1     
CONTINUING CARE RETIREMENT COMMUNITY

2     
AMENDMENTS

3     
2016 THIRD SPECIAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: Deidre M. Henderson

6     
House Sponsor: Earl D. Tanner

7     

8     LONG TITLE
9     General Description:
10          This bill modifies provisions related to continuing care retirement communities.
11     Highlighted Provisions:
12          This bill:
13          ▸     defines terms;
14          ▸     provides that a court may direct a trustee to purchase land on which a continuing
15     care facility is located from a ground lessor under certain circumstances;
16          ▸     provides that the Department of Insurance may require a provider to pay rent under
17     a ground lease;
18          ▸     provides that the Department of Insurance may subordinate a lien on a provider's
19     assets under certain circumstances;
20          ▸     modifies a provision regarding when a provider is required to return a continuing
21     care entrance fee;
22          ▸     modifies a provision related to the liability of a provider for a misstatement or
23     omission of a material fact;
24          ▸     requires a person that holds a possessory interest in a facility to be bound by the
25     continuing care contracts related to the facility under certain circumstances; and
26          ▸     provides that a person may not sell land on which a facility subject to a ground lease
27     is located free and clear of the provider's interest in the lease.
28     Money Appropriated in this Bill:
29          None
30     Other Special Clauses:
31          This bill provides a special effective date.
32     Utah Code Sections Affected:
33     AMENDS:
34          31A-44-102, as enacted by Laws of Utah 2016, Chapter 270
35          31A-44-104, as enacted by Laws of Utah 2016, Chapter 270
36          31A-44-401, as enacted by Laws of Utah 2016, Chapter 270
37          31A-44-404, as enacted by Laws of Utah 2016, Chapter 270
38          31A-44-502, as enacted by Laws of Utah 2016, Chapter 270
39          31A-44-503, as enacted by Laws of Utah 2016, Chapter 270
40          31A-44-601, as enacted by Laws of Utah 2016, Chapter 270
41          31A-44-602, as enacted by Laws of Utah 2016, Chapter 270
42          31A-44-605, as enacted by Laws of Utah 2016, Chapter 270
43     

44     Be it enacted by the Legislature of the state of Utah:
45          Section 1. Section 31A-44-102 is amended to read:
46          31A-44-102. Definitions.
47          As used in this chapter:
48          (1) "Continuing care" means [the] furnishing or providing access to an individual,
49     other than by an individual related to the individual by blood, marriage, or adoption, of lodging
50     together with nursing services, medical services, or other related services pursuant to a contract
51     requiring an entrance fee.
52          (2) "Continuing care contract" means a contract under which a provider provides
53     continuing care to a resident.
54          (3) (a) "Entrance fee" means an initial or deferred transfer to a provider of a sum of
55     money or property made or promised to be made as full or partial consideration for acceptance
56     of a specified individual as a resident in a facility.
57          (b) "Entrance fee" includes a monthly fee, assessed at a rate that is greater than the
58     value of the provider's monthly services, that a resident agrees to pay in exchange for
59     acceptance into a facility or a promise of future monthly fees assessed at a rate that is less than
60     the value of the services rendered.
61          (c) "Entrance fee" does not include an amount less than the sum of the regular period
62     charges for three months of residency in a facility.
63          (d) "Entrance fee" does not include a deposit of less than $1,000 made under a
64     reservation agreement.
65          (4) "Facility" means a place in which a person provides continuing care[.] pursuant to a
66     continuing care contract.
67          (5) "Ground lease" means a lease to a provider of the land and infrastructure
68     improvements to the land on which a facility is located.
69          (6) "Ground lessor" means, for a facility subject to a ground lease, the owner and lessor
70     of the land and infrastructure improvements to the land on which the facility is located.
71          [(5)] (7) "Living unit" means a room, apartment, cottage, or other area within a facility
72     set aside for the exclusive use or control of one or more identified individuals.
73          [(6)] (8) (a) "Provider" means:
74          [(a)] (i) the owner of a facility;
75          [(b)] (ii) a person, other than a resident, that claims a possessory interest in a facility; or
76          [(c)] (iii) a person who enters into a continuing care contract with a resident or
77     potential resident.
78          (b) "Provider" does not include a person who is solely a ground lessor.
