Representative James A. Dunnigan proposes the following substitute bill:


1     
CONTINUING CARE RETIREMENT FACILITIES

2     
AMENDMENTS

3     
2023 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: James A. Dunnigan

6     
Senate Sponsor: Wayne A. Harper

7     

8     LONG TITLE
9     General Description:
10          This bill modifies provisions related to the regulation of continuing care facilities.
11     Highlighted Provisions:
12          This bill:
13          ▸     defines terms;
14          ▸     modifies the processes through which the Insurance Department regulates
15     continuing care facilities; and
16          ▸     makes technical and conforming changes.
17     Money Appropriated in this Bill:
18          None
19     Other Special Clauses:
20          None
21     Utah Code Sections Affected:
22     AMENDS:
23          31A-44-102, as last amended by Laws of Utah 2016, Third Special Session, Chapter 8
24          31A-44-402, as enacted by Laws of Utah 2016, Chapter 270
25          31A-44-404, as last amended by Laws of Utah 2016, Third Special Session, Chapter 8
26          31A-44-502, as last amended by Laws of Utah 2016, Third Special Session, Chapter 8
27          31A-44-505, as enacted by Laws of Utah 2016, Chapter 270
28          31A-44-506, as enacted by Laws of Utah 2016, Chapter 270
29     ENACTS:
30          31A-44-315, Utah Code Annotated 1953
31          31A-44-501.1, Utah Code Annotated 1953
32     REPEALS:
33          31A-44-101, as enacted by Laws of Utah 2016, Chapter 270
34          31A-44-501, as enacted by Laws of Utah 2016, Chapter 270
35          31A-44-503, as last amended by Laws of Utah 2016, Third Special Session, Chapter 8
36     

