HB-6252, As Passed House, September 17, 2008

SUBSTITUTE FOR

HOUSE BILL NO. 6252

A bill to amend 1978 PA 368, entitled

"Public health code,"

by amending section 20142 (MCL 333.20142).

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 20142. (1) A health facility or agency shall apply for

licensure or certification on a form authorized and provided by the

department. The application shall include attachments, additional

data, and information required by this section and by the

department. The department may require applicants and licensees to

electronically file the forms required under this section.

(2) An applicant shall certify the accuracy of information

supplied in the application and supplemental statements.

(3) An applicant or a licensee under part 213 or 217 shall

disclose the names, addresses, principal occupations, and official

positions of all persons ~~who have~~ with an ownership or control

interest in the health facility or agency. An applicant or initial

licensee under part 217 shall also disclose a description of the

relationship, if any, between a person with an ownership or control

interest and every other person with an ownership or control

interest in the nursing home. If the health facility or agency is

located on or in leased real estate, the applicant or licensee

shall disclose the name of the lessor and any direct or indirect

interest the applicant or licensee has in the lease other than as

lessee. A Subject to this section and section 21711, a proposed

sale of or change in an ownership or control interest shall be

reported in writing to the director not less than 15 60 days before

the change ~~occurs, except that a person purchasing stock of a~~

~~company registered pursuant to the securities exchange act of 1934,~~

~~15 U.S.C. 78a to 78kk, is exempt from disclosing ownership in the~~

~~facility~~ or sale being proposed is scheduled to occur. A person

required to file a beneficial ownership report pursuant to section

16(a) of the securities exchange act of 1934, 15 ~~U.S.C.~~ USC 78p,

shall file with the department information relating to securities

ownership required by the department rule or order. ~~An applicant or~~

~~licensee proposing a sale of a nursing home to another person shall~~

~~provide the department with written, advance notice of the proposed~~

~~sale.~~ A license issued to an applicant or initial licensee under

part 217 is not transferable to any other person who seeks to

obtain or purchase an ownership or control interest in that nursing

home and is subject to revocation upon verification of the transfer

of any ownership or control interest to any other person. The

persons proposing to obtain or purchase an ownership or control

interest in a nursing home shall apply for licensure on a form and

in the manner prescribed by the department. The applicant or

licensee and the other parties to the sale of or change in an

ownership or control interest shall arrange to meet with specified

department representatives and shall obtain before the sale or

change a determination of the items of noncompliance with

applicable law and rules ~~which~~ that shall be corrected. The

department shall notify the respective parties of the items of

noncompliance ~~prior to the change of ownership~~ and shall indicate

that the items of noncompliance must be corrected as a condition of

issuance of a license to the new ~~owner~~ persons with an ownership or

control interest. In addition to any other requirement of this

article, the department shall not issue a license to the new

persons with an ownership or control interest until all of the

items of noncompliance have been corrected or the department has an

approved plan of correction. The department may accept reports

filed with the securities and exchange commission relating to the

filings. A person who violates this subsection is guilty of a

misdemeanor, punishable by a fine of not more than $1,000.00 for

each violation.

(4) An applicant or licensee under part 217 shall disclose the

names and business addresses of suppliers who furnish goods or

services to an individual nursing home or a group of nursing homes

under common ownership, the aggregate charges for which exceed

$5,000.00 in a 12-month period which includes a month in a nursing

home's current fiscal year. An applicant or licensee shall disclose

the names, addresses, principal occupations, and official positions

of all persons ~~who have~~ with an ownership or control interest in a

business ~~which~~ that furnishes goods or services to an individual

nursing home or to a group of nursing homes under common ownership

or control, if both of the following apply:

(a) The person, or the person's spouse, parent, sibling, or

child has an ownership or control interest in the nursing home

purchasing the goods or services.

(b) The aggregate charges for the goods or services purchased

exceeds $5,000.00 in a 12-month period which includes a month in

the nursing home's current fiscal year.

