HB4664ham001 100TH GENERAL ASSEMBLY

Rep. Kathleen Willis

Filed: 4/24/2018

10000HB4664ham001 LRB100 20398 MJP 39195 a

AMENDMENT TO HOUSE BILL 4664

AMENDMENT NO. ______. Amend House Bill 4664 by replacing everything after the enacting clause with the following:

"Section 1. Short title. This Act may be cited as the Continuing Care Retirement Community Transparency Act.

Section 5. Purpose. This Act is intended to establish new and strengthen existing rights for Illinois seniors residing in continuing care retirement communities. Given that the Department on Aging estimates a 57% increase in State residents ages 60 and over from the years 2000 to 2030, the General Assembly recognizes the need to proactively pass this Act to ensure adequate protections for Illinois seniors. The General Assembly finds the adoption of this Act necessary to increase standards to safeguard seniors from potentially harmful, ambiguous, or unfair agreements associated with independent living and continuing care retirement communities. The proposed reforms will further demonstrate the State of Illinois' commitment to protecting seniors in their homes, communities, and applicable long-term care establishments and facilities.

Section 10. Definitions. As used in this Act:

"Continuing care contract" means a contract to provide to a person for the duration of the person's life or for a term in excess of 11 months services that may include nursing services, medical services, personal care services, or any combination of these services, in addition to maintenance services for the person in a facility, conditioned upon the transfer of an entrance fee to the provider of the services in addition to or in lieu of the payment of regular periodic charges for the care and services involved.

"Department" means the Department of Public Health.

"Director" means the Director of Public Health.

"Entrance fee" means an initial or deferred transfer to a provider of a sum of money or property that is made or promised to be made by a person entering into a continuing care contract and assures a resident of services under the terms of a continuing care contract.

"Facility" means a place or places in which a provider undertakes to provide: (1) a resident with nursing services, medical services, or personal care services, in addition to maintenance services for the person's life or a term in excess of 11 months in accordance with a continuing care contract; and (2) a non-resident with nursing services, medical services, or personal care services, in addition to maintenance services for the person's life or a term in excess of 11 months.

"Living unit" means an apartment, room, or other area within a facility set aside for the exclusive use of one or more identified residents.

"Maintenance services" means food, shelter, and laundry services.

"Medical services" means those services pertaining to medical or dental care that are performed in behalf of a patient at the direction of a physician licensed under the Medical Practice Act of 1987 or a dentist licensed under the Illinois Dental Practice Act by the physician or dentist, by a registered nurse licensed under the Nurse Practice Act, by a licensed practical nurse licensed under the Nurse Practice Act, or by other professional and technical personnel.

"Non-resident" means a person admitted to a facility who has not entered into a continuing care contract.

"Nursing services" means those services pertaining to the curative, restorative, and preventive aspects of nursing care that are performed at the direction of a physician licensed under the Medical Practice Act of 1987 by or under the supervision of a registered nurse licensed under the Nurse Practice Act or a licensed practical nurse licensed under the Nurse Practice Act.

"Personal care services" means assistance with meals, dressing, movement, bathing, or other personal needs or maintenance, or general supervision and oversight of the physical and mental well-being of an individual, who may be incapable of managing his or her person whether or not a guardian has been appointed for the individual.

"Provider" means a person who provides services in accordance with a continuing care contract.

"Resident" means a person who enters into a continuing care contract with a provider or who is designated in a continuing care contract to be a person provided with maintenance services, nursing services, medical services, personal care services, or any combination of these services.

Section 15. Required disclosures; continuing care contract requirements.

(a) At the time of or before the execution of a continuing care contract or at the time of or before the transfer of any money or other property to a provider by or on behalf of a prospective resident, whichever shall first occur, the provider shall deliver a disclosure statement to the person with whom the continuing care contract is to be entered into, the text of which shall contain, to the extent not clearly and completely set forth in the continuing care contract attached as an exhibit to the continuing care contract, at least the following information:

(1) The name and business address of the provider and a statement of whether the provider is a partnership, corporation, or other type of legal entity.

(2) A description of the business experience of the provider in the operation or management of similar facilities and of the manager of the facility, if the facility will be managed on a day-to-day basis by an organization other than the provider. The description shall include information on any matter in which the manager or provider: (i) has been convicted of a felony or pleaded nolo contendere to a felony charge or been held liable or enjoined in a civil action by final judgment, if the felony or civil action involved fraud, embezzlement, fraudulent conversion, or misappropriation of property; or (ii) is subject to a currently effective injunctive or restrictive court order or, within the last 5 years, had any State or federal license or permit suspended or revoked as a result of an action brought by a governmental agency or department, if the order or action arose out of or related to business activity of health care, including actions affecting a license to operate a long-term care facility, retirement home, home for the aged, or assisted living establishment subject to this Act or a similar law in Illinois or another state.

