Section 396.10  Definitions

 

"Act" means the Life Care Facilities Act (Ill. Rev. Stat. 1989, ch. 111 1/2, par. 4160 et seq.).

 

"Certificates of need" means those permits issued pursuant to the Illinois Health Facilities Planning Act, as  now or hereafter amended (Section 2(n) of the Act, Ill. Rev. Stat. 1989, ch. 111½, pars. 1151 et seq.).

 

"Department" means the Department of Public Health (Section 2(a) of the Act).

 

"Director" means the Director of the Department (Section 2(b) of the Act).

 

"Entrance Fee" means an initial or deferred transfer to a provider of a sum of money or property, made or promised to be made by a person entering into a Life Care Contract, which assures a resident of services pursuant to a life care contract (Section 2(h) of the Act).

 

"Escrow Account" means an account with a bank, trust company, or other financial institution located in the State of Illinois, held in the name of the provider and the escrow agent.  The escrow account is returned to the provider or paid to a third party on fulfillment of the escrow conditions.

 

"Facility" means a place or places in which a provider undertakes to provide a resident with nursing services, medical services or personal care services, in addition to maintenance services for a term in excess of one year or for life pursuant to a life care contract.  The term also means a place or places in which a provider undertakes to provide such services to a non-resident (Section 2(f) of the Act).

 

"Financial disclosure statement" means the most recently completed and audited financial statement, and shall include, but not be limited to, disclosure of short term assets and liabilities.  This financial disclosure statement is to be delivered to prospective residents of a life care facility by the provider.

 

"Financial Institution" means a savings and loan association authorized to do business under the "Illinois Savings and Loan Act of 1985", as amended (Ill. Rev. Stat. 1987, ch. 17, par. 3301 et seq.), or a credit union authorized to do business under the "Illinois Credit Union Act", as amended (Ill. Rev. Stat. 1987, ch. 17, par. 4401 et seq.).

 

"Letter of Credit" means an official guarantee from the issuer (bank, trust company, or other financial institution located in the State of Illinois) to honor the commitments imposed in its provision for the length of time and amount specified.  Since the issuer pledges its full faith and credit behind the instrument, it is a security equal to that of an escrow account.  A letter of credit must be irrevocable and subject to the provisions of Section 7 of the Act which apply to the escrow in lieu of which the Letter of Credit is established.

 

"Life Care Contract" means a contract to provide to a person for the duration of such person's life or for a term in excess of one (1) year, nursing services, medical services or personal care services, in addition to maintenance services for such person in a facility, conditioned upon the transfer of an entrance fee to the provider of such services in addition to or in lieu of the payment of regular periodic charges for the care and services involved (Section 2(c) of the Act).

 

"Living Unit" means an apartment, room or other area within a facility set aside for the exclusive use of one or more identified residents, who have entered into a Life Care Contract (Section 2(g) of the Act).

 

"Maintenance Services" means food, shelter and laundry services (Section 2(m) of the Act).

 

"Medical Services" means those services pertaining to medical or dental care that are performed in behalf of patients at the direction of a physician licensed under the Medical Practice Act of 1987 (Ill. Rev. Stat. 1989, ch. 111, pars. 4400-1) or a dentist licensed under the Illinois Dental Practice Act (Ill. Rev. Stat. 1989, ch. 111, pars. 2301 et seq.) such physicians or by a registered or licensed practical nurse as defined in the Illinois Nursing Act of 1987 (Ill. Rev. Stat. 1989, ch. 111, pars. 3501 et seq.) or by other professional and technical personnel.  The Department shall not prescribe the course of medical treatment provided to an individual resident by the resident's physician in a facility.

 

"Newly Constructed Facility" means a life care facility which has not previously existed, at a site where structures are built or remodeled for the purpose of providing a place of residence for life care contractees.

 

"Non-Resident" means a person admitted to a facility who has not entered into a life care contract (Section 2(o) of the Act).

 

"Nursing Services" means those services pertaining to the curative, restorative and preventive aspects of nursing care that are performed at the direction of a physician licensed under the Medical Practice Act of 1987 by or under the supervision of a registered or licensed practical nurse as defined in the Illinois Nursing Act of 1987.  For purposes of the Act and this Part, the term only applies to services provided in a facility licensed under the Nursing Home Care Act (Ill. Rev. Stat. 1989, ch. 111½, par. 4151-101 et seq.) (Section 2(k) of the Act).

 

"Permit" means a written authorization to enter into life care contracts issued by the Department to a provider (Section 2(i) of the Act).

 

"Personal Care Services" means assistance with meals, dressing, movement, bathing or other personal needs or maintenance, or general supervision and oversight of the physical and mental well-being of an individual, who is incapable of maintaining a private independent residence or who is incapable of managing his person whether or not a guardian has been appointed for such individual.  For purposes of the Act and this Part, the term only applies to services provided in a facility licensed under the Nursing Home Care Act (Ill. Rev. Stat. 1989, ch. 111½, par. 4151-101 et seq.) (Section 2(l) of the Act).