79          [(7)] (9) "Provider disclosure statement" means, for a given provider, the disclosure
80     statement described in Section 31A-44-301.
81          [(8)] (10) "Reservation agreement" means an agreement that requires the payment of a
82     deposit to reserve a living unit for a prospective resident.
83          [(9)] (11) "Resident" means an individual entitled to receive continuing care in a
84     facility pursuant to a continuing care contract.
85          Section 2. Section 31A-44-104 is amended to read:
86          31A-44-104. Scope of regulation -- When compliance is required.
87          (1) The regulation of providers under this chapter does not limit or replace regulation
88     by any other governmental entity of continuing care facilities or providers.
89          (2) The department may not regulate, or in any manner inquire into, the quality of care
90     provided in a facility.
91          (3) A record that the department receives from a provider that is not required to be part
92     of a disclosure statement under this chapter is a protected record under Title 63G, Chapter 2,
93     Government Records Access and Management Act.
94          (4) The department shall determine the amount of any fee required under this chapter,
95     in accordance with Section 63J-1-504, and in an amount that covers the department's cost to
96     administer this chapter.
97          (5) A provider that begins marketing a continuing care facility project on or before
98     May 10, 2016, is not required to comply with this chapter until May 10, 2017.
99          Section 3. Section 31A-44-401 is amended to read:
100          31A-44-401. Continuing care contract requirements -- No waiver.
101          (1) A continuing care contract shall:
102          (a) provide that the provider shall refund the portion of a departing resident's entrance
103     fee that the provider has agreed to refund, if any, no later than the earlier of:
104          (i) if the departing resident ceased occupancy of the departing resident's unit before any
105     other departing resident who has not received an entrance fee refund, 30 days after the day on
106     which the [resident's living unit is occupied by a new resident] provider accumulates an amount
107     of money, from sales of living units previously occupied by departing residents, that is equal to
108     the departing resident's entrance fee refund; or
109          (ii) one year after the day on which the departing resident ceases to occupy the
110     departing resident's living unit, unless the provider proves that the provider has made and is
111     making a good faith effort to find [another resident for the living unit at the lowest entrance fee
112     that is acceptable to the resident ceasing to occupy the living unit;] an occupant for a living unit
113     that was previously occupied by a departing resident;
114          (b) provide that the resident may terminate the continuing care contract upon giving
115     notice of termination:
116          (i) with or without cause; and
117          (ii) clearly stating what portion of the entrance fee the provider will refund and the date
118     by which the provider will make the refund; and
119          (c) provide that a continuing care contract is terminated by the resident's death and
120     clearly state:
121          (i) what portion of the entrance fee the provider will refund in the event of the
122     resident's death;
123          (ii) the date before which the provider will make the refund; and
124          (iii) to whom the provider will make the refund.
125          (2) A continuing care contract may permit involuntary dismissal of a resident from a
126     continuing care facility upon a reasonable determination by the provider that the resident's
127     health and well-being require termination of the continuing care contract.
128          (3) If a resident is dismissed under Subsection (2) and is in a condition of financial
129     hardship, as defined by the department by rule made in accordance with Title 63G, Chapter 3,
130     Utah Administrative Rulemaking Act, the provider shall refund the resident's entrance fee:
131          (a) in an amount provided in the continuing care contract; and
132          (b) before the earlier of:
133          (i) a time provided in the continuing care contract; and
134          (ii) 60 days after the day on which the provider dismisses the resident from the facility.
135          (4) A resident may not waive a provision of this chapter by agreement.
136          Section 4. Section 31A-44-404 is amended to read:
137          31A-44-404. Nondisturbance of residents .
138          (1) A person may not directly or indirectly disturb the rights of a resident or third party
139     beneficiary under a continuing care contract and this chapter if the resident has substantially
140     performed the resident's obligations under the continuing care contract.
141          (2) If the person to whom a resident owes performance under the continuing care
142     contract is contested, and a court has not issued a temporary or permanent order resolving the
143     contest:
144          (a) the department may appoint a temporary receiver to receive the performance of the
145     resident; and
146          (b) a court may appoint a receiver upon petition by the department.
147          [(3) A person that succeeds a provider in the provider's interest in a facility is bound by
148     every continuing care contract concerning the facility, including a continuing care contract that
149     provides for the return of entrance fees.]
