Rhode Island General Laws
Chapter 23-17.11 - The Nursing Facilities Receivership Act
Section 23-17.11-3. - Definitions.

§ 23-17.11-3. Definitions.
As used in this chapter:
(1) “Department” means the department of health.
(2) “Director” means the director of the department of health.
(3) “Facility” means any nursing facilities as defined in chapter 17 of this title and the regulations adopted under chapter 17 of this title.
(4) “Person” means any individual, trust or estate, partnership, limited liability company, limited liability partnership, corporation (including associations, joint stock companies and insurance companies), state or political subdivision or instrumentality of a state.
(5) “Resident” means a person who resides in a nursing facility as defined in chapter 17 of this title and the regulations adopted pursuant to chapter 17 of this title.
(6) “Mismanagement” means the director’s determination that a facility lacks financial solvency or has demonstrated the inability to correct patterns of deficiencies in resident care or management. These deficiencies may be evidenced by excessive turnover and instability in the administration and clinical leadership, a consistent pattern of maintaining inadequate direct care and support service personnel or a demonstrated failure to implement a plan of correction and/or remediation as prescribed by the department.
(7) “Financial solvency” shall be defined by the department through regulation. Such regulation shall develop in consultation with the department of human services. In developing the definition, the department shall consider whether any of the following criteria should be included in the definition of financial solvency and whether other criteria should apply:
(i) Sufficient liquid resources, including anticipated accounts receivable due from providing care to residents to operate the facility for thirty (30) days;
(ii) Current to agreed-upon payment terms for all material financial obligations of the facility including, but not limited to, mortgage payments, lease payments, management contracts, payments to employees and for all employee benefit programs, payments for food and other resident supplies, payments for utilities and payments of all state and federal taxes;
(iii) Free from lien resulting from default by the facility;
(iv) No combination of current indebtedness totaling more than one hundred twenty (120) days of total facility revenues;
(v) Significant operating losses for two (2) successive years;
(vi) Frequent requests for advances on Medicaid reimbursement;
(vii) Unfavorable working capital ratios of assets to liabilities;
(viii) High proportion of accounts receivable more than ninety (90) days old;
(ix) Increasing accounts payable, unpaid taxes and/or payroll related costs;
(x) Minimal or decreasing equity and/or reserves; and/or
(xi) High levels of debt and high borrowing costs.
(8) “Controlling person” means any person or entity in control of a nursing facility directly or indirectly, including:
(i) In the case of a corporation or a limited liability company, or limited liability partnership, a person having a beneficial ownership interest of five percent (5%) or more in the corporation, limited liability company or limited liability partnership to which the facility is licensed;
(ii) In the case of a general partnership or limited partnership, any general partner;
(iii) In the case of a limited liability company, or limited liability partnership any member;
(iv) A legal entity that operates or contracts with another person for the operation of a nursing facility or an owner thereof;
(v) Each of the president, vice president, secretary and treasurer of a corporation that is not exempt from taxation under § 501(a) of the United States Internal Revenue Code as an organization described in § 501(c)(3) of such code; and
(vi) Such other ownership interest or relationship as may be determined by the director.
History of Section.P.L. 1988, ch. 528, § 1; P.L. 2005, ch. 159, § 2; P.L. 2005, ch. 226, § 2.