N.Y. MHY Law § 16.27 — New York Code / Act MHY / Title C / Article 16 / Section 16.27
Residential facilities; receivership
Status: in_force

§ 16.27 Residential facilities; receivership.\n  (a) The operator of any facility may at any time request the office to\ntake over the operation of such facility by the appointment of a\nreceiver. Upon receiving such a request, the office may, if it deems\nsuch action desirable, enter into an agreement with any such operators\nwith respect to the appointment of a receiver to take charge of the\nfacility under conditions as found acceptable by both parties.\nReceivership commenced in accordance with the provisions of this\nsubdivision shall terminate at such time as may be provided in the\nreceivership agreement, or one hundred twenty days after the receipt by\neither party of written notice that the other party wishes to terminate\nsuch receivership.\n  (b) (1) a. If the commissioner has reason to believe that it is\nnecessary to protect the health, safety and welfare of the persons with\ndevelopmental disabilities in a residential facility, at the time of\ntemporary suspension of the operating certificate of such a facility or\nupon issuance of a notice of intention to revoke or suspend the\noperating certificate of such a facility pursuant to section 16.17 of\nthis article, or at the time of any notice of disapproval of an\napplication for issuance or renewal of such certificate pursuant to\nsection 16.05 of this article, the commissioner may apply to the supreme\ncourt in the county where the facility is situated for an order to show\ncause why a receiver should not be appointed to take charge of the\nfacility. The supreme court shall, upon the request of the commissioner,\nand upon determining that the notice was properly issued and that the\nhealth, safety and welfare of the persons with developmental\ndisabilities would be served by the appointment of a receiver to operate\nthe facility, appoint a receiver to commence operating the facility upon\nthe effective date of the revocation, suspension, temporary suspension,\ndenial or nonrenewal of the operating certificate of such facility.\n  b. The receiver should, where reasonably possible, be a voluntary\nassociation or not-for-profit corporation which holds a valid and\ncurrent operating certificate for a residential facility pursuant to\nsection 16.05 of this article (or which shall satisfactorily demonstrate\nits lawful qualifications for such operating certificate) with the\napproval of the commissioner, an employee of the office or other\ndesignee.\n  c. Such application for an order to show cause, shall contain proof by\naffidavit that the commissioner has temporarily suspended the facility's\noperating certificate or has issued a notice of intention to revoke,\nsuspend, or deny issuance or renewal of its operating certificate.\n  d. In the case of a temporary suspension of an operating certificate,\na temporary receiver may be appointed and a temporary restraining order\nmay be granted. If the commissioner demonstrates that, unless a\ntemporary receiver is appointed and a temporary restraining order is\ngranted before a hearing can be held, the health or safety of any person\nwith developmental disabilities will be in imminent danger or that\nproperty necessary to the operation of the facility will be in imminent\ndanger of removal or destruction, a temporary receivership and a\ntemporary restraining order may be granted without notice. The temporary\nreceivership and temporary restraining order shall be in effect pending\na determination of the order to show cause.\n  e. The order to show cause why a receiver should not be appointed\nshall be returnable not less than five days after service is completed;\nprovided, however, that in the case of an appointment of a temporary\nreceiver without notice to the owner or operator pursuant to\nsubparagraph d of this paragraph, the order to show cause shall be\nreturnable no more than fourteen days from the appointment of a\ntemporary receiver.\n  f. The order to show cause shall provide for personal service of a\ncopy thereof and the papers on which it is based on the owner or owners\nof the real property on or in which the facility is located and on the\nfacility operator. In the case of an appointment of a temporary receiver\nwithout notice to the owner or operator pursuant to subparagraph d of\nthis paragraph, such order to show cause shall provide for personal\nservice upon such owner and operator within thirty-six hours after the\nappointment of the temporary receiver. If any owner or operator cannot\nwith due diligence be served personally within the county where the\nproperty is located and within the time fixed in such order, then\nservice may be made on such person by posting a copy thereof in a\nconspicuous place within the facility in question, and by sending a copy\nthereof by certified mail, return receipt requested, to such operator at\nthe last address registered by him with the department and such owner to\nthe address set forth in the last recorded deed with respect to such\nreal property on or in which the facility is located.  Service shall be\ndeemed complete on filing proof of service thereof in the office of the\ncounty clerk, or the clerk of the city of New York, as the case may be.\n  (2) 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 whether the health, safety and welfare of the\nresidents with developmental disabilities will be served by the\nappointment of a receiver to operate the facility. If the court shall\nfind that the facts warrant the granting thereof, then any such\nqualified and approved agency, person or corporation, the commissioner,\nor any person designated by the commissioner, shall be appointed\nreceiver to take charge and assume operation of the facility, and the\ncourt shall determine a fair monthly rental for the facility consistent\nwith its usage as such facility, taking into account all relevant\nfactors, including the condition of such facility, which amount shall,\nexcept in the case where the receiver is assuming an existing bona fide\narm's length lease, not exceed the amount which would be reimbursable to\nthe facility under the medical assistance program for real property\ncosts if each resident in the facility were a recipient of medical\nassistance.  Such rental shall be paid by the receiver to the owner or\nowners of the facility for each month that the receivership remains in\neffect, provided, however, that nothing contained herein shall be\nconstrued to alter and diminish any rental obligation the operator may\nhave under any currently valid lease.