Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 3004 (2016S3)

Sponsor

Sen. Henderson, D.

Final action

Governor Signed 7/17/2016

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• defines terms;
• provides that a court may direct a trustee to purchase land on which a continuing care facility is located from a ground lessor under certain circumstances;
• provides that the Department of Insurance may require a provider to pay rent under a ground lease;
• provides that the Department of Insurance may subordinate a lien on a provider's assets under certain circumstances;
• modifies a provision regarding when a provider is required to return a continuing care entrance fee;
• modifies a provision related to the liability of a provider for a misstatement or omission of a material fact;
• requires a person that holds a possessory interest in a facility to be bound by the continuing care contracts related to the facility under certain circumstances; and
• provides that a person may not sell land on which a facility subject to a ground lease is located free and clear of the provider's interest in the lease.

Every vote on this bill

Bill text

CONTINUING CARE RETIREMENT COMMUNITY
AMENDMENTS
THIRD SPECIAL SESSION
STATE OF UTAH
Chief Sponsor: Deidre M. Henderson
House Sponsor: 
Earl D. Tanner
LONG TITLE
General Description:
This bill modifies provisions related to continuing care retirement communities.
Highlighted Provisions:
This bill:
▸ defines terms;
▸ provides that a court may direct a trustee to purchase land on which a continuing
care facility is located from a ground lessor under certain circumstances;
▸ provides that the Department of Insurance may require a provider to pay rent under
a ground lease;
▸ provides that the Department of Insurance may subordinate a lien on a provider's
assets under certain circumstances;
▸ modifies a provision regarding when a provider is required to return a continuing
care entrance fee;
▸ modifies a provision related to the liability of a provider for a misstatement or
omission of a material fact;
▸ requires a person that holds a possessory interest in a facility to be bound by the
continuing care contracts related to the facility under certain circumstances; and
▸ provides that a person may not sell land on which a facility subject to a ground lease
is located free and clear of the provider's interest in the lease.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a special effective date.
Utah Code Sections Affected:
AMENDS:
31A-44-102
, as enacted by Laws of Utah 2016, Chapter 270
31A-44-104
, as enacted by Laws of Utah 2016, Chapter 270
31A-44-401
, as enacted by Laws of Utah 2016, Chapter 270
31A-44-404
, as enacted by Laws of Utah 2016, Chapter 270
31A-44-502
, as enacted by Laws of Utah 2016, Chapter 270
31A-44-503
, as enacted by Laws of Utah 2016, Chapter 270
31A-44-601
, as enacted by Laws of Utah 2016, Chapter 270
31A-44-602
, as enacted by Laws of Utah 2016, Chapter 270
31A-44-605
, as enacted by Laws of Utah 2016, Chapter 270
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
31A-44-102
 is amended to read:
31A-44-102.
Definitions.
As used in this chapter:
(1) "Continuing care" means [
the
] furnishing 
or providing access
 to an individual,
other than by an individual related to the individual by blood, marriage, or adoption, of lodging
together with nursing services, medical services, or other related services pursuant to a contract
requiring an entrance fee.
(2) "Continuing care contract" means a contract under which a provider provides
continuing care to a resident.
(3) (a) "Entrance fee" means an initial or deferred transfer to a provider of a sum of
money or property made or promised to be made as full or partial consideration for acceptance
of a specified individual as a resident in a facility.
(b) "Entrance fee" includes a monthly fee, assessed at a rate that is greater than the
value of the provider's monthly services, that a resident agrees to pay in exchange for
acceptance into a facility or a promise of future monthly fees assessed at a rate that is less than
the value of the services rendered.
(c) "Entrance fee" does not include an amount less than the sum of the regular period
charges for three months of residency in a facility.
(d) "Entrance fee" does not include a deposit of less than $1,000 made under a
reservation agreement.
(4) "Facility" means a place in which a person provides continuing care[
.
] 
pursuant to a
continuing care contract.
(5) "Ground lease" means a lease to a provider of the land and infrastructure
improvements to the land on which a facility is located.
(6) "Ground lessor" means, for a facility subject to a ground lease, the owner and lessor
of the land and infrastructure improvements to the land on which the facility is located.
