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Title: Section 901.10 - Management contracts

Effective Date


901.10 Management contracts. (a) For the purposes of this Part, a management contract is an agreement between a life care community's governing body and a contracting entity for the contracting entity to assume the primary responsibility for managing the day-to-day operations of an entire community or component thereof.

(b) A management contract shall contain the following information:

(1) a description of the proposed role of the governing body during the period of the proposed management contract. The description shall clearly reflect retention by the governing authority of ongoing responsibility for statutory and regulatory compliance;

(2) a provision that clearly recognizes that the responsibilities of the community's governing body are in no way obviated by entering into a management contract and that any powers not specifically delegated to the contracting entity through the provisions of the contract remain with the governing authority;

(3) a provision that states that the community's governing body shall retain the authority to discharge the managing entity and its employees at the community with or without cause; and

(4) a plan for assuring maintenance of the fiscal stability and the level and quality of services provided by the community during the term of the management contract.

(c) The governing body shall retain sufficient authority and control to discharge its responsibility under this Part. The following elements of control shall not be delegated to a managing entity:

(1) direct independent authority to appoint and discharge the chief executive officer or other key management employees above the department head level;

(2) independent control of the books and records;

(3) authority over the disposition of assets and the authority to incur on behalf of the community liabilities not normally associated with the day-to-day operation of a facility; and

(4) independent adoption of policies affecting the delivery of life care community services.

(d) A governing body wishing to enter into a management contract shall submit a proposed written contract to the department upon submission of a Certificate of Authority application in accordance with section 900.3(c)(13) or a governing body entering a new management contract or revising a management contract subsequent to the issuance of a certificate of authority shall submit a copy of the contract with the submission of the disclosure statement in accordance with section 901.9(a)(2). In addition, the governing body shall also submit, within the same time frame, the following:

(1) a statement as to whether the manager or managing entity has been convicted of a crime or pleaded nolo contendre to a felony charge, or been held liable or enjoined in a civil action by final judgement if the criminal or civil action involved fraud, embezzlement, fraudulent conversion or misappropriation of property;

(2) a statement as to whether the manager or managing entity had a prior discharge in bankruptcy or was found insolvent in any court action; and

(3) a statement as to whether the manager or managing entity is or was subject to a currently effective injunctive or restrictive order or federal or state administrative order relating to business activity or health care as a result of an action brought by a public agency or department, including without limitation, actions affecting a license to operate a life care, health care and/or adult care operation as defined in Section 900.1(m) of Part 900. The statement shall set forth the court or agency, date of conviction or judgement, the penalty imposed or the damages assessed, or the date, nature and issuer of the order.


VOLUME E (Title 10)