37     Be it enacted by the Legislature of the state of Utah:
38          Section 1. Section 31A-44-102 is amended to read:
39          31A-44-102. Definitions.
40          As used in this chapter:
41          (1) "Continuing care" means furnishing or providing access to an individual, other than
42     by an individual related to the individual by blood, marriage, or adoption, of lodging together
43     with nursing services, medical services, or other related services pursuant to a contract
44     requiring an entrance fee.
45          (2) "Continuing care contract" means a contract under which a provider provides
46     continuing care to a resident.
47          (3) (a) "Entrance fee" means an initial or deferred transfer to a provider of a sum of
48     money or property made or promised to be made as full or partial consideration for acceptance
49     of a specified individual as a resident in a facility.
50          (b) "Entrance fee" includes a monthly fee, assessed at a rate that is greater than the
51     value of the provider's monthly services, that a resident agrees to pay in exchange for
52     acceptance into a facility or a promise of future monthly fees assessed at a rate that is less than
53     the value of the services rendered.
54          (c) "Entrance fee" does not include an amount less than the sum of the regular period
55     charges for three months of residency in a facility.
56          (d) "Entrance fee" does not include a deposit of less than $1,000 made under a
57     reservation agreement.
58          (4) "Facility" means a place in which a person provides continuing care pursuant to a
59     continuing care contract.
60          (5) "Ground lease" means a lease to a provider of the land and infrastructure
61     improvements to the land on which a facility is located.
62          (6) "Ground lessor" means, for a facility subject to a ground lease, the owner and lessor
63     of the land and infrastructure improvements to the land on which the facility is located.
64          (7) "Insolvent" means:
65          (a) having generally ceased to pay debts in the ordinary course of business other than as
66     a result of a bona fide dispute;
67          (b) being unable to pay debts as they become due; or
68          (c) being insolvent within the meaning of federal bankruptcy law.
69          [(7)] (8) "Living unit" means a room, apartment, cottage, or other area within a facility
70     set aside for the exclusive use or control of one or more identified individuals.
71          [(8)] (9) (a) "Provider" means:
72          (i) the owner of a facility;
73          (ii) a person, other than a resident, that claims a possessory interest in a facility; or
74          (iii) a person who enters into a continuing care contract with a resident or potential
75     resident.
76          (b) "Provider" does not include a person who is solely a ground lessor.
77          [(9)] (10) "Provider disclosure statement" means, for a given provider, the disclosure
78     statement described in Section 31A-44-301.
79          [(10)] (11) "Reservation agreement" means an agreement that requires the payment of a
80     deposit to reserve a living unit for a prospective resident.
81          [(11)] (12) "Resident" means an individual entitled to receive continuing care in a
82     facility pursuant to a continuing care contract.
83          Section 2. Section 31A-44-315 is enacted to read:
84          31A-44-315. Financial assessment.
85          (1) The department shall assess the financial condition of a provider no less than once
86     per year.
87          (2) The department may consider any relevant documents and information in
88     performing an assessment.
89          (3) A provider shall prepare and timely provide to the department documents and
90     information requested by the department in connection with an assessment.
91          (4) Department work papers created or relied upon in connection with an assessment
92     are protected under Title 63G, Chapter 2, Government Records Access and Management Act.
93          (5) The department may conduct any portion of an assessment at the provider's facility
94     during regular business hours if the department notifies the provider of the anticipated visit and
95     assessment at least seven calendar days in advance.
96          (6) The department shall prepare a written report of the assessment and provide a copy
97     of the report to the provider within 28 days after the day on which the department completes
98     the gathering of information necessary to complete the assessment.
99          Section 3. Section 31A-44-402 is amended to read:
100          31A-44-402. Actuarial reserve -- Priority of entrance fee refunds.
101          (1) The department may require a provider that the department determines has actuarial
102     liability under Section 31A-44-204 to create an additional reserve fund to offset the actuarial
103     liability.
104          (2) The department may require the additional reserve fund described in Subsection (1)
105     by rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
106          (3) If a refund or remittance of funds is owed in relation to a living unit due to the
107     death or relocation of a resident, the provider shall prioritize the sale of the resident's living
108     unit over the sale of other units for which a refund or remittance of funds is not owed.
109          Section 4. Section 31A-44-404 is amended to read:
110          31A-44-404. Nondisturbance of residents.
111          (1) A person may not directly or indirectly disturb the rights of a resident or third party
112     beneficiary under a continuing care contract and this chapter if the resident has substantially
113     performed the resident's obligations under the continuing care contract.
114          (2) If the person to whom a resident owes performance under the continuing care
115     contract is contested, and a court has not issued a temporary or permanent order resolving the
116     contest:
117          (a) the department may appoint a temporary receiver to receive the performance of the
118     resident; and
119          (b) a court may appoint a receiver upon the department's petition [by the department],
120     or the department's motion under an existing action.
121          (3) (a) Except as provided in Subsection (3)(b), a person other than a resident that
122     holds a present right to possess a facility, including a ground lessor but only after the ground
123     lessor acquires a provider's possessory interest by termination of a ground lease or otherwise, is
124     bound by every continuing care contract related to the facility, including a continuing care
125     contract that provides for the return of part or all of a resident's entrance fee.
126          (b) If a ground lessor acquires a provider's possessory interest by termination of a
127     ground lease or otherwise, the ground lessor's obligation under the continuing care contracts is
128     limited to the monetary obligations of the provider to which the ground lessor succeeds.
129          (4) (a) The commissioner holds a covenant that:
130          (i) runs with the land on which a facility is located; and
131          (ii) except as provided in Subsection (4)(b), binds a person with a present right to
132     possess the land on which the facility is located, including a ground lessor but only after the
