2014 Delaware Code
Title 6 - Commerce and Trade
CHAPTER 42. HEALTH SPA REGULATION
§ 4204. Health Spa Guaranty Fund

(a) The Director of the Division of Consumer Protection shall establish and maintain the Health Spa Guaranty Fund in accordance with the provisions of this section.

(b)(1) Upon registering with the Director pursuant to § 4203 of this title and upon renewing its registration annually, each health spa shall pay to the State a fee in the amount indicated below:

Number of unexpired contractsexceeding 3 months Amount of annual fees 199 or fewer $1,000 200 to 499 $2,000 500 to 999 $4,000 1000 or more $8,000

(2) The number of unexpired contracts exceeding 3 months shall be calculated separately for each location where health spa services are offered, unless the spa offers all members fully interchangeable, comparable services at a separate location within a 15-mile radius.

(3) The amount of the fee shall be reviewed annually by the Director, and the health spa shall provide such information as the Director may request in order to ascertain the number of unexpired contracts exceeding 3 months.

(c) Payments received under subsection (b) of this section shall be credited by the State Treasurer to the Health Spa Guaranty Fund and money in the Fund may be invested or reinvested in the same manner as funds of the State Employees' Retirement System, and the interest arising from such investments shall be credited to the Guaranty Fund.

(d) Any buyer having a claim against a health spa may apply to the Director for payment of such claim from the Guaranty Fund, if the claim arises from a failure of the health spa to:

(1) Comply with its contract obligations;

(2) Comply with any provision of this chapter; or

(3) Remain open for the duration of its contracts or provide alternative facilities within 15 miles of the location designated in the health spa contract, if the health spa goes out of business or relocates.

(e) The Director shall provide forms for applications by buyers for payment from the Guaranty Fund. The application shall include the name and address of the health spa, the beginning and ending date of the contract, the price of the contract, the date of the closing of the health spa, the amount and the basis of the claim and a copy of the contract. No application for a payment from the Guaranty Fund shall be accepted by the Director more than 6 months after the date of the closing of the location of the health spa where the buyer entered into the contract.

(f) The Director shall proceed upon such application and if necessary hold a hearing to decide the merits of an application. The Director shall notify the health spa that a claim has been filed by a buyer and the health spa may request a hearing on the merits of the claim. The Director shall hold a hearing if one is requested by the health spa. The decision of the Director shall be final with respect to the application. The Director may hear applications of all buyers submitting claims against a single health spa in 1 proceeding.

(g) The Director shall issue an order requiring payment from the Guaranty Fund of any sum found to be payable upon such application. The total compensation payable from the Guaranty Fund on the closing of any 1 health spa location shall not exceed $100,000.

(h) If the Director pays any amount as a result of a claim against a health spa pursuant to an order under subsection (g) of this section, the health spa's registration shall be suspended and it shall not be eligible to register until it has repaid such amount in full, plus interest at a rate to be determined by the Director.

(i) If the Director pays any amount as a result of a claim against a health spa pursuant to an order under subsection (g) of this section, the Director shall determine if the health spa is possessed of real or personal property or other assets, liable to be sold or applied in satisfaction of the claim on such Fund. If the Director discovers any such assets, the Director may request that the Attorney General take any action necessary for the realization thereof for the reimbursement of the Guaranty Fund.

(j) If the money deposited in the Guaranty Fund is insufficient to satisfy any duly authorized claim or portion thereof, the Director shall, when sufficient money has been deposited in the Fund, satisfy such unpaid claims or portions thereof, in the order that such claims or portions thereof were originally filed.

(k) When the Director has caused any sum to be paid from the Guaranty Fund to a buyer who has entered into a health spa contract, the Director shall be subrogated to all of the rights of the buyer up to the amount paid, and the buyer shall assign all of personal right, title and interest in the claim up to such amount to the Director, and any amount and interest recovered by the Director on the claim shall be deposited to the Guaranty Fund, except as provided in subsection (c) of this section.

(l) If on December 31 of any year the balance of money in the Health Spa Guaranty Fund exceeds $250,000, the Director shall waive fee payments to the Fund for the following year for each health spa which has registered and paid fees for 3 or more consecutive years. If at the end of any fiscal year the balance of money in the Health Spa Guaranty Fund exceeds $350,000, the excess shall be withdrawn and deposited into the General Fund.

66 Del. Laws, c. 395, § 1; 69 Del. Laws, c. 291, § 98(c); 70 Del. Laws, c. 186, § 1.;