Maryland Department of Aging Section 11D
§ 11D.
(a) (1) A provider that holds a certificate of registration and a person with an ownership interest in or right to control the provider through governing body appointments or contractual or similar arrangements may not sell or otherwise transfer, directly or indirectly, more than 50% of the provider's ownership of a facility or more than 50% of the ownership of, or right to control, a person that owns or controls a facility, unless the provider or person obtains the approval of the Department to the sale or other transfer in accordance with this section.
(2) Any series of such sales or other transfers within a 12-month period shall be aggregated for purposes of this section.
(3) This section does not apply to a transfer of ownership of a facility, or to a transfer of ownership or control of a person owning or controlling a facility, if the transfer is part of a business reorganization, and if the same party or parties holding a majority of ownership or right to control before the business reorganization will retain, directly or indirectly, a majority of ownership or right to control after the business reorganization.
(4) Notwithstanding paragraph (3) of this subsection, 30 days prior notice shall be given by the provider to the Department and to the facility's subscribers of any reorganization meeting the standards of paragraph (3) of this subsection.
(b) (1) A provider subject to subsection (a)(1) of this section shall:
(i) At least 90 days before the proposed effective date of the sale or other transfer, file with the Department a statement of intent to transfer ownership or control; and
(ii) At least 65 days before the proposed effective date of the sale or other transfer, give written notice of the proposed sale or other transfer to the subscribers of the affected facility and to the Department.
(2) The written notice required by paragraph (1)(ii) of this subsection shall specify the place and time for the meeting specified in paragraph (4) of this subsection. The notice to the Department shall include the following information, which also shall be provided to any subscriber of the affected facility on request:
(i) The address of the provider and the office to which comments may be sent;
(ii) The name and address of the affected facility and the name and address of the provider;
(iii) The organizational structure and management of the provider and the facility after the proposed sale or other transfer is completed, including:
1. If the provider is to be a corporation or limited liability company, the name of the corporation or limited liability company, the state in which the corporation is incorporated or the limited liability company is formed, and the name of the chief executive officer;
2. If the provider is to be a partnership, the names of the general partners, the state governing the formation of the partnership, and the name of the primary individual responsible for managing the partnership;
3. If the provider is to be an unincorporated association, the names of the members, the state governing the unincorporated association's activities, and the name of the primary individual responsible for managing the association;
4. If the provider is to be a trust, the name of the trustee, the names of the owners of the beneficial interests in the trust, the state governing the trust, and the name of the primary individual responsible for overseeing the trust's activities;
5. If the provider is to be a partnership having a corporation or limited liability company as one or more of its general partners, the name of the corporation or limited liability company, the state in which the corporation is incorporated or the limited liability company is formed, and the name of the chief executive officer; and
6. The names and occupations of the officers, directors, trustees, general partners, principals, and any person or entity who will have a 10% or greater equity or beneficial interest in the provider or in the entity owning or controlling the provider;
(iv) A copy of the corporate charter, partnership agreement, articles of association, membership agreement, or trust agreement as it will pertain to the legal organization of the provider after the sale or other transfer;
(v) A statement as to any affiliation with a religious, charitable, or other nonprofit organization that will exist after the proposed sale or other transfer and the extent, if any, to which the affiliate organization will be responsible for the financial and contractual obligations of the provider;
(vi) The name and address of any business or professional entity or operation that is likely to provide goods, premises, or services to the facility or provider, after the sale or other transfer, of a value of $10,000 or more within any year, including a description of the goods, premises, or services in which any of the persons identified in item (iii)6 of this paragraph has a 10% or greater financial interest;
(vii) The name of the proposed manager or management company that will manage the day-to-day operations of the facility after the sale or other transfer, and a description of the business experience of the manager or company in the operation or management of similar facilities;
(viii) A description of any matter in which any person identified in item (iii)6 of this paragraph:
A. Has been convicted of a felony or pleaded nolo contendere to a felony charge, if the felony involved fraud, embezzlement, fraudulent conversion, or misappropriation of property, or has been held liable or enjoined in a civil action by final judgment if the civil action involved fraud, embezzlement, fraudulent conversion, or misappropriation as a fiduciary; or
B. Was subject to an effective injunctive or restrictive order of a court of record or, within the past 10 years, had any state or federal license or permit suspended or revoked 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;
(ix) A financial plan in a form reasonably acceptable to the Department demonstrating the projected effects of the sale or other transfer on the financial operations of the provider and the facility, including any obligations of the provider to make payments in connection with the sale or other transfer from the financial resources of the provider or the facility;
(x) A statement that demonstrates that the sale or other transfer is not likely to have an unreasonably adverse impact on the financial stability of the provider or unreasonably adversely affect the provider's capacity to perform its obligations under the continuing care agreements to which it is a party; and
(xi) Any other information that the Department requires.
(3) For the first fifteen days after giving the notice specified in paragraph (1)(ii) of this subsection, subscribers may submit to the provider and to the Department written questions and comments on the proposed sale or other transfer.
(4) Not later than the 25th day after the notice specified in paragraph (1)(ii) of this subsection, representatives of the provider shall hold a meeting with representatives of the subscribers of the affected facility to discuss the proposed sale or other transfer. Representatives of the subscribers shall be chosen by the subscribers and may not exceed 15 in number. The names and addresses of the subscriber representatives shall be given by the representatives to the provider and to the Department. Representatives of the Department may attend such meeting.
(5) For the first 10 days after the meeting specified in paragraph (4) of this subsection, subscribers may submit to the provider and to the Department additional written comments on the proposed sale or other transfer.
(c) After reviewing the information as required in subsection (b) of this section, the Department shall make a determination as to whether the sale or other transfer satisfies the standard for approval in subsection (d) of this section. The determination by the Department shall be made by the 50th day after the date of the notice required by subsection (b)(1)(ii) of this section, unless extended by the Department for good cause. The Department shall notify the provider and the subscriber representatives in writing of its determination and rationale.
(d) The Department shall approve a sale or other transfer of ownership or control unless the Department determines that the sale or other transfer is likely to have an unreasonably adverse impact on the financial stability of the provider or is likely to have an unreasonably adverse effect on a provider's capacity to perform its obligations under the continuing care agreements to which it is a party.
(e) The decision by the Department with respect to the proposed sale or other transfer is subject to appeal only by the provider in accordance with the Administrative Procedure Act. No other person shall be deemed to be a party in interest to the proceedings. If an appeal is taken by the provider, the Department shall give prompt notice of the appeal to the subscriber representatives. The Department shall give subscriber representatives prompt notice of any decision rendered in the appeal.
(f) A sale or other transfer of ownership or control subject to this section may not be completed until after the 15th day following the later of:
(1) The day on which the Department issues the notice specified in subsection (c) of this section of a determination to approve the sale or other transfer; or
(2) The hearing officer or administrative law judge renders a decision permitting the sale or other transfer if appeal is taken under subsection (e) of this section.
