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2004 SESSION

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040119212
HOUSE BILL NO. 390 Offered January 14, 2004 Prefiled January 12, 2004 A BILL to amend and reenact § 59.1-306 of the Code of Virginia, relating to the Virginia Health Spa Act; requirement for bond or letter of credit. ---------- Patron-- Amundson ---------- Referred to Committee on Commerce and Labor ----------

Be it enacted by the General Assembly of Virginia:

1. That § 59.1-306 of the Code of Virginia is amended and reenacted as follows:

§ 59.1-306. Bond or letter of credit required; exception.

A. Every health spa, before it enters into a health spa contract and accepts any moneys in excess of the prorated monthly fee for the month when the contract is initially executed plus one month's fees or accepts any initiation fee in excess of seventy-five dollars$75, shall file and maintain with the Commissioner, in form and substance satisfactory to him, a bond with corporate surety, from a company authorized to transact business in the Commonwealth or a letter of credit from a bank insured by the Federal Deposit Insurance Corporation in the amounts indicated below:

     Number of                                Amount of bond
  applicable contracts                     or letter of credit
         0 to 250    $10,000 75,000
         251 to 500    $20,000 85,000
         501 to 750   $30,000 95,000
         751 to 1000               $40,000 105,000
         1001 to 1250                   $50,000 115,000
         1251 to 1500                   $60,000 125,000
         1501 to 1750                   $70,000 135,000
         1751 to 2000                   $80,000 145,000
         2001 or more                  $100,000 165,000

The number of applicable unexpired contracts shall be separately calculated for each location where health spa services are offered.

Each separate location where health spa services are offered shall be considered a separate health spa and shall file a separate bond or letter of credit with respect thereto, even though the separate locations are owned or operated by the same owner.

However, no owner shall be required to file with the Commissioner bonds or letters of credit in excess of $ 300,000. If the $ 300,000 limit is applicable, then the bonds or letters of credit filed by such owner shall apply to all health spas owned or operated by the same owner.

B. A health spa which has not filed a bond or letter of credit may nevertheless sell health spa contracts of up to thirty-six36 months' duration so long as the amount of payment actually charged, due or received each month by the health spa or any holder of its health spa contracts does not exceed the monthly fee calculated pursuant to the definition thereof in § 59.1-296, with the exception that the payment actually charged may include a maximum initiation fee of seventy-five dollars$75 for health spa contracts of twelve12 months or more in duration.