N.Y. Public Health Law § 2810: 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been revoked pursuant to paragraph (a) of subdivision five of section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)