Title: Section 485.9 - Receivership.
485.9 Receivership. (a) Receiver appointed upon application of the commissioner.
(1) When the department revokes or temporarily suspends the operating certificate of a facility and the commissioner determines that appointment of a receiver is necessary to protect the health, safety and welfare of the residents of a facility, the commissioner may seek the appointment of a receiver by applying to the Supreme Court in the county where the facility is situated for an order directing the operators, owners and prime lessors, if any, of the premises to show cause why the commissioner, or at the discretion of the commissioner his designee, should not be appointed receiver to take charge of the facility.
(2) The commissioner shall not be required to seek the appointment of a receiver or to assume the responsibilities of a receiver directly or indirectly through his designee; nor shall any court be authorized to compel the commissioner to assume the responsibilities of a receiver or to appoint a designee to assume such responsibilities.
(3) The department may, if it deems appropriate, grant an operating certificate to any facility operating or scheduled to operate under a receiver. The duration of the operating certificate shall not exceed the duration of the receivership.
(4) Any receiver appointed upon application of the commissioner shall have all of the powers and duties of a receiver appointed in an action to foreclose a mortgage on real property, together with the following additional powers and duties:
(i) The receiver shall, with all reasonable speed but, in any case, within six months after the date on which the receivership was ordered, unless otherwise extended by the court, provide for the orderly transfer of all residents in the facility to other facilities or make other provisions for their continued safety and care.
(ii) The receiver shall operate the facility in compliance with regulations of the department.
(iii) The receiver, with the approval of the commissioner, shall incur expenses as may be necessary to operate the facility. 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 have 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 by the receiver. The receiver shall compensate the 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 owners have already been reimbursed.
(iv) The receiver shall not be required to file any bond.
(5) Notwithstanding paragraph (4) of this subdivision and, except in the case where the receiver is assuming an existing bona fide arm'slength lease, the commissioner shall determine a reasonable monthly rental for the facility, based on consideration of all appropriate factors, including the condition of such facility. The rent, as determined by the commissioner, shall be paid by the receiver to the owners or prime lessors as may be directed by the court for each month that the receivership remains in effect. In the event that the amount established by the commissioner is less than the currently valid lease, the obligation of the operator shall not be altered or diminished.
(6) The receiver:
(i) shall be intitled to a fee and reimbursement for expenses as determined by the commissioner, based upon consideration of all appropriate factors relating to the operation of the facility, to be paid as a charge against the operator, not to exceed the fees, commissions and necessary expenses authorized to be paid to receivers in an action to foreclose a mortgage;
(ii) 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 or operator would have been liable; he shall not have any liability in his personal capacity, except for gross negligence and intentional acts;
(iii) may, subject to approval by the commissioner, ratify any collective bargaining agreement in effect between the operator and the employees of a facility, or suspend such collective bargaining agreement; provided, however, that the receiver, in his official capacity, remains liable for payment of wages and salaries at the rates and levels in effect at the time of his appointment; and
(iv) shall notify the commissioner of any lien or conveyance made in contemplation of receivership with an intent to remove an asset of the facility from the jurisdiction and use of the receiver, or to hinder or delay the receiver in the execution of his duties and responsibilities as receiver.
(7) (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 who refuses or omits to make such 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 for any 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 who would have been entitled to receive the sum so paid. No resident shall be discharged, nor shall any contract of 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.
(8) All transactions involving the receivership shall be on the accrual basis of accounting.
(9) Obligations of the operators, owners or prime lessors.
(i) The operators, owners or prime lessors shall not be relieved of any civil or criminal liability or obligation incurred, or any duty imposed by law, by reason of acts or omissions of such persons prior to the appointment of any receiver. During the period a facility is operated by a receiver, the operator, owner or prime lessor, if any, shall continue to be liable for all obligations for the payment of taxes or other operating and maintenance expenses of the facility, and the owner or other appropriate person shall continue to be liable for the payment of mortgages or liens.
(ii) Expenses incurred by a receiver to meet the operating and maintenance expenses of the facility and the basic needs of the residents of the facility shall be deemed the obligations of the operator, and not the obligations of the receiver or the State.
(iii) The receiver shall not be responsible for any obligations incurred by the owner, operator or prime lessor, if any, prior to the appointment of the receiver.
(iv) The receiver shall be entitled to use for operating and maintenance expenses, and for the basic needs of the residents of the facility, a portion of the revenues due the operator during the month in which the receiver is appointed. This portion shall be established on the basis of the amounts of the operating and maintenance expenses for such month. Such amounts shall be prorated by dividing the number of days of the receivership appointment by the number of days in the month.
(v) Any sums determined to be due and owing by the receiver to the owner, operator or prime lessor shall be offset by any charges determined to be the obligations of the owner, operator or prime lessor.
(10) The court shall terminate the receivership only under any of the following circumstances:
(i) six months after the date on which it was ordered, except that the court may extend such period for good cause shown;
(ii) when the department grants an operator a new operating certificate; or
(iii) at such time as all of the residents in the facility have been provided alternative modes of care, either in another facility or otherwise.
(11) At the time of termination of the receivership, the receiver shall render a full and complete accounting to the court and shall dispose of any profit or surplus as instructed by the court.
(12) Payments to receivers appointed upon application of the commissioner.
(i) The commissioner is authorized to make payments to a receiver only if the receiver demonstrates to the satisfaction of the commissioner that the facility's funds which are available are insufficient to meet operating and maintenance expenses of the facility and the basic needs of the residents of the facility.
(ii) The operator shall be liable for all monies made available to the receiver pursuant to this paragraph.
(iii) Any payments made by the commissioner to a receiver shall be made without any obligation on the part of the social services district, in which the receiver-operated facility is located, to reimburse the department for any such payments.
(b) Court-appointed receiver without application of the commissioner.
(1) In the event of a transfer of possession of the premises of a facility from an approved operator to a court-appointed receiver, the department may authorize such court-appointed receiver to continue to operate the facility for a temporary period pending the filing and review of an application to the department by the receiver or by another person for an operating certificate.
(2) Such temporary authorization shall be granted and continued only if the court-appointed receiver agrees to and complies with the terms and conditions set by the department. Such terms and conditions shall include:
(i) operation of the facility in compliance with the regulations of the department;
(ii) a waiver by the receiver of any assessment of fees against the department, the commissioner, and the State;
(iii) submission of a statement of intention to apply or not to apply for certification as operator of the facility within 15 days after transfer of possession to the receiver;
(iv) if the receiver indicates an intention to apply for an operating certificate, submission of an application for an operating certificate within 90 days after the transfer of possession to the receiver, unless the time for such filing is extended by the department;
(v) if the receiver indicates no intention to apply for an operating certificate, agreement to cooperate fully with potential operators and the department in the orderly transfer of the facility to a certified operator or to provide for the orderly transfer of all residents in the facility to other facilities or make other provisions for their continued safety and care.
(3) The commissioner may make application to appear and advise the court of any objections he may have to the transfer of possession from the approved operator to any other persons, including a receiver, or of any objections he may have to continuing a receiver or any other person in possession.
VOLUME B-1 (Title 18)