Chapter
159
2005 -- S 1137 SUBSTITUTE A AS AMENDED
Enacted 07/05/05
A N A C T
RELATING TO HEALTH
AND SAFETY -- THE LONG-TERM CARE REFORM ACT OF 2005 -- NURSING FACILITIES
RECEIVERSHIP ACT
Introduced By: Senators Tassoni, Paiva-Weed, Perry, McCaffrey, and Roberts
Date Introduced: May 26, 2005
It is
enacted by the General Assembly as follows:
SECTION
1. The title of Chapter 23-17.11 of the General Laws is hereby amended to
read as
follows: The Emergency Skilled Nursing and Intermediate Care Facilities Act The
Nursing
Facilities Receivership Act.
SECTION
2. Sections 23-17.11-2, 23-17.11-3, 23-17-4 and 23-17.11-6 of the General
Laws in
Chapter 23-17.11 entitled "The Emergency Skilled Nursing and
Intermediate Care
Facilities
Act" "The Nursing
Facilities Receivership Act" are hereby amended to read as follows:
23-17.11-2.
Declaration of purpose. -- The purpose of this chapter is to ensure
quality
care for
citizens of the state by vesting in the department of health the power
necessary to
regulate
skilled nursing facilities and intermediate care facilities and
provide appropriate legal
remedies
to provide quality of care for residents in nursing care facilities.
23-17.11-3.
Definitions. -- As used in this chapter:
(1) "Department" means the department of health.
(2) "Director" means the director of the department of health.
(3) "Facility" means any skilled nursing facilities or
intermediate care facility as defined
in
chapter 17 of title 23 and the regulations adopted under chapter 17 of title
23.
(4)
"Person" means any individual, trust or estate, partnership, limited
liability company,
limited
liability partnership, corporation (including associations, joint stock
companies and
insurance
companies), state or political subdivision or instrumentality of a state.
(5)
"Resident" means a person who resides in a nursing facility as
defined in chapter 17
of
title 23 and the regulations adopted pursuant to chapter 17 of title 23.
(6)
"Mismanagement" means the director's determination that a facility
lacks financial
solvency
or has demonstrated the inability to correct patterns of deficiencies in
resident care or
management.
These deficiencies may be evidenced by excessive turnover and instability in
the
administration
and clinical leadership, a consistent pattern of maintaining inadequate direct
care
and
support service personnel or a demonstrated failure to implement a plan of
correction and/or
remediation
as prescribed by the department.
(7)
"Financial solvency" shall be defined by the department through
regulation. Such
regulation
shall develop in consultation with the department of human services. In
developing the
definition,
the department shall consider whether any of the following criteria should be
included
in
the definition of financial solvency and whether other criteria should apply:
(i) Sufficient liquid resources, including anticipated accounts receivable due
from
providing
care to residents to operate the facility for thirty (30) days;
(ii)
Current to agreed-upon payment terms for all material financial obligations of
the
facility
including, but not limited to, mortgage payments, lease payments, management
contracts,
payments
to employees and for all employee benefit programs, payments for food and other
resident
supplies, payments for utilities and payments of all state and federal taxes;
(iii)
Free from lien resulting from default by the facility;
(iv)
No combination of current indebtedness totaling more than one hundred twenty
(120)
days
of total facility revenues;
(v)
Significant operating losses for two (2) successive years;
(vi)
Frequent requests for advances on Medicaid reimbursement;
(vii)
Unfavorable working capital ratios of assets to liabilities;
(viii)
High proportion of accounts receivable more than ninety (90) days old;
(ix)
Increasing accounts payable, unpaid taxes and/or payroll related costs;
(x)
Minimal or decreasing equity and/or reserves; and/or
(xi)
High levels of debt and high borrowing costs.
(8)
"Controlling person" means any person or entity in control of a
nursing facility
directly
or indirectly, including:
(i)
in the case of a corporation or a limited liability company, or limited
liability
partnership,
a person having a beneficial ownership interest of five percent (5%) or more in
the
corporation,
limited liability company or limited liability partnership to which the
facility is
licensed;
(ii)
in the case of a general partnership or limited partnership, any general
partner;
(iii)
in the case of a limited liability company, or limited liability partnership
any
member;
(iv)
a legal entity that operates or contracts with another person for the operation
of a
nursing
facility or an owner thereof;
(v)
each of the president, vice president, secretary and treasurer of a corporation
that is
not
exempt from taxation under section 501(a) of the United States Internal Revenue
Code as an
organization
described in section 501(c)(3) of such code; and
(vi)
such other ownership interest or relationship as may be determined by the
director.
