Maryland Department of Aging Section 17A
§ 17A.
(a) There is a Financial Review Committee.
(b) (1) The Committee consists of 7 members appointed by the Secretary.
(2) Of the 7 members, 2 shall be knowledgeable in the field of continuing care, 2 shall be certified public accountants, 1 shall be from the financial community, and 2 shall be consumer members, preferably subscribers of continuing care facilities.
(3) The term of a member is 3 years. The terms of members are staggered as required by the terms provided for members of the Committee on July 1, 1985.
(4) A member may serve consecutive terms.
(5) The Committee shall elect its chairman.
(6) Members may not receive compensation, however, members are entitled to reimbursement for expenses incurred in the performance of their official duties as provided for in the State budget.
(7) Any Financial Review Committee member shall have the immunity from liability described under § 5-514 of the Courts and Judicial Proceedings Article.
(8) A Financial Review Committee member may not participate in a review of a continuing care provider's financial condition if that member has an interest in the provider, as defined by the Maryland Public Ethics Law.
(9) The deliberations of the Committee and communications between the Department and the Committee, including but not limited to recommendations of the Committee, shall be confidential.
(c) (1) After reviewing a provider's application for a renewal certificate, the Department may refer the application and accompanying materials to the Committee for its consideration. The Committee shall review the application and the materials and may request additional information from the Department. Within 45 days of receipt of an application, the Committee shall notify the Department in writing:
(i) Whether or not the Committee recommends finding the provider in financial difficulty;
(ii) Whether or not the Committee recommends identifying the financial difficulty as including a significant risk of financial failure in accordance with subsection (h) of this section; and
(iii) Stating the reason or reasons for its recommendations.
(2) The Department may refer a finding of possible financial difficulty to the Committee for its consideration. The Committee shall review the finding and may request additional information from the Department. Within 45 days of receipt of a finding, the Committee shall notify the Department in writing:
(i) Whether or not the Committee recommends finding the provider in financial difficulty;
(ii) Whether or not the Committee recommends identifying the financial difficulty as including a significant risk of financial failure in accordance with subsection (h) of this section; and
(iii) Stating the reason or reasons for its recommendations.
(3) The Committee may request one 30-day extension from the Secretary under paragraph (1) or (2) of this subsection. The Secretary may grant or deny the extension.
(d) (1) Within 25 days of being notified of the Committee's recommendations, the Department shall consider the recommendations of the Committee and make a final determination of whether financial difficulty exists, including whether it finds a significant risk of financial failure in accordance with subsection (h) of this section. If the Department determines that the provider is in financial difficulty it shall immediately notify the provider by certified mail, return receipt requested, and inform the provider of whether the Department has determined that there is a significant risk of financial failure.
(2) (i) The provider shall advise its subscribers of the Department's determination in a meeting to be held by the provider with representatives of the subscribers.
(ii) The meeting shall be held within 10 days of the provider's receipt of notice from the Department.
(iii) The provider shall advise the Department of the date, time, and location of such meeting.
(e) A provider notified of financial difficulty by the Department shall prepare and submit to the Department for its approval a 5-year financial plan to correct the causes of the financial difficulty. The financial plan shall be submitted within 60 days of notification. The provider may request one 30-day extension from the Secretary. The Secretary may grant the extension. The Department shall respond to the provider within 60 days of receipt of the proposed plan. The Department may work with the provider to establish the financial plan and may consult with the Financial Review Committee prior to approving the plan. Upon approval the plan shall be implemented. The provider shall make available to its subscribers copies of its approved 5-year plan.
(f) The Department may withhold the renewal certificate or withdraw a certificate of registration:
(1) If the provider does not prepare a financial plan;
(2) If the provider is unwilling or unable to prepare a financial plan;
(3) If the financial plan is inadequate to correct the current or impending financial condition which necessitated the financial plan; or
(4) If the provider fails to implement the plan.
(g) The provider shall submit to the Department an annual progress report for the term of its financial plan and shall revise its financial plan if the Department determines that revisions are necessary.
(h) The Department may determine that there exists a significant risk of the financial failure of a provider based on one or more of the following findings or circumstances:
(1) The provider has failed to meet loan covenants that give a lender or a bond trustee the option to exercise remedies on its collateral;
(2) An actuarial report has been provided to the Department reflecting significant underfunding of future liabilities that are unlikely to be readily addressed;
(3) There is a significant shortfall by the provider in maintaining required reserves for a significant period of time;
(4) A significant balloon payment or future loan payment will become due within the next 12 months and the provider is unable to demonstrate that it will obtain a modification from its lender, have the resources to make the payment, or have the ability to refinance;
(5) There is a significant declining occupancy likely to have a material adverse financial impact;
(6) There has been a material adverse change in debt service coverage ratio for an extended period of time that reduces the ratio to less than 1.0;
(7) There has been a significant decline in days cash on hand that is unrelated to additions to property, plant, and equipment or other community enhancements and that could result in an inability to pay obligations of the provider as they become due;
(8) There has been a significant increase in the operating ratio, adjusted for unrealized gains and losses on investments, that could result in the inability of the provider to meet its obligations; or
(9) The refusal or inability of the provider to provide accurate information or data required to be submitted to the Department under this subtitle and related regulations.
