Residential health care facilities; receivership

§ 2810. Residential health care facilities; receivership. 1. The
owner or owners of any residential health care facility may at any time
request the department to take over the operation of such facility by
the appointment of a receiver. Upon receiving such a request, the
department may, if it deems such action desirable, enter into an
agreement with any such owners on the appointment of a receiver to take
charge of the facility under whatever conditions as shall be found
acceptable by both parties. Receivership commenced in accordance with
the provisions of this subdivision shall terminate at such time as is
agreed upon by the parties, or at such time as either party notifies the
other in writing that he wishes to terminate such receivership.

2. a. As a means of protecting the health, safety and welfare of the
patients in a residential health care facility, whenever the
commissioner revokes the operating certificate of such a facility he
shall apply to the supreme court in the county where the facility is
situated for an order directing the owner of the land and/or structure
on or in which the facility is located to show cause why the
commissioner, or his designee, should not be appointed receiver to take
charge of the facility. In those cases where operating certificates have
been revoked pursuant to paragraph (a) of subdivision five of section
twenty-eight hundred six of this chapter the supreme court shall appoint
a receiver who may be the commissioner or his designee. Such application
shall contain proof by affidavit that the facility has had its operating
certificate revoked. Such order to show cause shall be returnable not
less than five days after service is completed and shall provide for
personal service of a copy thereof and the papers on which it is based
on the owner or owners of the land and/or structure on or in which the
facility is located. If any such owner cannot with due diligence be
served personally within the county where the property is located and
within the time fixed in such order, then service may be made on such
person by posting a copy thereof in a conspicuous place within the
facility in question, and by sending a copy thereof by registered mail,
return receipt requested, to such owner at the last address registered
by him with the department, or in the absence of such registration, to
the address set forth in the last recorded deed with respect to such
facility. Service shall be deemed complete on filing proof of service
thereof in the office of the county clerk, or the clerk of the city of
New York, as the case may be.

b. On the return of said order to show cause, determination shall have
precedence over every other business of the court unless the court shall
find that some other pending proceeding, having similar statutory
precedence, shall have priority. The court may conduct a hearing at
which all interested parties shall have the opportunity to present
evidence pertaining to the application. If the court shall find that the
facts warrant the granting thereof, then the commissioner, or any person
designated by the commissioner, shall be appointed receiver to take
charge of the facility, and the court shall determine a fair monthly
rental for the facility, and for the furniture, fixtures and movable
equipment therein, taking into account all relevant factors, including
the condition of such facility, and the condition of such furniture,
fixtures and movable equipment, which amount shall, except in the case
where the receiver is assuming an existing bona fide arm's length lease,
not exceed the amount which would be reimbursable to the facility under
the medical assistance program for real property costs and for the costs
of furniture, fixtures and movable equipment if each patient in the
facility were a recipient of medical assistance. Such rental shall be
paid by the receiver to the owner or owners of the facility and to the
owner or owners of the furniture, fixtures and movable equipment therein
for each month that the receivership remains in effect.

c. Any receiver appointed pursuant to this subdivision shall have all
of the powers and duties of a receiver appointed in an action to
foreclose a mortgage on real property, together with such additional
powers and duties as are herein granted and imposed. The receiver shall
with all reasonable speed but, in any case, within eighteen months after
the date on which the receivership was ordered provide for the orderly
transfer of all patients in the facility to other facilities or make
other provisions for their continued safety and health care. During the
interim period when such patients must remain in the facility, the
receiver may correct or eliminate those deficiencies in the facility
that seriously endanger the life, health or safety of such patients
provided that such correction or elimination of deficiencies does not
include major alterations of the physical structure of the facility. He
shall, during this period, operate the facility in such a manner as to
guarantee safety and adequate health care for such patients. He shall
have the power to let contracts therefor or incur expenses provided that
where individual items of repairs, improvements or supplies exceed three
thousand dollars, the receiver shall obtain price quotations from at
least three reputable sources. The receiver shall not be required to
file any bond. He shall collect incoming payments from all sources and
apply them to the costs incurred in the performance of his functions as
receiver. The receiver shall honor all existing leases, mortgages and
chattel mortgages that had previously been undertaken as obligations of
the owners or operators of the facility. No security interest in any
real or personal property comprising the facility or contained within
the facility, or in any fixture of the facility, shall be impaired or
diminished in priority by the receiver. The receiver shall compensate
the owner or owners of any goods held in inventory for those goods which
he uses or causes to be used by reimbursing the costs of such goods,
except that no such compensation shall be made for any such goods for
which the owners or operators of the facility have already been
reimbursed. Neither the receiver nor the department shall engage in any
activity that constitutes a confiscation of property without the payment
of fair compensation.