23-17.11-4.
Powers and duties of director. -- (a) The director shall promulgate any
rules
and
regulations pertaining to skilled nursing facilities and intermediate
care facilities that he or
she
shall determine are necessary and proper to carry out the purposes of this chapter
and shall
establish
a process for notification of quality of care concerns, survey results and
enforcement
actions
to residents and their families, residents' legal representative and health
care providers, the
long-term
care ombudsman, and the public.
(b) The director shall have proper standing and is authorized to bring suit in
the superior
court to
enforce the provisions of this chapter. The attorney general or his or her
designee shall
represent
the director in the proceeding, including any ancillary proceeding and any
appeals
resulting
from the proceeding.
(c)
The facility shall be responsible for all costs associated with this chapter in
an amount
to be
determined by the director or the attorney general, subject to the approval of
the superior
court.
(d)
For the purposes of this chapter, any nursing facility licensed under chapter
23-17
shall
provide on demand to the director of the department of health, the director of
the department
of
human services and the attorney general any and all documents referring or
relating to the
financial
management of the facility, including, but not limited to; liens; Medicaid cost
reports;
accounts
receivable; accounts payable; monthly unaudited financial statements; audited,
reviewed
or
compiled financial statements as prepared in the ordinary course of business;
contracts with
related
parties; tax returns related to indebtedness; payroll and staffing; state taxes
and federal
taxes.
23-17.11-6.
Mismanagement of facility. -- (a) Whenever the director shall determine
that a
facility is being mismanaged or operated in a manner which will have a
detrimental impact
on the
health, safety, or well-being of any residents of a facility, and that the
appointment of a
receiver
would facilitate the protection of health, safety, or well-being of the
residents of the
facility,
the director shall petition the superior court for the appointment of a
receiver.
(b) The court shall appoint a receiver if it determines that the appointment of
a receiver
is
necessary or appropriate to the protection of the health, safety, and
well-being of the persons.
The
court shall appoint as a receiver any person(s) who shall have experience in
the delivery of
health
care services, and, if feasible, shall have experience with the operation of
long-term care
facilities.
A receiver shall not have a financial interest in, or any affiliation with, the
facility that
is the
subject of the receivership including, but not limited to, its owners,
licensee, management
company,
employee(s), agent(s), or related party(ies). The court may, as it deems necessary or
appropriate
to accomplish the purposes of this chapter, confer upon any receiver appointed
under
this
section any or all of the following powers:
(1) All power under common law and the laws of this state and the rules of its
courts
regarding
receiverships generally;
(2) The power to continue to operate the facility for the benefit of the
residents of the
facility;
(3) The power to sell the facility with the approval of the court; and/or
(4) The power to effectuate facilitate the safe and orderly
removal and placement of all
residents
of the facility in a manner which will not be detrimental to the health and
safety of the
persons residents.
(c) Every plan for removal of persons from closure of a facility
shall be subject to
approval
by the court.
(d) Upon the removal of the last resident from a facility, the licensee shall
forfeit his or
her
license to operate the facility.
SECTION
3. Chapter 23-17.11 of the General Laws entitled "The Emergency Skilled
Nursing
and Intermediate Care Facilities Act" "The Nursing Facilities Receivership Act" is
hereby
amended by adding thereto the following sections:
23-17.11-7.
Reports -- Use of experts -- Costs. – The department of health or
the
department
of attorney general may, in effectuating the purposes of this chapter, engage
experts
or
consultants, including, but not limited to, accountants, auditors, nursing home
administrators,
medical
doctors, nurses or industry analysts. All copies of reports prepared by experts
and
consultants,
and costs associated with these reports, shall be made available to the
facility and to
the
public. All costs incurred under this chapter shall be the responsibility of
the facility in an
amount
to be determined by the attorney general or the director, as they deem
appropriate.
