a) Within sixty (60) days of the extraordinary or unusual change or

(b) Thirty (30) days prior to any material deviation.

(4) Upon request of the provider and showing of good cause, the Office may extend the time to submit the updated feasibility study.

(5) Based on its review of the amended or updated feasibility study and any additional information requested with respect to the feasibility study, the Office may disapprove a material deviation on the following grounds:

(a) The deviation is not demonstrated to be financially feasible;

(b) The deviation will or is likely to result in the provider or facility failing to meet the requirements of chapter 651, F.S., or this chapter;

(c) The deviation will or is likely to result in the provider being unable to provide continuing care or continuing care at-home pursuant to its continuing care agreements; or

(d) The deviation will or is likely to result in the provider being unable to meet all financial and contractual obligations related to its operations, including obligations to residents.

Rulemaking Authority 651.015(3) 651.034(7) FS. Law Implemented 651.021, 651.022, 651.023, 651.034 FS. History–New 7-16-92, Formerly 4-193.030, Amended, ____________.

 

69O-193.040 Advertisement Enforcement Procedures.

(1) Each provider shall maintain for at least three (3) years at its home or principal office in this state a complete file containing every printed, published, or prepared advertisement it has used in this state, with a notation attached to each indicating the manner and extent of distribution and the form number of any contract advertised.

(2) No change.

(3) The file shall be maintained for at least three (3) years for providers subject to triennial examinations or at least five (5) years for accredited providers subject to examination at least once every five (5) years, as provided in s. 651.105(1), F.S. Each provider shall retain the advertisements, notations, and form numbers until such time that an exam report has been issued for the period of time in which the advertisement was used in this state.

Rulemaking Authority 651.015(3) FS. Law Implemented 651.095, 651.105 FS. History–New 7-16-92, Formerly 4-193.040.

 

69O-193.050 Calculation of the Minimum Liquid Reserve Requirement.

(1) A Minimum Liquid Reserve (MLR) Calculation shall be filed with the Office, on or before May 1 of each year if the provider’s fiscal year end is December 31 or within 120 days of the last day of the fiscal year of the provider if the provider has declared a fiscal year other than the calendar year, on Form OIR-A3-477, “Minimum Liquid Reserve (MLR) Calculation,” effective 11/19, hereby incorporated by reference and available at www.flrules.org/XXXXX.  The filings shall be submitted electronically at https://www.floir.com/iportal.  The minimum liquid reserve (MLR) must be funded not later than sixty one (61) days after the MLR calculation is due to be filed, except as provided in subsection (5) of this rule. Thus, the MLR must be fully funded not later than the first day of the provider’s year, whether fiscal or calendar, or the first day of operations, whichever applies.

(2)(a) The Office may require a recalculation of the minimum liquid reserve requirement and resubmission of Form OIR-A3-477 in the event of additional long-term financing or other occurrences resulting in a change to the aggregate amount of all principal and interest payments due during the fiscal year on any mortgage loans or other long-term financing or a change to all leasehold payments and all costs related to such payments financing of the facility. Any increase in required minimum liquid reserves must be funded not later than 61 days after the minimum liquid reserve calculation is filed. If the date for filing the MLR calculation has passed, the MLR may not be recalculated until the next due date for filing.

(b) Additional long-term financing or other extraordinary occurrences may cause the Office to require a recalculation of the MLR, which could result in an increase or decrease in the MLR, notwithstanding the date of filing the MLR calculation.

(3) Pursuant to section 651.041, F.S., an escrow account maintained under chapter 651, F.S., must be funded and meet the diversification requirements as prescribed in part II, chapter 625, F.S.

(3)(4) For purposes of the MLR requirement, long-term financing includes, but is not limited to, lease payments, mortgage payments, the long-term portion of any construction loan, and any long-term debt between affiliates or controlling parties of the provider that relate to the real property or fixtures of a facility.

