Md. Code Regs. 32.02.02.15

Current through Register Vol. 51, No. 22, November 1, 2024

Section 32.02.02.15 - Disclosure Statement

A. General. A provider holding either a preliminary, initial, or renewal certificate of registration shall furnish, without cost, a disclosure statement to all prospective subscribers and, upon request, annually to all subscribers. A disclosure statement shall be provided to a prospective subscriber before payment of any part of the entrance fee or, if earlier, the execution of a continuing care at home agreement. The provider shall submit its initial disclosure statement to the Department for review at least 45 days before distributing the statement to any prospective or existing subscribers.

B. Disclosure Statement Revisions. A provider shall revise its disclosure statement annually. A provider shall file a revised disclosure statement with the Department within 120 days after the end of the provider's fiscal year and notify current subscribers that the revised disclosure statement is available for review. The Department shall review the disclosure statement solely to ensure compliance with this regulation.

C. Disclosure Statement Contents. The disclosure statement shall include:

(1) The name and address of the provider;

(2) The name and address of any parent or subsidiary person;

(3) The organizational structure and management of the provider, including:

(a) If the provider is a corporation or limited liability company, the:

(i) Name of the corporation or limited liability company,

(ii) State in which the corporation is incorporated or the limited liability company is formed, and

(iii) Name of the chief executive officer;

(b) If the provider is a partnership, the:

(i) Names of the general partners,

(ii) State governing the formation of the partnership, and

(iii) Name of the primary individual responsible for managing the partnership;

(c) If the provider is an unincorporated association, the:

(i) Names of the members,

(ii) State governing the association's activities, and

(iii) Name of the primary individual responsible for managing the association;

(d) If the provider is a partnership having a corporation or limited liability company as one or more of its general partners, the:

(i) Name of each corporation or limited liability company,

(ii) State in which the corporation is incorporated or the limited liability company is formed, and

(iii) Name of the chief executive officer;

(e) If the provider is a trust, the:

(i) Name of each trustee,

(ii) Names of the owners of beneficial interests in the trust,

(iii) State whose law governs the trust, and

(iv) Name of the primary individual responsible for overseeing the trust's activities; and

(f) A statement regarding whether the provider is qualified, or intends to qualify, as a tax-exempt organization under the Internal Revenue Code;

(4) A statement regarding any affiliation of the provider with a religious, charitable, or other nonprofit organization, and the extent to which that organization is responsible for the financial and contractual obligations of the provider;

(5) A description of all fees collected by the provider that are not optional, including:

(a) Entrance fees;

(b) Additional periodic fees; and

(c) Any additional fees for health care services that are not covered by the entrance fee and periodic fee;

(6) The date and the amount of any changes in the fees that are not optional imposed in any of the past 5 years during which the provider was providing continuing care at home;

(7) A statement describing provisions that have been, or will be, made to comply with the reserve requirements in Regulation .14 of this chapter;

(8) A general statement regarding the provider's investment policy related to the required reserves, including how often the reserve funds' investments are reviewed and by whom;

(9) A copy of the most recent certified financial statement available under generally accepted accounting principles;

(10) A description of any long-term financing for the provider;

(11) If operations have not begun, a summary of the most recent feasibility study approved by the Department, which shall include:

(a) A description of the anticipated sources and uses of funds to finance the project, including related costs such as:

(i) Financing expenses,

(ii) Marketing costs, and

(iii) Legal and administrative costs;

(b) The projected balance sheets, income statements, and cash flow statements of the provider contained in the most recent feasibility study approved by the Department or, if there have been revisions to these financial projections since approval was received, then:

(i) Include the most current projections, and

(ii) Specify that the financial projections have been revised since the feasibility study was approved by the Department;

(c) A projected presales schedule;

(d) A statement indicating when the provider expects to have executed agreements for 30 percent of the number of subscribers needed for the provider to reach its break-even point;

(e) A statement indicating when the provider plans to begin operations;

(f) A statement indicating when the provider expects to enroll the number of subscribers needed for the provider to reach its break-even point; and

(g) Any further information the Department requires;

(12) If operations have begun and the provider has not enrolled the number of subscribers needed for the provider to reach its break-even point, a summary of the most recent feasibility study approved by the Department, which shall include:

(a) A description of the sources and uses of funds to finance the project, including related costs such as:

(i) Financing expenses,

(ii) Marketing costs, and

(iii) Legal and administrative costs;

(b) The projected balance sheets, income statements, and cash flow statements of the provider shown in the most recent feasibility study approved by the Department or, if there have been revisions to these financial projections since approval was received, then:

(i) Include the most current projections, and

(ii) Specify that the financial projections have been revised since the feasibility study was approved by the Department;

(c) A projected presales schedule;

