§ 461-F — Operation of facility in receivership

§ 461-f. Operation of facility in receivership. 1. As a means of\nprotecting the health, safety and welfare of the residents of an adult\ncare facility subject to inspection and supervision by the department,\nit may become necessary under certain circumstances to authorize the\ncontinuing operation of such facility for a temporary period by a court\nappointed receiver, at the discretion of the commissioner, as provided\nin this section or with respect to an adult home, enriched housing\nprogram or residence for adults, a receiver approved by the department\nof health pursuant to written agreement between the department and the\noperator or operators of such facility, provided that such agreement\nshall not exceed a period of sixty days but may be extended for an\nadditional sixty day period upon agreement by the parties.\n 2. The operator or operators of any adult home, enriched housing\nprogram or residence for adults may at any time request the department\nof health to appoint a receiver to take over the operation of such\nfacility. Upon receiving such a request, the department of health may,\nif it deems such action desirable, enter into an agreement with any such\noperator or operators for the appointment of a receiver to take charge\nof the facility under whatever conditions as shall be found acceptable\nby the parties, provided that such agreement shall not exceed a period\nof sixty days but may be extended for an additional sixty day period\nupon agreement by the parties.\n 3. (a) In the event of a transfer of possession of the premises of\nsuch facility from an approved operator to a court appointed receiver in\na bankruptcy or mortgage foreclosure proceeding, the department may\nauthorize such court appointed receiver to continue to operate such\nfacility for a temporary period pending the filing and review of an\napplication to the department by such receiver or by another person for\nan operating certificate, provided, however, that such court appointed\nreceiver agrees to operate the facility during such temporary period in\naccordance with such terms and conditions as may be set by the\ndepartment, which terms and conditions shall include compliance with all\napplicable provisions of law and regulations of the department, and\nwhich shall include a waiver by the receiver of any assessment of fees\nagainst the department, the commissioner and the state. Such application\nfor an operating certificate shall be filed within ninety days after the\ntransfer of possession to the receiver, unless the time for such filing\nis extended by the department.\n (b) The commissioner may make application to appear and advise the\ncourt of any objections he may have to the transfer of possession from\nthe approved operator to any other person including a receiver or of any\nobjections he may have to continuing a receiver or any other person in\npossession.\n (c) After a receiver obtains such temporary authorization, he may\noperate such facility only so long as he continues to do so in\ncompliance with the applicable law, regulations of the department, and\nthe terms and conditions for such authorization as set by the\ndepartment.\n 4. (a) When the department revokes or temporarily suspends the\noperating certificate of such facility and the commissioner determines\nthat appointment of a receiver is necessary to protect the health,\nsafety and welfare of the residents of a facility the commissioner may\napply to the supreme court in the county where the facility is situated\nfor an order directing the operators, owners and prime lessors, if any,\nof the premises to show cause why the commissioner, or at the discretion\nof the commissioner, his designee, should not be appointed receiver to\ntake charge of the facility. Such order to show cause shall be\nreturnable not less than five days after service is completed and shall\nprovide for personal service of a copy thereof and the papers on which\nit is based on the operators, owners and prime lessors, if any, of the\npremises. If any such operator, owner or prime lessor cannot with due\ndiligence be served personally within the county where the property is\nlocated and within the time fixed in such order, then service may be\nmade on such person by posting a copy thereof in a conspicuous place\nwithin the facility in question, and by sending a copy thereof by\nregistered mail, return receipt requested, to such operator, owner or\nprime lessor at the last address reported to the department, or\notherwise known to the department.