Commerce, Consumer Protection

Rule R152-23

Utah Health Spa Services

Notice of Proposed Rule

(Amendment)

DAR File No.: 36904
Filed: 10/01/2012 05:39:24 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

Health spa business models have evolved in this state making it necessary to clarify the class of consumers protected by the Health Spa Services Protection Act. Proof of liability insurance was added as a requirement for licensure.

Summary of the rule or change:

References to members and memberships were changed to reference consumers of health spa services and the contractual obligations for health spa services permissible under the Health Spa Services Protection Act.

State statutory or constitutional authorization for this rule:

• Section 63G-3-201
• Section 13-2-5
• Section 13-23-1

Anticipated cost or savings to:

the state budget:

The state budget will not be affected by clarifying the consumers that are entitled to protection under the Health Spa Services Protection Act.

local governments:

Local government will not be affected by clarifying the consumers that are entitled to protection under the Health Spa Services Protection Act.

small businesses:

Health spas that qualify as small businesses will not be affected by clarifying the consumers that are entitled to protection under the Health Spa Services Protection Act. The proof of insurance requirement will only affect small business health spas that have not or do not currently carry liability insurance. It is doubtful that small businesses would engage in a risky enterprise such as health spa services without insuring against the risks associated with offering such services, so the Division anticipates that this requirement will affect very few, if any, health spas.

persons other than small businesses, businesses, or local governmental entities:

Consumers that enter into contracts for health spa services that are not the traditional gym membership arrangements will more clearly fall under the protection of the Health Spa Services Protection Act.

Compliance costs for affected persons:

The proof of insurance requirement will impact affected persons that have not or do not currently carry liability insurance. It is doubtful that businesses would engage in a risky enterprise such as health spa services without insuring against the risks associated with offering such services, so the Division anticipates that this requirement will not increase the compliance costs for affected persons.

Comments by the department head on the fiscal impact the rule may have on businesses:

As stated in the rule analysis, the proposed amendments clarify existing rules as to the class of consumers protected by the Health Spa Services Protection Act and the specific acts that are required or prohibited in order to afford that protection. The costs to businesses of obtaining liability insurance are anticipated to be minimal and are unavoidable if the protections contemplated by the statute are to be implemented.

Francine A. Giani, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Commerce
Consumer Protection
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Angela Hendricks at the above address, by phone at 801-530-6035, by FAX at 801-538-6001, or by Internet E-mail at ahendricks@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

11/14/2012

This rule may become effective on:

11/21/2012

Authorized by:

Traci Gundersen, Director

R152. Commerce, Consumer Protection.

R152-23. Utah Health Spa Services.

R152-23-1. Authority.

These Rules are promulgated in accordance with the provisions of Section 63G-3-201 and Section 13-2-5, Utah Code Ann. (1953), as amended, to prescribe for the administration of the Health Spa Services Protection Act, Section 13-23-1, et seq., Utah Code Ann. (1953), as amended.

 

R152-23-2. Scope and Applicability.

These rules shall apply to the conduct of every [Health Spa]health spa within the State of Utah.

 

R152-23-3. Definitions.

In addition to the definitions set forth in Section 13-23-2, the following definitions shall apply to these Rules.

(1) "Advance Sales" shall mean sales of [membership]consumer contracts on any date prior to the date a health spa facility becomes fully operational and available for use.

(2) "Costs" shall mean those costs incurred by the Division in investigating complaints, in collecting and distributing funds, and in otherwise fulfilling its responsibilities under the Health Spa Services Protection Act or these Rules.

(3) "Facility" means the physical building where the health spa services are provided.

(4) "Operate" means to advertise health spa services, to sell memberships, or to perform any other function of business by a [Health Spa]health spa that is doing business in Utah.

(5) "Personal Trainer" means an individual who is a health spa under Section 13-23-2 because the individual (1) hires another individual, either as an employee or an independent contractor, to provide instruction to assist patrons to improve their physical condition or appearance through aerobic conditioning, strength training, fitness training or other exercise, and (2) is granted the use of a facility that contains exercise equipment.

 

R152-23-4. Registration Requirements.

(1) A [Health Spa]health spa may not operate in this state without first having received a registration permit from the Division. [The application for a permit shall be completed on the form provided by the Division.]Each health spa entity shall obtain a registration permit prior to selling, offering or attempting to sell, soliciting the sale of, or becoming a party to any contract to provide health spa services.

(2) The application shall request the following items:

(a) Name, addresses, email address and telephone numbers of owner(s) of the [Health Spa]health spa Facility and the facility address, telephone number, email address, and name of contact person at the facility.

(b) Payment of the non-refundable application fee.

(c) A current pricing structure for [membership]health and fitness services.

(d) A copy of the contract that will be utilized by the facility containing the provisions required by law. The required provisions shall be highlighted for easy reference.

(e) The documents necessary to satisfy the surety requirement of Section 13-23-5(2)(a). If the [Health Spa]health spa claims that it is exempt from providing the surety, then it must provide the Division with sufficient evidence that each requirement of Section 13-23-6 is satisfied.

(f) The number of [membership]consumer contracts that relate to each facility.