(4)(5) Where a provider has elected to fund the MLR upon release of entrance fees as provided by section 651.023(6)(d) 651.023(4)(e), F.S., the funds shall be deposited directly from the entrance fee account into the MLR accounts account.

(5)(6) A provider shall have and maintain reserves for property real estate taxes and hazard insurance as provided in section 651.035, F.S., even if where there is no long-term debt or financing on the facility.

(6) To request Office approval of a withdrawal of MLR funds, a provider must file Form OIR-A3-1284, “Request for Withdrawal from Minimum Liquid Reserves,” effective 11/19, hereby incorporated by reference and available at www.flrules/org/XXXXX. The filing shall be submitted electronically at https://www.floir.com/iportal.

(7) If a provider, or its escrow agent or trustee, intends to use funds from a debt service reserve that is included in computing a provider’s minimum liquid reserve pursuant to section 651.035(1)(b), F.S., rather than filing Form OIR-A3-1284 as required in (6) above, the following process applies:

(a) The provider, or its escrow agent or trustee if so authorized in the agreement under which such debt service reserve is held, shall submit the documents listed below. 

1. An affidavit, sworn to by an officer or director of the provider, stating that the provider anticipates being unable to make its scheduled debt service payment and a withdrawal from the debt service reserve included in the minimum liquid reserves pursuant to section 651.035(1)(b), F.S., is required to avoid a payment default. The affidavit shall include all of the following information:

a. The amount of the payment;

b. The payment due date;

c. The maximum amount of the withdrawal needed to make the payment;

d. The date the anticipated date of the withdrawal;

e. The account(s) from which the withdrawal will be made, which should match the account information and escrow statements previously provided to the Office; and

f. If there is a discrepancy in this account information, a written explanation of the discrepancy and any relevant documentation at the time of filing. 

2. A document providing the following information with respect to the effect of the withdrawal on the provider’s minimum liquid reserves and compliance with section 651.035, F.S.

a. A statement of whether the lender or trustee will require the provider to deposit additional funds in the debt service reserve to repay the amount withdrawn.

b. If the provider will be required to deposit additional funds in the debt service reserve to repay the amount withdrawn, the anticipated or proposed schedule for funding.

c. If the withdrawal will result in the provider being out of compliance with section 651.035, F.S., the provider shall submit a preliminary plan or anticipated timeline for coming into compliance. If the provider intends to work with a consultant to establish a plan, as proscribed in its financing documents, the provider should provide a brief explanation of that process and the anticipated date that such a plan will be completed.

(b) The request must be made at least 30 days before the anticipated date of the withdrawal.

(c) The Office will approve requests that contain all of the components specified in paragraph (7)(a) within 30 days of filing.

(d) The Office’s approval of a withdrawal from a debt service reserve included in the minimum liquid reserves pursuant to section 651.035(1)(b), F.S., does not constitute approval of the plan submitted pursuant to sub-subparagraph (7)(a)2.c. above.

(e) The filing shall be submitted electronically at https://www.floir.com/iportal.

Rulemaking Authority 651.015(3), 651.026(2)(d), 651.035(9) FS. Law Implemented 651.026, 651.035 FS. History–New 7-16-92, Formerly 4-193.050, Amended, ____________.

 

69O-193.053 Waiver of Minimum Liquid Reserves.

Substantial rewording of Rule 69O-193.053, F.A.C. follows.  See Florida Administrative Code for present text.

(1) If principal and interest payments are paid to a trust that is beneficially held by residents as described in section 651.023(7), F.S., the Office may waive all or any portion of the escrow requirements for mortgage principal and interest if the Office finds that such waiver is not inconsistent with the security protections intended by Chapter 651, FS.