(3) A statement as to whether the provider is, or is affiliated with, a religious, charitable, or other nonprofit organization; the extent of the affiliation, if any; the extent to which the affiliate organization will be responsible for the financial and contract obligations of the provider; and the provision of the federal Internal Revenue Code, if any, under which the provider or affiliate is exempt from the payment of income tax.

(4) The location and description of the physical property or properties of the facility, existing or proposed, and, to the extent proposed, the estimated completion date or dates, whether construction has begun, and the contingencies subject to which construction may be deferred.

(5) Certified financial statements of the provider, including a balance sheet as of the end of the most recent fiscal year and income statements for the 3 most recent fiscal years of the provider or such shorter period of time as the provider shall have been in existence. If the provider's fiscal year ended more than 90 days prior to the date the application is filed, interim financial statements as of a date not more than 90 days before the filing shall be included, but need not be certified.

(6) If the operation of the facility has not yet commenced, a statement of the anticipated source and application of the funds used or to be used in the purchase or construction of the facility, including: (i) an estimate of the cost of purchasing or constructing and equipping the facility, including related costs such as financing expense, legal expense, land costs, occupancy development costs, and all other similar costs that the provider expects to incur or become obligated for before the commencement of operations; (ii) a description of any mortgage loan or other long-term financing intended to be used for the financing of the facility, including the anticipated terms and costs of the financing; (iii) an estimate of the total entrance fees to be received from residents at or before commencement of operation of the facility; (iv) an estimate of the funds, if any, that are anticipated to be necessary to fund start-up losses and provide reserve funds to ensure full performance of the obligations of the provider under a continuing care contract; (v) a projection of estimated income from fees and charges other than entrance fees, showing individual rates presently anticipated to be charged and including a description of the assumptions used for calculating the estimated occupancy rate of the facility and the effect on the income of the facility of government subsidies for health care services; and (vi) such other material information concerning the facility or the provider as the provider wishes to include.

(7) Forecasted financial statements for the provider of the next 5 years, including a balance sheet, a statement of operations, a statement of cash flows, and a statement detailing all significant assumptions, compiled by an independent certified public accountant.

The cover page of the disclosure statement shall state, in a prominent location and in boldface type, the date of the disclosure statement and that the delivery of the disclosure statement to a contracting party before the execution of a continuing care contract is required by this Section but that the disclosure statement has not been reviewed or approved by any government agency or representative to ensure accuracy or completeness of the information set out. A copy of the standard form of a continuing care contract used by the provider shall be attached to each disclosure statement. The Department may require a provider to alter or amend its disclosure statement in order to provide full and fair disclosure to prospective residents. The Department may also require the revision of a disclosure statement that it finds to be unnecessarily complex, confusing, or illegible.

(b) A continuing care contract for a facility used by a provider shall provide all of the following:

(1) The party contracting with the provider may rescind the continuing care contract at any time before occupying a living unit in the facility, in which event the party shall, within a reasonable period, receive a refund of all money or property transferred to the provider, less: (i) those costs specifically incurred by the provider or facility at the request of the party and described in the continuing care contract or an addendum thereto signed by the party; and (ii) a reasonable service charge, if set out in the continuing care contract, not to exceed 1% of the entrance fee. If the living unit is available for occupancy on the occupancy date agreed upon in the continuing care contract, and the party failed to occupy the living unit, the party shall be deemed to have rescinded the continuing care contract, unless the party and the provider agree in writing to extend the occupancy date.

(2) If the living unit is not available for occupancy on the date agreed upon in the continuing care contract, then the party has 14 days to rescind the continuing care contract. If the continuing care contract is rescinded, then, within a reasonable period, the party shall receive a refund of all money or property transferred to the provider plus a reasonable inconvenience fee, if set out in the continuing care contract, not to exceed 1% of the amount of the entrance fee.

(3) If a resident dies before occupying a living unit in the facility, the continuing care contract is automatically canceled and the legal representative of the resident shall receive a refund of all money or property transferred to the provider, less: (i) those costs specifically incurred by the provider or facility at the request of the party and described in the continuing care contract or an addendum to the continuing care contract signed by the party; and (ii) a reasonable service charge, if set out in the continuing care contract, not to exceed 1% of the entrance fee.

(4) The services provided or proposed to be provided under a continuing care contract, including the extent to which medical care is furnished, and specify those services that are included in the basic continuing care contract and those made available at or by the facility at extra charge.

