HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 1573 Continuing Care Providers
SPONSOR(S): Commerce Committee, Insurance & Banking Subcommittee, Persons-Mulicka
TIED BILLS: IDEN./SIM. BILLS: CS/SB 622
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee 12 Y, 0 N, As CS Fortenberry Lloyd
2) Commerce Committee 17 Y, 0 N, As CS Fortenberry Hamon
SUMMARY ANALYSIS
Continuing care retirement communities (CCRCs) offer a transitional approach to the aging process,
accommodating residents’ evolving levels of care needs. A CCRC can include independent living apartments
or houses, as well as an assisted living facility or a nursing home. CCRCs may also offer at-home programs
that provide residents with services until they are ready to move to the CCRC. The fees associated with a
CCRC include a reservation deposit, an initial entrance fee (often a major sum) and monthly fees to cover
costs related to health care and other aspects of community living.
Regulatory oversight of CCRCs in Florida is shared primarily between the Agency for Health Care
Administration (AHCA) and the Office of Insurance Regulation (OIR). OIR regulates CCRC providers as
specialty insurers, while AHCA regulates the provision of health care.
The bill makes changes to the law governing CCRCs, including amending law enacted in 2019 following
insolvencies at two Tampa area CCRCs. The bill:
Allows a CCRC provider to keep their escrow account in a national bank with a branch in Florida, rather
than only institutions with a Florida branch;
Permits the release of expansion-related escrow funds when 3/4ths of the total units are reserved, rather
than when only half of the total units have been paid in full, plus, the provider must submit an attestation
concerning use of the entrance fees collected;
Reduces the timeline for OIR review and approval of expansion applications from 45 days to 30 days;
Revises when a provider may withdraw funds from its debt service reserves;
Significantly expands the list of financial institutions that may supply a provider with a letter of credit in order
to satisfy the statutory minimum liquid reserve requirements, including institutions without a Florida branch;
Changes the conditions under which an individual must pay a penalty for cancelling a contract with a CCRC.
Shortens the lookback period for required OIR market conduct examinations;
Increases transparency for the benefit of authorized resident councils in CCRC operations, budgeting,
planning, pricing, and OIR examining;
Clarifies that a residents’ council has the authority to establish and maintain its own governance documents
and that residents have the right to participate in resident council matters, including elections ;
Requires facilities with common ownership to each have their own designated resident representative; and
Specifies resident representative obligations of good faith as a fiduciary to the residents.
The bill has no effect on state or local revenues or expenditures. It has an indeterminate direct economic
impact on the private sector.
The bill has an effective date of July 1, 2023.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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DATE: 4/19/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Continuing Care Retirement Communities
Continuing care retirement communities (CCRCs) offer a transitional approach to the aging process,
accommodating residents’ evolving levels of care needs. A CCRC can include independent living
apartments or houses, as well as an assisted living facility or a nursing home. CCRCs may also offer
at-home programs that provide residents with services until they are ready to move to the CCRC. 1 The
fees associated with a CCRC include an initial entrance fee and monthly fees to cover costs related to
health care and other aspects of community living.2
Regulatory oversight of CCRCs in Florida is shared primarily between the Agency for Health Care
Administration (AHCA) and the Office of Insurance Regulation (OIR). OIR regulates CCRC providers 3
as specialty insurers. AHCA regulates aspects of the CCRCs related to the provision of health care,
such as nursing facilities, assisted living facilities, home health agencies, quality of care, and medical
facilities.4
History of Regulatory Oversight
Certificate of Authority Granted by OIR
Because residents may pay, in some cases, considerable amounts in entrance fees and ongoing
monthly fees, OIR is given primary responsibility to regulate and monitor the operation of CCRCs and
to determine facilities’ financial condition and the management capabilities of their managers and
owners.5 If a provider is accredited through a process “substantially equivalent” to the requirements of
ch. 651, F.S., OIR may waive any requirements of the chapter.6
To operate a CCRC in Florida, a provider must obtain from OIR a certificate of authority (COA)
predicated upon first receiving a provisional COA.7 The application process involves submitting various
financial statements and information, expectations of the financial condition of the project, and copies of
contracts.8 Further, the applicant must provide evidence that the applicant is reputable and of
responsible character.9 A COA will be issued once a provider meets the requirements set forth in s.
651.023, F.S.10
Continuing Care Contracts
Continuing care services are governed by a contract between the facility and the resident of a CCRC.
In Florida, continuing care contracts are considered an insurance product and are reviewed and
1 S. 651.057, F.S.
2 AARP, How Continuing Care Retirement Communities Work , available at https://www.aarp.org/caregiving/basics/info-
2017/continuing-care-retirement -communities.html (last visited Mar. 24, 2023).
