Wis. Stat. § 50.05 — WI Code / Chapter 50 / Section 50.05
Placement of monitor and appointment of receiver.
Status: in_force

(1) Definitions. In this section:

(a) “Affiliate” means:

1. With respect to a partnership, each partner thereof.

1L. With respect to a limited liability company, each member thereof.

2. With respect to a corporation, each officer, director, principal stockholder and controlling person thereof.

3. With respect to a natural person: any person related in the first degree of kinship to that person; each partnership and each partner thereof of which that person or any affiliate of that person is a partner; each limited liability company and each member or manager thereof of which that person or any affiliate of that person is a member or manager; and each corporation in which that person or any affiliate of that person is an officer, director, principal stockholder or controlling person.

(b) “Controlling person” means any person who has the ability, directly or indirectly, to control the management or policies of the facility.

(c) “Emergency” means a situation, physical condition or one or more practices, methods or operations which presents imminent danger of death or serious physical or mental harm to residents of the facility.

(d) “Facility” means a nursing home or community-based residential facility.

(dm) “Nursing facility” has the meaning given in s. 49.498 (1) (i) .

(e) “Operator” means any person licensed or required to be licensed under this subchapter as the operator of a facility.

(f) “Principal stockholder” of a corporation means any person who, directly or indirectly, beneficially owns, holds or has the power to vote, 10 percent or more of any class of securities issued by the corporation.

(2) Conditions for placement of a monitor or appointment of a receiver. The department may place a monitor in a facility and the secretary, as specified in sub. (4) , may petition for appointment of a receiver for a facility when any of the following conditions exist:

(a) The facility is operating without a license.

(b) The department has suspended or revoked the existing license of the facility.

(c) The department has initiated revocation procedures under s. 50.03 (5) and has determined that the lives, health, safety, or welfare of the residents cannot be adequately assured pending a full hearing on license revocation.

(d) The facility is closing or intends to close and adequate arrangements for relocation of residents have not been made at least 30 days prior to closure.

(e) The department determines that an emergency exists or that placement of a monitor or appointment of a receiver is necessary to protect the health, safety or welfare of the residents.

(f) The facility is a nursing facility that is in violation of s. 49.498 , a rule promulgated under s. 49.498 , or a requirement under 42 CFR 483 related to the operation of a nursing facility, meets the criteria established by rule under s. 49.498 (14) (c) for placement of a monitor or appointment of a receiver, and there is a need for placement of a monitor or appointment of a receiver during the period that any of the following applies:

1. There is an orderly closure of the nursing facility.

2. The nursing facility institutes improvements in order to bring the nursing facility into compliance with the requirements of s. 49.498 , a rule promulgated under s. 49.498 , or a requirement under 42 CFR 483 related to the operation of a nursing facility.

(3) Monitor. In any situation described in sub. (2) , the department may place a person to act as monitor in the facility. The monitor shall observe operation of the facility, assist the facility by advising it on how to comply with state regulations, and shall submit a written report periodically to the department on the operation of the facility. The department may require payment by the operator or controlling person of the facility for the costs of placement of a person to act as monitor in the facility.

(4) Appointment of receiver. Only the secretary, represented by the department of justice, may apply for a court order appointing the secretary or the secretary’s designee receiver of the facility. The secretary, as represented, may apply by verified petition to the circuit court for Dane County for the order. The court shall hold a hearing on the petition within 5 days of the filing of the petition. The petition and notice of the hearing shall be served on the operator, administrator or designated agent of the facility as provided under ch. 801 or shall be posted in a conspicuous place in the facility not later than 3 days before the time specified for the hearing, unless a different period is fixed by order of the court. Notwithstanding ss. 803.01 to 803.09 and 844.18 , the only persons who may appear as a party at a hearing under this subsection or sub. (5) are the secretary or the secretary’s designee and the operator of the facility. The court shall appoint a receiver for a specified time period requested by the secretary up to 120 days, if it finds that any ground exists which would authorize the appointment of a receiver under sub. (2) and that appointment of a receiver will contribute to the continuity of care or the orderly and safe transfer of residents in the facility. The court may extend the period of receivership in 30-day increments only on the petition of the department and if the court finds that the department has been unable to transfer all of the residents to another suitable location or the department has determined that it is necessary for the receivership to be extended for the continued health, safety and welfare of the residents. Notwithstanding s. 808.03 (1) , any order issued at the hearing on the petition for receivership under this subsection or sub. (5) or at a subsequent hearing concerning matters arising under the receivership or concerning termination of the receivership under sub. (14) may be appealed as a matter of right.

