§ 4670 — Receiverships

§ 4670. Receiverships. 1. The commissioner may, upon a determination\nthat serious operational deficiencies exist or serious financial\nproblems exist and such action is desirable, enter into an agreement\nwith the operator or owners of a fee-for-service continuing care\nretirement community with respect to the appointment of a receiver to\ntake charge of the community under conditions as found acceptable by\nboth parties. Receivership commenced in accordance with the provisions\nof this subdivision shall terminate at such time as may be provided in\nthe receivership agreement, or at such time as either party notifies the\nother in writing that it wishes to terminate such receivership.\n 2. The commissioner shall, at the time of revocation, suspension or\ntemporary suspension of a certificate of authority, apply to the supreme\ncourt where the community is situated for an order directing the owner\nof the land and/or structure on or in which the community is located, to\nshow cause why a receiver should not be appointed to take charge of the\ncommunity. In those cases where the certificate of authority has been\nrevoked, suspended or temporarily suspended, the supreme court shall\nappoint a receiver that, where reasonably possible, is a legal entity\nthat holds a valid certificate of authority. Such application shall\ncontain proof by affidavit that the facility has had its certificate of\nauthority revoked, suspended or temporarily suspended. Such order to\nshow cause shall be returnable not less than five days after service is\ncompleted and shall provide for personal service of a copy thereof and\nthe papers on which it is based, on the owner or owners of the land\nand/or structures on or in which the community is located. If any such\nowner and manager cannot with due diligence be served personally within\nthe county where the property is located and within the time fixed in\nsuch order, then service may be made on such person by posting a copy\nthereof in a conspicuous place within the community in question, and by\nsending a copy thereof by registered mail, return receipt requested, to\nsuch owner at the last address registered by such owner with the\ndepartment or in the absence of such registration to the address set\nforth in the last recorded deed with respect to the facility. Service\nshall be deemed complete on filing proof of service thereof in the\noffice of the county clerk, or the clerk of the city of New York, as the\ncase may be.\n 3. On the return of said order to show cause, the matter shall have\nprecedence over every other business of the court unless the court shall\nfind that some other pending proceeding, having a similar statutory\nprecedence, shall have priority. The court may conduct a hearing at\nwhich all interested parties shall have the opportunity to present\nevidence pertaining to the application. If the court shall find the\nfacts warrant the granting thereof, then any such qualified and approved\nagency, person or corporation, or the commissioner or any person\ndesignated by the commissioner, shall be appointed receiver to take\ncharge and assume operation of the community. However, such receiver may\nmake application to the appointing court for decision, reformation or\nsuch other relief as may be appropriate to protect the best interests of\nthe residents residing within such community. No security interest in\nany real or personal property comprising the community shall be impaired\nor diminished in priority by the receiver. The receiver shall compensate\nthe owner or owners of any goods held in inventory for those goods which\nhe or she uses or causes to be used by reimbursing the costs of such\ngoods, except that no such compensation shall be made for any goods for\nwhich the owners or operators of the community have already been\nreimbursed.\n 4. Any receiver appointed pursuant to this section shall have all of\nthe powers and duties of a receiver appointed in an action to foreclose\na mortgage on real property, together with such additional powers and\nduties as are granted and imposed pursuant to this section. The receiver\nmay correct or eliminate those deficiencies in the facility that\nseriously endanger the life, health, safety or finances of such\nresidents subject to such terms as the court may direct. The receiver\nshall operate the community in such a manner as intended to assure\nsafety and adequate care for such residents. Any receiver who is an\nofficial or employee of the state shall not be required to file any\nbond. The receiver shall honor all existing leases, mortgages and\nchattel mortgages that had previously been undertaken as obligations of\nthe owners or operators of the community.\n 5. The appointing court, upon application of the receiver, may make\nsuch provision as justice may require for reasonable compensation and\nreimbursement of the reasonable expenses of the receiver. The receiver\nshall be liable only in his or her official capacity for injury to\nperson and property by reason of conditions of the community in a case\nwhere an owner would have been liable; provided that he or she operates\nsuch facility in compliance with the terms of his or her appointment,\nthe receiver shall not have any liability in his or her personal\ncapacity, except for gross negligence and intentional acts.\n 6. a. The court shall terminate the receivership only under the\nfollowing circumstances:\n (i) when the community is issued a new certificate of authority; or\n (ii) at such time as all of the residents in the community have been\nprovided alternate residential and health care services.\n b. At the time of termination, the receiver shall render a full and\ncomplete accounting to the court and shall make disposition of surplus\nmoney at the discretion of the court.\n 7. a. Any person who is served a copy of an order of the court\nappointing the receiver shall, upon being notified of the name and\naddress of the receiver, make all payments for goods supplied by the\ncommunity, or services rendered by the community, to the receiver. A\nreceipt shall be given for each such payment, and copies of all such\nreceipts shall be kept on file by the receiver. The amount so received\nshall be deposited by the receiver in a special account which shall also\nbe used for all disbursements made by the receiver.\n b. Any person refusing or omitting to make such a payment after such\nservice and notice may be sued therefor by the receiver. Such person\nshall not in such suit dispute the authority of the receiver to incur or\norder such expenses, or the right of the receiver to such payments made\nto him or her. The receipt provided by the receiver for any sum paid to\nhim or her shall, in all suits and proceedings and for every other\npurpose, be as effectual in favor of any person holding the receipt as\nactual payment of the amount thereof to the operator or other person or\npersons who would, but for the provisions of this section, have been\nentitled to receive the sum to be paid. No resident shall be discharged,\nnor shall any contract or rights be forfeited or impaired, nor any\nforfeiture or liability be incurred, by reason of any omission to pay\nany operator, owner, contractor or other person any sum so paid to the\nreceiver.\n 8. Any other provision of this article notwithstanding, the\ncommissioner may, if such commissioner deems appropriate, grant to any\ncommunity operating or scheduled to operate under a receivership\nauthorized by this section a certificate of authority, the duration of\nwhich shall be limited to the duration of the receivership.\n 9. a. No provision of this section shall be deemed to relieve the\noperator, owner or manager of any civil or criminal liability incurred,\nor any duty imposed by law, by reason of acts or omissions of the\noperator, owner or manager prior to the appointment of any receiver\npursuant to this section, nor shall anything in this section be\nconstrued to suspend during the receivership any obligation of the owner\nfor the payment of taxes or other operating and maintenance expenses of\nthe community nor of the owner or any other person for the payment of\nmortgages or liens.\n b. The receiver shall not be responsible for any obligations incurred\nby the owner, manager or prime lessor, if any, prior to the appointment\nof the receiver, other than those obligations to residents pursuant to\nthe fee-for-service continuing care contracts.\n c. The receiver shall be entitled to use for operating and maintenance\nexpenses and the basic needs of the residents of the community a portion\nof the revenues due the operator during the month in which the receiver\nis appointed, which portion shall be established on the basis of the\namounts of the unpaid operating and maintenance expenses for such month.\n