(5) A description of all fees required of residents, including the entrance fee and periodic charges, if any. If the facility is already in operation, or if the provider or manager operates one or more similar facilities within the State, there shall be included tables showing the frequency and average dollar amount of each increase in monthly rates at each facility for the previous 5 years or such shorter period as the facility may have been operated by the provider or manager.

(6) The health and financial conditions required for an individual to be accepted as a resident and to continue as a resident once accepted, including the effect of any change in the health or financial condition of a person between the date of entering a continuing care contract and the date of initial occupancy of a living unit by that person.

(7) The provisions that have been made or will be made, if any, to provide reserve funding or security to enable the provider to fully perform its obligations under a continuing care contract, including the establishment of escrow accounts, trusts, or reserve funds.

(c) A provider providing continuing care at a facility on the effective date of this Act under a continuing care contract that requires prepayment for some or all of the covered services shall, within 180 days after the effective date of this Act, forward a copy of the following to the Department:

(1) the disclosure statement required under subsection (a) to be delivered to a person with whom a continuing care contract shall be entered; and

(2) the continuing care contract to be entered into by the provider under subsection (b) with a person who will occupy a living unit in a facility.

The Department shall make the information available to the public.

(d) Residents may:

(1) establish a residents' association and elect the officers of the residents' association;

(2) receive, upon request, a current copy of a facility's disclosure statement as described in subsection (a), and providers shall, upon request, make a reasonable effort to explain the terms and information contained within the disclosure document; however, nothing in this paragraph (2) shall be construed to modify the contractual rights of residents or providers; providers may make reasonable provisions for the form and manner in which the requests shall be submitted;

(3) submit comments to providers on matters that may affect the health and welfare of residents and affect the future of the facility, including, but not limited to, the facility's size and ownership and the provider's financial health; providers may make reasonable provisions for the form and manner in which the comments shall be submitted and shall seek comment from residents when designing or adopting policies that significantly affect the future of the facility;

(4) receive, upon request, information regarding any major construction, modification, expansion, or renovation of the facility, including information on cost estimates, funding, financing, projected income, schedule, and impacts on the existing facility; providers may make reasonable provisions for the form and manner in which the requests shall be submitted; and

(5) receive, upon request, information regarding the purpose and intended funding of all financial reserves kept by a provider; providers may make reasonable provisions for the form and manner in which the requests may be submitted.

(e) A provider shall:

(1) offer a reasonable explanation of any adjustment in monthly fees and other major fees paid by residents; and

(2) inform residents of matters that may affect the health and welfare of residents and affecting the future of the facility, including, but not limited to, the facility's size and ownership and the provider's financial health; on these matters, the providers shall facilitate communications between residents and management, which may include residents' representation on the provider's managing body, but need not depend solely on board representation.

(f) Notwithstanding the remedy set forth in subsection (b), a violation of this Section by a provider for a facility shall constitute an unlawful practice under the Consumer Fraud and Deceptive Business Practices Act.

(g) A facility must comply with this Section on and after 180 days after the effective date of this Act.

Section 20. Audits of providers. The Director or his or her authorized designee may conduct an audit or other examination of the financial affairs of any provider as often as the Director deems it necessary for the protection of the interests of the residents and the people of this State and, for this purpose, shall have access to the books, records, financial data, and other documents maintained by the facility.

Section 25. Annual report. A printed report compiled by the provider of a facility shall be provided to all residents of the facility on an annual basis and submitted to the Department on an annual basis. The report shall be provided to a resident electronically, upon request. The report shall be updated with the information for the preceding year as well as future projections, where specified. The report shall be in 12-point bold type and provide, at minimum, the following:

(1) a statement detailing the facility's financial condition;

(2) audited balance sheets;

(3) a statement of income and expenses;

(4) a statement of cash flow;

(5) a list of reserve assets;

(6) a summary of the most recent State inspections;

(7) the policy if financial difficulties arise;

(8) the rules and regulations of the facility;

(9) the life changes policy; and

(10) anticipated fee increases for the upcoming year.

Section 30. Online consumer database. The Department shall provide the public with online access to the annual reports required under Section 25, facility inspection reports, and any other documentation that the Department determines may be useful for the public regarding these facilities.

Section 35. Electronic submissions required. All documentation submitted to the Department under this Act shall be submitted electronically in a format stipulated by the Department.

Section 90. The Consumer Fraud and Deceptive Business Practices Act is amended by adding Section 2VVV as follows:

(815 ILCS 505/2VVV new)

Sec. 2VVV. Violations of the Continuing Care Retirement Community Transparency Act. A provider for a facility under the Continuing Care Retirement Community Transparency Act who violates Section 15 of the Continuing Care Retirement Community Transparency Act commits an unlawful practice within the meaning of this Act.".