150          (3) (a) Except as provided in Subsection (3)(b), a person other than a resident that
151     holds a present right to possess a facility, including a ground lessor but only after the ground
152     lessor acquires a provider's possessory interest by termination of a ground lease or otherwise, is
153     bound by every continuing care contract related to the facility, including a continuing care
154     contract that provides for the return of part or all of a resident's entrance fee.
155          (b) If a ground lessor acquires a provider's possessory interest by termination of a
156     ground lease or otherwise, the ground lessor's obligation under the continuing care contracts is
157     limited to the monetary obligations of the provider to which the ground lessor succeeds.
158          (4) (a) The commissioner holds a covenant that:
159          (i) runs with the land on which a facility is located; and
160          (ii) except as provided in Subsection (4)(b), binds a person with a present right to
161     possess the land on which the facility is located, including a ground lessor but only after the
162     ground lessor acquires a provider's possessory interest by termination of a ground lease or
163     otherwise, to every continuing care contract related to the facility, including a continuing care
164     contract that provides for the return of all or part of a resident's entrance fee.
165          (b) If a ground lessor acquires a provider's possessory interest by termination of a
166     ground lease or otherwise, the ground lessor's obligation under the continuing care contracts
167     under the covenant described in Subsection (4)(a) is limited to the monetary obligations of the
168     provider to which the ground lessor succeeds.
169          (c) A person may not sell the land on which the facility is located free and clear of the
170     interest described in Subsection (4)(a).
171          (5) A person may not sell or transfer the land on which a facility subject to a ground
172     lease is located free and clear of the provider's possessory interest in the ground lease.
173          Section 5. Section 31A-44-502 is amended to read:
174          31A-44-502. Order to rehabilitate .
175          (1) A court order to rehabilitate a facility under Section 31A-44-501 may direct a
176     trustee to:
177          [(1)] (a) take possession of the provider's property in order to conduct the provider's
178     business, including employing any manager or agent that the trustee considers necessary; and
179          [(2)] (b) take action as directed by the court to eliminate the causes and conditions that
180     made rehabilitation necessary, which action may include:
181          [(a)] (i) selling the facility through bankruptcy or receivership proceedings; and
182          [(b)] (ii) requiring a purchaser of the facility to honor any continuing care contract for
183     the facility.
184          (2) (a) For a facility subject to a ground lease, a court may, in addition to the actions
185     described in Subsection (1), direct a trustee to purchase from the ground lessor, or assign to
186     another person that agrees to operate the facility, for market value, the ground lessor's interest
187     in the land and the infrastructure improvements to the land on which the facility is located.
188          (b) A court may direct a trustee under Subsection (2)(a) to purchase from a ground
189     lessor the land and infrastructure improvements to the land on which a facility is located,
190     regardless of the terms of the ground lease agreement.
191          (c) If a court directs a trustee to purchase or assign the land and infrastructure
192     improvements to the land under Subsection (2)(a), the ground lessor shall sell or assign the
193     land and infrastructure improvements to the land in compliance with the court order.
194           (d) The commissioner shall determine market value in accordance with rules made by
195     the commissioner in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
196     Act.
197          (e) In determining market value under Subsection (2)(d), the commissioner shall:
198          (i) value the land and infrastructure improvements to the land on which the facility is
199     located as though the land and infrastructure improvements to the land were not subject to the
200     ground lease; and
201          (ii) disregard the monetized value of an existing ground lease.
202          (3) Solely for the purpose of enforcing this section, a court has personal jurisdiction in
203     a proceeding under this section over:
204          (a) the owner of a facility; and
205          (b) the owner of the land and infrastructure improvements to the land on which a
206     facility is located.
207          Section 6. Section 31A-44-503 is amended to read:
208          31A-44-503. Order to liquidate .
209          (1) If the trustee determines that further efforts to rehabilitate a provider's facility are
210     impractical or useless, the trustee may petition a court for liquidation of the facility.
211          (2) A court that issues an order to liquidate a facility under Subsection (1) shall appoint
212     a trustee to collect and liquidate all of the provider's assets located in this state.
213          (3) An individual may not enter into a continuing care contract at a facility after a court
214     enters an order to liquidate the facility.
215          (4) (a) For a facility subject to a ground lease, a court may, in an order to liquidate
216     under this section, direct a trustee to purchase from the ground lessor, or assign to another
217     person that agrees to operate the facility, for market value, the ground lessor's interest in the
218     land and the infrastructure improvements to the land on which the facility is located.