d. The receiver shall be entitled to the same fees, commissions and
necessary expenses as receivers in actions to foreclose mortgages. The
receiver shall be liable only in his official capacity for injury to
person and property by reason of conditions of the facility in a case
where an owner would have been liable; he shall not have any liability
in his personal capacity, except for gross negligence and intentional
acts. The personnel and facilities of the department shall be available
to the receiver for the purposes of carrying out his duties as receiver
and the cost of such services shall be deemed a necessary expense of the
receiver.

e. (i) The court shall terminate the receivership only under any of
the following circumstances:

(a) eighteen months after the date on which it was ordered;

(b) when the department grants the facility a new operating
certificate, whether the structure of the facility or the land on which
it is located shall be under the same or different ownership; or

(c) at such time as all of the patients in the facility have been
provided alternative modes of health care, either in another facility or
otherwise.

(ii) At the time of termination, the receiver shall render a full and
complete accounting to the court and shall make disposition of surplus
money at the direction of the court.

f. (i) Any person who is served a copy of an order of the court
appointing the receiver shall, upon being notified of the name and
address of the receiver, make all payments for goods supplied by the
facility, or services rendered by the facility, to the receiver. A
receipt shall be given for each such payment, and copies of all such
receipts shall be kept on file by the receiver. The amount so received
shall be deposited by the receiver in a special account which shall also
be used for all disbursements made by the receiver.

(ii) Any person refusing or omitting to make such a payment after such
service and notice may be sued therefor by the receiver. Such person
shall not in such suit dispute the authority of the receiver to incur or
order such expenses, or the right of the receiver to have such payments
made to him. The receipt of the receiver for any sum paid to him shall,
in all suits and proceedings and for every purpose, be as effectual in
favor of any person holding the same as actual payment of the amount
thereof to the owner or other person or persons who would, but for the
provisions of this subdivision, have been entitled to receive the sum so
paid. No patient shall be discharged, nor shall any contract or rights
be forfeited or impaired, nor any forfeiture or liability be incurred,
by reason of any omission to pay any owner, contractor or other person
any sum so paid to the receiver.

g. Any other provision of this chapter notwithstanding, the department
may, if it deems appropriate, grant to any facility operating or
scheduled to operate under a receivership authorized by this subdivision
an operating certificate the duration of which shall be limited to the
duration of the receivership.

h. No provision contained herein shall be deemed to relieve the owner
or any other person of any civil or criminal liability incurred, or any
duty imposed by law, by reason of acts or omissions of the owner or any
other person prior to the appointment of any receiver hereunder, nor
shall anything contained herein be construed to suspend during the
receivership any obligation of the owner or any other person for the
payment of taxes or other operating and maintenance expenses of the
facility nor of the owner or any other person for the payment of
mortgages or liens.

* 3. The commissioner is authorized to make non-interest bearing
payments to receivers appointed pursuant to this section within the
amounts made available therefor by the legislature. No such payment
shall be made unless the commissioner reasonably anticipates that
repayment shall be made prior to or upon termination of the
receivership. Any such payment to a receiver shall be made pursuant to a
repayment agreement entered into by the receiver with the commissioner
which shall specify a time within which full repayment must be made.
Repayments by receivers shall be applied to reimburse any first instance
appropriation made for the purposes of this subdivision.

* NB (Effective pending Federal Law)