 

"Provider" means a person who provides services pursuant to a life care contract (Section 2(d) of the Act).

 

"Ready for occupancy" means that the facility's completed structure is ready to initiate and sustain full operations as a Life Care residence.  All mechanical systems, including plumbing, electrical systems, ventilation systems for heating and cooling, and emergency alarm systems must be fully functional. Access driveways and walkways must be in place, and all services as described in the Life Care contract must be available.  The facility must be in compliance with all existing local housing codes.

 

"Regular periodic charges" means the monthly fee for care and services as described in the life care contract.

 

"Resident" means a person who enters into a life care contract with a provider, or who is designated in a life care contract to be a person provided with maintenance and nursing, medical or personal care services (Section 2(e) of the Act).

 

"Substantially completed" means that the facility's entire structure and grounds are completed as described in the facility's architectural blueprints and construction contracts, and that the facility is in compliance with existing local building codes.

 

Section 396.20  Who Must Obtain a Permit

 

Any provider who proposes to establish or acquire a life care facility must receive a permit from the Department.

 

Section 396.30  Application for a Permit

 

a)         Applications shall be made on forms provided by the Department. Applications forms may be obtained by writing to:

 

            Illinois Department of Public Health

            Division of Health Statistics and Policy Development

            535 West Jefferson Street, Second Floor

            Springfield, Illinois 62761

 

b)         An application for a permit to operate a life care facility must contain the following:

 

1)         A copy of the proposed form of life care contract to be entered into with residents (Section 4 of the Act).

 

2)         A copy of the letter of credit or escrow agreement as provided by Section 7 of the Act.  To allow the Department to determine the provider's compliance with Section 7 of the Act, a complete, detailed written description of any long-term financing of the facility must be submitted with the application.  The submission of a copy of the escrow agreement or letter of credit will fulfill this requirement if the document contains such a description.

 

3)         A permit application fee of $100.00 (Section 4 of the Act).

 

4)         An audited statement of the facility's financial position in each of the three years prior to the application.

 

A)        If the facility has not previously existed, audited financial statements, including an equity statement, with descriptions of the facility's start-up capital and financing are required.

 

B)        Financial statements of the provider shall be prepared in accordance with generally accepted accounting principles and reported upon by certified public accountants with generally accepted auditing standards.

 

5)         The identity of the licensed or facilities at which licensed care will be provided to those residents in need of such care, as provided for in life care contract.

 

A)        Newly constructed facilities may make licensed long term care beds available to non-residents only with the approval of the Department.  Approval will be based upon whether the facility will be providing sufficient licensed beds to accomodate its residents without having to transfer or discharge any resident or non-resident.  Facilities seeking such approval shall include with the application a written explanation as to how the above will be accomplished.  This explanation shall include at a minimum, the number and type of licensed beds at the facility, the maximum number of beds that will be used for non-residents, a description of any plans to phase out the number of beds to be used for non-residents, and projections of the number and types of licensed beds that will be needed for residents, along with the basis for those projections.  Facilities which received a "continuum of care variance" from the Illinois Health Facilities Planning Board under 77 Ill. Adm. Code 1110.1730(c)(3) will not receive approval to admit non-residents to long-term care beds.

 

B)        If the life care facility contains no licensed long-term care beds, a written explanation of plans to meet the eventual needs of those residents who require contractually entitled levels of care, beyond maintenance services in living units, must be provided to the Department at the time of application. "Living units", and "Maintenance Services" are defined in Section 396.10 of the Life Care Facilities Contract Code.

 

Section 396.40  Permits

 

Applications will be reviewed and permits granted or denied in accordance with the criteria of this Part.

 

a)         Permits shall be issued for a specific number of living units and

 

b)         Permits shall be granted to specific grantees and are not transferable.

 

Section 396.50  Provider Responsibilities

 

a)         At the time of or prior to the execution of a life care contract and the transfer of any money or other property to a provider or escrow agent, the provider shall deliver to the resident a copy of a financial disclosure statement reflecting the provider's financial condition (Section 5(a) of the Act).

 

b)         The life care contract shall provide that any person entering the contract shall have a period of 14 days beginning with the first full calendar day following the execution of the contract, or the payment of an initial sum of money as a deposit or application fee, or receipt of the financial disclosure statement, whichever occurs last, within which to rescind the life care contract without penalty or further obligation.  In the event of such rescission, all money or property paid or transferred by such person shall be fully refunded.  No person shall be required to move into a facility until after the expiration of the 14 day recision period (Section 5(b) of the Act).

 

c)         To the extent that a facility also qualifies as a long-term care facility under the Nursing Home Care Act, then the long-term care portion of the facility must comply with that Act and the regulations promulgated thereunder as well as the Act and this Part.

 

d)         When required by subsections (e) and (f) below, the provider shall establish and maintain on a current basis, an escrow account and/or letter of credit with a bank, trust company, or other financial institution located in the State of Illinois.  Such financial institution shall provide to the Department notification describing the facility's escrow account or letter of credit on an annual basis and within 15 days of any change affecting the escrow account or letter of credit.