3 A “provider” is “the owner or operator… which… provides continuing care or continuing care at -home for a fixed or
variable fee… for the period of care.” S. 651.011(23), F.S.
4 Agency for Health Care Administration, Consumer Guides: Nursing Home Care in Florida, available at
https://quality.healthfinder.fl.gov/reports-guides/nursinghomes fl.aspx (last visited Mar. 24, 2023).
5 Ss. 651.021, 651.022, 651.023, F.S.
6 S. 651.028, F.S.
7 S. 651.022, F.S.
8 Ss. 651.021-651.023, F.S.
9 S. 651.022(2)(c), F.S.
10 S. 651.023(4)(a), F.S.
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approved by OIR.11 A CCRC enters into contracts with prospective residents to provide housing and
medical care in exchange for an entrance fee and monthly fees. Entrance fees are a significant
commitment by the resident, as entrance fees range from approximately $100,000 to over $1 million. 12
CCRCs offer different types of contracts that provide for varying amounts of monthly fees and levels of
healthcare discounts.13
All CCRC contracts provide for a refund of a declining portion of the entrance fee if the contract is
cancelled for reasons other than the death of the resident during the first four years of occupancy by
the resident.14 However, many contracts exceed this requirement and contain minimum refund
provisions that promise a refund of a specified portion (typically 50 to 90 percent) of the entrance fee
upon the death of the resident or termination of the contract regardless of the length of occupancy by
the resident.15
Financial Requirements/Solvency
CCRCs are required to file an annual report with OIR, which includes an audited financial report, and
other detailed financial information, such as a listing of assets maintained in the liquid reserve required
under s. 651.035, F.S., and information about fees required of residents.16 OIR requires unaudited
quarterly reports from CCRCs, but OIR will waive such quarterly reports for accredited CCRCs. 17 OIR
may also require more frequent filing of financial reports and additional information if OIR deems such
reports necessary to monitor and evaluate the financial condition of a CCRC that is subject to a
corrective action plan; declining financial position; refinancing; acquisition; or administrative
supervision, delinquency, receivership, or bankruptcy proceedings.18
Section 651.033, F.S., prescribes requirements for the establishment and maintenance of escrow
accounts, duties of escrow agents, and procedures for withdrawals from a CCRC’s reserve funds. As
prescribed in s. 651.035, F.S., CCRCs are required to maintain a minimum liquid reserve (MLR)
consisting of, as applicable, a debt service reserve, operating reserve, and renewal and replacement
reserve. A provider may meet the MLR requirement by obtaining an unconditional irrevocable letter of
credit from a financial institution participating in the State of Florida Treasury Certificate of Deposit
Program.19
Rights of Residents in a Continuing Care Retirement Community
OIR is also authorized to discipline a facility for violations of residents’ rights.20 These rights include:
A right to live in a safe and decent living environment, free from abuse and neglect;
Freedom to participate in and benefit from community services and activities and to achieve
the highest possible level of independence, autonomy, and interaction within the community;
and
Ability to present grievances and recommend changes in policies, procedures, and services
to the staff of the facility, governing officials, or any other person without restraint,
interference, coercion, discrimination, or reprisal.21
11 S. 651.055(1), F.S.
12 Kennedy, Jayme, The cost of continuing care retirement communities: Can you afford it?, Care.com, published Jan. 31,
2021, available at https://www.care.com/c/continuing-care-retirement-community-cost/ (last visited Mar. 25, 2023).
13 Id.
14 S. 651.055, F.S.
15 Jones, Roger J., Continuing Care Retirement Communities (CCRCs) Fees – A Primer on the Tax Treatment of
Entrance and Monthly Fees, The National Law Review, published Dec. 6, 2012, available at
https://www.natlawreview.com/article/continuing -care-retirement-communities-ccrcs-fees-primer-tax-treatment -ent rance-
and- (last visited Mar. 25, 2023).
16 S. 651.026, F.S.
17 S. 651.0261. F.S., Rr. 69O-193.005(1) and 69O-193.055, F.A.C.
18 R69O-193.005(2). F.A.C.
19 S. 651.085(5), F.S.
20 S. 651.083, F.S.
21 Id.
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Each CCRC must establish a resident’s council to provide a forum for residents’ input on issues that
affect the general residential quality of life, such as the facility’s financial trends and problems, as well
as proposed changes in policies, programs, and services. 22 CCRCs are required to maintain and make
available certain public information and records, such as records of all cost and inspection reports
pertaining to that facility, a concise summary of the last examination report issued by OIR, and a
summary of the most recent annual statement.23
OIR Enforcement Authority
If a provider fails to meet the requirements of ch. 651, F.S., relating to a provisional COA or a COA,
OIR must notify the provider of any deficiencies and require the provider to take corrective action within
a time period determined by OIR.24 If the provider does not correct the deficiencies by the expiration of
such time, OIR may initiate delinquency proceedings as provided in s. 651.114, F.S., or seek other
relief provided under ch. 651, F.S.25 OIR may deny, suspend, or revoke the provisional COA or the
COA of any applicant or provider for grounds specified in s. 651.106, F.S.
