CHAPTER 46. Life-Care Registration Act
The following words and phrases when used in this chapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:
(1) “Continuing care.” The furnishing to an individual, other than an individual related by consanguinity or affinity to the person furnishing such care, of housekeeping services, board and lodging or lodging services, together with furnishing or promising to furnish nursing services, medical services or other health-related services, regardless of whether or not the lodging and services are provided at the same location and pursuant to an agreement effective for the life of the individual or for a period in excess of 1 year, including mutually terminable contracts and in consideration of the payment of an entrance fee with or without other periodic charges. The payment of, or agreement to pay, condominium or cooperative assessments for common expenses of the condominium or cooperative with respect to a condominium or cooperative housing unit which is part of or associated with a continuing care facility shall be considered as the furnishing of lodging services.
(2) “Deposit.” A portion of the entrance fee or any other charges of the provider, except the application fee, received by the provider to reserve a living unit, or reserve a priority position on the facility’s waiting list.
(3) “Entrance fee.” An initial or deferred transfer to a provider of a sum of money or other property made or promised to be made as full or partial consideration for acceptance of a specified individual as a resident in a facility. A fee which is less than the sum of the regular periodic charges for 1 year of residency will not be considered to be an entrance fee for the purposes of this chapter. If a resident is required to own a condominium or cooperative unit in order to obtain continuing care at a continuing care facility, the price paid for such unit shall be considered as an entry fee and the purchased unit shall be considered as a living unit for the purposes of this chapter.
(4) “Facility.” The place or places in which a person undertakes to provide continuing care to an individual.
(5) “Living unit.” A room, apartment, cottage, house, condominium, cooperative or other area within a facility set aside for the exclusive use or control of 1 or more identified individuals.
(6) “Manager.” An entity operating a facility on behalf of the provider. This does not include personal financial statements of any employee of the manager.
(7) “Omission of a material fact.” The failure to state a material fact required to be stated in any disclosure statement or registration in order to make the statements made therein not misleading in light of the circumstances under which they were made.
(8) “Provider.” A person undertaking to provide continuing care in a facility.
(9) “Resident.” An individual entitled to receive continuing care in a facility.
(10) “Secretary.” The Secretary of State of Delaware.
(11) “Solicit.” All actions of a provider or manager in seeking to have individuals residing in this State pay an application fee and enter into a continuing care agreement by any means such as, but not limited to, personal, telephone or mail communication or any other communication directed to and received by any individual in this State and any advertisements in any media distributed or communicated by any means to individuals in this State.67 Del. Laws, c. 357, § 1;
No provider shall engage in the business of providing continuing care in this State until it shall have:
(1) Filed a registration statement on a form to be prescribed by the Secretary;
(2) Filed with the Secretary the disclosure statement provided for in § 4603 of this title; and
(3) Paid a registration fee of $50 to the Secretary;
provided, however, a nonprofit continuing care facility as defined in this chapter whose facilities will not accommodate more than 100 residents shall be exempt from the provisions of this chapter, providing the facility annually submits to the Secretary of State a certified audit evidencing qualifications for this exemption.67 Del. Laws, c. 357, § 1;
(a) Prior to the execution of a contract to provide continuing care or prior to the transfer of any money or other property (other than an application fee not to exceed $1,500) to a provider by or on behalf of a prospective resident, whichever shall first occur, the provider shall advise in writing the person with whom the contract is to be entered into that a copy of the current disclosure statement verified by the provider’s chief financial officer is available for examination by the said person and that the person may also have a copy of the current disclosure statement if requested. If said person requests a copy, it shall be provided to the person at least 2 days prior to the execution of the contract or the transfer of money to a provider whichever shall first occur. In the disclosure statement for each facility, a multiple facility provider does not have to disclose information about its other facilities unless the operation of the facilities is financially connected. The disclosure statement shall contain all of the following information unless such information is in the contract, a copy of which must be attached to the statement:
(1) The name and business address of the provider and a statement of whether the provider is a partnership, corporation or other type of legal entity.
(2) The names and business addresses of the officers, directors, trustees, managing or general partners, and any person having a 10% or greater equity or beneficial interest in or of the provider and a description of such person’s interest in or occupation with the provider.
(3) With respect to:
a. The provider;
b. Any person named in response to paragraph (a)(2) of this section; and
c. The proposed manager, if the facility will be managed on a day-to-day basis by a person other than an individual directly employed by the provider:
1. A description of the business experience of such person, if any, in the operation or management of similar facilities.
2. The name and address of any professional service, firm, association, trust, partnership or corporation in which such person has, or which has in such person, a 10% or greater interest and which it is presently intended will or may provide goods, leases or services to the facility of a value of $500 or more, within any year, including:
(A) A description of the goods, leases or services and the probable or anticipated cost thereof to the facility or provider;
(B) The process by which the contract was awarded; and
(C) Any additional offers that were received.
