Effective October 1, 2023: What You Need to Know

Connecticut has enacted significant changes to its change of ownership (“CHOW”) laws for healthcare providers, including nursing homes. These updates are enshrined in Connecticut Public Act 23-122 (“CHOW Law”), which supersedes Section 19a-493 of the Connecticut General Statutes. The new regulations come with stricter requirements for healthcare providers seeking a change in ownership. This article seeks to elucidate the major aspects of these changes.

Changes to Connecticut’s CHOW Laws – All Providers

The new CHOW Law necessitates that prior to the issuance of a Connecticut license, the proposed new owner—or in instances of a change in beneficial ownership, the current owner—of a healthcare facility must submit an application for approval to the Connecticut Department of Public Health. This should be done not later than 120 days before the proposed date of the change.
The application must include the following elements:

• Cover Letter: Identification of the facility or institution, its address, county, and the number and type of beds licensed by the Connecticut Department of Public Health.
• Transaction Description: A detailed explanation of the transaction causing the change in ownership, including names of the current owners.
• New Ownership Information: Names of each proposed new owner or beneficial owner.
• Parent Corporation Information: If applicable, names of each owner of any non-publicly traded parent corporation.
• Organizational Charts: Current and proposed organizational charts showing the changes in ownership.
• Legal Agreements: Copies of sale agreements, leases, or other documents detailing transfer of ownership.
• History of Ownership: Names and addresses of any healthcare facilities owned or operated by each proposed new owner in the U.S., for the past five years.
• Disclosure of Legal History: Information on whether each proposed new owner has previous convictions or pleaded guilty to fraud, patient abuse, or similar crimes.

Changes to Connecticut’s CHOW Laws – Nursing Homes

For operators seeking to establish or maintain a nursing home, the CHOW Law outlines additional informational requirements.
These include:

• Ownership Information: Names and business addresses of the owners and their legal status (individual, partnership, corporation, etc.).
• Management Information: Names and roles of key personnel including officers, directors, trustees, or managing and general partners.
• Certificate of Good Standing: If incorporated in another state.
• Business Experience: Detailed business experience of the owner and the administrator.
• Legal Affidavits: Statements from key personnel disclosing past felonies or liabilities in civil action related to fraudulent activities.
• Organizational Affiliations: Information on any affiliations with religious, charitable, or other nonprofit organizations.
• Additional Facilities: Description and status of other healthcare facilities owned by the entity.
• Financial Projections: If applicable, a statement detailing the financial layout for purchasing or constructing the nursing home.

Practical Takeaways

The CHOW Law significantly changes the landscape of ownership changes for healthcare providers in Connecticut. Nursing facility operators, whether new or transferring ownership, must be particularly cautious in navigating the newly added layers of requirements. Diligent preparation and legal consultation are advised to ensure compliance.

This is not just a matter of administrative formality; it’s a significant legal requirement that necessitates comprehensive due diligence and potentially affects the legal standing of the facility and its operators. Therefore, understanding and adapting to these changes are vital for all healthcare providers in Connecticut.

This article is for informational purposes only and does not constitute legal advice.