\n  (3) 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 eighteen months after\nthe date on which the receivership was ordered to provide for the\norderly transfer of all persons with developmental disabilities in the\nfacility to other facilities or make other provisions for their\ncontinued safety and care. During the interim period when such persons\nwith developmental disabilities must remain in the facility, the\nreceiver may correct or eliminate those deficiencies in the facility\nthat seriously endanger the life, health or safety of such persons with\ndevelopmental disabilities provided that such correction or elimination\nof deficiencies does not include major alterations of the physical\nstructure of the facility.  The receiver shall, during this period\noperate the facility in such a manner as to guarantee safety and\nadequate care for such persons with developmental disabilities. The\nreceiver shall have the power to let contracts therefor or incur\nexpenses in accordance with the provisions of local laws, ordinances,\nrules and regulations applicable to contracts for public works except\nthat advertisement shall not be required for each such contract.\nNotwithstanding any such laws, ordinances, rules or regulations, the\nreceiver may let contracts or incur expenses for individual items of\nrepairs, improvements or supplies without the procurement of competitive\nbids where the total amount of any such individual item does not exceed\nfive thousand dollars. Any receiver who is an official or employee of\nthe state of New York shall not be required to file any bond. The\nreceiver shall collect incoming payments from all sources and apply them\nto the costs incurred in the performance of the receiver's functions.\nThe receiver shall honor all existing leases, mortgages and chattel\nmortgages that had previously been undertaken as obligations of the\nowners or operators of the facility. However, such receiver may make\napplication to the appointing court for recission, reformation or such\nother relief as may be appropriate with respect to the executory\ncovenants or provisions of any contractual obligations of such owners or\noperators as may be necessary or appropriate to protect the best\ninterests of the persons with developmental disabilities residing within\nsuch 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 owner or owners of any\ngoods held in inventory for those goods which he uses or causes to be\nused by reimbursing the costs of such goods, except that no such\ncompensation shall be made for any such goods for which the owners or\noperators of the facility have already been reimbursed. Neither the\nreceiver nor the office shall engage in any activity that constitutes a\nconfiscation of property without the payment of fair compensation.\n  (4) The appointing court, upon application of the receiver, may make\nsuch provision as justice may require for a reasonable compensation and\nreimbursement of the reasonable expenses of such receiver. The receiver\nshall be liable only in the receiver's official capacity for injury to\nperson and property by reason of conditions of the facility in a case\nwhere an owner would have been liable; provided that the receiver\noperates such facility in compliance with the terms of the appointment\nthe receiver shall not have any liability in a personal capacity, except\nfor gross negligence and intentional acts.\n  (5) a. The court shall terminate the receivership only under any of\nthe following circumstances:\n  (i) eighteen months after the date on which it was ordered;\n  (ii) when the office grants the facility a new operating certificate,\nwhether the structure of the facility or the land on which it is located\nshall be under the same or different ownership; or\n  (iii) at such time as all of the persons with developmental\ndisabilities in the facility have been provided alternative residential\nservices.\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 direction of the court.\n  (6) 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\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  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 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 to\nbe paid. No person with developmental disabilities 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 owner, contractor or other person any sum so paid to the receiver.\n  (7) Any other provision of this chapter notwithstanding, the office\nmay, if it deems appropriate, grant to any facility operating or\nscheduled to operate under a receivership authorized by this subdivision\nan operating certificate the duration of which shall be limited to the\nduration of the receivership.\n  (8) (i) No provision contained herein shall be deemed to relieve the\nowner or operator of any civil or criminal liability incurred, or any\nduty imposed by law, by reason of acts or omissions of the owner or\noperator prior to the appointment of any receiver hereunder, nor shall\nanything contained herein be construed to suspend during the\nreceivership any obligation of the owner or operator for the payment of\ntaxes or other operating and maintenance expenses of the facility nor of\nthe owner or any other person for the payment of mortgages or liens.\n  (ii) 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  (iii) 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 unpaid operating and maintenance\nexpenses for such month.\n  (iv) 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  (c) (1) Subject to paragraph two of this subdivision, and subject to\nthe approval of the director of the budget, the commissioner is\nauthorized to make payments to receivers appointed pursuant to the\nprovisions of subdivision (b) 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  (2) Notwithstanding any inconsistent provisions of law, payments made\npursuant to this section shall be made from funds appropriated therefor\nand such payments shall be made only if a certificate of allocation and\na schedule of amounts to be available therefor shall have been issued by\nthe director of the budget 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 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) This section shall apply only to the facilities under the\njurisdiction of the office for people with developmental disabilities.\nReference to the commissioner in this section shall mean the\ncommissioner of developmental disabilities.\n