As a condition of doing business in the healthcare field, persons and companies must generally obtain the appropriate licenses or approvals. In addition to requirements that apply to all businesses, such as registering corporate entities with the Secretary of State or obtaining local business licenses known as business tax receipts, there are also substantive requirements that vary based on the type of services to be provided. To properly assess whether a person or a company meets the minimum substantive qualifications for licensure, state agencies require the submission of license applications. These applications request information on topics such as education, training, experience, and financial requirements.
These applications can often be confusing, which sometimes leads to errors or omissions in the applications. Although these errors and omissions can often be resolved successfully during the application process, they delay agency review and approval of the application. Agencies typically review and process applications within statutorily imposed timeframes and, if the application is complete, often beat those timeframes. However, each error in an application requires more time to review and resolve the error and could even eventually cause rejection of the application. Because these delays prevent an applicant from commencing business, they can result in missed business opportunities and a loss of revenue. It is therefore in an applicant’s best interests to minimize errors and omissions in the application before it is submitted.
In this article, we focus on some of the critical areas where we often see errors in two common types of healthcare-related applications: HMO certificate of authority applications (submitted to the Florida Office of Insurance Regulation); and healthcare-facility applications, such as clinic applications (submitted to the Florida Agency for Health Care Administration). However, many of the concepts discussed in this article apply to any application submitted to a state or federal agency.
- Notary certificates – Application forms often include requirements to submit material that has been notarized. These types of forms are routinely notarized, and notarization is not a difficult process, but mistakes are often made. Make sure that the dates of the signature and the notary stamp are the same; make sure that the notary has completely filled in all of the information required on the notary stamp; and verify that the notary correctly executes the document.
- Corporate information – Ensure the applicant’s information that is on file with the Florida Secretary of State matches the information given in the application.
- Biographical information – Many applications require background screening for the owners or managers of the applicant. Biographical affidavits are often long and ask for detailed information. Remember to address all of the requests. If a request is not applicable, respond “N/A” so that the regulator knows the item was reviewed. And remember to check the time frames. For example, if the application asks for 20 years of employment history, be sure to provide information for the last 20 years. If there are significant gaps in employment history, explain the reason.
- Financial documentation – Applicants are often required to demonstrate their financial viability (for example, by providing current financial statements) and to predict their financial viability after receiving their license (for example, by providing proforma financial projections). Make sure to provide the correct financial statement using the applicable accounting principles (e.g., GAAP vs. SAP). Often an application will ask for the most recent audited financial statement and the most recent unaudited, year-to-date statement. If both are available, the applicant should provide both. Requests for pro forma financial projections often are based upon a certain time frame (e.g., 3 years of projections) and a profitability measure (e.g., projected to be profitable for twelve consecutive months). Make sure that the pro forma statements meet both of these requirements, as well as any other specific requirements imposed by the agency, such as limitations on projected operating margin.
- Insurance certificates – Proof of appropriate insurance is required for many applications. The evidence of insurance should cover the time frame referenced in the application (e.g., do not include insurance certificates that are expired). If the applicant is a subsidiary of the insured, the proof of insurance should identify the applicant as a named or additional insured.
Reading the instructions and carefully responding to each part of the question may seem like a “common sense” approach. Unfortunately, corners are often cut in the haste to submit the application. Ironically, that haste, and the errors and omissions it causes, often leads to far longer delays than would have been encountered had the application been completed in a more thorough, though more time-consuming, manner. Accordingly, when preparing applications, the key takeaways are as follows:
- Read the application entirely;
- Take time to address each item thoroughly and completely;
- Make sure the answers are consistent throughout the application;
- If the application requires the completion of a form, make sure to use the current and correct version of that form (current versions of the application forms for the Office of Insurance Regulation are available here and the application forms for the Agency for Health Care Administration are available here);
- Review documentation and responses that were prepared and provided by other persons, instead of relying upon them not to have made mistakes; and
- Double check the application after completion, but before submission, to help catch any clerical or inadvertent mistakes.
Finally, if an applicant is unsure what specific documentation or material an application requires, contact the appropriate regulatory authority and ask for more clarification. The regulators prefer answering questions in advance to help the applicant submit a correct and complete application, as opposed to having to review documents and material that may be unnecessary and not responsive. We advise applicants to hire an attorney or consultant with experience submitting the particular application, and with a good reputation for practicing routinely before the specific state agency.