\n (b) On the return of said order to show cause, determination shall\nhave precedence over every other business of the court unless the court\nshall find that some other pending proceeding, having 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 that the\nfacts warrant the granting thereof, then the commissioner, or at the\ndiscretion of the commissioner, any person designated by the\ncommissioner, shall be appointed receiver to take charge of the\nfacility. Except in the case where the receiver is assuming an existing\nbona fide arms length lease, the commissioner shall determine a\nreasonable monthly rental for the facility, based on consideration of\nall appropriate factors, including the condition of such facility. The\nrent as determined by the commissioner shall be paid by the receiver to\nthe owners or prime lessors as may be directed by the court for each\nmonth that the receivership remains in effect, provided, however that\nnothing contained herein shall be construed to alter or diminish any\nobligation the operator may have under any currently valid lease.\n (c) Any receiver appointed pursuant to this subdivision shall have all\nof the powers and duties of a receiver appointed in an action to\nforeclose a mortgage on real property, together with such additional\npowers and duties as are herein granted and imposed. The receiver shall\nwith all reasonable speed but, in any case, within six months after the\ndate on which the receivership was ordered, unless otherwise extended by\nthe court, provide for the orderly transfer of all residents in the\nfacility to other facilities or make other provisions for their\ncontinued safety and care. He shall, during this period, operate the\nfacility in compliance with the applicable law and regulations of the\ndepartment, and shall have such additional powers, approved by the\ncommissioner, to incur expenses as may be necessary to so operate the\nfacility. The receiver shall not be required to file any bond. He shall\ncollect incoming payments from all sources and apply them to the costs\nincurred in the performance of his functions as receiver. The receiver\nshall honor all existing leases, mortgages and chattel mortgages that\nhad previously been undertaken as obligations of the owners or operators\nof the facility. No security interest in any real or personal property\ncomprising the facility or contained within the facility, or in any\nfixture of the facility, shall be impaired or diminished in priority by\nthe receiver. The receiver shall compensate the owners of any goods held\nin inventory for those goods which he uses or causes to be used by\nreimbursing the costs of such goods, except that no such compensation\nshall be made for any such goods for which such owners have already been\nreimbursed.\n (d) (i) The receiver shall be entitled to a fee and reimbursement for\nexpenses as determined by the commissioner, based upon consideration of\nall appropriate factors relating to the operation of the facility, to be\npaid as a charge against the operator, not to exceed the fees,\ncommissions and necessary expenses authorized to be paid to receivers in\nan action to foreclose a mortgage.\n (ii) The receiver shall be liable only in his official capacity for\ninjury to person and property by reason of conditions of the facility in\na case where an owner would have been liable; he shall not have any\nliability in his personal capacity, except for gross negligence and\nintentional acts.\n (iii) The receiver appointed pursuant to this subdivision may, subject\nto approval by the commissioner, ratify any collective bargaining\nagreement in effect between the operator and the employees of a\nfacility, or suspend such collective bargaining agreement, provided\nhowever, that he remain liable for payment of wages and salaries at the\nrates and levels in effect at the time of his appointment.\n (iv) (A) The receiver shall notify the commissioner of any lien or\nconveyance made in contemplation of receivership with an intent to\nremove an asset of the facility from the jurisdiction and use of the\nreceiver, or to hinder or delay the receiver in the execution of his\nduties and responsibilities as receiver; such notice shall be forwarded\nto the commissioner in a manner to be determined by regulations of the\ndepartment.\n (B) With respect to any such lien or conveyance, the commissioner\nshall have available any remedy available to a trustee in a bankruptcy\nproceeding pursuant to the federal bankruptcy act or any remedy\navailable to a creditor in a proceeding pursuant to article ten of the\ndebtor and creditor law and may apply to the court to have such lien or\nconveyance set aside, or to have the court make any order which the\ncircumstances of the case may require.\n (e) (i) The court shall terminate the receivership only under any of\nthe following circumstances:\n a. six months after the date on which it was ordered, except that the\ncourt may extend such period for good cause shown;\n b. when the department grants the facility a new operating\ncertificate; or\n c. at such time as all of the residents in the facility have been\nprovided alternative modes of care, either in another facility or\notherwise; provided, that the residents shall not be removed from the\nfacility unless it is required for the protection of the health, safety\nor welfare of the residents.\n (ii) At the time of termination of the receivership, the receiver\nshall render a full and complete accounting to the court and shall\ndispose of any profit or surplus money at the direction of the court.