(5) Subsections (6) and (7) only apply if at the time of

application the applicant is a party to a transaction or any

related transactions that involve 4 or more nursing homes in total,

in any state. An applicant may omit information required under

subsection (6) or (7) if the applicant certifies that the

information is not available. The department shall not use the

omission of information required under subsection (6) or (7) as

grounds for refusal to issue a license to the applicant if the

applicant truthfully certifies that the information is not

available.

(6) Subject to subsection (5), the department shall not issue

an initial license to an applicant under part 217 unless the

department receives all of the following information from the

applicant and the department determines that the applicant is able

to operate the nursing home in compliance with this act and any

other state or federal law that applies to the operation of that

nursing home:

(a) The number and type of patients who will receive care or

services at the nursing home.

(b) The number and type of staff employed by the nursing home

and any information required by the department relating to the

experience and training of employees, management agreements for the

operation of the nursing home, and the moral character of the

applicant.

(i) Inspection reports and complaint investigation reports for

the nursing home.

(ii) Inspection reports and complaint investigation reports for

all other health facilities or agencies for which a person with an

ownership or control interest in the nursing home is also a person

with an ownership or control interest.

(iii) Data regarding average staff time spent per resident per

day, including, but not limited to, information regarding agency

and contract staff. This data shall be expressed as the average

nursing hours per resident per day, broken down by employee

classification and employment type, and shall be determined based

on payroll data. If the data described in this subparagraph are not

available, the staffing data reported to the United States

department of health and human services for its "Nursing Home

Compare" website may be substituted, if approved by the department.

(iv) Data described in subparagraph (iii) for all other health

facilities or agencies for which a person with an ownership or

control interest in the nursing home is also a person with an

ownership or control interest.

(d) Data for the past 3 years and projected annual average

data for the next 3 years regarding payer mix in terms of medicare,

medicaid, private pay, or any other payment method.

(e) Data regarding staff turnover during the past 3 years and

any projections related to rates of staff turnover.

(f) Any operational covenants required by any entities

providing financing for the nursing home or for a transaction

involving a sale of or change in an ownership or control interest.

(g) Service agreements entered into with or expected to be

entered into with and the terms of agreements to be entered into

with any person with an ownership or control interest.

(h) Forward-looking plans or projections prepared by the

applicant or licensee that relate to hours of care per resident per

day, number of staff, occupancy rates, payer mix, or any other

criteria that could affect quality of care as determined in rules

promulgated by the department, together with an explanation for any

assumptions made in preparing the projections.

(i) A statement that the applicant's assets, liabilities,

revenues, and expenditures identified in the applicant's business

plan are sufficient to predict that the applicant has the financial

capacity to own and operate a nursing home in compliance with this

act and any other state or federal law applicable to the operation

of a nursing home.

(j) Up to 3 years of detailed past financial data for the

nursing home and the applicant, including, but not limited to,

separate line items for nurse staffing and for employee benefit

costs.

(k) Detailed financial projections for the next 3 years for

the nursing home and the applicant, including, but not limited to,

separate line items for nurse staffing and for employee benefit

costs.

(l) An explanation of all financial projections made under

subdivision (k), including an analysis comparing the past and

projected data and an explanation of any significant changes to or

discrepancies in the past and projected data.

(7) Subject to subsection (5), in the case of a proposed sale

of or change in an ownership or control interest, the department

shall not issue a new license to the new persons with an ownership

or control interest under part 217 unless the department receives

all of the following information from the persons proposing to

obtain or purchase an ownership or control interest and the

department determines that the applicant is able to operate the

nursing home in compliance with this act and any other state or

federal law that applies to the operation of that nursing home:

(a) For the past 3 years, a listing of all health facilities

and agencies for which each person proposing to obtain or purchase

an ownership or control interest in the nursing home is or has been

a person with an ownership or control interest in that health

facility or agency.

