As used in Section 1253.3, the following definitions shall apply:

(a) “Applicant” means any person, as defined in Section 19, that has submitted an application for a license, pursuant to Section 1265, to operate a health facility as defined under subdivision (k).

(b) “Application” means those materials, set forth in Section 1265, that an applicant submits to the department for a license to operate a health facility.

(c) “Beneficial ownership interest” means any of the following:

(1) The possession by a person, as defined in Section 19, of an ownership interest, including a combination of direct and indirect ownership interests, totaling 5 percent or more in any licensed health facility.

(2) An ownership interest of 5 percent or more in any mortgage, deed of trust, note, or other obligation secured by a licensee of or applicant for licensure of a health facility if that interest equals at least 5 percent of the value of the property or assets of the applicant or licensed health facility.

(3) Is an officer or director of a licensed health facility or applicant for licensure of a health facility that is organized as a corporation.

(4) Is a partner in a licensed health facility or applicant for licensure of a health facility that is organized as a partnership.

(5) Is a member of a licensed health facility or applicant for licensure of a health facility that is organized as a limited liability company.

(d) “Chain” means a group of two or more licenses that are owned directly or indirectly, as defined in this section, by the same persons, companies, or entities.

(e) “Change of ownership” means any of the following:

(1) For a partnership, the removal, addition, or substitution of a partner.

(2) For a corporation, the merger of the applicant’s or licensee’s corporation into another corporation, or the consolidation of two or more corporations of the licensee, resulting in the creation of a new corporation; however, the transfer of corporate stock, the merger of another corporation into the applicant’s or licensee’s corporation, or the approved lawful conversion of a corporation to a limited liability company does not constitute a change of ownership.

(3) For a limited liability company, the merger of the applicant’s or licensee’s limited liability company into another limited liability company, or the consolidation of two or more limited liability companies, of the licensee, resulting in the creation of a new limited liability company; however, the transfer of limited liability company interest, the merger of another limited liability company into the applicant’s or licensee’s limited liability company or the approved lawful conversion of a limited liability company to a corporation does not constitute a change of ownership.

(4) The sale, conveyance, transfer, or disposition of title and property of a licensed health facility or licensee of a licensed health facility to another person or entity who is not the licensee where, as a result of the sale, conveyance, transfer or disposition, the licensee has lost the right to possess and occupy the physical structures, buildings, or real property that comprise the operational location of the health facility approved by the department.

(5) The lease of all or part of the health facility’s property and assets to a person or entity who is not the licensee, where the lease is either a new lease or a transfer, sublease, or assignment of the licensee’s right to possess or occupy the physical structures, buildings, or real property that comprise the operational location of the health facility approved by the department.

(f) “License” means a basic permit to operate a health facility with an authorized number and classification of beds. A license shall not be transferable.

(g) “Manage” means to assume operational control over a facility, to make financial decisions for the facility, to direct or control aspects of patient care and quality within the facility, or to be involved in the hiring, firing, supervision, and direction of direct care staff when these actions are completed by a management company hired, retained, or authorized to act on behalf of a licensee. Manage does not include financing exchanged between multifacility organizations.

(h) “Managing employee” means any general manager, business manager, administrator, director, or other individual who exercises operational or managerial control over, or who directly or indirectly conducts, the day-to-day operations of a licensed health facility.

(i) “Management company” means an entity that directly or indirectly conducts the day-to-day operations or exercises managerial control of a health facility licensed by the department but is not the licensee.

(j) “Ownership interest” means the possession of equity in the capital, the stock, the principal property and assets, or the profits of the licensed health facility. An ownership interest may be either direct or indirect.

(1) A direct ownership interest is an interest in the licensed health facility or applicant for licensure of a health facility.

(2) An indirect ownership interest is an ownership interest in an entity that itself has an ownership interest in a licensed health facility or of an applicant for licensure of a health facility.

(k) “Operate” means to own, lease, sublease, establish, maintain, conduct the affairs of, or manage a skilled nursing facility.

(l) “Parent corporation” or “parent organization” means an organization that is the legal entity owning a controlling interest in an organization licensed by the department. The parent organization is the “ultimate” parent, or the top entity in a hierarchy (which may include other parent organizations) of subsidiary organizations that is not itself a subsidiary of any corporation. A legal entity may be its own parent organization if it is not a subsidiary of any other organization.

(Added by Stats. 2022, Ch. 578, Sec. 3. (AB 1502) Effective January 1, 2023.)