N.Y. MHY Law § 19.41 — New York Code / Act MHY / Title D / Article 19 / Section 19.41
Facilities; receivership
Status: in_force

§ 19.41 Facilities; receivership.\n  a. The owner or owners of any facility may at any time request the\noffice to take over the operation of such facility by the appointment of\na receiver. Upon receiving such a request, the office may, if it deems\nsuch action desirable, enter into an agreement with any such owners with\nrespect to the appointment of a receiver to take charge of the facility\nunder conditions as found acceptable by both parties. Receivership\ncommenced in accordance with the provisions of this subdivision shall\nterminate at such time as may be provided in the receivership agreement,\nor at such time as either party notifies the other in writing that he or\nshe wishes to terminate such receivership.\n  b.  (1) Upon issuing a notice that the commissioner will revoke or\nsuspend a license or operating certificate in accordance with this\narticle and article thirty-two of this chapter, or that he or she will\ndisapprove an application of renewal of such certificate or license\npursuant to this article and article thirty-two of this chapter the\ncommissioner may apply to the supreme court in the county where the\nfacility is located for an order to show cause why a receiver should not\nbe appointed to operate the facility. The court shall, upon determining\nthat the notice was properly issued and that it would be in the best\ninterests of the persons served by the facility to have services\ncontinued after the effective date of the revocation or suspension,\nappoint a receiver for the facility to take effect upon the revocation\nor suspension of the operating certificate or license in accordance with\nthe provisions of this article.\n  The order to show cause shall be returnable not less than five days\nafter service is completed and shall provide for personal service of a\ncopy thereof and the papers upon which it is based on the operator of\nthe facility and upon the owner or owners of the land and/or owners of\nthe land and/or structure on or in which the facility is located. If any\nsuch operator or owner cannot with due diligence be served personally\nwithin the county where the property is located and within the time\nfixed in such order, then service may be made on such person by posting\na copy thereof in a conspicuous place within the facility in question,\nand by sending a copy thereof by registered mail, return receipt\nrequested, to such owner at the last address registered to him or her\nwith the office, or in the absence of such registration, to the address\nset forth in the last recorded deed with respect to such facility.\nService shall be deemed complete on filing proof of service thereof in\nthe office of the county clerk, or the clerk of the city of New York, as\nthe case may be.\n  (2) The commissioner may, prior to suspending an operating certificate\nor license pursuant to this article and article thirty-two of this\nchapter, request a temporary restraining order appointing a receiver for\na facility effective with the commissioner's issuance of the notice of\nthe suspension. The court shall issue the temporary restraining order if\nit is satisfactorily shown by the commissioner that he or she has\nreasonable grounds for finding that continued operation of the facility\nby the current provider of services presents an imminent danger to the\nhealth and welfare of any of the public or any of the individuals served\nby the facility.\n  (3) The court shall appoint a receiver which should, where reasonably\npossible, be a voluntary association or other not-for-profit corporation\nrecommended by the commissioner which holds a valid and current\noperating certificate or license for a similar type facility, or which\nshall satisfactorily demonstrate to the commissioner its qualifications\nfor such operating certificate or license.\n  (4) 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, the court shall determine a fair\nmonthly rental for the facility consistent with its usage as such\nfacility, which amount shall, except in the case where the receiver is\nassuming an existing bona fide arm's length lease, not exceed the amount\nwhich would be reimbursable to the facility in accordance with current\nguidelines established by the office. Such rental shall be paid by the\nreceiver to the owner or owners of the facility for each month that the\nreceivership remains in effect, provided, however, that nothing\ncontained herein shall be construed to alter and diminish any rental\nobligation the operator may have under any currently valid bona fide\narm's length lease.\n  (5) If the operating certificate or license of the operator of the\nfacility is revoked or suspended, then the receiver shall apply for the\nissuance of an appropriate operating certificate or license for the\nfacility and shall for the duration of the receivership comply with all\napplicable statutes and regulations.\n  (6) 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, provide for the orderly\ntransfer of all clients in the facility to other care or make other\narrangements as authorized in subparagraph (a) of paragraph eight of\nthis subdivision. During the interim period when such clients must\nremain in the facility, the receiver may correct or eliminate those\ndeficiencies in the facility that seriously endanger the life, health,\nor safety of such clients; 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 clients. The receiver shall have the power to let\ncontracts therefor or incur expenses in accordance with the provisions\nof applicable statutes, rules and regulations, and applicable guidelines\nestablished by the office. Any receiver who is an official or employee\nof the state of New York shall not be required to file any bond. Such\nreceiver shall collect incoming payments from all sources and apply them\nto the costs incurred in the performance of its functions as a receiver.\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 recision, 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 clients served by such facility. No security interest\nin any real or personal property comprising the facility or contained\nwithin the facility shall be impaired or diminished in priority by the\nreceiver. The receiver shall compensate the owner or owners of any goods\nheld in inventory for those goods which it uses or causes to be used,\nexcept that no such compensation shall be made for any such goods for\nwhich the owner or operators of the facility have already been\nreimbursed. Neither the receiver nor the office shall engage in any\nactivity that constitutes a confiscation of property without the payment\nof fair compensation.\n  (7) 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 its official capacity for injury to person and\nproperty by reason of conditions of the facility in a case where an\nowner would have been liable; provided that it operates such facility in\ncompliance with the terms of its appointment, it shall not have any\nliability in its personal capacity, except for gross negligence and\nintentional acts.\n  (8) (a) The court shall terminate the receivership only under any of\nthe following circumstances:\n  (i) eighteen months after the date on which it is ordered;\n  (ii) when the receiver, or other voluntary agency or not-for-profit\ncorporation satisfactory to the commissioner, has (A) agreed to continue\nthe operation of the facility, (B) entered into a satisfactory long-term\n(not less than two years) arrangement reached on a bona fide arm's\nlength basis with the owner or owners of land and/or structure on or in\nwhich the facility is or is to be located, and (C) applied for and\nreceived from the commissioner a new operating certificate or license,\nas appropriate, for the continued operation of the facility; or\n  (iii) at such times as all of the persons served by the facility have\nbeen provided alternative services.\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  (9) (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\nalso be 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 it. The receipt of the receiver for any sum paid to it shall, in\nall 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 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  (10) (a) 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\nmortgages or liens.\n  (b) The receiver shall not be responsible for any obligations incurred\nby the owner, operator, or prime lessor, if any, prior to the\nappointment of the receiver.\n  (c) The receiver shall be entitled to use for operating and\nmaintenance expenses and the basic needs of persons served by 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  (d) 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\nlessor.\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 the operating and\nmaintenance expenses of the facility and the basic needs of those served\nby 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 therefore shall have been issued\nby the director of the budget and a copy of such certificate filed with\nthe comptroller, the chairman of the senate fiance 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\nof each such amendment shall be filed with the comptroller, the chairman\nof the senate finance committee, and the chairman of the assembly ways\nand means committee.\n