(2) To obtain a waiver for all or any part of the escrow requirement for mortgage principal and interest contained in section 651.035(1), F.S., the provider must meet the requirements of section 651.023(7), F.S., and file Form OIR-A3-1068, “Request for Waiver of Minimum Liquid Reserve,” effective 11/19, hereby incorporated by reference and available at www.flrules.org/XXXXX, electronically at https://www.floir.com/iportal;

(3) For a new facility commencing operations, Form OIR-A3-1068 must be submitted no later than 30 days before the provider requests the release of moneys held in escrow pursuant to section 651.023(6), Florida Statutes.  For a provider whose after escrowed funds have been released, Form OIR-A3-1068 shall be filed with the Office, on or before May 1 of each year if the provider’s fiscal year end is December 31 or within 120 days of the last day of the fiscal year of the provider if the provider has declared a fiscal year other than the calendar year.

(4) Any previous waiver granted by the Office terminates as of the date the provider is required to file its next MLR calculation.  If the subsequent request for waiver is denied, the provider shall have 61 days from the date MLR calculation and Request for Waiver of Minimum Liquid Reserve were due to be filed to fully fund the required reserve accounts.

Rulemaking Authority 651.015(3) FS. Law Implemented 651.023, 651.035 FS. History–New 7-16-92, Formerly 4-193.053, Amended, ____________.

 

69O-193.055 Accreditation.

(1) A provider or facility is accredited for the purposes of sections 400.235(5)(b)1. and 651.105(1), F.S., if it is accredited without stipulations or conditions by Commission on Accreditation of Rehabilitation Facilities International (“CARF International”). The Office may, upon written request by the provider, waive the quarterly reporting requirement and the tri-annual examination of a provider for a facility if:

(a) The facility is accredited by the National Continuing Care Accreditation Commission and submits to the Office current evidence that the facility is in good standing.

(b) The provider agrees to furnish the Office, within five business days, a copy of any communication from the National Continuing Care Accreditation Commission which may directly or indirectly threaten the facility’s accreditation, or the accreditation of any facility owned or operated by the provider, wherever located.

(2) The provider will file evidence that the provider or facility is accredited and in good standing each year with its annual report filing. Any request for waiver granted by the Office is valid only for the reporting period for which the request is made and may not be approved for subsequent reporting periods if any of the following are applicable:

(a) Any action by the National Continuing Care Accreditation Commission which results or could result in loss of accreditation.

(b) Any action by any federal or state agency or regulatory body which could result in revocation, denial or suspension of a license or certificate.

(c) Any action by any federal or state agency or regulatory body which results or could result in a provider or facility’s being out of compliance with the provisions of chapter 651, F.S., or any similar laws or rules of any other state.

(d) Initiation of any criminal or civil action, including bankruptcy or receivership proceedings by any federal or state agency or regulatory body having jurisdiction over the provider or over any business operations of the provider.

(e) Failure by a provider to notify the Office of any of the above within five business days.

(f) Any circumstances that may exist which would be grounds for the Office to conduct an investigation of the provider.

(3) The provider shall furnish the Office, within five business days, a copy of any communication from CARF International concerning the loss or potential loss of accreditation of the provider or any facility owned or operated by the provider, wherever located.  Nothing in this rule shall be construed to restrict or modify the Office’s authority to conduct investigations or examinations, request information or otherwise enforce the provisions of chapter 651, F.S.

Rulemaking Authority 651.015(3), 651.028 FS. Law Implemented 651.028 FS. History–New 7-16-92, Formerly 4-193.055, Amended, ____________.

 

69O-193.058 Continuous Updates.

Each Regardless of the information filed with the annual license renewal application, each provider shall immediately notify the Office and file pertinent documents within five business days regarding:

(1) through (2) No change.

(3) Any other information that might adversely affect the ability of a provider, facility, or its management to operate under the assumptions made in the most recent license application; or

(4) Any change in the management company of a facility; or

(4)(5) Any change in the name or fictitious name of a provider or facility.

Rulemaking Authority 651.015(3) FS. Law Implemented 651.023, 651.0235, 651.026 FS. History–New 7-16-92, Formerly 4-193.058, Amended, ____________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Michael Lawrence, Jr., Assistant General Counsel

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Financial Services Commission

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: December 03, 2019

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: September 30, 2019