 

e)         Requirements for new facilities:

 

1)         If the entrance fee applies to a living unit which has not previously been occupied by any resident, all entrance fee payments representing either all or any smaller portion of the total entrance fee shall be paid to the escrow agent by the resident (Section 7(a)(1) of the Act).

 

2)         When the provider has sold at least ½ of the living units covered by a single permit, obtained a mortgage commitment, if needed, and obtained all necessary zoning permits and certificates of need, if required, the escrow agent may release a sum representing 1/5 of the resident's total entrance fee to the provider. Upon completion of the foundation of the living unit an additional 1/5 of the resident's total entrance fee may be released to the provider.  When the living unit is under roof a further and additional 1/5 of the resident's total entrance fee may be released to the provider.  All remaining monies, if any, shall remain in escrow until the resident's living unit is substantially completed and ready for occupancy by the resident.  When the living unit is ready for occupancy the escrow agent may release the remaining escrow amount to the provider and further entrance fee payments, if any, may be paid by the resident to the provider directly.  All monies released from escrow shall be used for the facility and for no other purpose.  (Section 7(a)(2) of the Act)

 

f)         Requirements for all facilities:

            At the time of resident occupancy and at all times thereafter, the escrow amount shall be in an amount which equals or exceeds the aggregate principal and interest payments due during the next 6 months on account of any first mortgage or other long-term financing of the facilities (Section 7(b)(1) of the Act).  Balloon payments due at the conclusion of the Mortgage shall not be subject to the escrow requirements (Section 7(b)(5) of the Act).  In lieu of the escrow account, the provider may obtain an irrevocable letter of credit in the amount required by this provision.  The letter of credit shall specify that funds are to be paid out in the amount and manner specified by the Director.

 

g)         The escrow monies required by Section 6 of the Act may be released to the provider upon approval by the Director.  Such approval shall only be granted in the event of unforeseeable peril or calamity, such as damage due to fire, vandalism, earthquake, etc., or in the event that the escrow funds are the only source for payment of the long-term debt of the facility. The Director may attach such conditions on the release of monies as he deems fit including, but not limited to, the performance of an audit which satisfies the Director that the facility is solvent, a plan from the facility to bring the facility back in compliance with Section (6) and a repayment schedule and that the funds be used solely for the purpose for which they were released (Section 7(b)(2) of the Act).

 

h)         An audited statement of the financial condition of the facility must be submitted annually to the Department by the provider within 120 days of the close of the facility's fiscal year.

 

i)          Providers must immediately report to the Department in writing any changes in the financial condition of the facility which could threaten the facility's ability to sustain operations or meet its contractual obligations to its residents or creditors.  Reportable changes in the facility's financial condition include serious delinquency in payments due to creditors, reduction of services to which residents are entitled, financial loss due to theft or gross mismanagement, as well as loss due to physical damage to the facility or legal damages for which the provider is found to be liable.

 

j)          If the facility ceases to operate all monies in the escrow account except the amount representing principal and interest shall be repaid by the escrow agent to the resident (Section 7(b)(4) of the Act).  Such repayments shall be in the form of a cashier's check.

 

Section 396.60  Enforcement Provisions

 

a)         At any time the Director receives notice from the escrow agent that the provisions of Section 7 of the Act have not been complied with, or at any other time when the Director has reason to believe that the provider is insolvent, is in imminent danger of becoming insolvent or that its condition is such that it may be financially unable to fully perform its obligations pursuant to life care contracts, the Director shall, through the Attorney General, file an appropriate action on behalf of the State of Illinois and any or all residents in any court of competent jurisdiction, including the federal bankruptcy court or any other federal court (Section 9 of the Act).  Factors which the Director shall consider in making the determination under this subsection shall include, but not be limited to, those changes in a facility's financial condition which are reportable under Section 396.50(i).

 

b)         The Director or his authorized designee may conduct an audit or other examination of the financial affairs of any provider as often as he deems it necessary for the protection of the interests of the residents and the people of this State, and for this purpose shall have access to the books, records, financial data and other documents maintained by the facility (Section 10 of the Act).

 

c)         The Department shall deny the application for permit or revoke or suspend an existing permit for violation of any provision of this Part (Section 11 of the Act). Facilities which do not comply with all provisions of this Part will not be granted Life Care Permits.  Permittees found to be in violation of the provisions of this Part will suffer suspension of their Life Care Permit.  Violations of the provisions of this Part which are not remedied within 30 days after the facility receives notice of such violation from the Department will result in the revocation of the facilitiy's Life Care Permit. Proceedings for denial, revocation or suspension of a permit will be conducted in accordance with the Department's Rules of Practice and Procedure in Administrative Hearings (77 Ill. Adm. Code 100).

 

Section 396.70  Penalty

 

Any person acting in the capacity of a provider who enters into a life care contract, or extends the term of an existing life care contract, without first having been issued a permit by the Department or without otherwise acting in compliance with the provisions of the Act, shall be guilty of a Class A misdemeanor (Section 12 of the Act).