NY Pub Health L § 2806-A (2021)
2021 New York Laws PBH - Public Health Article 28 - Hospitals 2806-A - Temporary Operator.

* § 2806-a. Temporary operator. 1. For the purposes of this section:  (a) "adult care facility" shall mean an adult home or enriched housing program licensed pursuant to article seven of the social services law or an assisted living residence licensed pursuant to article forty-six-B of this chapter;  (b)  "established  operator"  shall mean the operator of an adult care facility, a general hospital or a diagnostic and treatment  center  that has  been  established  and  issued  an  operating  certificate  as such pursuant to this article;  (c) "facility" shall mean (i) a general hospital or a  diagnostic  and treatment  center  that has been issued an operating certificate as such pursuant to this article; or (ii) an adult care facility;  (d) "temporary operator" shall mean any person or entity that:  (i) agrees to operate a facility on a  temporary  basis  in  the  best interests  of  its residents or patients and the community served by the facility; and  (ii) has demonstrated that he or she has the character, competence and financial ability to operate the facility in compliance with  applicable standards;  (e)  "serious  financial instability" shall include but not be limited to defaulting or violating key covenants of loans,  or  missed  mortgage payments,  or general untimely payment of obligations, including but not limited to employee benefit fund, payroll  tax,  and  insurance  premium obligations,  or  failure  to  maintain  required  debt service coverage ratios or, as applicable, factors that have triggered a written event of default notice to the department by the dormitory authority of the state of New York; and  (f)  "extraordinary  financial  assistance"  shall  mean  state  funds provided  to  a facility upon such facility's request for the purpose of assisting the facility to address serious  financial  instability.  Such funds  may  be  derived  from  existing  programs within the department, special appropriations, or other funds.  (g) "improper delegation of  management  authority  by  the  governing authority  or  operator" of a general hospital shall include, but not be limited to, the delegation to an entity that has not been established as an operator of the general hospital of (i) authority to hire or fire the administrator or other key management employees;  (ii)  maintenance  and control  of  the books and records; (iii) authority over the disposition of assets and the incurring of liabilities on behalf  of  the  facility; and  (iv)  the  adoption  and  enforcement  of  policies  regarding  the operation of the facility. The criteria  set  forth  in  this  paragraph shall  not  be  the  sole  determining  factors,  but  indicators  to be considered with such other factors that may be pertinent  in  particular instances.  Professional expertise shall be exercised in the utilization of the criteria. All of the listed indicia need  not  be  present  in  a given instance for there to be an improper delegation of authority.   2. (a) In the event that: (i) a facility seeks extraordinary financial assistance  and the commissioner finds that the facility is experiencing serious financial instability that is jeopardizing existing or continued access  to  essential  services  within  the  community,  or  (ii)   the commissioner  finds  that  there are conditions within the facility that seriously endanger the life, health or safety of residents or  patients, the commissioner may appoint a temporary operator to assume sole control and  sole  responsibility  for the operations of that facility, or (iii) the commissioner finds that there has been  an  improper  delegation  of management authority by the governing authority or operator of a general hospital,  the commissioner shall appoint a temporary operator to assume sole  control  and  sole  responsibility  for  the  operations  of  that  facility. The appointment of the temporary operator shall be effectuated pursuant  to this section and shall be in addition to any other remedies provided by law.  (b) The established operator of a facility may at any time request the commissioner  to  appoint  a  temporary  operator. Upon receiving such a request, the commissioner may, if he or  she  determines  that  such  an action is necessary to restore or maintain the provision of quality care to  the  residents  or  patients  or  alleviate the facility's financial instability, enter into an agreement with the established  operator  for the  appointment of a temporary operator to assume sole control and sole responsibility for the operations of that facility.   3. (a) A temporary operator appointed pursuant to this section  shall, prior  to  his  or  her  appointment  as temporary operator, provide the commissioner with a  work  plan  satisfactory  to  the  commissioner  to address  the  facility's  deficiencies and serious financial instability and a schedule for implementation of such plan. A work plan shall not be required prior to the appointment of the temporary operator pursuant  to clause  (ii)  of paragraph (a) of subdivision two of this section if the commissioner  has  determined  that  the  immediate  appointment  of   a temporary  operator  is  necessary because public health or safety is in imminent  danger  or  there  exists  any  condition  or  practice  or  a continuing  pattern  of  conditions  or  practices  which poses imminent danger to the health or  safety  of  any  patient  or  resident  of  the facility.  Where  such  immediate  appointment  has  been  found  to  be necessary, the temporary operator shall provide the commissioner with  a work plan satisfactory to the commissioner as soon as practicable.  (b)  The  temporary  operator  shall  use  his  or her best efforts to implement the work plan provided to the commissioner, if applicable, and to correct or eliminate any deficiencies or financial instability in the facility and to promote the quality and  accessibility  of  health  care services  in  the  community  served by the facility. Such correction or elimination of deficiencies or serious financial instability  shall  not include  major  alterations  of  the physical structure of the facility. During the term of his or her appointment, the temporary operator  shall have  the sole authority to direct the management of the facility in all aspects of operation and shall be afforded full access to  the  accounts and  records  of the facility. The temporary operator shall, during this period, operate the facility in such a manner as to promote  safety  and the  quality  and  accessibility  of health care services or residential care in the community served by the  facility.  The  temporary  operator shall  have  the  power  to  let contracts therefor or incur expenses on behalf of the facility, provided that where individual items of repairs, improvements or supplies exceed  ten  thousand  dollars,  the  temporary operator  shall  obtain  price  quotations from at least three reputable sources. The temporary operator shall not be required to file any  bond. 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 temporary operator. Neither the temporary operator nor the department shall engage in any activity that constitutes a confiscation of property without  the payment of fair compensation.   4.  The  temporary  operator shall be entitled to a reasonable fee, as determined by the commissioner, and necessary expenses  incurred  during his  or  her  performance  as  temporary  operator,  to be paid from the revenue of the facility. The temporary operator shall  collect  incoming payments  from  all  sources and apply them to the reasonable fee and to costs incurred in the performance of his or her functions  as  temporary operator  in  correcting  deficiencies  and  causes of serious financial  instability. The temporary operator shall be liable only in his  or  her capacity  as  temporary  operator  for  injury to person and property by reason of conditions of the facility in  a  case  where  an  established operator  would have been liable; he or she shall not have any liability in his or  her  personal  capacity,  except  for  gross  negligence  and intentional acts.   5.  (a)  The initial term of the appointment of the temporary operator shall not exceed one hundred eighty days. After one hundred eighty days, if  the  commissioner  determines  that  termination  of  the  temporary operator  would  cause  significant  deterioration of the quality of, or access to, health care or residential care  in  the  community  or  that reappointment is necessary to correct the conditions within the facility that  seriously  endanger  the  life,  health  or safety of residents or patients, or the financial instability that required the appointment  of the  temporary  operator,  the  commissioner  may  authorize  up  to two additional ninety-day terms.  (b) Upon the completion of the  two  ninety-day  terms  referenced  in paragraph (a) of this subdivision,  (i)  if  the  established  operator  is  the  debtor  in  a bankruptcy proceeding, and the commissioner determines that the temporary  operator requires additional terms to operate the facility during the pendency of the  bankruptcy  proceeding and to carry out any plan resulting from the proceeding, the commissioner may reappoint the  temporary  operator  for additional  ninety-day  terms  until  the  termination of the bankruptcy proceeding, provided that the commissioner shall provide for notice  and a hearing as set forth in subdivision six of this section; or  (ii)  if  the  established  operator requests the reappointment of the temporary  operator,  the  commissioner  may  reappoint  the   temporary operator  for  one  additional ninety-day term, pursuant to an agreement between  the  established  operator,  the  temporary  operator  and  the department.  (c)  Within fourteen days prior to the termination of each term of the appointment of the temporary  operator,  the  temporary  operator  shall submit  to  the  commissioner  and  to the established operator a report describing:  (i)  the  actions  taken  during  the  appointment  to  address   such deficiencies and financial instability,  (ii)  objectives for the continuation of the temporary operatorship if necessary and a schedule for satisfaction of such objectives,  (iii) recommended actions for the ongoing operation  of  the  facility subsequent   to   the   term   of   the   temporary  operator  including recommendations regarding the proper  management  of  the  facility  and ongoing  agreements  with individuals or entities with proper delegation of management authority; and  (iv) with respect to the first ninety-day term referenced in paragraph (a) of this subdivision, a  plan  for  sustainable  operation  to  avoid closure,  or transformation of the facility which may include any option permissible  under  this  chapter  or  the  social  services   law   and implementing  regulations thereof. The report shall reflect best efforts to produce a full and complete accounting.  (d) The  term  of  the  initial  appointment  and  of  any  subsequent reappointment   may  be  terminated  prior  to  the  expiration  of  the designated term, if the established operator and the commissioner  agree on a plan of correction and the implementation of such plan.   6.  (a)  The  commissioner,  upon  making a determination to appoint a temporary operator pursuant to paragraph (a) of subdivision two of  this section  shall,  prior to the commencement of the appointment, cause the established operator of the facility to be notified of the determination  by registered or certified mail addressed to the principal office of the established  operator.  