Section 26-A8208. INSOLVENCY OR HAZARDOUS FINANCIAL CONDITION

8208.1The Commissioner may deem a provider or continuing care facility that has a negative fund balance to be insolvent or in imminent danger of becoming insolvent if any of the following hazardous financial condition standards or factors are applicable or present:

(a)There are findings or conditions reported in the provider’s or continuing care facility’s financial statements that the Commissioner determines to be adverse to the financial stability of the provider or continuing care facility;

(b)The current or projected ratios of total assets, including required reserve levels, to total liabilities indicate an impairment or deterioration of the provider’s or continuing care facility’s operations or equity or demonstrate a trend that could lead to an impairment or a deterioration of the provider’s or continuing care facility’s operations, working capital, or equity;

(c)The current or projected ratios of current assets to current liabilities indicate an impairment or deterioration of the provider’s or continuing care facility’s operations, working capital, or equity or demonstrate a trend that could lead to an impairment or a deterioration of the provider’s or continuing care facility’s operations, working capital, or equity;

(d)The provider or continuing care facility is unable to perform normal daily activities and meet its obligations as they become due, considering the provider’s or continuing care facility’s current or projected cash flow and liquidity position;

(e)The provider’s or continuing care facility’s operating losses for the past year or projected operating losses are of such magnitude as to jeopardize normal daily activities or continued operations of the provider or continuing care facility;

(f)The insolvency of an affiliated provider or continuing care facility or other affiliated person results in legal liability of the provider or continuing care facility for payments and expenses of such magnitude as to jeopardize the provider’s or continuing care facility’s ability to meet its obligations as they become due, without the substantial disposition of assets outside the ordinary course of business, restructuring of debt, or externally forced revisions of its operations;

(g)The provider or continuing care facility has receivables that are more than ninety (90) days old;

(h)The insolvency is not temporary and the provider or continuing care facility cannot demonstrate that the insolvency will be materially reduced or eliminated;

(i)There is an adverse effect on the provider or continuing care facility of reporting entrance fees as deferred revenues, with consideration given to all reporting requirements required under generally accepted accounting principles and the ultimate net income component of those revenues; and

(j)A start-up provider or continuing care facility or any operational provider or continuing care facility undergoing plant expansion or refinancing of its debt has a financial condition as a result of such action that could seriously jeopardize its present or future operations.

8208.2The provider or continuing care facility shall prepare a plan to address and correct and condition that has led to a determination of insolvency or imminent danger of insolvency by the Commissioner.  The plan must be presented to the Commissioner within ninety (90) days after the date of the determination of insolvency or imminent danger of insolvency.  If the plan is disapproved by the Commissioner, the plan does not correct the condition leading to the Commissioner’s determination of insolvency, or the provider’s or continuing care facility’s hazardous condition is such that it cannot be significantly corrected or eliminated, the Commissioner may take action pursuant to sections 103 and 111 of the Act.

authority

The Administrator of the Office of Documents and Administrative Issuances (ODAI), pursuant to the authority set forth in section 309 of the District of Columbia Administrative Procedure Act, approved October 21, 1968 (82 Stat. 1203; D.C. Official Code § 2-559), and the Commissioner of the Department of Insurance, Securities and Banking (DISB), pursuant to the authority set forth in section 117 of the Continuing Care Retirement Communities Act of 2004, effective April 6, 2005 (D.C. Law 15-270; D.C. Official Code § 44-151.01, et seq.(2005 Supp.))(“Act”).

source

Notice of Final Rulemaking published at 53 DCR 1399 (February 24, 2006); as amended by Corrected Notice of Final Rulemaking published at 53 DCR 8475, 8482 (October 20, 2006); as corrected by Errata Notice published at 58 DCR 2421, 2422 (March 18, 2011).