(1) A long-term care warranty shall be subject to immediate forfeiture whenever the department determines that any one of the following circumstances exist:

(a) The licensee is in violation of long-term care requirements as specified in the license and the regulations and has failed to cure such violation although the licensee has been given written notice thereof pursuant to section 25-11-107 (5) and has had reasonable time to cure such violation; or

(b) The licensee has failed to provide an acceptable replacement warranty when:

(I) The licensee's financial warrantor no longer has the financial ability to carry out obligations under this article; or

(II) The department has received notice or information that the financial warrantor intends to cancel, terminate, or revoke the warranty; or

(c) The licensee has failed to maintain its financial assurance warranty in good standing as required by section 25-11-110 (6)(a).

(2) (a) A long-term care warranty shall be subject to immediate use and expenditure by the department whenever the department determines that disposal, decommissioning, and decontamination requirements specified in the license conditions and regulations have been satisfied. The department shall give the licensee written notice of the department's intent to use the long-term care warranty for long-term care purposes. The notice shall contain findings of fact and conclusions of law to support its decision and shall direct affected financial warrantors to deliver to the department the full amounts warranted by applicable long-term care warranties within not more than thirty days after the date of the notice.

(b) The licensee may request a hearing on a notice under paragraph (a) of this subsection (2) that shall be conducted in accordance with section 24-4-105, C.R.S. Any request for a hearing under this subsection (2) shall be made within thirty days after the date of the notice and shall not affect the obligation to submit to the department funds from long-term care warranties unless a stay is granted by the department or by administrative or judicial order.

(3) The department may request the attorney general, and the attorney general is authorized, to commence legal proceedings necessary to secure or recover amounts warranted by long-term care warranties. The attorney general shall have the power to collect, foreclose upon, present for payment, take possession of, or dispose of pledged property, and otherwise reduce to cash any financial assurance arrangement required by this article.

(4) (a) Long-term care funds recovered by the department pursuant to this section shall be immediately deposited into the long-term care fund created in section 25-11-113 and shall be used solely for the long-term care for the facility covered by the financial assurance warranty and to cover the department's reasonable attorney and administrative costs associated with long-term care for such facility.

(b) The department or its agent shall have a right to enter property of the licensee to perform long-term care and monitoring. Upon completion of long-term care activities, the department shall present to the licensee a full accounting and shall refund all unspent warranty moneys, including interest.