(g) The name, address, email address, and telephone number of each Personal Trainer who will use the [Health Spa's]health spa's facilities during the year.

(h) The company name and contact information for a third party billing and management provider, if used.

(i) Evidence that the health spa facility maintains current liability or professional liability insurance.

(3) A separate registration shall be required for each facility that is maintained and operated by a [Health Spa]health spa.

(4) If any information contained in the application becomes incorrect or incomplete, then the [Health Spa]health spa shall, within thirty (30) days of the information becoming incorrect or incomplete, correct the application or file the complete information.

(5) All initial applications and renewal applications shall be processed within twenty (20) business days after their receipt by the Division.

 

R152-23-5. Health Spa [Membership Contracts]Consumer Contracts for Health Spa Services.

(1) Health Spa [membership]consumer contracts shall contain the following provisions:

(a) Each [membership]consumer contract shall contain:

(i) the date of the transaction , including the date health spa services will commence and expire;

(ii) the name and address of the [Health Spa]health spa facility; and

(iii) the name, address, email address (if available), and telephone number of the consumer.

(b) Each [membership]consumer contract shall contain one of the following provisions, printed in capital letters, regarding closure of the facility:

(i) A [Health Spas]health spa that [are]is required to comply with the surety requirement shall [contain]include a provision in consumer contracts that states as follows: "IN THE EVENT THE HEALTH SPA FACILITY CLOSES AND ANOTHER HEALTH SPA FACILITY OPERATED BY THE SELLER OF THIS CONTRACT, OR ASSIGNS OF THE SELLER,[ OF THIS CONTRACT] IS NOT AVAILABLE WITHIN FIVE (5) MILES OF THE LOCATION THE [MEMBER]CONSUMER INTENDS TO PATRONIZE, SELLER WILL REFUND TO [MEMBER]CONSUMER A PRORATA SHARE OF THE [MEMBERSHIP]CONTRACT COST, BASED UPON THE UNUSED [MEMBERSHIP] TIME REMAINING ACCORDING TO THE CONTRACT."

(ii) A [Health Spas]health spa that [are]is not required to comply with the surety requirement shall [contain]include a provision in consumer contracts that states as follows: "IF THIS HEALTH SPA CEASES OPERATION AND FAILS TO OFFER AN ALTERNATE LOCATION WITHIN FIVE (5) MILES, NO FURTHER PAYMENTS UNDER THIS CONTRACT SHALL BE DUE TO ANYONE, INCLUDING ANY PURCHASER OF ANY NOTE ASSOCIATED WITH OR CONTAINED IN THIS CONTRACT."

(c) All [membership]consumer contracts shall specify what items of equipment or services provided by the health spa facility on the date of the execution of the [membership] contract are subject to deletion or change at the discretion of the facility.

(d) Each [membership]consumer contract shall include one of the following provisions regarding the consumer's right of rescission under Section 13-23-3(6). The provision shall be bolded and printed in capital letters with at least 12 point font and shall be located on the first page of the contract and just above the signature line.

(i) [Membership]Consumer contracts sold in advance sales shall contain a provision that states as follows: "YOU, THE CONSUMER, MAY CANCEL THIS CONTRACT AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE HEALTH SPA BECOMES FULLY OPERATIONAL AND AVAILABLE FOR USE. IF THE HEALTH SPA DOES NOT BECOME FULLY OPERATIONAL AND AVAILABLE FOR USE WITHIN 60 DAYS AFTER THE DATE OF THE CONTRACT, YOU MAY CANCEL THIS CONTRACT AT ANY TIME."

(ii) All other [membership]consumer contracts shall contain a provision that states as follows: "YOU, THE CONSUMER, MAY CANCEL THIS CONTRACT AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE ON WHICH THE CONTRACT IS EXECUTED."

(e) All [membership]consumer contracts shall itemize the costs to the consumer and shall include a statement as to the total cost of the contract. These costs shall be clearly stated on the first page of the contract.

(f) Every [membership]consumer contract shall clearly state the beginning and expiration dates of its term. In any event, no [membership]consumer contract shall provide for a [membership] term of longer than thirty-six (36) months.

(2) The [membership]consumer contract or any attachment to it shall clearly state any rules of the [Health Spa]health spa that apply to:

(a) the consumer's use of its facilities and services; and

(b) cancellation and refund policies of the [Health Spa.]health spa, which shall include:

(i) A clear and unambiguous written statement of the health spa's cancellation and refund policy for consumers who desire a refund after the three-business-day cooling-off period under Section 13-23-3(6).

(ii) A clear and unambiguous written statement of the health spa's cancellation and refund policy for consumers who desire a refund after a consumer has received a portion of the contracted health spa services.

(3) Each [membership]consumer contract shall specify which equipment or facility of the [Health Spa]health spa is omitted from the contract's coverage.

 

R152-23-6. Rescission.

(1) Except where advanced sales are involved, no fee may be charged if a consumer exercises the consumer's right to rescind the contract pursuant to Section 13-23-3(6).

