Health studios; security requirements.

Each health studio that sells contracts for health studio services shall meet the following requirements:

(1) Each health studio shall maintain for each separate business location a bond issued by a surety company admitted to do business in this state. The principal sum of the bond must be $25,000, and the bond, when required, must be obtained before a business tax receipt may be issued under chapter 205. Upon issuance of a business tax receipt, the licensing authority shall immediately notify the department of such issuance in a manner established by the department by rule. The bond must be in favor of the department for the benefit of a person injured as a result of a violation of ss. 501.012-501.019. Liability for injuries as a result of a violation of ss. 501.012-501.019 may be determined in an administrative proceeding of the department or through a civil action. However, claims against the bond or certificate of deposit may only be paid by order of the department in an administrative proceeding in amounts up to the determined liability for the injuries. The aggregate liability of the surety to all persons for all breaches of the conditions of the bonds provided by this section may not exceed the amount of the bond. The original surety bond required by this section shall be filed with the department on a form adopted by department rule.

(2) In lieu of maintaining the bond required in subsection (1), the health studio may furnish to the department on a form adopted by department rule:

(a) An irrevocable letter of credit from a foreign or domestic bank in the amount of $25,000; or

(b) A guaranty agreement that is secured by a certificate of deposit in the amount of $25,000.

The original letter of credit or certificate of deposit submitted in lieu of the bond shall be filed with the department. The department shall decide whether the security furnished in lieu of bond by the health studio complies with the requirements of this section.

(3) A consumer may file a claim against the bond, letter of credit, or certificate of deposit. Such claim, which must be submitted in writing on an affidavit form adopted by department rule, must be submitted to the department within 120 days after an alleged injury has occurred or is discovered to have occurred or a judgment has been entered. The proceedings shall be conducted pursuant to chapter 120. For proceedings conducted pursuant to ss. 120.569 and 120.57, the department shall act only as a nominal party.

(4) Any indebtedness determined by final order of the department shall be paid by the health studio to the department within 30 days after the order is entered for disbursement to the consumer. If the health studio fails to make payment within 30 days, the department shall make a demand for payment upon the surety which includes an institution issuing a letter of credit or depository on a certificate of deposit. Upon failure of a surety to comply with a demand for payment pursuant to a final order, the department may file an action in circuit court to recover payment, up to the amount of the bond or other form of security, pursuant to s. 120.69. If the department prevails in such action, the department may recover court costs and reasonable attorney fees.

(5) A health studio that sells contracts for future health studio services and collects direct payment on a monthly basis for those services is exempt from the security requirements of subsections (1) and (2) if any service fee charged is reasonable and fair. The number of monthly payments in such a contract must be equal to the number of months in the contract. The contract must conform to all the requirements for future health studio services contracts specified in ss. 501.012-501.019 and must specify in the terms of the contract the charges to be assessed for those health studio services.

(6) If the health studio furnishes the department with evidence satisfactory to the department that the aggregate dollar amount of all current outstanding contracts of the health studio is less than $5,000, the department may reduce the principal amount of the surety bond or other sufficient financial responsibility required in subsections (1) and (2) to a sum of at least $10,000. However, at any time the aggregate dollar amount of such contracts exceeds $5,000, the health studio shall notify the department and shall provide the bond or other documentation as required in subsections (1) and (2). Health studios whose bonds have been reduced shall provide the department with an annually updated list of members. The department shall increase the security requirement to $25,000 for a health studio that fails to file an annual report.

(7) Each health studio shall furnish the department with a copy of the escrow account which would contain all funds received for future consumer services, whether provided under contract or otherwise, sold before the business location’s full operation and specify a date certain for opening, if such an escrow account is established.

(8) Subsections (1) and (2) do not apply to a health studio that has been operating in compliance with ss. 501.012-501.019 and rules adopted thereunder, under the same ownership and control, continuously for the most recent 5-year period; that has not had any civil, criminal, or administrative adjudication against it by any state or federal agency; and that has a satisfactory consumer complaint history. As used in this subsection, the term “satisfactory consumer complaint history” means that there are no unresolved consumer complaints regarding the health studio on file with the department. A consumer complaint is unresolved if a health studio has not responded to the department’s efforts to mediate the complaint or if there has been an adjudication that the health studio has violated ss. 501.012-501.019 or the rules adopted thereunder. Such exemption extends to all current and future business locations of an exempt health studio.

(9) This section does not apply to a business, otherwise defined as a health studio, which sells a single contract of 30 days or less to a member without any option for renewal or any other condition that establishes any right in the member beyond the term of such contract. However, this exemption does not apply if the business offers any other health studio contract, regardless of duration, at any time before or during the existence of such single contract of 30 days or less.

(10) Except in the case of a natural disaster or an act of God, a health studio that is exempt from the requirements of subsections (1) and (2), but does not have any business locations open for 14 consecutive days, waives its exemption and is considered to be a new health studio for the purposes of ss. 501.012-501.019.