(d) A semiannual schedule which shows actual presales since operations began;

(e) A statement indicating when the provider expects to enroll the number of subscribers needed for the provider to reach its break-even point; and

(f) Any further information the Department requires;

(13) A cash flow forecast statement for the current and the next 2 fiscal years;

(14) The names and occupations of:

(a) The provider's officers, directors, trustees, and managing or general partners; and

(b) Any person with a 10 percent or greater equity or beneficial interest in the provider;

(15) A description of the financial interest in or occupation with the provider of each person identified under §C(14) of this regulation;

(16) If it is anticipated that a business entity will provide to the provider goods, premises, or services with a value of $10,000 or more within any fiscal year, and if a person identified in §C(14) of this regulation has a financial interest of 10 percent or more in the business entity, then include:

(a) The name and address of the business entities;

(b) A description of the goods, premises, or services; and

(c) The anticipated yearly costs the provider will incur for the goods, premises, or services;

(17) If the continuing care at home operations are, or will be, managed on a day-to-day basis by a person other than an individual directly employed by the provider, then include a description of the proposed manager or management company, including the business experience the manager or company has operating or managing similar operations;

(18) A description of any matter in which an individual identified under §C(14) of this regulation has:

(a) Been convicted of, or pleaded nolo contendere to, a felony charge involving fraud, embezzlement, fraudulent conversion, or misappropriation of property;

(b) Been held liable, or enjoined by a final judgment, in a civil action involving fraud, embezzlement, fraudulent conversion, or misappropriation as a fiduciary;

(c) Been subject to an effective injunctive or restrictive order of a court of record arising out of or relating to business activity or health care, including actions affecting a license to operate any facility or service for aging, impaired, or dependent persons; or

(d) Had any state or federal license or permit suspended or revoked within the past 10 years, as a result of an action brought by a governmental agency arising out of or relating to business activity or health care, including actions affecting a license to operate any facility or service for aging, impaired, or dependent persons;

(19) A description of the form of governance of the provider, including the composition of the governing body;

(20) A statement that the provider shall hold the periodic meetings with subscribers as required under Regulation .13 of this chapter;

(21) If applicable, a description of the conditions under which the provider may:

(a) Be issued an initial certificate of registration; and

(b) Use escrowed deposits;

(22) If applicable, a statement of the amount of a subscriber's deposit that may be used upon issuance of an initial certificate of registration;

(23) A summary of the basic services provided or proposed to be provided under the provider's agreements;

(24) For each basic service a provider is required to provide by Regulation .02E of this chapter, a statement that explains:

(a) Any limits on the amount of the basic service that will be provided to a subscriber in exchange for the entrance fee and periodic fee; and

(b) If there is a limit, the methodology used to measure the amount of services, such as hours of service, calendar months, or the dollar value of services rendered;

(25) A summary of any services in addition to the basic services that are provided or proposed to be provided under the provider's agreements;

(26) For each additional service described under §C(25) of this regulation, a statement that describes which of those additional services are to be covered by the entrance fee and any periodic fees and which additional services will be made available at an extra charge;

(27) The names of facilities with which the provider has a formal arrangement to provide services to subscribers;

(28) A statement describing which, if any, services are portable and may be used outside the geographic service area;

(29) A statement describing any procedures a subscriber must follow to use a benefit outside the geographic service area;

(30) If it is the provider's policy that a subscriber maintain certain insurance, a statement describing each type of insurance required and, if applicable, the amounts of coverage required;

(31) A statement that the provider will promptly amend its disclosure statement if, in the opinion of the provider or the Department, an amendment is necessary to prevent the disclosure statement from containing any material misstatement of fact required by this regulation to be stated in the disclosure statement or omission of a material fact required by this regulation to be stated in the disclosure statement;

(32) If it is the provider's policy to impose a surcharge on some, but not all, subscribers because of some condition or circumstance, a statement that describes the types of conditions or circumstances that would warrant a surcharge and that a surcharge is not considered part of the entrance fee when calculating a refund under Regulation .25 of this chapter; and

(33) Any other material information concerning the provider that the Department requires or that the provider wishes to include.

D. The disclosure statement shall contain a cover page that states in a prominent location and type face, the following:

(1) The date of the disclosure statement;

(2) That the issuance of a certificate of registration does not constitute approval, recommendation, or endorsement of the provider by the Department; and

(3) That the issuance of a certificate of registration is neither evidence of, nor does it attest to, the accuracy or completeness of the information set out in the disclosure statement.

E. Any amended disclosure statement shall be:

(1) Filed with the Department at the same time that it is delivered to a subscriber or prospective subscriber; and

(2) Subject to all the requirements of this chapter.

Md. Code Regs. 32.02.02.15