§8002. Certificate of authority; authority of the Department

Link to law: http://legislature.vermont.gov/statutes/section/08/151/08002
Published: 2015

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Title

08

:
Banking and Insurance






Chapter

151

:
CONTINUING CARE RETIREMENT COMMUNITIES











 

§

8002. Certificate of authority; authority of the Department

(a) A provider

shall not receive any entrance fee or portion thereof, or enter into a

continuing care contract unless the provider has obtained a certificate of

authority from the Commissioner. However, a refundable payment of $1,000.00 or

less and a processing fee of $250.00 or less shall not be considered entrance

fees for the purposes of this chapter. The Commissioner is authorized to modify

the amounts of refundable payments and processing fees to reflect increased

costs or inflation.

(b) The

application for the certificate of authority shall include the following

information: the name and address of the provider that will operate the

facility, a copy of the proposed continuing care contract and escrow agreement

to be used by the applicant, a schedule of all fees to be charged, a

description of the applicant's refund policy and, if the applicant is not an

individual, a description of the applicant. This description shall include the

names and addresses of members of its board of directors, if any; its

affiliation with or sponsorship by other organizations, if any, and a statement

of the financial responsibility of such organizations; the applicant's

financial, marketing plans, and proposed marketing materials; a plan for

establishment of a resident assistance fund; an actuarial report demonstrating

financial feasibility; and such other information as the Commissioner may

require. An applicant shall submit sufficient evidence of:

(1) the amount

and liquidity of its assets relative to the risks to be assumed;

(2) the adequacy

of the expertise, experience, and character of the person or persons who will

manage it; and

(3) the overall

soundness of its plan of operation.

(c) The

Commissioner shall acknowledge receipt of an application within 15 days of the

day it is received. If the application is not complete, the Commissioner shall

notify the applicant, in writing, that additional information is required.

(d) The

Commissioner shall act on the application within 90 days after an application

is determined to be complete. The Commissioner may approve, approve with

conditions, or deny a certificate of authority.

(e) The

Commissioner shall not issue a certificate of authority unless he or she

determines that the application conforms to the requirements of this chapter

and that the provider has demonstrated financial feasibility in accordance with

the information submitted pursuant to subsection (b) of this section.

(f) The

certificate of authority of a provider shall remain in effect until revoked,

after notice and hearing, upon a determination that the provider has violated

any provision of this chapter, any rule adopted according to the provisions of

this chapter, or order of the Commissioner.

(g) Providers

who have been granted a certificate of authority shall be subject to the

provisions of subchapter 7 of chapter 101 of this title, examination and

reporting; and sections 3661, 3686, and 3687 of this title. The Commissioner

shall conduct an examination whenever deemed necessary but at least twice in

the first six years of operation and at least once every five years thereafter.

The Commissioner may waive or modify subchapter 7 of chapter 101 of this title

and sections 3661, 3686, and 3687 as appropriate to the special characteristics

of continuing care retirement communities.

(h) Review of

rates and fees.

(1) Rate

standards.

(A) Excessive:

Rates are excessive if they are producing or are likely to produce unreasonably

high profits for the services provided, the excess of revenue over expenses is

not reasonably related to the financial requirements of the provider, or

expenses are unreasonable when compared to like or similar services provided.

(B) Inadequacy:

Rates are inadequate if they are insufficient to sustain projected losses and

expenses in the class or classes of business to which they apply or the use of

such rates has or, if continued, will have the effect of substantially

lessening competition or the tendency to create a monopoly in any market.

(C) Unfair

discrimination: Unfair discrimination exists if, after allowing for practical

limitations, price differentials fail to reflect equitably the differences in

expected losses and expenses. A rate is not unfairly discriminatory because

different premiums result for a class of residents with like loss exposures but

different expenses, or like expenses but different loss exposures, so long as

the rate equitably reflects the differences with reasonable accuracy. This

provision shall not prohibit a provider from establishing a rate structure

which subsidizes a portion of the units within a facility.

(2) Rating

methods or criteria. In reviewing the Commissioner shall utilize the following

criteria:

(A) Basic factor

in rates. Due consideration shall be given to past and prospective loss and

expense experience within, and as reasonable and necessary outside this State;

to catastrophic hazards; to a reasonable provision for underwriting profit; to

contingencies; to trends within and outside this State, to additional sums for

leveling premium rates over time or for dividends or savings to be allowed or

returned to residents; and to all other relevant factors.

(B)

Classification. Risks may be classified in any lawful and reasonable way for

the collection of statistics and establishment of rates. Rates for new

residents may be established prospectively for individual risks in accordance

with rating plans or schedules which provide for recognition of probable

variations in hazards, expenses, or both.

(C) Expenses.

The expense provisions included in the rates to be used by a provider shall

reflect the operating methods of the provider, and, so far as is determinable

and reasonable, its own actual and anticipated expense experience for the kind

of services provided, or any subdivision thereof.

(D) Profits. The

rates may contain an allowance providing for a reasonable profit. In

determining the reasonableness of profit, consideration shall be given to all

relevant investment income and a provision for contingencies may be included.

(3) Filing of

rates and other rating information. Every provider shall file with the

Commissioner all rates and supplementary rate information which are to be used

in this State. Such rates and information shall be provided to the Commissioner

at least 60 days before the effective date.

(4) Use of rates

and rate review. The Commissioner has the authority to review rates pursuant to

the criteria set forth in this section. The Commissioner may disapprove a rate

if the Commissioner finds that it is excessive, inadequate, or discriminatory.

(A) A prefiled

rate may be disapproved by the Commissioner before its effective date. Existing

rates shall remain in effect until a final determination is made on the

proposed rate.

(B) A rate may

be disapproved at any time subsequent to the effective date. The rate shall

remain in effect until a new rate is finally determined.

(i) Advertising

and marketing materials shall be consistent with the provisions of this

chapter. Upon request by the Commissioner, the provider shall submit such

materials to the Commissioner for review. In the event the Commissioner

determines that the materials are inconsistent with the provisions of this

chapter, he or she shall order the provider to desist from further use of those

materials. (Added 1987, No. 247 (Adj. Sess.), § 1.)
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