Except in limited circumstances, OIR’s right to initiate delinquency proceedings against a provider is
subordinate to the rights of a trustee or lender if the trustee or lender agrees that the rights of residents
under a CCRC contract will be honored and will not be disturbed by a foreclosure.26 If OIR recommends
that the Department of Financial Services (DFS) Division Rehabilitation and Liquidation institute
receivership or liquidation proceedings against a CCRC, the continuing care contracts are deemed
preferred claims against assets of the provider.27 Such claims are subordinate, however, to any
secured claim.
Until 2019, even though OIR had enforcement authority over CCRCs, ch. 651, F.S., lacked the
framework that OIR uses to protect consumers of other insurance products, including early intervention
concepts like impairment, a statutory requirement to provide supplementary information to support or
explain filings, and clear authority to prohibit certain individuals from exercising control over a CCRC.
The need for better regulatory oversight became apparent with the case of a CCRC in Tampa in which
unapproved owners and managers failed to cooperate with examination by OIR and with other
provisions of state law. Previously, a bankruptcy court in 1997 cancelled residents’ contracts for a
different CCRC in Tampa. Additionally, a CCRC in St. Augustine filed for bankruptcy in 2013 and 2016,
which resulted in former residents or their estates receiving only 20 percent of their entrance fee
refunds.
Involvement by the Department of Financial Services
DFS may become involved with a resident after a CCRC contractual agreement has been signed by
both parties or during a mediation or arbitration process. 28 Typically, residents will contact DFS Division
of Consumer Services, which receives and resolves complaints involving products and persons
regulated by OIR or DFS.29
Chapter 631, F.S., governs the rehabilitation and liquidation process for insurers in Florida. Federal law
provides that insurance companies are not eligible to be a debtor in federal bankruptcy proceedings
and are instead subject to state laws regarding receivership. 30 In Florida, the Division of Rehabilitation
22 S. 651.081, F.S.
23 S. 651.091, F.S.
24 S. 651.105(4), F.S.
25 Id.
26 S. 651.114(8), F.S.
27 S. 651.071, F.S.
28 Rr. 69O-193.062 and 69O-193.063, F.A.C.
29 S. 624.307, F.S.
30 Historically and currently, Florida CCRCs have entered bankruptcy despite being regulated as a specialty insurer in
Florida and despite the federal Bankruptcy Code precluding insurance companies from being a debtor in bankruptcy.
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and Liquidation within DFS is responsible for managing insurance companies placed into receivership.
The goal of rehabilitation is to return the insurer to solvency. The goal of liquidation, however, is to
liquidate the business of the insurer and use the proceeds to pay claims, including those of
policyholders, creditors, and employees.
2019 Statutory Changes Regarding CCRCs
In 2019, the state enacted broad statutory changes to enhance OIR’s authority to regulate CCRCs. 31
Section 651.034, F.S., was created to establish a framework of required actions if a provider falls below
specified levels of three key indicators at the time of the annual report: occupancy, days cash on hand,
and the debt service coverage ratio. The key indicators were selected based on their tendency to
highlight problematic financial developments. If the provider’s performance falls below the specified
levels on two of the following three key indicators at the time of the annual report, it is considered a
“regulatory action level event.”
In the event that a “regulatory action level event” occurs, the provider is required to submit a corrective
action plan; OIR is required to perform an examination or analysis of the provider; and OIR is required
to issue a corrective order specifying any corrective actions that OIR determines are required. For new
CCRCs, OIR may exempt a provider from the consequences of a regulatory action level event or
impairment until the earlier of the CCRC reaching stabilized occupancy, the time projected to achieve
stabilized occupancy, or five years from the date of issuance of the COA.
A definition for “impaired” was to allow for earlier intervention by OIR in an effort to prevent harm to
Florida consumers. The impairment framework has been an effective tool in preventing, or minimizing
the impact of, insurer insolvencies. The previous intervention framework for CCRCs was triggered only
after a provider became insolvent, meaning it is unable to pay its obligations as they come due in the
normal course of business. The establishment of the impairment framework allowed OIR to begin
partnering with a provider much sooner to mitigate or resolve any potential issues that would put
resident interests in jeopardy.
A provider is considered impaired if it fails to hold the MLR. Additionally, a provider without mortgage or
bond financing is considered impaired if it does not maintain the specified level of days cash on hand,
and a provider with mortgage or bond financing is considered impaired if it does not ma