710 Ind. Admin. Code 2-3-5

Current through December 4, 2024

Section 710 IAC 2-3-5 - Contents of an initial disclosure statement

Authority: IC 23-2-4-24

Affected: IC 23-2-4

Sec. 5.

The initial disclosure statement shall contain the following information:

(1) Cover Page. The following information shall appear on the cover page of the initial disclosure statement:

(A) In bold face, the words "INITIAL DISCLOSURE STATEMENT."

(B) The name and address of the home.

(C) The name and address of the provider, if different from that of the home.

(D) If the provider is affiliated with a religious, charitable, or other nonprofit organization, a statement to that effect and the name and address of such organization.

(E) The following statement, in at least ten (10) point type:

NOTICE TO PROSPECTIVE RESIDENTS

"ALL PROSPECTIVE RESIDENTS SHOULD READ THIS DISCLOSURE STATEMENT IN ITS ENTIRETY BEFORE ENTERING INTO ANY CONTRACT OR WRITTEN AGREEMENT OR PAYING ANY FEE. ADDITIONALLY, A REPRESENTATIVE OF THE PROVIDER IS AVAILABLE DURING NORMAL BUSINESS HOURS TO ANSWER ANY QUESTIONS RELATING TO THIS DISCLOSURE STATEMENT AND THE REPRESENTATIONS CONTAINED HEREIN."

(2) Table of Contents, containing at least the following headings in the following order: The Provider, The Manager, Management's Discussion and Analysis of Financial Condition, The Home, Services, Cancellation of the Contract, Management and Principal Owners of the Provider, Management and Principal Owners of the Manager, Litigation, Opinion of Independent Accountants, Financial Statements, Form of Continuing Care Agreements.

(3) The Provider. Information concerning the provider, including but not limited to:

(A) date and form of organization;

(B) affiliation with any religious, charitable, or other nonprofit organization;

(C) description of the provider's business, including the name and address of any other home or health facility owned or operated, any property in which the provider owns a twenty-five percent (25%) interest and on which a home or health facility is intended to be located, and a description of any other business not related to continuing care or health care; and

(D) a statement as to whether, within ten (10) years prior to the date of the initial disclosure statement, he:

(i) was convicted of a crime;

(ii) was a party to any civil action for fraud, embezzlement, fraudulent conversion, or misappropriation of property that resulted in a judgment against him;

(iii) had a prior discharge in bankruptcy or was found insolvent in any court action; and

(iv) had any state or federal licenses or permits suspended or revoked in connection with any health care or continuing care activities, or related business activities.

This clause does not require a negative disclosure.

(4) The Manager. The same information required for the provider under subdivision (3).

(5) Management's Discussion and Analysis of Financial Condition:

(A) Liquidity. Discuss the provider's ability to generate cash adequate to meet its needs for cash. In particular, discuss on both a long-term and a short-term basis any known trends that are reasonably likely to result in the provider's liquidity increasing or decreasing in a material way. If a cash shortage is identified, indicate the course of action the provider has taken or proposes to take to remedy the shortage and identify and separately describe both internal and external sources of cash.

(B) Capital Resources. Describe the provider's commitments for capital expansion, renovation, and other expenditures. Indicate the anticipated source of funds needed to fulfill such commitments. Discuss any expected changes in the mix of equity, debt, and any off-balance sheet financing arrangements.

(C) Results of Operations. Discuss the provider's results of operations during the past three (3) years, using year-to-year comparisons when practical. Describe any unusual or infrequent events or transactions or any significant economic changes that materially affected the amount of reported income from continuing operations and, in each case, indicate the extent to which income was so affected. Also describe any known trends or uncertainties that have had or that the provider reasonably expects will have a material favorable or unfavorable impact on net sales or revenues or income from continuing operation.

(D) Other. Discuss any other information necessary to an understanding of the provider's financial condition, changes in financial condition, and results of operations. Focus specifically on material events and uncertainties known to management that would cause reported financial information not to be necessarily indicative of future operating results or of future financial condition. This would include descriptions and amount of:

(i) matters that would have an impact on future operations and have not had an impact in the past; and

(ii) matters that have had an impact on reported operations and are not expected to have an impact upon future operations.

(6) The Home. A description of the home and its facilities, including a description of any other health care facility, the services of which the resident may be entitled to under the continuing care agreement, including:

(A) general physical description of the home;

(B) the number of residents of the home;

(C) facilities for meals, laundry, and transportation;

(D) recreational facilities;

(E) medical service facilities;

(F) a description of the staff of the home, including a statement as to whether any professional persons are on the staff; and

(G) a description of the community in which the home is located.

(7) Services. A description of all services to be provided by the provider under its continuing care agreements with contracting parties, and a description of all fees for those services, including any conditions under which the fees may be adjusted. Services described must include:

(A) meal services;

(B) laundry services;

(C) transportation services;

(D) nursing services; and

(E) medical services.

(8) Cancellation of the Contract. A description of the terms and conditions under which the continuing care agreement can be cancelled, and a description of the terms and conditions under which fees may be refunded.

(9) Management and Principal Owners of the Provider:

(A) The name and business address of any person having a five percent (5%) or greater ownership interest in the provider.

(B) For each officer, director, trustee, partner, manager, or person holding a similar position of the provider, the following information:

(i) His name, title, and duties.

(ii) His business experience, including all employments for the last ten (10) years.

(iii) A statement as to whether, within ten (10) years prior to the date of the initial disclosure statement, he:

(AA) was convicted of a crime;

(BB) was a party to any civil action for fraud, embezzlement, fraudulent conversion, or misappropriation of property that resulted in a judgment against him;

(CC) had a prior discharge in bankruptcy or was found insolvent in any court action; and

(DD) had any state or federal licenses or permits suspended or revoked in connection with any health care or continuing care activities, or related business activities.

This item does not require a negative disclosure.

(10) Management and Principal Owners of the Manager. The same information required for the provider in subdivision (9).

(11) Litigation. A statement as to whether the provider or manager is party to any pending litigation involving claims under IC 23-2-4, or any litigation the result of which may materially affect the financial condition of the provider.

(12) Opinion of Independent Accountants. The report of an independent certified public accountant, based on an examination of the issuer's financial statements in accordance with generally accepted auditing standards, including such tests of the accounting records and such other auditing procedures as considered necessary under the circumstances, and an opinion that such financial statements fairly present the financial position of the issuer and the results of its business operations for the periods stated therein.

(13) Financial Statements. The provider's financial statements, prepared in accordance with generally accepted accounting principles, including a balance sheet as of the provider's last fiscal year, and income statements for the last three (3) fiscal years, or such shorter period of time as the provider has been in operation.

(14) Form of Continuing Care Agreements. A copy of the continuing care agreement proposed by the provider. The copies must be bound in the initial disclosure statement but may be detachable for execution by the parties.

(15) Any other information the commissioner may require by order.

710 IAC 2-3-5

Securities Division; 710 IAC 2-3-5; filed Jan 30, 1985, 9:33 a.m.: 8 IR 612; filed Dec 5, 1988, 8:20 a.m.: 12 IR 918; errata filed Feb 21, 1989, 9:45 a.m.: 12 IR 1558; readopted filed May 31, 2002, 11:34 p.m.: 25 IR 3462; readopted filed Dec 2, 2008, 9:01 a.m.: 20081224-IR-710080819RFA

Readopted filed 9/23/2015, 2:54 p.m.: 20151021-IR-710150280RFA

Readopted filed 9/27/2021, 11:04 a.m.: 20211027-IR-710210374RFA