Current through Register Vol. 39, No. 6, September 16, 2024
(a) A
negative fund balance is a financial position of a provider or facility in
which the assets of a provider or facility do not exceed its liabilities, as
required under generally accepted accounting principles. The Commissioner may
deem a provider or 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:
(1) There are findings or conditions reported
in the provider's or facility's financial statements that the Commissioner
determines to be adverse to the financial stability of the provider or
facility.
(2) The current or
projected ratios of total assets, including required reserve levels, to total
liabilities indicate an impairment or a deterioration of the provider's or
facility's operations or equity; or demonstrate a trend that could lead to an
impairment or a deterioration of the provider's or facility's operations,
working capital, or equity.
(3) The
current or projected ratios of current assets to current liabilities indicate
an impairment or a deterioration of the provider's or 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 facility's operations,
working capital, or equity.
(4) The
provider or facility is unable to perform normal daily activities and meet its
obligations as they become due, considering the provider's or facility's
current or projected cash flow and liquidity position.
(5) The provider's or facility's operating
losses for the past year or projected operating losses are of such magnitude as
to jeopardize normal daily activities or continued provider or facility
operations.
(6) The insolvency of
an affiliated provider or facility or other affiliated person results in legal
liability of the provider or facility for payments and expenses of such
magnitude as to jeopardize the provider's or facility's ability to meet its
obligations as they become due, without substantial disposition of assets
outside the ordinary course of business, any restructuring of debt, or
externally forced revisions of its operations.
(7) The provider or facility has receivables
that are more than 90 days old.
(8)
The insolvency is not temporary and the provider or facility cannot demonstrate
that the insolvency is materially reduced or eliminated.
(9) There is an adverse effect on the
provider or 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.
(10) A start-up provider
or facility or any operational provider or facility undergoing plant expansion
or refinancing of its debt has a financial condition as a result of such action
that could otherwise seriously jeopardize present or future
operations.
(b) The
provider or facility shall prepare a plan to address and correct any 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 90
days after the date of the insolvency determination. If the plan to correct the
condition 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 facility's hazardous condition is such that it cannot be
significantly corrected or eliminated, the Commissioner may then proceed under
G.S.
58-64-10 or
G.S.
58-64-45.
Authority
G.S.
58-2-40;
58-64-10;
58-64-45;
58-64-65;
Eff. January
1, 1994;
Pursuant to
G.S.
150B-21.3A, rule is necessary without
substantive public interest Eff. December 20,
2015.
