It can appear that the heavy lifting of a change of ownership for your health care facility is in the prospecting, sale, or the paperwork but there are common mistakes that owners make in this important business transaction relate to the new owner’s AHCA license application, sale documentation, and proof of financial ability to operate.
Let’s explore those mistakes to help you navigate your Change of Ownership smoothly and help avoid fines, complaints, and Notice of Intent to Deny (NOID) renewal applications.
Mistake 1: Timely Reporting of Your Change of Ownership
Timing is everything when it comes to submitting your change of ownership (CHOW) to AHCA and this is where the mistakes and problems can occur.
All licensees must submit its change of ownership (CHOW) application 60 days prior to the date of change of ownership. Failure to do so can result in an Administrative complaint, fine and/or Notice of Intent to Deny renewal application.
All health care facility licensees must submit an application for Change of Ownership to AHCA.
Mistake 2: Preparing the Documentation
The actual sale or change of ownership document must be prepared accordingly or may result in the denial of the CHOW application. According to AHCA the CHOW documentation must include the following items and failure to provide this documentation may result in unlicensed activity:
- If the sales document (Asset Purchase Agreement, Stock Purchase, or the like) has closed and ownership per the sales document has passed ownership to the new owner without notifying AHCA, this may result Unlicensed Activity. Reminder: the AHCA healthcare license is not transferrable at closing.
- Merger or Acquisition of a company which has an AHCA Facility license may also result in Unlicensed Activity if a CHOW application is not timely submitted to AHCA.
Mistake 3: New Ownership Licensing
It’s a common myth where business owners believe they can simply sell their health care facility or entity to anyone and that the new owner will apply for a license with AHCA. Or the seller wrongly informs the buyer of the protocol for this application process suggesting that the new owner can file for a renewal of the former owner’s license once they take over the business.
In these situations where owners incorrectly believe this is the process and AHCA denies their license under these situations.
If AHCA rejects your Change of Ownership application, you will receive a Notice of Intent to Deny the License. Read our blog: Received a NOID, Here’s What to Expect.
It’s important to keep current with changes to Florida Division of Corporations or Sunbiz.org.
Bottom line: Changing or filing Amended Articles of Incorporation with the Florida Division of Corporations is not enough to Change of Ownership of a Health Care Facility. If you have done so, and have not submitted a CHOW application with AHCA, may result in Unlicensed Activity and/or an Administrative Complaint.
Dig in to find more information about Change of Ownership Applications.
Mistake 4: Failure to perform Proof of Financial Ability to Operate
AHCA requires the new owner to complete the Proof of Financial Ability to Operate. This can be most problematic if not done by an someone experienced with the AHCA financial spreadsheet.
Mistake 5: New Owner with Criminal Background Problems
All new owners will be required to undergo a level II background screening. If either of the new owners have a criminal history, that person’s background screening can halt the CHOW process.
Contact the law offices of Howell, Buchan & Strong, Attorneys at Law for your free consultation at any one of our locations:
Orlando (407) 717-1773 |Tallahassee (850) 877-7776 | Tampa (813) 833-6726 | Sarasota (941) 779-4348