3. A description of any matter in which such a person:
(A) Has been convicted of a felony or pleaded nolo contendere to a felony charge or been held liable or enjoined in a civil action by final judgment if the felony or civil action involved fraud, embezzlement, fraudulent conversion or misappropriation of property; or
(B) Is subject to a currently effective injunctive or restrictive order of a court of record, or within the past 5 years had any state or federal license or permit suspended or revoked as a result of an action brought by a governmental agency or department, arising out of or relating to business activity or health care, including, without limitation, actions affecting a license to operate a foster care facility, nursing home, retirement home, home for the aged or facility registered under this chapter or a similar act in another state.
(4) A statement as to:
a. Whether the provider or manager is or ever has been affiliated with a religious, charitable or other nonprofit organization;
b. The nature of the affiliation, if any;
c. The extent to which the affiliate will be responsible for the financial and contractual obligations of the provider; and
d. The provision of the federal Internal Revenue Code, if any, under which the provider or affiliate is exempt from the payment of income tax.
(5) The location and description of the physical property or properties of the facility, existing or proposed, and, to the extent proposed, the estimated completion date or dates, whether or not construction has begun and the contingencies subject to which construction may be deferred.
(6) Each of the services provided or proposed to be provided under contracts for continuing care at the facility, including the extent to which medical and/or nursing care is furnished. The disclosure statement shall clearly state which services are included in the basic contracts for continuing care and which services are made available at or by the facility at extra charge.
(7) A description of all fees required of residents, including the entrance fee and periodic charges, if any. The description shall include the manner by which the provider may adjust periodic charges or other recurring fees and the limitations on such adjustments, if any. If the facility is already in operation or if the provider or manager operates 1 or more facilities within this State, there shall be included tables showing the frequency and average dollar amount of each increase in periodic rates at each such facility for the previous 5 years or such shorter period as the facility may have been operated by the provider or manager.
(8) The provisions that have been made or will be made, if any, to provide reserve funding or security to enable the provider to fully perform its obligations under contracts to provide continuing care at the facility, including the establishment of escrow accounts, trusts or reserve funds, together with the manner in which such funds will be invested and the names and experience of persons who will make the investment decisions.
(9) Financial statements of the provider and manager for each facility in Delaware certified as complete and accurate by the Treasurer or other officer of the provider and manager, and prepared in accordance with generally accepted accounting principles, including:
a. A balance sheet as of the end of the 2 most recent fiscal years. The balance sheet shall include the amount and purpose of all reserve accounts, how the reserves are invested and the interest or other income earned thereon.
b. Income and expense statements for each facility in Delaware for the 2 most recent fiscal years or such shorter period of time the facility shall have been in existence. The income and expense statement shall show the total receipts from and expenditures for each service (residential, dining, health care, etc.) provided to residents.
c. The plans of the provider of an existing facility for the year following the date of the disclosure statement projecting the items in paragraphs (a)(6) through (9) of this section inclusive, or any other anticipated financial items.
d. Annual reports or financial statements as set forth in paragraph (a)(9)a. or b. of this section of all persons or entities having more than a 10 percent interest in the provider or manager. This paragraph shall apply only to initial application for new or existing facilities.
(10) If operation of the facility has not yet commenced, a statement of the anticipated source and application of the funds used or to be used in the purchase or construction of the facility for the 3 years after the date of opening, including:
a. An estimate of the cost of purchasing or constructing and equipping the facility including such related costs as financing expense, legal expense, land costs, occupancy development costs and all other similar costs which the provider expects to incur or become obligated for prior to the commencement of operations.
b. A description of any mortgage loan or other long-term financing intended to be used for the financing of the facility, including the anticipated terms and costs of such financing.
c. An estimate of the total entrance fees to be received from or on behalf of residents at or prior to commencement of operation of the facility.
d. An estimate of the funds, if any, which are anticipated to be necessary to fund start-up losses and provide reserve funds to assure full performance of the obligations of the provider under contracts for the provision of continuing care.
e. A projection of estimated income from fees and charges other than entrance fees, showing individual rates presently anticipated to be charged and including a description of the assumptions used for calculating the estimated occupancy rate of the facility and the effect on the income of the facility of government subsidies for health-care services, if any, to be provided pursuant to the contracts for continuing care.
f. A projection of estimated operating expenses of the facility, including a description of the assumptions used in calculating the expenses and separate allowances, if any, for the replacement of equipment and furnishings and anticipated major structural repairs or additions.
g. Identification of any assets pledged as collateral for any purpose.
h. An estimate of annual payments of principal and interest required by any mortgage loan or other long-term financing.