\n (f) (i) 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\nfacility, or services rendered by the facility, 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 (ii) 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 have such payments\nmade to him. The receipt of the receiver for any sum paid to him shall,\nin all suits and proceedings and for every purpose, be as effectual in\nfavor of any person holding the same as actual payment of the amount\nthereof to the owner or other person or persons who would, but for the\nprovisions of this subdivision, have been entitled to receive the sum so\npaid. No resident shall be discharged, nor shall any contract or rights\nbe forfeited or impaired, nor any forfeiture or liability be incurred,\nby reason of any omission to pay any owner, contractor or other person\nany sum so paid to the receiver.\n (g) Any other provision of this chapter notwithstanding, the\ndepartment may, if it deems appropriate, grant to any facility operating\nor scheduled to operate under a receivership authorized by this\nsubdivision an operating certificate the duration of which shall be\nlimited to the duration of the receivership.\n (h) (i) No provision contained herein shall be deemed to relieve the\noperators, owners or prime lessors, if any, of any civil or criminal\nliability or obligation incurred, or any duty imposed by law, by reason\nof acts or omissions of such persons prior to the appointment of any\nreceiver hereunder. During the period a facility is operated by a\nreceiver, the operator, owner or prime lessor, if any, shall continue to\nbe liable for all obligations for the payment of taxes or other\noperating and maintenance expenses of the facility and the owner or\nother appropriate person shall continue to be liable for the payment of\nmortgages or liens.\n (ii) Expenses incurred by a receiver to meet the operating and\nmaintenance expenses of the facility and the basic needs of the\nresidents of the facility shall be deemed the obligations of the\noperator, and not the obligation of the receiver or the state.\n (iii) The receiver shall not be responsible for any obligations\nincurred by the owner, operator or prime lessor, if any, prior to the\nappointment of the receiver.\n (iv) The receiver shall be entitled to use for operating and\nmaintenance expenses and the basic needs of the residents of the\nfacility a portion of the revenues due the operator during the month in\nwhich the receiver is appointed which portion shall be established on\nthe basis of the amounts of the operating and maintenance expenses for\nsuch month.\n (v) Any sums determined to be due and owing by the receiver to the\nowner, operator or prime lessor shall be off-set by any charges\ndetermined to be the obligations of the owner, operator or prime lessor.\n 5. (a) Subject to paragraph (c) of this subdivision, the commissioner\nis authorized to make payments to receivers appointed pursuant to the\nprovisions of subdivision three of this section, only if the receiver\ndemonstrates to the satisfaction of the commissioner that the facility's\nfunds which are available are insufficient to meet operating and\nmaintenance expenses of the facility and the basic needs of the\nresidents of the facility.\n (b) The operator of a facility operated by a receiver pursuant to the\nprovisions of subdivision three of this section shall be liable for all\nmonies made available to the receiver pursuant to the provisions of\nparagraph (a) of this subdivision.\n (c) To the extent funds are appropriated, payments made pursuant to\nthis section shall be made from the local assistance fund and such\npayments shall be made only if a certificate of allocation and a\nschedule of amounts to be available therefor shall have been issued by\nthe director of the budget, upon the recommendation of the commissioner\nof social services, and a copy of such certificate filed with the\ncomptroller, the chairman of the senate finance committee and the\nchairman of the assembly ways and means committee. Such certificate may\nbe amended from time to time by the director of the budget, upon the\nrecommendation of the commissioner of social services, and a copy of\neach such amendment shall be filed with the comptroller, the chairman of\nthe senate finance committee and the chairman of the assembly ways and\nmeans committee.\n (d) Any payments made by the department to a receiver pursuant to the\nprovisions of this section shall be made without any obligation on the\npart of the social services district in which the receiver-operated\nfacility is located to reimburse the department for any such payments.\n 6. Nothing contained in this section shall be construed to require the\ncommissioner to seek the appointment of a receiver or to assume the\nresponsibilities of a receiver directly or indirectly through his\ndesignee; nor shall this section authorize any court to compel the\ncommissioner to assume the responsibilities of a receiver or to appoint\na designee to assume such responsibilities.\n