[
(5)
] 
(7)
 "Living unit" means a room, apartment, cottage, or other area within a facility
set aside for the exclusive use or control of one or more identified individuals.
[
(6)
] 
(8) (a)
 "Provider" means:
[
(a)
] 
(i)
 the owner of a facility;
[
(b)
] 
(ii)
 a person, other than a resident, that claims a possessory interest in a facility; or
[
(c)
] 
(iii)
 a person who enters into a continuing care contract with a resident or
potential resident.
(b) "Provider" does not include a person who is solely a ground lessor.
[
(7)
] 
(9)
 "Provider disclosure statement" means, for a given provider, the disclosure
statement described in Section 
31A-44-301
.
[
(8)
] 
(10)
 "Reservation agreement" means an agreement that requires the payment of a
deposit to reserve a living unit for a prospective resident.
[
(9)
] 
(11)
 "Resident" means an individual entitled to receive continuing care in a
facility pursuant to a continuing care contract. 
Section 2. Section 
31A-44-104
 is amended to read:
31A-44-104.
Scope of regulation -- When compliance is required.
(1) The regulation of providers under this chapter does not limit or replace regulation
by any other governmental entity of continuing care facilities or providers.
(2) The department may not regulate, or in any manner inquire into, the quality of care
provided in a facility.
(3) A record that the department receives from a provider that is not required to be part
of a disclosure statement under this chapter is a protected record under Title 63G, Chapter 2,
Government Records Access and Management Act.
(4) The department shall determine the amount of any fee required under this chapter,
in accordance with Section 
63J-1-504
, and in an amount that covers the department's cost to
administer this chapter.
(5) A provider that begins 
marketing
 a continuing care facility project on or before
May 10, 2016, is not required to comply with this chapter until May 10, 2017. 
Section 3. Section 
31A-44-401
 is amended to read:
31A-44-401.
Continuing care contract requirements -- No waiver.
(1) A continuing care contract shall:
(a) provide that the provider shall refund the portion of a 
departing
 resident's entrance
fee that the provider has agreed to refund, if any, no later than the earlier of:
(i) 
if the departing resident ceased occupancy of the departing resident's unit before any
other departing resident who has not received an entrance fee refund,
days after the day on
which the [
resident's living unit is occupied by a new resident
] 
provider accumulates an amount
of money, from sales of living units previously occupied by departing residents, that is equal to
the departing resident's entrance fee refund
; or
(ii) one year after the day on which the 
departing
 resident ceases to occupy the
departing
 resident's living unit, unless the provider proves that the provider has made and is
making a good faith effort to find [
another resident for the living unit at the lowest entrance fee
that is acceptable to the resident ceasing to occupy the living unit;
] 
an occupant for a living unit
that was previously occupied by a departing resident;
(b) provide that the resident may terminate the continuing care contract upon giving
notice of termination:
(i) with or without cause; and
(ii) clearly stating what portion of the entrance fee the provider will refund and the date
by which the provider will make the refund; and
(c) provide that a continuing care contract is terminated by the resident's death and
clearly state:
(i) what portion of the entrance fee the provider will refund in the event of the
resident's death;
(ii) the date before which the provider will make the refund; and
(iii) to whom the provider will make the refund.
(2) A continuing care contract may permit involuntary dismissal of a resident from a
continuing care facility upon a reasonable determination by the provider that the resident's
health and well-being require termination of the continuing care contract.
(3) If a resident is dismissed under Subsection (2) and is in a condition of financial
hardship, as defined by the department by rule made in accordance with Title 63G, Chapter 3,
Utah Administrative Rulemaking Act, the provider shall refund the resident's entrance fee:
(a) in an amount provided in the continuing care contract; and
(b) before the earlier of:
(i) a time provided in the continuing care contract; and
(ii) 60 days after the day on which the provider dismisses the resident from the facility.
(4) A resident may not waive a provision of this chapter by agreement. 
Section 4. Section 
31A-44-404
 is amended to read:
31A-44-404.
Nondisturbance of residents .
(1) A person may not directly or indirectly disturb the rights of a resident or third party
beneficiary under a continuing care contract and this chapter if the resident has substantially
performed the resident's obligations under the continuing care contract.