(11) The cover page of the disclosure statement shall state, in a prominent location and type face, the date of the disclosure statement and that registration with the Secretary does not constitute approval, recommendation or endorsement of the facility by the Secretary, nor is it evidence of, nor does it attest to, the accuracy or completeness of the information set out in the disclosure statement.
(12) A copy of the standard form or forms of contract for continuing care used by the provider shall be attached as an exhibit to each disclosure statement. If not part of the contract, any contract changes since the last filing of a disclosure statement, any rules and regulations regarding the administration of the facility, conduct of the residents, or rights of the residents shall also be filed.
(13) Any initial or annual disclosure statement shall be made available to any member of the public upon request upon payment of reasonable copying charges.
(b) The provider shall file with the Secretary, annually within 4 months following the end of the provider’s fiscal year, an annual verified disclosure statement which shall contain the information required by this chapter for the initial disclosure statement. The annual disclosure statement shall also be accompanied by a narrative describing any material differences between:
(1) The pro forma income statements filed pursuant to this chapter either as part of the application for registration or as part of the most recent annual disclosure statement; and
(2) The actual results of operations during the fiscal year.
(c) Each provider shall have 5 copies of the current disclosure statement readily available during normal business hours for examination by all residents at a convenient location in each continuing care facility operated by or for the provider in Delaware. The residents shall be given a reasonable opportunity to examine the disclosure statement and copies of all or any part thereof shall be made by the facility for the resident when requested. Except for the copy of the disclosure statements referred to in subsection (a) of this section, the reasonable copying cost may be charged for such copies.
(d) In addition to filing the annual disclosure statement, the provider may amend its currently filed disclosure statement at any other time if, in the opinion of the provider, an amendment is necessary to prevent the disclosure statement and annual disclosure statement from containing any material misstatement of fact or omission to state a material fact required to be stated therein. Any such amendment or amended disclosure statement must be filed with the Secretary before it is delivered to any resident or prospective resident and is subject to all the requirements, including those as to content and delivery, of this chapter.67 Del. Laws, c. 357, § 1; 70 Del. Laws, c. 186, § 1;
(a) No provider shall make, publish, disseminate, circulate or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in a newspaper or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television statement, or in any other way, an advertisement, announcement or statement of any sort containing any assertion, representation or statement which is untrue, deceptive or misleading.
(b) No provider shall file with the Secretary or make, publish, disseminate, circulate or deliver to any person or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated or delivered to any person or placed before the public, any financial statement which does not accurately state its true financial condition.67 Del. Laws, c. 357, § 1;
(a) Any person who, as a provider or manager, or on behalf of the provider or manager has not filed the registration statement and disclosure statement with the Secretary and paid the fee required by § 4602 of this title:
(1) Enters into a contract for continuing care at a facility;
(2) Enters into a contract for continuing care at a facility without having first delivered a disclosure statement meeting the requirements of this chapter to the person contracting for such continuing care; or
(3) Enters into a contract for continuing care at a facility with a person who has relied on a disclosure statement which omits a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading;
shall be liable to the person contracting for such continuing care for damages and repayment of all fees including entrance fees paid to the provider, facility or person violating this chapter, together with interest thereon at the legal rate for judgments, court costs and reasonable attorney fees less the reasonable value of care and lodging provided to the resident not previously paid for by the resident by or on whose behalf the contract for continuing care was entered into prior to discovery of the violation, misstatement or omission or the time the violation, misstatement or omission should reasonably have been discovered.
(b) Any provider who fails after a written request therefor to deliver a copy of the disclosure statement to any person who is party to a resident agreement with the provider, shall be liable to such resident for all costs, including counsel fees, incurred by such resident in requiring the provider to provide the resident with a copy of its disclosure statement.
(c) Liability under this section shall exist regardless of whether or not the provider or person liable had actual knowledge of the misstatement or omission.
(d) A person may not file or maintain an action under this section unless and until the person makes written demand on the provider for the refund provided under this subsection, the demand describes the act or omission complained of, and the demand is refused by the provider or not answered by the provider in writing within 10 days of the date the provider received the demand.
(e) An action shall not be maintained to enforce a liability created under this chapter unless brought before the expiration of 6 years after the execution of the contract for continuing care which gave rise to the violation.
(f) A nonprofit continuing care facility within the definition of continuing care in this chapter, which maintains a resident population of which 1/3 or more residents are unable to pay the full costs of care each month; and which guarantees lifetime care regardless of ability to pay in its resident’s agreement prior to accepting a resident, and whose resident’s agreement specifically states the reason a person may be transferred or removed to another facility or expelled for cause, and which facility is subject to other state and federal regulations affecting the nature and character of services provided, shall be exempted from the provisions of this chapter, providing the facility annually submits to the Secretary of State a certified audit evidencing qualifications for this exemption.67 Del. Laws, c. 357, § 1; 70 Del. Laws, c. 186, § 1;