SECTION 553.35. Change of Ownership and Notice of Changes

(a) For purposes of this section, a temporary change of ownership license is a temporary license issued to an applicant who proposes to become the new operator of a facility that exists on the date the application is submitted.

(b) A license holder may not transfer its license. The applicant (new license holder) must obtain a temporary change of ownership license followed by an initial three-year license in accordance with this section. When the Texas Health and Human Services Commission (HHSC) approves the change of ownership by issuing a temporary change of ownership license to the new license holder, the current license holder's license becomes invalid as of the effective date of the change of ownership indicated in the change of ownership application. Between the effective date of the change of ownership and the issuance of the temporary change of ownership license, the current license holder remains responsible under its license; however, the applicant may operate a facility on behalf of a current license holder during such period of time.

(c) An applicant must submit to HHSC through the online portal:

(1) a complete HHSC application for a license in accordance with HHSC instructions and §553.23 of this subchapter (relating to Initial Application Procedures and Requirements) or an incomplete application with a letter explaining the circumstances that prevented the inclusion of the missing information;

(2) full payment of the fees required in §553.47 of this subchapter (relating to License Fees); and

(3) a signed and notarized Change of Ownership Transfer Affidavit HHSC Form 1092 from the applicant and the facility's current license holder of intent to transfer operation of the facility from the current license holder to the applicant, beginning on the change of ownership effective date specified on the change of ownership application.

(d) To avoid a facility operating while unlicensed, an applicant must submit all items required by subsection (c) of this section at least 30 days before the anticipated date of the change of ownership, unless the 30-day notice requirement is waived in accordance with subsection (e) of this section.

(e) HHSC may waive the 30-day notice required by subsection (d) of this section if HHSC determines that the applicant presents evidence showing that circumstances prevented the submission of the items specified in subsection (c) of this section and that not waiving the notice would create a threat to resident welfare or health and safety.

(f) Upon HHSC approval of the items specified in subsection (c) of this section, HHSC issues a temporary change of ownership license to the applicant if HHSC finds that the applicant, all controlling persons, and all persons disclosed in the application satisfy the requirements in §553.17 of this subchapter (relating to Criteria for Licensing), except for §553.17(c) and (d).

(1) The issuance of a temporary change of ownership license constitutes HHSC's official written notice to the facility of the approval of the application for a change of ownership.

(2) The effective date of the temporary change of ownership license is the date requested in the application and cannot precede the date the application is received by HHSC through the online portal.

(g) A temporary change of ownership license expires on the earlier of:

(1) 90 days after its effective date or the last day of any extension HHSC provides in accordance with subsection (h) of this section; or

(2) the date HHSC issues a three-year license in accordance with subsection (k) of this section.

(h) HHSC, in its sole discretion, may extend a temporary change of ownership license for a term of 90 days at a time based upon extenuating circumstances.

(i) HHSC staff conduct an on-site health inspection to verify compliance with the licensure requirements after issuing a temporary change of ownership license. HHSC may conduct a desk review instead of an on-site health inspection after issuing a temporary change of ownership if:

(1) less than 50 percent of the direct or indirect ownership interest in the former license holder differs from that of the new license holder; or

(2) every owner with a disclosable interest in the new license holder has a disclosable interest in the former license holder.

(j) HHSC, in its sole discretion, may conduct an on-site Life Safety Code inspection of the facility after issuing a temporary change of ownership license.

(k) If the applicant, all controlling persons, and all persons disclosed in the application satisfy the requirements of §553.17 of this subchapter, except for §553.17(c)(1)(A) - (C), for a license, and the facility passes the change of ownership health inspection as described in subsection (i) of this section, HHSC issues a three-year license within 30 days after HHSC determines that the applicant and the facility have met the licensure requirements of this section. The effective date of the three-year license is the same date as the effective date of the change of ownership and cannot precede the date the application was received by HHSC through the online portal.

(l) HHSC may deny an application for a change of ownership if the applicant, controlling person, or any person disclosed in the application fails to meet the criteria for a license established in §553.17 of this subchapter.

(m) If HHSC denies an application for a temporary change of ownership license or a three-year license, HHSC sends the applicant a written notice of the denial and informs the applicant of the applicant's right to request an administrative hearing to appeal the denial. The administrative hearing is held in accordance with HHSC rules at 1 TAC Chapter 357, Subchapter I (relating to Hearings Under the Administrative Procedure Act).

(n) If a license holder that is not a publicly traded company adds an owner with a disclosable interest, but the license holder does not undergo a change of ownership, the license holder must notify HHSC no later than 30 days after the addition of the owner by submitting an application through the online portal.

(o) If a license holder changes its name but does not undergo a change of ownership, the license holder must notify HHSC and submit documentation evidencing a legal name change by submitting an application through the online portal. On receipt of the notice and documentation, HHSC reissues the current license in the license holder's new name.

Source Note: The provisions of this §553.35 adopted to be effective August 31, 2021, 46 TexReg 5017; amended to be effective October 11, 2022, 47 TexReg 6589