Chapter 158

2005 -- S 1136 SUBSTITUTE A

Enacted 07/05/05

A N A C T

RELATING TO HEALTH AND SAFETY -- THE LONG-TERM CARE REFORM ACT OF 2005 -- NURSING FACILITY LICENSURE

Introduced By: Senators Gibbs, Blais, Roberts, Tassoni, and Perry

Date Introduced: May 26, 2005

It is enacted by the General Assembly as follows:

SECTION 1. Chapter 23-17 of the General Laws entitled “Licensing of Health Care Facilities” is hereby amended by adding thereto the following section:

23-17-.05- Legislative findings and purpose. -- The general assembly finds and

declares that the health and welfare of the citizens of the state requires the close supervision of

nursing facilities. The general assembly further finds and declares that the primary purpose of this

supervision is to protect residents living in nursing facilities.

The purpose of this act is to establish standards for the initial and continued licensure of

nursing facilities and for additional ongoing oversight and enforcement with respect to nursing

facilities in order to:

(1) Determine the general financial solvency of nursing facilities, and to assure that the

quality of resident care is not compromised by a lack of solvency;

(2) Avoid the closure of nursing facilities due to bankruptcy, receivership, or deficiencies

in the quality of resident care, or any combination thereof;

(3) Affirm the financial and fiduciary responsibility of the owners or boards of directors

or other governing bodies to prevent declines in financial condition or the quality of resident care

that may make closure and other actual or potential harm to nursing home residents imminent;

(4) Assure that nursing home residents and their families are notified whenever the future

operation of the facility in which they reside is in jeopardy; and

(5) Provide powers and abilities to the director of the department of health to effect the

purposes of this act.

SECTION 2. Section 23-17-8.1 of the General Laws in Chapter 23-17 entitled "Licensing

of Health Care Facilities" is hereby amended to read as follows:

23-17-8.1. Curtailment of activities. -- Whenever the director determines that a health

care facility licensed under this chapter is not being operated in conformance with all of the

requirements established under this chapter, the director may, in lieu of suspension or revocation

of the license of the facility, order the licensee to be placed on probationary status and set

conditions with which the licensee must comply within a set period of time, order the licensee to

admit no additional persons to the facility, to provide health services to no additional persons

through the facility, to transfer all or some of the persons occupying the facility to other suitable

accommodations, or to take any other corrective action necessary to secure compliance with the

requirements established under this chapter. Notice of the order and any subsequent hearing that

may be scheduled shall comply with the requirements of procedural due process stipulated in

section 23-17-8. The director may act pursuant to this section only in those instances wherein the

director determines that the continued operation of the facility will not result in undue hardship to

its occupants.

SECTION 3. Section 23-17-12.3 of the General Laws in Chapter 23-17 entitled

"Licensing of Health Care Facilities" is hereby amended to read as follows:

23-17-12.3. Penalty for violation of sections 23-17-12 -- 23-17-12.2. -- Every person

including a controlling person, or corporation who shall willfully and continually violate the

provisions of sections 23-17-12 -- 23-17-12.2 will be subject to a fine up to three hundred dollars

($300) for each violation of these sections.

For purposes of this section, "controlling person" is any person or entity in control of a

nursing facility directly or indirectly, including: (1) in the case of a corporation or of a limited

liability company, a person having a beneficial ownership interest of five percent (5%) or more in

the nursing facility; (2) in the case of a general partnership or limited partnership, any general

partner; (3) a legal entity that operates or contracts with another person for the operation of a

nursing facility or an owner thereof; (4) in the case of a limited liability company, any member;

(5) each president, vice president, secretary, treasurer of a business corporation that is not exempt

from taxation under 501(a) of the US Internal Revenue Code as an organization described in

section 501(c)(3) of such code; and (6) such other ownership interest or relationship as may be

determined by the director.

SECTION 4. Chapter 23-17 of the General Laws entitled "Licensing of Health Care

Facilities" are hereby amended by adding thereto the following sections:

23-17-5.1. Additional information required of nursing facility applicants for initial

licensure or change of ownership. -- (a) The department shall adopt regulations regarding

information to be provided by applicants for the initial licensure of or change of ownership of a

nursing facility to include information relating to the background and qualifications of the

applicant or proposed license holder. For purposes of this section, applicants must meet a

financial threshold that shall include, as a minimum, that the applicant or proposed license holder

shall have sufficient resources to operate the nursing facility at licensed capacity for thirty (30)

days, evidenced by an unencumbered line of credit, a joint escrow account established with the

department, or a performance bond secured in favor of the state or a similar form of security

satisfactory to the department. The department may also require background information to be

submitted relating to any partner, officer, director, manager or member (if member-managed) of

the applicant or proposed license holder, or information relating to each person having a

beneficial ownership interest of five percent (5%) or more in the applicant or proposed license

holder.

(b) In reviewing information required by subsection (a), the department may require the

applicant or proposed license holder to file a sworn affidavit substantiating the validity of any

submitted information as required by the department to substantiate a satisfactory compliance

history relating to each state or other jurisdiction in which the applicant, proposed license holder

or any other person described by subsection (a) operated a nursing facility at any time during the

five-year period preceding the date on which the application is made. The department shall

determine what constitutes a satisfactory compliance history. The department may also require

the applicant or proposed license holder to file information relating to the current financial

condition of the applicant, proposed license holder or any other person described by subsection

(a) and the history of the financial condition of the applicant, proposed license holder or any other

person described by subsection (a) with respect to a facility operated in another state or

jurisdiction at any time during the five-year period preceding the date on which the application is

made.

above, the department shall gather information from state departments and agencies relating to

the background and qualifications of the applicant, proposed license holder, or any person having

a five percent (5%) or more beneficial ownership interest.

(d) Any applicant seeking a nursing facility license who intends to contract with a

management company to assist with that facility's operations shall file a copy of the proposed

management contract with the department or provide information to the department regarding the

management services to be provided by the management company that indicate the management

fees to be paid and areas of control for which the management company shall be responsible. All

applications for initial licensure and change of ownership shall include copies of any proposed

management contracts and information about management fee arrangements as well as

identification of every person having an ownership of five percent (5%) or more in the

management company, if the management company is a corporation or limited liability company,

and identification of every general or limited partner if the management company is a general

partnership or a limited partnership.

23-17-5.2. Additional information required for license renewal of all nursing

facilities. – (a) At least once every two (2) years, the department shall gather information from

state departments and agencies relating to the experience and qualifications of the nursing facility

applicant for relicensure.

(b) Effective January 1, 2006, any nursing facility applying for renewal of its license that

contracts with a management company to assist with the facility's operation shall file a copy of

the management contract with the department including the management fee and, if the

management company is a corporation or limited liability company, shall identify every person

having an ownership interest of five percent (5%) or more in such corporation or limited liability

company and, if the management company is a general partnership or limited partnership, shall

identify all general or limited partners of such general partnership or limited partnership.

submit a copy of the revised management contract to the department within thirty (30) days of the

effective date of the new contract provisions.

SECTION 5. This act shall take effect upon passage.

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LC03355/SUB A

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