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HB 5426

AN ACT RELATING TO HEALTH AND SAFETY -- LICENSING OF HEALTHCARE FACILITIES

2025 Regular Session Introduced by David Bennett and 9 co-sponsors

Requires Rhode Island nursing facilities to disclose ultimate ownership and imposes a 3% cap on equity/asset withdrawals of annual patient-care revenue, with DOH oversight.

04/23/2025 Committee recommended measure be held for further study
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Bill Summary · HB 5426

Summary — HB 5426 (2025): Licensing of Healthcare Facilities (RI)

Status and timeline
- Introduced in the 2025 session (Introduced by Reps. Speakman, Morales, Boylan, Donovan, Carson, McGaw, Handy, Bennett, Potter, and Casey). Filed March 14, 2025; legislative record also shows an introduction date of February 12, 2025.
- Referred to House Health & Human Services; read first time April 7, 2025.
- 04/23/2025: Committee recommended the measure be held for further study.
- Effective date language: “This act shall take effect upon passage.” One substantive provision is written to apply “on or after July 1, 2025.”

Purpose and intent
- Increase transparency of ownership and financial flows for licensed nursing facilities and limit large withdrawals of equity/assets that could reduce resources available for resident care.

Key provisions
1. Expanded ownership disclosure (amends R.I. Gen. Laws § 23-17-65)
- Operators of nursing facilities must file with the Department of Health (DOH) detailed ownership information, including name, address, and description of the interest held by:
- Anyone with beneficial ownership of the land or building,
- Holders of mortgages/notes/deeds of trust secured by the property,
- Lessors/lessees and sublessees,
- Ultimate and actual owners and lessees, and the operator(s).
- Additional disclosure rules for entities:
- For partnerships/LLCs: names and addresses of partners/members.
- For private corporations: names and addresses of officers, directors, stockholders, principal stockholders/controlling persons.
- For publicly traded corporations or banks: principal executives, directors, and (if known) principal stockholders.
- “Operator” is defined to include the licensee and the ultimate ownership entity above the licensee.
- DOH must, upon request, furnish to the public all documents received under this section.

  1. Penalties and enforcement

    • Failure to file required ownership information, or knowingly filing false information, may subject the operator (after notice and hearing) to penalties under §§ 23-17-8 and 23-17-8.1.
    • The DOH director may require a financial audit at the operator’s expense and may impose a fine equal to the greater of $1,000,000 or the amount of facility assets diverted to undisclosed interest holders.

  2. Limit on withdrawals/transfers of equity or assets (adds § 23-17-12.12)

    • Starting July 1, 2025, no nursing facility may withdraw equity or transfer assets in aggregate exceeding 3% of the facility’s total reported annual revenue for patient care services without prior written approval from the DOH director.
    • Notification must be sent in a form acceptable to the licensing agency by certified mail.
    • “Total reported annual revenue” is based on the facility’s most recent BM-64 filed with the Dept. of Human Services, or an alternative form prescribed by the director.
    • The director must approve or disapprove the request within 60 days of receipt.

Who is affected
- All nursing facilities licensed under chapter 23-17 in Rhode Island.
- Facility operators, owners, investors, mortgage holders, lessors/lessees, and corporate entities with ownership stakes.
- The Department of Health (administration, review, audits, enforcement).

Potential impacts and considerations
- Increases public transparency of who ultimately owns and benefits from nursing facilities.
- Places limits on distributions/asset transfers that could protect funds available for resident care, but may constrain owners’ ability to extract returns (notably private equity or investor-owned facilities).
- Imposes new administrative burdens on facilities (data collection, filings, possible audits) and on DOH (reviewing approvals, audits, enforcement).
- The 60-day decision timeline provides administrative predictability for withdrawal requests; the 3% limit ties allowable withdrawals to reported patient-care revenue.
- Significant financial penalties aim to deter nondisclosure or diversion of assets.

For further reference
- Amends R.I. Gen. Laws § 23-17-65 and adds § 23-17-12.12 (Licensing of Healthcare Facilities).

Compiled from official sources — confirm details with the bill’s official record.

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