(2) If the person to whom a resident owes performance under the continuing care
contract is contested, and a court has not issued a temporary or permanent order resolving the
contest:
(a) the department may appoint a temporary receiver to receive the performance of the
resident; and
(b) a court may appoint a receiver upon petition by the department.
[
(3) A person that succeeds a provider in the provider's interest in a facility is bound by
every continuing care contract concerning the facility, including a continuing care contract that
provides for the return of entrance fees.
]
(3) (a) Except as provided in Subsection (3)(b), a person other than a resident that
holds a present right to possess a facility, including a ground lessor but only after the ground
lessor acquires a provider's possessory interest by termination of a ground lease or otherwise, is
bound by every continuing care contract related to the facility, including a continuing care
contract that provides for the return of part or all of a resident's entrance fee.
(b) If a ground lessor acquires a provider's possessory interest by termination of a
ground lease or otherwise, the ground lessor's obligation under the continuing care contracts is
limited to the monetary obligations of the provider to which the ground lessor succeeds.
(4) (a) The commissioner holds a covenant that:
(i) runs with the land on which a facility is located; and
(ii) except as provided in Subsection (4)(b), binds a person with a present right to
possess the land on which the facility is located, including a ground lessor but only after the
ground lessor acquires a provider's possessory interest by termination of a ground lease or
otherwise, to every continuing care contract related to the facility, including a continuing care
contract that provides for the return of all or part of a resident's entrance fee.
(b) If a ground lessor acquires a provider's possessory interest by termination of a
ground lease or otherwise, the ground lessor's obligation under the continuing care contracts
under the covenant described in Subsection (4)(a) is limited to the monetary obligations of the
provider to which the ground lessor succeeds.
(c) A person may not sell the land on which the facility is located free and clear of the
interest described in Subsection (4)(a).
(5) A person may not sell or transfer the land on which a facility subject to a ground
lease is located free and clear of the provider's possessory interest in the ground lease.
Section 5. Section 
31A-44-502
 is amended to read:
31A-44-502.
Order to rehabilitate .
(1)
 A court order to rehabilitate a facility under Section 
31A-44-501
 may direct a
trustee to:
[
(1)
] 
(a)
 take possession of the provider's property in order to conduct the provider's
business, including employing any manager or agent that the trustee considers necessary; and
[
(2)
] 
(b)
 take action as directed by the court to eliminate the causes and conditions that
made rehabilitation necessary, which action may include:
[
(a)
] 
(i)
 selling the facility through bankruptcy or receivership proceedings; and
[
(b)
] 
(ii)
 requiring a purchaser of the facility to honor any continuing care contract for
the facility.
(2) (a) For a facility subject to a ground lease, a court may, in addition to the actions
described in Subsection (1), direct a trustee to purchase from the ground lessor, or assign to
another person that agrees to operate the facility, for market value, the ground lessor's interest
in the land and the infrastructure improvements to the land on which the facility is located.
(b) A court may direct a trustee under Subsection (2)(a) to purchase from a ground
lessor the land and infrastructure improvements to the land on which a facility is located,
regardless of the terms of the ground lease agreement.
(c) If a court directs a trustee to purchase or assign the land and infrastructure
improvements to the land under Subsection (2)(a), the ground lessor shall sell or assign the
land and infrastructure improvements to the land in compliance with the court order.
(d) The commissioner shall determine market value in accordance with rules made by
the commissioner in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
Act.
(e) In determining market value under Subsection (2)(d), the commissioner shall:
(i) value the land and infrastructure improvements to the land on which the facility is
located as though the land and infrastructure improvements to the land were not subject to the
ground lease; and
(ii) disregard the monetized value of an existing ground lease.
(3) Solely for the purpose of enforcing this section, a court has personal jurisdiction in
a proceeding under this section over:
(a) the owner of a facility; and
(b) the owner of the land and infrastructure improvements to the land on which a
facility is located.
Section 6. Section 
31A-44-503
 is amended to read:
31A-44-503.
Order to liquidate .
(1) If the trustee determines that further efforts to rehabilitate a provider's facility are
impractical or useless, the trustee may petition a court for liquidation of the facility.
(2) A court that issues an order to liquidate a facility under Subsection (1) shall appoint
a trustee to collect and liquidate all of the provider's assets located in this state.