133     ground lessor acquires a provider's possessory interest by termination of a ground lease or
134     otherwise, to every continuing care contract related to the facility, including a continuing care
135     contract that provides for the return of all or part of a resident's entrance fee.
136          (b) If a ground lessor acquires a provider's possessory interest by termination of a
137     ground lease or otherwise, the ground lessor's obligation under the continuing care contracts
138     under the covenant described in Subsection (4)(a) is limited to the monetary obligations of the
139     provider to which the ground lessor succeeds.
140          (c) A person may not sell the land on which the facility is located free and clear of the
141     interest described in Subsection (4)(a).
142          (5) A person may not sell or transfer the land on which a facility subject to a ground
143     lease is located free and clear of the provider's possessory interest in the ground lease.
144          Section 5. Section 31A-44-501.1 is enacted to read:
145          31A-44-501.1. Receivership.
146          (1) The department may, by petition or motion, request that a court appoint the
147     commissioner as receiver for a provider.
148          (2) The court may appoint the commissioner as receiver if, as determined by the
149     commissioner, the provider:
150          (a) is insolvent or at material risk of becoming insolvent within the next 12 months;
151          (b) is materially unable to meet the income or available cash projections described in
152     the provider's disclosure statement; or
153          (c) is unable or at risk of being unable to perform a material obligation under a
154     continuing care contract within the next 12 months.
155          (3) In evaluating whether a receiver is appropriate under this section, the court:
156          (a) shall evaluate and promote the best interests of the residents that have contracted
157     with the provider; and
158          (b) may require the proceeds of a lien imposed under Section 31A-44-601 to be used to
159     pay an entrance fee to another facility on behalf of a resident of the provider's facility.
160          (4) The commissioner may not file an independent proceeding or action described in
161     this section if another judicial proceeding or action based on the provider's financial condition
162     is pending, but may move to intervene in a pending proceeding or action that is based on the
163     provider's financial condition.
164          Section 6. Section 31A-44-502 is amended to read:
165          31A-44-502. Relief available.
166          (1) [A court order to rehabilitate a facility under Section 31A-44-501 may direct a
167     trustee to] In a judicial proceeding, including under Sections 31A-44-501 and 31A-44-501.1, a
168     court may:
169          (a) direct a receiver to take possession of the provider's property in order to conduct the
170     provider's business, including employing any manager or agent that the [trustee] receiver
171     considers necessary; and
172          (b) [take action as directed by the court] direct a receiver to eliminate the causes and
173     conditions that made [rehabilitation] receivership necessary, which action may include:
174          (i) selling the facility [through bankruptcy or receivership proceedings]; [and]
175          (ii) requiring a purchaser of the facility to honor any continuing care contract for the
176     facility; and
177          (iii) collecting and liquidating all or a portion of the provider's assets within the court's
178     jurisdiction.
179          (2) (a) For a facility subject to a ground lease, a court may, in addition to the actions
180     described in Subsection (1), direct a [trustee] receiver to purchase from the ground lessor, or
181     assign to another person that agrees to operate the facility, for market value, the ground lessor's
182     interest in the land and the infrastructure improvements to the land on which the facility is
183     located.
184          (b) A court may direct a [trustee under Subsection (2)(a)] receiver to purchase from a
185     ground lessor the land and infrastructure improvements to the land on which a facility is
186     located, regardless of the terms of the ground lease agreement.
187          (c) If a court directs a [trustee] receiver to purchase or assign the land and
188     infrastructure improvements to the land under Subsection (2)(a), the ground lessor shall sell or
189     assign the land and infrastructure improvements to the land in compliance with the court order.
190          [(d) The commissioner shall determine market value in accordance with rules made by
191     the commissioner in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
192     Act.]
193          [(e)] (d) In determining market value under Subsection [(2)(d)] (2)(a), the
194     commissioner shall:
195          (i) value the land and infrastructure improvements to the land on which the facility is
196     located as though the land and infrastructure improvements to the land were not subject to the
197     ground lease; and
198          (ii) disregard the monetized value of an existing ground lease.
199          (3) A provider that is subject to a liquidation order may not enter into a new continuing
200     care contract.
201          [(3)] (4) Solely for the purpose of enforcing this section, a court has personal
202     jurisdiction in a proceeding under this section over:
203          (a) the owner of a facility; and
204          (b) the owner of the land and infrastructure improvements to the land on which a
205     facility is located.
206          (5) If the commissioner is appointed as receiver, the commissioner may hire or retain a
207     deputy receiver to perform any duties of receivership.
208          Section 7. Section 31A-44-505 is amended to read:
209          31A-44-505. Termination of receivership.
210          (1) A court may terminate a [rehabilitation] receivership of a provider's facility and
211     order the return of the facility and the facility's assets to the provider if the court determines:
212          (a) the objectives of the [order to rehabilitate the facility] receivership orders have been
213     accomplished; and
214          (b) [the facility may be returned to the provider without further jeopardy to the facility's
215     residents, creditors, or owners, or the public] termination of the receivership will not jeopardize
216     the interests of the facility's residents, creditors, owners, or the public.
217          (2) A court may enter an order under this section after the court enters:
218          (a) a full report and accounting of the conduct of the facility's affairs during the
219     rehabilitation; and
220          (b) a report on the facility's financial condition.
221          Section 8. Section 31A-44-506 is amended to read:
222          31A-44-506. Payment of receiver.
223          A [trustee's] receiver's and any deputy receiver's reasonable costs, expenses, and fees
224     are payable from a provider's or facility's assets.
225          Section 9. Repealer.
226          This bill repeals:
227          Section 31A-44-101, Title.
228          Section 31A-44-501, Application for court order for rehabilitation or liquidation.
229          Section 31A-44-503, Order to liquidate.