(5) Emergency procedure. If it appears from the petition filed under sub. (4) , or from an affidavit or affidavits filed with the petition, or from testimony of witnesses under oath when the court determines that this is necessary, that there is probable cause to believe that an emergency exists in the facility, the court shall immediately issue the requested order for appointment of a receiver, ex parte and without further hearing. An appearance by the secretary or the secretary’s designee to obtain the order is not a hearing of any preliminary contested matter for the purposes of s. 801.58 (1) . Notice of the petition and order shall be served on the operator, administrator, or designated agent of the facility as provided under ch. 801 or shall be posted in a conspicuous place in the facility within 24 hours after issuance of the order and a hearing on the petition shall be held within 3 days after notice is served or posted unless the operator consents to a later date. After the hearing, the court may terminate, continue or modify the temporary order.

(6) Objective. The receiver shall with all reasonable speed, but in any event by the date receivership ends under sub. (4) , provide for the orderly transfer of all residents in the facility to other suitable facilities or make other provisions for their continued health, safety and welfare.

(7) Powers and duties of receiver. A receiver appointed under this chapter:

(a) May exercise those powers and shall perform those duties set out by the court.

(b) Shall operate the facility in such a manner as to assure safety and adequate health care for the residents.

(c) Shall have the same rights to possession of the building in which the facility is located and of all goods and fixtures in the building at the time the petition for receivership is filed as the operator would have had if the receiver had not been appointed. The receiver shall take such action as is reasonably necessary to protect or conserve the tangible assets or property of which the receiver takes possession, or the proceeds of any transfer thereof, and may use them only in the performance of the powers and duties set forth in this section and by order of the court.

(d) May use the building, fixtures, furnishings, and any accompanying consumable goods in the provision of care and services to residents and to any other persons receiving services from the facility at the time the petition for receivership was filed. The receiver shall collect payments for all goods and services provided to residents or others during the period of the receivership, at the same rate of payment as was charged by the operators at the time the petition for receivership was filed, unless a different rate is set by the court.

(e) May correct or eliminate any deficiency in the structure or furnishings of the facility which presents an immediate or serious danger to the health or safety of residents while they remain in the facility, provided the total cost of correction does not exceed $3,000. The court may order expenditures for this purpose in excess of $3,000 only on application from the receiver.

(f) May let contracts and hire agents and employees to carry out the powers and duties created under this section. Competitive bidding requirements under s. 16.75 do not apply to contracts for services or materials let by the receiver.

(g) Except as specified in sub. (9) , shall honor all leases, mortgages and secured transactions governing the building in which the facility is located and all goods and fixtures in the building of which the receiver has taken possession, but only to the extent of payments which, in the case of a rental agreement, are for the use of the property during the period of the receivership, or which, in the case of a purchase agreement, come due during the period of the receivership.

(h) Shall have full power to direct and manage and to discharge employees of the facility, subject to any contract rights they may have. The receiver shall pay employees at the same rate of compensation, including benefits, that the employees would have received from the operator, except that the receiver shall compensate employees for time actually worked during the period of receivership and may reimburse for vacations or periods of sick leave. The receiver may grant salary increases and fringe benefits to employees of a nursing home, in accord with the facility payment formula under s. 49.45 (6m) . Receivership does not relieve the operator of any obligation to employees not carried out by the receiver.

(i) Shall, if any resident is transferred or discharged, provide for:

1. Transportation of the resident and the resident’s belongings and medical records to the place to which the resident is being transferred or discharged.

2. Aid in location of an alternative placement and in discharge planning.

3. If the patient is being transferred, preparation for transfer to mitigate transfer trauma.

(j) Shall, if any resident is to be transferred, permit participation by the resident or the resident’s guardian in the selection of the resident’s alternative placement.

(k) Shall, unless emergency transfer is necessary, prepare a resident under pars. (i) 3. and (j) by explaining alternative placements, and by providing orientation to the placement chosen by the resident or the resident’s guardian.

(L) Shall be entitled to and shall take possession of all property or assets of residents which are in the possession of an owner, operator or controlling person of the facility. The receiver shall preserve all property, assets and records of residents of which the receiver takes possession and shall provide for the prompt transfer of the property, assets and records to the alternative placement of any transferred resident.