(3) An individual may not enter into a continuing care contract at a facility after a court
enters an order to liquidate the facility.
(4) (a) For a facility subject to a ground lease, a court may, in an order to liquidate
under this section, direct a trustee to purchase from the ground lessor, or assign to another
person that agrees to operate the facility, for market value, the ground lessor's interest in the
land and the infrastructure improvements to the land on which the facility is located.
(b) A court may direct a trustee under Subsection (4)(a) to purchase from a ground
lessor the land and infrastructure improvements to the land on which a facility is located,
regardless of the terms of the ground lease agreement.
(c) If a court directs a trustee to purchase or assign land and infrastructure
improvements to the land under Subsection (4)(a), the ground lessor shall sell or assign the
land and infrastructure improvements to the land in compliance with the court order.
(d) The commissioner shall determine market value in accordance with rules made by
the commissioner in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
Act.
(e) In determining market value under Subsection (4)(d), the commissioner shall:
(i) value the land and infrastructure improvements to the land on which the facility is
located as though the land and infrastructure improvements to the land were not subject to the
ground lease; and
(ii) disregard the monetized value of an existing ground lease.
(5) Solely for the purpose of enforcing this section, a court has personal jurisdiction in
a proceeding under this section over:
(a) the owner of a facility; and
(b) the owner of the land and infrastructure improvements to the land on which a
facility is located.
Section 7. Section 
31A-44-601
 is amended to read:
31A-44-601.
Lien held by the commissioner in favor of a resident or a group of
residents.
(1) To secure the obligations of the provider to a resident or a group of residents under
a continuing care contract, the commissioner holds a lien in favor of the resident or group of
residents that attaches on the day the notice described in Subsection (3) is recorded as provided
in Subsection (4).
(2) A lien described in Subsection (1) covers the real and personal property of the
provider 
that is used in connection with the facility
.
(3) The provider shall prepare, for [
each
] 
the
 county where the [
provider has an interest
in real or personal property
] 
facility is located
, a written notice, sworn to by [
an officer of the
provider
] 
each person with an interest in the facility
, that contains:
(a) the name of [
the
] 
any
 provider 
and ground lessor
;
(b) a legal description of the provider's real or personal property 
that is used in
connection with the facility
; and
(c) a statement that the real or personal property 
used in connection with the facility
 is
subject to this chapter and to the lien imposed by this section[
.
]
, except that the interest of a
ground lessor in the land and infrastructure improvements to the land on which the facility is
located is not subject to the lien imposed by this section.
(4) The provider shall record the notice described in Subsection (3) in the real property
records of each county where the provider has real property on or before the date the provider
first executes a continuing care contract for the facility.
(5) Except as provided in Subsection (6), the lien described in Subsection (1) is
subordinate to [
a
] 
any
 lien on the property of the provider.
(6) The amount of [
a
] 
any
 lien on the provider's property that is superior to a lien
described in Subsection (1) is limited to the portion of the funds secured by the lien that the
provider uses to:
(a) construct, acquire, replace, or improve a facility;
(b) refinance the portion of a loan used to construct, acquire, replace, or improve a
facility;
(c) pay, for a loan related to the facility, a reasonable loan fee, a loan expense, or loan
interest; [
or
]
(d) refund an entrance fee to a facility resident;
[
(d)
] 
(e)
 pay reasonable operating costs of the facility[
.
]
; or
(f) pay an amount for a purpose determined by the commissioner by rule made in
accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
(7) If a lien on the property of the provider is superior to a lien described in Subsection
(1), a provider may only use an entrance fee to:
(a) reduce a debt secured by a superior lien;
(b) construct, acquire, replace, or improve a facility;
(c) fund reserves for the provider's actuarial debt under continuing care contracts for a
facility;
(d) refund an entrance fee of a resident of a facility;
(e) pay a facility resident's debt to the provider for a recurring fee due under the
resident's continuing care contract; or
(f) pay an amount for a purpose approved by the commissioner.
(8) The commissioner may judicially foreclose a lien described in Subsection (1) if
property subject to the lien is liquidated or the provider is insolvent or bankrupt.
(9) The commissioner shall use the proceeds from a lien foreclosed under Subsection
(8) to satisfy the provider's obligations under any continuing care contract in effect on the day
the commissioner forecloses the lien.
