Court Says State Went Too Far in Receivership of Insolvent Fla. CCRC

A district court in Florida has overturned an order allowing the State of Florida to intervene and act as receiver for an insolvent continuing care retirement community (CCRC) for the benefit of its residents, saying an initial ruling “erred on the side of caution.” 

Florida is “without this authority” under the case’s circumstances, involving the Devonshire at PGA National, Chatworth at PGA National LLC, and Chatworth PGA Properties LLC defaulting on its $158.4 million mortgage loan, says the new opinion filed on Jan. 11, 2013. 

Last summer, a trial court found Devonshire to be insolvent, even though it had been meeting its other financial obligations and paying other expenses as due, and “decided to err on the side of caution with regard to the residents” because of the possibility of risk to residents, says the recent court opinion. 


The state’s Department of Financial Services (DFS) and Office of Insurance Regulations (OIR) have a “strong consumer protection component to safeguard the interests of residents,” playing key oversight and regulatory roles for CCRCs, and may intervene “with all the necessary powers and duties” they possess under certain state statutes, including an “active interventionist approach where CCRCs are in financial distress and immediate corrective action is warranted.” 

For example, if the OIR finds that an insurer is insolvent or that further transaction of its business is hazardous or potentially hazardous, then the DFS may seek to rehabilitate the insurer under Section 631.051of the Florida Statutes. 

However, another section of the state’s statutes outlines circumstances where OIR and DFS must suspend its exercise of statutory powers when certain requirements related to trustees or lenders are met, says the court filing, and the Devonshire challenged the trial court ruling to this effect.


No evidence has been presented that the Devonshire wasn’t making payment on the day-to-day, operational aspects of the CCRC it oversees. Additionally, residents know of the mortgage default but none have moved out (as the time of the hearing), and no interruptions in services to residents had occurred, said a three-judge panel. 

The judges conclude that while the trial court was “correct in concluding that Devonshire met the statutory definition of insolvency,” it “erred in entering an injunction under the circumstances of this case” due to a statutory exception in Florida’s statutes, prompting them to remand the receivership with directions to vacate the injunction. 

View the filing

Recommended SHN+ Exclusives

Written by Alyssa Gerace