(m) May restrict admissions to the facility.

(8) Payment to receiver.

(a) A person who is served with notice of an order of the court appointing a receiver and of the receiver’s name and address shall be liable to pay the receiver for any goods or services provided by the receiver after the date of the order if the person would have been liable for the goods or services as supplied by the operator. The receiver shall give a receipt for each payment and shall keep a copy of each receipt on file. The receiver shall deposit amounts received in a special account and shall use this account for all disbursements.

(b) The receiver may bring an action to enforce the liability created by par. (a) . Proof of payment to the receiver is as effective in favor of the person making the payment as payment of the amount to the person who would, but for this subsection, have been entitled to receive the sum so paid.

(c) A resident may not be discharged, nor may any contract or rights be forfeited or impaired, nor may forfeiture or liability be increased, by reason of an omission to pay an owner, operator or other person a sum paid to the receiver.

(9) Avoidance of preexisting leases, mortgages and contracts.

(a) A receiver may not be required to honor any lease, mortgage, secured transaction or other wholly or partially executory contract entered into by the owners or operators of the facility if any of the following is applicable:

1. The person seeking payment under the lease, mortgage, secured transaction or other wholly or partially executory contract was an operator or controlling person of the facility or was an affiliate of an operator or controlling person at the time the lease, mortgage, secured transaction or other wholly or partially executory contract was made.

2. The rental, price or rate of interest required to be paid under the lease, mortgage, secured transaction or other wholly or partially executory contract was in excess of a reasonable rental, price or rate of interest at the time the contract was entered into.

3. Payment under the lease, mortgage, secured transaction or other wholly or partially executory contract has been modified by the parties’ subsequent oral or written agreement or constructive waiver.

(b) If the receiver is in possession of real estate or goods subject to a lease, mortgage or security interest which the receiver is permitted to avoid under par. (a) , and if the real estate or goods are necessary for the continued operation of the facility under this section, the receiver may apply to the court to set a reasonable rental, price or rate of interest to be paid by the receiver during the duration of the receivership. The court shall hold a hearing on the application within 15 days. The receiver shall send notice of the application to any known owners of the property involved at least 10 days prior to the hearing. Payment by the receiver of the amount determined by the court to be reasonable is a defense to any action against the receiver for payment or for possession of the goods or real estate subject to the lease or mortgage involved by any person who received such notice, but the payment does not relieve the owner or operator of the facility of any liability for the difference between the amount paid by the receiver and the amount due under the original lease or mortgage involved.

(c) During the period of appointment of a receiver, there may be no foreclosure of a mortgage entered into by the owner or operator of the facility or eviction of facility residents if the foreclosure or eviction serves to defeat the purpose of the appointment.

(9m) Impeding receivership prohibited; automatic stay. No person may impede the operation of a receivership established under this section. After the appointment of a receiver, any action that interferes with the functioning of the facility, including cancellation of an insurance policy executed on behalf of the facility, repossession of equipment used in the facility or termination of utility services or other services or goods that are necessary to protect the health, safety or welfare of the nursing home residents, is automatically stayed for a period of not more than 60 days.

(10) Contingency fund. If funds collected under subs. (3) , (7) and (8) are insufficient to meet the expenses of performing the powers and duties conferred on the receiver by this section, or if there are insufficient funds on hand to meet those expenses, the department may draw from the supplemental fund created under s. 20.435 (6) (dm) to pay the expenses associated with the placement of a monitor, if any, in a nursing home and the receivership of a nursing home. Operating funds collected under this section and not applied to the expenses of the placement of a monitor, if any, and the receivership, except for the amount of a security, if any is required under sub. (14m) , shall be used to reimburse the fund for advances made under this section.

(11) Compensation of monitor or receiver. The court shall set the compensation of a person placed as a monitor, if any, and of the receiver, which will be considered necessary expenses of a receivership.

(12) Liability of receiver; status as public employee.

(a) In any action or special proceeding brought against a receiver in the receiver’s official capacity for acts committed while carrying out the powers and duties created under this section, the receiver shall be considered a public employee for purposes of s. 895.46 .

(b) A receiver may be held liable in a personal capacity only for the receiver’s own gross negligence, intentional acts or breach of fiduciary duty.