CopyCited 1 times | Published | Florida 1st District Court of Appeal | 2013 WL 132695, 2013 Fla. App. LEXIS 479, 38 Fla. L. Weekly Fed. D 123
...important exceptions, but also have a strong consumer protection component to safeguard the interests of residents. 4 As a part of this regime, the Department of Financial Services (DFS) and the Office of Insurance Regulation (OIR) play key roles. 5 Section 651.114, entitled “Delinquency proceedings; remedial rights,” sets forth the authority of OIR to seek remedial relief. Subsection 651.114(5) provides that: (5)Should the [OIR] find that sufficient grounds exist for rehabilitation, liquidation, conservation, reorganization, seizure, or summary proceedings of an insurer as set forth in ss....
...advisory council. Subsection (6) provides that OIR and DFS may intervene “with all the necessary powers and duties” they possess “under the provisions of part I of chapter 631 in regard to delinquency proceedings of insurance companies.” Id. § 651.114(6)....
...These powers provide for an active interventionist approach where CCRCs are in financial distress and immediate corrective action is warranted; OIR may also choose to take an incrementalist approach by requiring or specifying corrective plans with which providers must comply. 6 Section
631.051, referred to above in subsection
651.114(5), sets forth the powers of DFS to rehabilitate an insurer....
...Based upon findings by OIR that an insurer is insolvent or that further transaction of its business is hazardous (or potentially so), the DFS may seek to rehabilitate the insurer under this section. A countervailing statutory provision— relevant in this appeal — is section 651.114(8)(a), which carves out circumstances where OIR, and by implication DFS, must suspend its exercise of statutory powers when certain requirements related to trustees or lenders are met. Id. § 651.114(8)(a)....
...foreclosure or conveyance in lieu thereof,” provided residents meet certain requirement (such as paying their contractual obligations, complying with their contracts, and asserting no claims that are inconsistent with the lender’s rights). 8 Id. § 651.114(8)(a)(l)-(3)....
...]” 9 In this event, OIR must notify the lender “in writing of its determination, setting forth the reasons giving rise to the determination and specifying those remedial rights afforded to the office which the office shall then reinstate.” Id. § 651.114(8)(c)....
...become insolvent; and Devon-shire’s continued operation was hazardous to its residents, creditors, policyholders, stockholders, or the public. On July 2, 2012, Devonshire responded by challenging: OIR’s authority to refer Devonshire to DFS under section
651.114(8); Devonshire’s status as insolvent under
651.011(8); and OIR’s conclusion that Devonshire’s continued operation would be hazardous. DFS replied on July 6, 2012, contesting Devonshire’s arguments and claiming Devonshire lacked standing to rely on section
651.114(8)....
...Ill The two primary issues presented are (A) whether Devonshire is “insolvent” within the meaning of section
651.011(8), Florida Statutes, and (B) whether OIR and DFS have statutory authority to act against Devonshire under the circumstances despite the exemption in section
651.114(8), Florida Statutes. We agree with the trial court’s conclusion that Devonshire is insolvent as defined in section
651.011(8); we disagree that OIR and DFS have the authority to act under the circumstances due to the exemption in section
651.114(8)(a), but recognize that they may do so upon a showing by OIR that the interests of the residents warrant intervention under section
651.114(8)(c)....
...Doran,
224 So.2d 693, 699 (Fla.1969) (statute providing for issuance of injunctions upon application by “citizens” applies to one citizen as well; applying §
1.01(1), Fla. Stat.). Because we find no fault in the trial court’s determination as to Devonshire’s insolvency, we move on to the next argument. B. Section
651.114(8)’s Exemption Devonshire argues that DFS has no authority to act because the Lender has included language in the loan documents that specifies that the Lender will protect residents as specified in the statutory suspension clause. It argues that the language of section
651.114(8)(a) “demonstrates that it was intended to permit a mortgage foreclosure to go forward, without the initiation of a delinquency proceeding, as long as during the foreclosure process the rights of the residents are being honored.” DFS contrarily argues that section
651.114(8) “is applicable only when a lender has taken possession of a CCRC through the foreclosure process.” 11 As a part of its Agreement with Devon-shire, the Lender included the following language: Section 11.10 Resident Rights. Pursuant to Section
651.114, Florida Statutes, the Administrative Agent and Lenders agree that the rights of each resident of the Project under the resident’s Residential Agreement will be honored and will not be disturbed by a foreclosure under the Financing...
...Devonshire argues that the inclusion of this language in the Agreement operates to suspend the remedial powers of OIR (and DFS) over Devonshire unless it is shown that the interests of residents are not being adequately protected as defined in the section 651.114(8)(c)....
...agrees that the rights of residents under a continuing care or continuing care at-home contract will be honored and will not be disturbed by a foreclosure or conveyance in lieu thereof’ (provided residents abide by certain conditions not relevant here). § 651.114(8)(a)....
...consent, the office shall notify the trustee or lender in writing of its determination, setting forth the reasons giving rise to the determination and specifying those remedial rights afforded to the office which the office shall then reinstate. § -651.114(8)(c) (emphasis added)....
...Admittedly, the inability to make the multi-million dollar lump sum payment is troubling; but if OIR and DFS have evidence that the rights of residents are not being honored, nothing prevents intervention upon a proper showing under the revival clause in section 651.114(8)(c)....
...651.106 apply to the trustee or lender or that the terms of the contract used as the basis for the issuance of the temporary certificate of authority by the [OIR] have not been or are not being met by the trustee or lender since the date of acquisition. § 651.114(8)(d) (emphasis added). Other portions of subsection (8) relate to contingencies that are independent of a successful foreclosure process. See §§ 651.114(7) (likely future insolvency); (8)(c) (assignment of delinquent loan)....
...[[Image here]] In conclusion, we hold that the trial court was correct in concluding that Devonshire met the statutory definition of “insolvency” but erred in entering an injunction under the circumstances of this case due to the statutory exception in section 651.114(8)(a)....
...tive action plan. If the provider fails to submit a plan within 30 days after the [OIR’s] directive or submits a plan that is insufficient to correct the condition, the [OIR] may specify a plan and direct the provider to implement the plan.” Id. § 651.114(7)....
...fore the acquisition of the facility by the trustee or lender; or 4.Provide services to the residents to the extent that the trustee or lender would be required to advance or expend funds that have not been designated or set aside for such purposes. § 651.114(8)(b). .This section also applies when OIR determines “a lender or trustee has assigned or has agreed to assign all or a portion of a delinquent or defaulted loan to a third party without the [OIR’s] written consent[.]” § 651.114(8)(c)....
...ely available, would not be sufficient to discharge all its liabilities or that the insurer is unable to pay its debts as they become due in the usual course of business.” §
631.011(14). . DFS also argues that Devonshire has no standing to invoke section
651.114(8)(a) whose exemption was intended to benefit lenders and trustees, not CCRC providers....
...Here, Devonshire is directly impacted by the injunction and adversely affected by its terms, thereby establishing its ability to argue in favor of the statutory exception’s application. Nedeau v. Gallagher,
851 So.2d 214, 215-16 (Fla. 1st DCA 2003). We do not construe section
651.114(8)(a) as a remedial provision, which would limit the class of persons entitled to invoke its proscriptions to those intended to be protected....
