(a) Effective December 1, 2008, minimum standards of
financial condition require the applicant or license holder to have
sufficient financial resources to:
(1) satisfy obligations at the time they come due;
and
(2) ensure at all times the delivery of essential care
and services, such as nursing or dietary services, or utilities.
(b) A license holder must notify DADS of significant
adverse changes in financial condition, which include changes in financial
position, cash flow, results of operation, or other events that could
adversely affect the delivery of essential care and services, such
as nursing or dietary services, or utilities. The following are examples
of significant adverse changes in financial condition that must be
reported:
(1) The license holder, operator, administrator, manager,
or other controlling person receives notice that a judgment or tax
lien of at least $50,000 has been filed, recorded, or levied against
the facility or any of the assets of the facility or the license holder
and the judgment or tax lien is not satisfied, or an appropriate extension
has not been obtained, within three working days after receipt of
the notice.
(2) A financial institution refuses to honor facility-operation-related
checks or other financial instruments issued by the license holder,
operator, administrator, manager, or other controlling person or agent
of the license holder, operator, administrator, manager, or other
controlling person and:
(A) the cumulative amounts of the checks or financial
instruments are $50,000 or more; and
(B) the checks or financial instruments are not honored
or replaced to the satisfaction of the holders of the instruments
within five working days after the holders have notified the license
holder, operator, administrator, manager, or the person authorized
to issue the instrument of the dishonored items.
(3) The facility fails to maintain the facility's utilities
or a sufficient quantity of supplies, including nursing, dietary,
pharmaceutical, or other care and service supplies, to meet the needs
of the residents.
(4) The license holder, operator, administrator, manager,
or other controlling person fails to make timely payments of any
facility-related tax of at least $10,000 and fails to satisfy such
tax within five working days after the date the tax becomes due.
(5) The license holder, operator, administrator, manager,
or other controlling person files a voluntary bankruptcy petition,
or a creditor files an involuntary bankruptcy petition against the
license holder or controlling person, under the United States Code
or any other laws of the United States.
(6) A court appoints a bankruptcy trustee for the facility.
(7) A person seeking appointment of a receiver for
the facility files a petition in any jurisdiction.
(8) The license holder, operator, administrator, manager,
or other controlling person is unable to meet conditions of a facility-operation-related
loan or debt covenant unless the loan or debt covenant has been waived,
and that inability leads to:
(A) the imposition of a fine or penalty;
(B) restructuring;
(C) a change in terms or conditions of the loan or
debt covenant; or
(D) a recall by the issuing entity.
(9) The license holder, operator, administrator, manager,
or other controlling person is delinquent on more than $50,000 of
facility-related contractual obligations or vendor contracts and has
not cured the delinquency within five working days after receipt of
notice from the creditor or creditors to pay the debt.
(c) The license holder must notify DADS in writing
of a significant adverse change in its financial condition as required
by subsection (b) of this section within 72 hours after the license
holder becomes aware of or should have become aware of the change.
(d) The license holder's notice required by subsection
(b) of this section must include a description of:
(1) the specific significant adverse change in financial
condition;
(2) how the significant adverse change in financial
condition affects the license holder's ability to deliver essential
care and services; and
(3) the actions the license holder has taken to address
the significant adverse change in financial condition.
(e) The license holder must fax the notice required
in subsection (b) of this section to (512) 438-2730 or (512) 438-2728,
and the notice must be kept on file with a copy of the fax confirmation.
(f) The license holder must provide any other information
DADS requests to substantiate continued compliance with the requirements
of this section within 30 days after the request.
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