Such  notification  shall  include  a   detailed description  of  the  findings underlying the determination to appoint a temporary operator, and the date and time of a required meeting with the commissioner  and/or his or her designee within ten business days of the date of such notice. At such meeting,  the  established  operator  shall have  the  opportunity  to  review and discuss all relevant findings. At such meeting or within ten additional business  days,  the  commissioner and  the  established  operator  shall  attempt  to  develop  a mutually satisfactory plan of correction and schedule for implementation. In  the event  such  plan  of  correction is agreed upon, the commissioner shall notify the established operator that the commissioner no longer  intends to  appoint  a temporary operator. A meeting shall not be required prior to the appointment of the temporary operator pursuant to clause (ii)  of paragraph (a) of subdivision two of this section if the commissioner has determined  that  the  immediate  appointment of a temporary operator is necessary because public health or safety is in imminent danger or there exists any condition or practice or a continuing pattern  of  conditions or  practices which poses imminent danger to the health or safety of any patient or resident of the facility. Where  such  immediate  appointment has  been  found  to  be  necessary,  the commissioner shall provide the established operator with a notice as required under this  paragraph  on the date of the appointment of the temporary operator.  (b)  Should the commissioner and the established operator be unable to establish a plan  of  correction  pursuant  to  paragraph  (a)  of  this subdivision,  or  should the established operator fail to respond to the commissioner's initial  notification,  a  temporary  operator  shall  be appointed  as  soon  as is practicable and shall operate pursuant to the provisions of this section.  (c) The established operator shall be afforded an opportunity  for  an administrative  hearing on the commissioner's determination to appoint a temporary operator. Such administrative hearing  shall  occur  prior  to such appointment, except that the hearing shall not be required prior to the  appointment  of  the  temporary operator pursuant to clause (ii) of paragraph (a) of subdivision two of this section if the commissioner has determined that the immediate appointment of  a  temporary  operator  is necessary because public health or safety is in imminent danger or there exists  any  condition or practice or a continuing pattern of conditions or practices which poses imminent danger to the health or safety of  any patient  or  resident  of  the  facility.  An  administrative hearing as provided for under this paragraph shall begin no later than  sixty  days from the date of the notice to the established operator and shall not be extended  without the consent of both parties. Any such hearing shall be strictly limited to the  issue  of  whether  the  determination  of  the commissioner to appoint a temporary operator is supported by substantial evidence.  A  copy  of  the  decision  shall  be sent to the established operator.  (d) The commissioner shall, upon making a determination to reappoint a temporary operator for  the  first  of  an  additional  ninety-day  term pursuant to paragraph (a) of subdivision five of this section, cause the established operator of the facility to be notified of the determination by registered or certified mail addressed to the principal office of the established  operator.  If  the  commissioner determines that additional reappointments  pursuant  to  subparagraph  (i)  of  paragraph  (b)   of subdivision  five  of  this section are required, the commissioner shall again cause the established operator of the facility to be  notified  of such  determination  by  registered  or  certified mail addressed to the principal office of the established operator at the commencement of  the  first  of  every two additional terms. Upon receipt of such notification at the principal office of  the  established  operator  and  before  the expiration  of ten days thereafter, the established operator may request an  administrative  hearing  on the determination to begin no later than sixty days from the date of the reappointment of the temporary operator. Any such hearing shall be strictly limited to the issue of  whether  the determination of the commissioner to reappoint the temporary operator is supported by substantial evidence.   7.  No  provision contained in this section shall be deemed to relieve the established operator 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 established operator or any other person prior  to  the appointment  of  any  temporary  operator  hereunder; nor shall anything contained in this section be construed to suspend during the term of the appointment of the temporary operator any obligation of the  established operator or any other person for the payment of taxes or other operating and maintenance expenses of the facility nor of the established operator or any other person for the payment of mortgages or liens.   8. The commissioner shall cause the temporary president of the senate, the  speaker  of  the  assembly,  and  the  chairs of the senate and the assembly health committees to  be  notified  of  the  appointment  of  a temporary  operator pursuant to paragraph (a) of subdivision two of this section upon such appointment. Such notification shall include, but  not be  limited  to,  the  name of the established operator, the name of the appointed temporary operator and a description of the reasons  for  such appointment to the extent practicable under the circumstances and in the sole discretion of the commissioner.   * NB Repealed March 28, 2022