(b) For up to the past 5 years, all of the following

information for the nursing home and for all other health

facilities or agencies for which a person with an ownership or

control interest in the nursing home is also a person with an

ownership or control interest:

(i) Bankruptcies.

(ii) Facility or agency closures, whether voluntary or

involuntary.

(iii) Receiver appointments.

(iv) Denials, suspensions, or revocations of any license,

permit, or certificate of need.

(v) Injunctions issued in proceedings against the facility or

agency initiated by a federal or state regulatory agency.

(vi) Audits but not including internal audits, investigations,

or fines related to the receipt or use of federal or state funds.

(vii) Summaries of and citations to administrative, civil, or

criminal proceedings involving the facility or agency related to

quality of care, residents' rights, professional negligence, or

wrongful death, which proceeding resulted in a final judgment or

order or a judgment or order currently on appeal.

subsection (6)(h) that are prepared in connection with a proposed

sale of or change in an ownership or control interest.

(d) A detailed description of the proposed sale of or change

in an ownership or control interest, including, but not limited to,

all of the following:

(i) The sources and uses of financing for the proposed sale or

change.

(ii) Interest rates to be paid on any debt incurred for

purposes of completing the proposed sale or change.

(iii) Management or other fees related to the proposed sale or

change.

(iv) Projected capital structure of the nursing home and any

related entities following the proposed sale or change.

(v) Strategic alternatives considered in connection with the

proposed sale or change.

(vi) Industry analyses considered in connection with the

proposed sale or change.

(vii) Operational covenants required by any entities providing

financing for the proposed sale or change.

(viii) Leases to be entered into in connection with the proposed

sale or change.

(8) Except as otherwise provided in this subsection, the

department shall provide access to an initial license application

by an applicant under part 217 and any information submitted in

support of that application under this section as provided in the

freedom of information act, 1976 PA 442, MCL 15.231 to 15.246. Upon

request, the department shall provide access to an initial license

application by an applicant under part 217 and any information

submitted in support of that application under this section within

10 days of receipt of the request. The department shall promptly

make available on its website all of the following information:

(a) A listing of all nursing homes licensed under this

article.

(b) All persons with an ownership or control interest in the

nursing home listed under subdivision (a).

all health facilities and agencies for which that person is also a

person with an ownership or control interest.

(d) Audited financial statements, if any, submitted under

section 21711 by a nursing home.

(e) All license applications by nursing homes under this

article.

(f) If received, a notice of a proposed sale of or change in

an ownership or control interest in a nursing home and all persons

proposing to obtain or purchase an ownership or control interest.

(9) ~~(5)~~ An applicant or licensee who makes a false statement

in an application or statement required by the department pursuant

to this article is guilty of a felony , punishable by imprisonment

for not more than 4 years , or a fine of not more than $30,000.00,

or both.

(10) Notwithstanding any provision of this section to the

contrary, a change in ownership or control of an entity does not

occur in a situation in which less than a majority or controlling

minority interest in a nursing home is to be transferred, or in

which less than 34% of the ownership or control interest in a

nursing home is to be transferred, whether that interest is held

directly or indirectly through any number of intermediary persons.

(11) If the department determines it necessary for the health,

safety, and welfare of the patients served by an applicant or

licensee under part 217, the department may issue a nonrenewable

conditional license effective for not more than 1 year and may

prescribe such conditions as the department determines to be

necessary to protect the public health, safety, and welfare of the

patients. The department may include, but is not limited to, the

following conditions on the nonrenewable conditional license issued

under this subsection:

(a) That the nursing home provide additional financial or

other information during the period of licensure, on a schedule

prescribed by the department.

(b) That the nursing home submit certain information regarding

quality of care or staffing.

inspections.

(d) That the nursing home meet or maintain certain

requirements regarding quality of care or staffing during the

period of licensure.

(12) As used in this section, "person with an ownership or

control interest" means, with respect to an entity, a person who

meets any of the following:

(a) Has directly or indirectly an ownership interest of 5% or