Section 8. Section 
31A-44-602
 is amended to read:
31A-44-602.
Enforcement by department -- Rulemaking. 
(1) Subject to the requirements of Title 63G, Chapter 4, Administrative Procedures
Act, the department may:
(a) receive and act on a complaint 
from a resident
 about a provider or a facility;
(b) take action designed to obtain voluntary compliance by the provider with this
chapter 
for the benefit of a resident
;
(c) commence administrative or judicial proceedings on the commission's own in order
to enforce compliance by a provider with this chapter 
for the benefit of a resident
; [
or
]
(d) after a complaint by a resident about a provider for a facility subject to a ground
lease, require the provider to pay rent in accordance with the ground lease; or
[
(d)
] 
(e)
 take action against a provider who fails to:
(i) respond to the department, in writing, before 30 business days after the day on
which the provider receives notice from the department of a complaint filed with the
department; or
(ii) submit information requested by the department.
(2) The department may:
(a) counsel an individual on the individual's rights or duties under this chapter;
(b) make rules in accordance with Title 63G, Chapter 3, Utah Administrative
Rulemaking Act, to:
(i) restrict or prohibit practices by the provider that are misleading, unfair, or abusive;
(ii) promote or assure fair and full disclosure of the terms and conditions of continuing
care contracts, agreements, and communications between a resident and a provider;
(iii) promote or assure the ability of the public to compare continuing care contracts,
providers, and facilities; and
(iv) clearly disclose any financial risks related to a provider's facility to the facility's
residents;
(c) employ hearing examiners, clerks, and other employees and agents as necessary to
perform the department's duties under this chapter; [
and
]
(d) appoint a receiver for a provider[
.
]
; and
(e) upon request by a provider, subordinate a lien imposed under Section 
31A-44-601
for the purpose of the provider obtaining secondary financing or refinancing of a facility if:
(i) the facility is financially sound; and
(ii) subordinating the lien does not adversely affect the residents of the facility.
Section 9. Section 
31A-44-605
 is amended to read:
31A-44-605.
Civil liability. 
(1) A provider who enters into a continuing care contract with an individual without
complying with the disclosure statement requirement described in this chapter, or who makes a
continuing care contract with an individual who relies on a disclosure statement that 
misstates
or
 omits a material fact, is liable to the individual for:
(a) actual damages;
(b) repayment of all fees the individual paid to the provider, minus the reasonable
value of care and lodging provided to the individual before the violation, misstatement, or
omission was discovered or reasonably should have been discovered;
(c) interest at the legal rate for judgments;
(d) court costs; and
(e) reasonable attorney fees.
(2) A provider is liable under this section [
regardless of whether the provider had
actual knowledge of the
] 
unless the provider proves by a preponderance of evidence that the
provider and the provider's agents and employees did not know and should not have known of
the
 misstatement or omission.
(3) An individual may not [
file or
] maintain an action under this section if:
(a) the individual[
, before filing the action,
] receives a written offer from the provider
for refund of all amounts paid to the provider or the provider's facility plus reasonable interest
from the date of payment, minus the reasonable value of care and lodging provided before the
receipt of the offer;
(b) the individual receives the offer described in Subsection (3)(a) before a day that is
days after the earlier of:
(i) the day on which the individual submits a written request to the provider for
repayment under this section; or
(ii) the day on which the individual files an action under this section;
[
(b)
] 
(c)
 the offer includes a description of the provisions of this section; and
[
(c)
] 
(d)
 the recipient of the offer fails to accept the offer within 30 days after the date
the offer is received.
(4) An individual shall bring an action under this section before the day three years
after:
(a) the day on which the individual enters into the continuing care contract; or
(b) the individual discovers, or reasonably should have discovered, the provider's
violation, misstatement, or omission.
(5) A person does not have a cause of action under this chapter except as expressly
provided by this chapter.
(6) This chapter does not limit the liability that exists under any other statute or
common law.
(7) The provisions of this chapter are not exclusive and the remedies provided by this
chapter are in addition to any other remedies provided by any other law. 
Section 10. 
Effective date.
If approved by two-thirds of all the members elected to each house, this bill takes effect
upon approval by the governor, or the day following the constitutional time limit of Utah
Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
the date of veto override.