23-17.11-8.
Duty to cooperate. – The facility has a duty to cooperate with the
director
and
the attorney general in all aspects as related to this chapter.
23-17.11-9.
Retaliation prohibited. – (a) No discriminatory, disciplinary or
retaliatory
action
shall be taken by the facility against any officer or employee of a facility;
or against any
guardian
or family member of any resident; or against any resident of the facility; or
against any
volunteer,
for any communication by him or her with the director or the attorney general
or their
designees
pursuant to the provisions of this chapter. The identity of individuals who ask
to remain
anonymous
shall be protected. All anonymous communications shall be investigated but
shall not
constitute
the sole basis for disciplinary action by the director or the attorney general.
(b)
Enforcement. Any person who believes that he or she has been retaliated or
discriminated
against in violation of subsection (a) may file a civil action within three (3)
years of
the
date of retaliation or discrimination.
(c)
Remedies. If the court determines that violation has occurred, the court may
order the
person
who committed the violation to:
(1)
Pay compensatory damages, costs of litigation and attorneys' fees; and/or
(2)
Take other appropriate actions to remedy any part retaliation or
discrimination.
(d)
Limitation. The protections of this section shall not apply to any person who
knowingly
or recklessly provides substantially false information to the director or the
attorney
general
or their designees.
23-17.11-10.
Lien. – The state shall have a lien for reasonable costs incurred
pursuant to
this
chapter on the following property: the building in which the facility is
located if owned by a
controlling
person; the land on which the facility is located if owned by a controlling
person; and
any
fixtures, equipment or goods used in the operation of the facility if owned by
a controlling
person.
Such lien shall be prior to any mortgage or lien which the court finds has been
executed
or
obtained for a fraudulent purpose or to hinder or delay creditors. Such lien
shall also be prior to
a mortgage
or lien held by any person with an ownership interest in the nursing facility;
or held
by
any controlling person.
23-17.11-11.
Whistleblower protections. – (a) Prohibition against discrimination.
No
person
subject to the provisions of this chapter may discharge, demote, threaten or
otherwise
discriminate
against any person or employee with respect to compensation, terms, conditions
or
privileges
of employment as a reprisal because the person or employee (or any person
acting
pursuant
to the request of the employee) provided or attempted to provide information to
the
director
or his or her designee or to the attorney general or his or her designee
regarding possible
violation
of this chapter.
(b)
Enforcement. Any person or employee or former employee subject to the
provisions
of
this chapter who believes that he or she has been discharged or discriminated
against in
violation
of subsection (a) may file a civil action within three (3) years of the date of
discharge or
discrimination.
(c)
Remedies. If the court determines that a violation has occurred, the court may
order
the
person who committed the violation to:
(1)
Reinstate the employee to the employee's former position;
(2)
Pay compensatory damages, costs of litigation and attorneys' fees ; and/or
(3)
Take other appropriate actions to remedy any past discrimination.
(d)
Limitation. The protections of this section shall not apply to any person or
employee
who:
(1)
Deliberately causes or participates in the alleged violation of law or
regulation; or
(2)
Knowingly or recklessly provides substantially false information to the
director or the
attorney
general or his or her designees.
23-17.11-12.
Penalties. – Any facility or person that intentionally fails to
comply with
sections
23-17.11-4(c) and (d), 23-17.11-7 and 23-17.11-8 shall be guilty of a
misdemeanor and
punished
by a fine of not more than one thousand dollars ($1,000) or imprisoned for not
more
than
one year. Each day of violation shall constitute a separate and distinct
offense for calculation
of
the penalty. Each controlling person of a facility subject to penalties under
this section shall be
severally
and personally liable for any fine, penalty or imprisonment provided in this
section for
violating
sections 23-17.11-4(c) and (d), 23-17.11-7, and 23-17.11-8 of this chapter.
23-17.11-13.
Severability. – If any provision of this act or application thereof
to any
person
or circumstance is held invalid, the invalidity shall not affect other
provisions or
applications
of the chapter
which can be given effect without the invalid provision or application, and
to
this end the provisions of this chapter are declared to be severable.
SECTION 4. This act shall take effect upon passage.
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LC03361/SUB A/3
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