219          (b) A court may direct a trustee under Subsection (4)(a) to purchase from a ground
220     lessor the land and infrastructure improvements to the land on which a facility is located,
221     regardless of the terms of the ground lease agreement.
222          (c) If a court directs a trustee to purchase or assign land and infrastructure
223     improvements to the land under Subsection (4)(a), the ground lessor shall sell or assign the
224     land and infrastructure improvements to the land in compliance with the court order.
225          (d) The commissioner shall determine market value in accordance with rules made by
226     the commissioner in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
227     Act.
228          (e) In determining market value under Subsection (4)(d), the commissioner shall:
229          (i) value the land and infrastructure improvements to the land on which the facility is
230     located as though the land and infrastructure improvements to the land were not subject to the
231     ground lease; and
232          (ii) disregard the monetized value of an existing ground lease.
233          (5) Solely for the purpose of enforcing this section, a court has personal jurisdiction in
234     a proceeding under this section over:
235          (a) the owner of a facility; and
236          (b) the owner of the land and infrastructure improvements to the land on which a
237     facility is located.
238          Section 7. Section 31A-44-601 is amended to read:
239          31A-44-601. Lien held by the commissioner in favor of a resident or a group of
240     residents.
241          (1) To secure the obligations of the provider to a resident or a group of residents under
242     a continuing care contract, the commissioner holds a lien in favor of the resident or group of
243     residents that attaches on the day the notice described in Subsection (3) is recorded as provided
244     in Subsection (4).
245          (2) A lien described in Subsection (1) covers the real and personal property of the
246     provider that is used in connection with the facility.
247          (3) The provider shall prepare, for [each] the county where the [provider has an interest
248     in real or personal property] facility is located, a written notice, sworn to by [an officer of the
249     provider] each person with an interest in the facility, that contains:
250          (a) the name of [the] any provider and ground lessor;
251          (b) a legal description of the provider's real or personal property that is used in
252     connection with the facility; and
253          (c) a statement that the real or personal property used in connection with the facility is
254     subject to this chapter and to the lien imposed by this section[.], except that the interest of a
255     ground lessor in the land and infrastructure improvements to the land on which the facility is
256     located is not subject to the lien imposed by this section.
257          (4) The provider shall record the notice described in Subsection (3) in the real property
258     records of each county where the provider has real property on or before the date the provider
259     first executes a continuing care contract for the facility.
260          (5) Except as provided in Subsection (6), the lien described in Subsection (1) is
261     subordinate to [a] any lien on the property of the provider.
262          (6) The amount of [a] any lien on the provider's property that is superior to a lien
263     described in Subsection (1) is limited to the portion of the funds secured by the lien that the
264     provider uses to:
265          (a) construct, acquire, replace, or improve a facility;
266          (b) refinance the portion of a loan used to construct, acquire, replace, or improve a
267     facility;
268          (c) pay, for a loan related to the facility, a reasonable loan fee, a loan expense, or loan
269     interest; [or]
270          (d) refund an entrance fee to a facility resident;
271          [(d)] (e) pay reasonable operating costs of the facility[.]; or
272          (f) pay an amount for a purpose determined by the commissioner by rule made in
273     accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
274          (7) If a lien on the property of the provider is superior to a lien described in Subsection
275     (1), a provider may only use an entrance fee to:
276          (a) reduce a debt secured by a superior lien;
277          (b) construct, acquire, replace, or improve a facility;
278          (c) fund reserves for the provider's actuarial debt under continuing care contracts for a
279     facility;
280          (d) refund an entrance fee of a resident of a facility;
281          (e) pay a facility resident's debt to the provider for a recurring fee due under the
282     resident's continuing care contract; or
283          (f) pay an amount for a purpose approved by the commissioner.
284          (8) The commissioner may judicially foreclose a lien described in Subsection (1) if
285     property subject to the lien is liquidated or the provider is insolvent or bankrupt.
286          (9) The commissioner shall use the proceeds from a lien foreclosed under Subsection
287     (8) to satisfy the provider's obligations under any continuing care contract in effect on the day
288     the commissioner forecloses the lien.
289          Section 8. Section 31A-44-602 is amended to read:
290          31A-44-602. Enforcement by department -- Rulemaking.