(2) When the [membership]consumer contract is the result of the [Health Spa's]health spa's advance sales and the consumer exercises the consumer's right to rescind, then a fee may be charged against the payments made by the consumer to the extent allowed by Section 13-23-4.

 

R152-23-7. Procedure When Facility Closes.

(1) In the event a [Health Spa]health spa shall, for any reason, close, discontinue normal operations for a period of ten (10) business days, or otherwise cease to do business at any of its facilities while having outstanding obligations to provide health spa services to [members]consumers holding valid [membership]consumer contracts, the [Health Spa]health spa shall, after obtaining the Division's approval, immediately refund the unused portion of all [membership] fees, including the proration of any fees paid up front. The proration of fees paid up front is required only on initial contracts unless similar fees were charged when the contracts were renewed.

(2) Within ten (10) business days of the closure of its facility, the [Health Spa]health spa shall provide the Division with a copy of each [membership]consumer contract that was valid on the date of closure.

(3) The Division shall determine the amount of refunds that shall be made and to whom. Such refunds shall be made under the supervision and with the prior approval of the Division. If sufficient funds are not available to make a full refund, then the refund shall be made from the surety proceeds on a prorata basis based upon the full amount that is determined to be due to all [members]consumers. The refund amount due shall be determined by multiplying the number of days remaining on the [member's]consumer's contract term as of the date of closure by the daily cost of [such membership]the health spa services contract to the [member]consumer at the time of purchase. The [Health Spa]health spa shall remain responsible for the balance.

(4) For purposes of Sections 13-23-5(6) and (7), the distance of five (5) miles shall be calculated by the distance traveled by an automobile over a public road.

(5) The notice required in Section 13-23-5(7) shall be in writing and shall include the following:

(a) The date on which the health spa will cease operations or relocate and fail to offer an alternative location within five miles;

(b) Information concerning [the members of]consumers holding contracts with the health spa, including:

(i) the total number of [members]active consumer contracts;

(ii) the name, address, email address, and telephone number of each [member]consumer;

(iii) the total cost of each [membership]consumer contract; and

(iv) the effective beginning and ending dates of each [membership]consumer contract;

(c) Proof of the bond, letter of credit, or certificate of deposit required under Section 13-23-5(2)(a) and proof that the bond, letter of credit, or certificate of deposit will remain in force for one year after the health spa notifies the Division that it has ceased all activities regulated by Title 13, Chapter 23 of the Utah Code;

(d) A description of what action the health spa plans to take with regard to its [members]consumers holding contracts for health spa services, including:

(i) the amount of each [member's]consumer's refund;

(ii) any reason refunds are not to be made;

(iii) an explanation of how refunds are to be calculated; and

(iv) copies of the refund checks that the health spa has issued[; and].

(e) Any complaints that the health spa has received from [the members]consumers and how the complaints were resolved.

(6) Within thirty (30) days prior to closing, the health spa shall notify consumers of the closure in writing and set forth what actions the health spa plans to take in regards to transfers, cancellations or refunds.

(7) Once the health spa has notified the Division of its intent to cease operations, it may not offer, sell or attempt to sell, solicit the sale of, or become a party to any new contracts to provide health spa services within forty-five (45) days preceding the anticipated date of closure.

(8) In the event a health spa transfers its contracts to an alternative facility located within five (5) miles of the facility of origin, neither the health spa facility transferring consumer contracts nor the health spa facility receiving consumer contracts may charge any additional fees to contract holders in order to gain access to or otherwise utilize services originally contracted for.

(a) Contract transfers shall be serviced at health spa facilities that are comparable to the facility of origin. In instances where consumers have paid for services that are not offered or are otherwise not comparable, the health spa shall obtain written authorization from consumers to transfer to the noncomparable facility or make an offer to rescind the contract.

 

R152-23-8. Bond, Irrevocable Letter of Credit, or Certificate of Deposit.

(1) The surety required by Section 13-23-5(2) shall be provided to the Division not less than thirty (30) days in advance of any advanced sales by any [Health Spa]health spa. Annual renewals of such Bonds, Irrevocable Letters of Credit, or Certificates of Deposit shall be filed with the Division not less than thirty (30) days in advance of expiration of existing Bonds, Irrevocable Letters of Credit, or Certificates of Deposit.

(2) The Division shall have the right to approve or reject Bonds, Irrevocable Letters of Credit, or Certificates of Deposit submitted to the Division. In the event a Bond, Irrevocable Letter of Credit, or Certificate of Deposit is rejected by the Division, the [Health Spa]health spa shall submit another surety within fifteen (15) days following notice by the Division. In no event shall a [Health Spa]health spa operate without having a Bond, Irrevocable Letter of Credit, or Certificate of Deposit in effect or establishing an exemption pursuant to Section 13-23-6.

(3) In addition to [the members']consumer refunds, the Division shall be entitled to recover from the surety proceeds all of its costs and fines as allowed by Sections 13-23-5(2)(c) and (e).

 

KEY: consumer protection, health spas

Date of Enactment or Last Substantive Amendment: [August 9, 2010]2012

Notice of Continuation: March 22, 2012

Authorizing, and Implemented or Interpreted Law: 63G-3-201; 13-2-5; 13-23-1