291          (1) Subject to the requirements of Title 63G, Chapter 4, Administrative Procedures
292     Act, the department may:
293          (a) receive and act on a complaint from a resident about a provider or a facility;
294          (b) take action designed to obtain voluntary compliance by the provider with this
295     chapter for the benefit of a resident;
296          (c) commence administrative or judicial proceedings on the commission's own in order
297     to enforce compliance by a provider with this chapter for the benefit of a resident; [or]
298          (d) after a complaint by a resident about a provider for a facility subject to a ground
299     lease, require the provider to pay rent in accordance with the ground lease; or
300          [(d)] (e) take action against a provider who fails to:
301          (i) respond to the department, in writing, before 30 business days after the day on
302     which the provider receives notice from the department of a complaint filed with the
303     department; or
304          (ii) submit information requested by the department.
305          (2) The department may:
306          (a) counsel an individual on the individual's rights or duties under this chapter;
307          (b) make rules in accordance with Title 63G, Chapter 3, Utah Administrative
308     Rulemaking Act, to:
309          (i) restrict or prohibit practices by the provider that are misleading, unfair, or abusive;
310          (ii) promote or assure fair and full disclosure of the terms and conditions of continuing
311     care contracts, agreements, and communications between a resident and a provider;
312          (iii) promote or assure the ability of the public to compare continuing care contracts,
313     providers, and facilities; and
314          (iv) clearly disclose any financial risks related to a provider's facility to the facility's
315     residents;
316          (c) employ hearing examiners, clerks, and other employees and agents as necessary to
317     perform the department's duties under this chapter; [and]
318          (d) appoint a receiver for a provider[.]; and
319          (e) upon request by a provider, subordinate a lien imposed under Section 31A-44-601
320     for the purpose of the provider obtaining secondary financing or refinancing of a facility if:
321          (i) the facility is financially sound; and
322          (ii) subordinating the lien does not adversely affect the residents of the facility.
323          Section 9. Section 31A-44-605 is amended to read:
324          31A-44-605. Civil liability.
325          (1) A provider who enters into a continuing care contract with an individual without
326     complying with the disclosure statement requirement described in this chapter, or who makes a
327     continuing care contract with an individual who relies on a disclosure statement that misstates
328     or omits a material fact, is liable to the individual for:
329          (a) actual damages;
330          (b) repayment of all fees the individual paid to the provider, minus the reasonable
331     value of care and lodging provided to the individual before the violation, misstatement, or
332     omission was discovered or reasonably should have been discovered;
333          (c) interest at the legal rate for judgments;
334          (d) court costs; and
335          (e) reasonable attorney fees.
336          (2) A provider is liable under this section [regardless of whether the provider had
337     actual knowledge of the] unless the provider proves by a preponderance of evidence that the
338     provider and the provider's agents and employees did not know and should not have known of
339     the misstatement or omission.
340          (3) An individual may not [file or] maintain an action under this section if:
341          (a) the individual[, before filing the action,] receives a written offer from the provider
342     for refund of all amounts paid to the provider or the provider's facility plus reasonable interest
343     from the date of payment, minus the reasonable value of care and lodging provided before the
344     receipt of the offer;
345          (b) the individual receives the offer described in Subsection (3)(a) before a day that is
346     30 days after the earlier of:
347          (i) the day on which the individual submits a written request to the provider for
348     repayment under this section; or
349          (ii) the day on which the individual files an action under this section;
350          [(b)] (c) the offer includes a description of the provisions of this section; and
351          [(c)] (d) the recipient of the offer fails to accept the offer within 30 days after the date
352     the offer is received.
353          (4) An individual shall bring an action under this section before the day three years
354     after:
355          (a) the day on which the individual enters into the continuing care contract; or
356          (b) the individual discovers, or reasonably should have discovered, the provider's
357     violation, misstatement, or omission.
358          (5) A person does not have a cause of action under this chapter except as expressly
359     provided by this chapter.
360          (6) This chapter does not limit the liability that exists under any other statute or
361     common law.
362          (7) The provisions of this chapter are not exclusive and the remedies provided by this
363     chapter are in addition to any other remedies provided by any other law.
364          Section 10. Effective date.
365          If approved by two-thirds of all the members elected to each house, this bill takes effect
366     upon approval by the governor, or the day following the constitutional time limit of Utah
367     Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
368     the date of veto override.