NY Ment Hygiene L § 19.41 (2021)
2021 New York Laws MHY - Mental Hygiene Title D - Alcoholism and Substance Abuse Act Article 19 - Office of Alcoholism and Substance Abuse 19.41 - Facilities; Receivership.

§ 19.41 Facilities; receivership.   a.  The  owner  or  owners of any facility may at any time request the office to take over the operation of such facility by the appointment of a receiver. Upon receiving such a request, the office may, if  it  deems such action desirable, enter into an agreement with any such owners with respect  to the appointment of a receiver to take charge of the facility under conditions as  found  acceptable  by  both  parties.  Receivership commenced  in  accordance  with the provisions of this subdivision shall terminate at such time as may be provided in the receivership agreement, or at such time as either party notifies the other in writing that he or she wishes to terminate such receivership.   b.  (1) Upon issuing a notice that the  commissioner  will  revoke  or suspend  a  license  or  operating  certificate  in accordance with this article and article thirty-two of this chapter, or that he or  she  will disapprove  an  application  of  renewal  of such certificate or license pursuant to this article and article  thirty-two  of  this  chapter  the commissioner  may  apply  to  the  supreme court in the county where the facility is located for an order to show cause why a receiver should not be appointed to operate the facility. The court shall, upon  determining that  the  notice  was  properly issued and that it would be in the best interests of the  persons  served  by  the  facility  to  have  services continued  after  the  effective  date  of the revocation or suspension, appoint a receiver for the facility to take effect upon  the  revocation or suspension of the operating certificate or license in accordance with the provisions of this article.   The  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 upon which it is based on the operator of the facility and upon the owner or owners of the land and/or  owners  of the land and/or structure on or in which the facility is located. If any such  operator  or  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 to  him  or  her with  the office, 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.  (2) The commissioner may, prior to suspending an operating certificate or license pursuant to this  article  and  article  thirty-two  of  this chapter, request a temporary restraining order appointing a receiver for a  facility  effective with the commissioner's issuance of the notice of the suspension. The court shall issue the temporary restraining order if it is satisfactorily shown by  the  commissioner  that  he  or  she  has reasonable  grounds for finding that continued operation of the facility by the current provider of services presents an imminent danger  to  the health and welfare of any of the public or any of the individuals served by the facility.  (3)  The court shall appoint a receiver which should, where reasonably possible, be a voluntary association or other not-for-profit corporation recommended  by  the  commissioner  which  holds  a  valid  and  current operating  certificate  or license for a similar type facility, or which shall satisfactorily demonstrate to the commissioner its  qualifications for such operating certificate or license.  (4)  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, the court  shall  determine  a  fair monthly  rental  for  the  facility  consistent  with  its usage as such facility, 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 in accordance with current guidelines established by the office. Such rental shall be paid  by  the receiver  to the owner or owners of the facility for each month that the receivership  remains  in  effect,  provided,  however,   that   nothing contained  herein  shall  be  construed to alter and diminish any rental obligation the operator may have under any  currently  valid  bona  fide arm's length lease.  (5)  If  the  operating  certificate or license of the operator of the facility is revoked or suspended, then the receiver shall apply for  the issuance  of  an  appropriate  operating  certificate or license for the facility and shall for the duration of the receivership comply with  all applicable statutes and regulations.  (6) 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  clients  in  the facility to other care or make other arrangements as authorized in subparagraph (a)  of  paragraph  eight  of this  subdivision.  During  the  interim  period  when such clients 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 clients; provided that such correction or  elimination of  deficiencies  does  not  include  major  alterations of the physical structure of the facility.  The  receiver  shall,  during  this  period, operate  the  facility  in  such  a  manner  as  to guarantee safety and adequate care for such clients. The receiver shall have the power to let contracts therefor or incur expenses in accordance with  the  provisions of applicable statutes, rules and regulations, and applicable guidelines established  by  the office. Any receiver who is an official or employee of the state of New York shall not be required to file  any  bond.  Such receiver shall collect incoming payments from all sources and apply them to the costs incurred in the performance of its functions as a 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. However, such receiver may make application to the appointing court for recision, reformation,  or  such other  relief  as  may  be  appropriate  with  respect  to the executory covenants or provisions of any contractual obligations of such owners or operators as may  be  necessary  or  appropriate  to  protect  the  best interests  of  the clients served by such facility. No security interest in any real or personal property comprising the  facility  or  contained within  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 it uses or causes  to  be  used, except  that  no  such compensation shall be made for any such goods for which  the  owner  or  operators  of  the  facility  have  already  been  reimbursed.  Neither  the  receiver  nor  the office shall engage in any activity that constitutes a confiscation of property without the payment of fair compensation.  (7)  The  appointing court, upon application of the receiver, may make such provision as justice may require for a reasonable compensation  and reimbursement  of the reasonable expenses of such receiver. The receiver shall be liable only in its 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; provided that it operates such facility in compliance with the terms of its appointment,  it  shall  not  have  any liability  in  its  personal  capacity,  except for gross negligence and intentional acts.  (8) (a) The court shall terminate the receivership only under  any  of the following circumstances:  (i) eighteen months after the date on which it is ordered;  (ii)  when  the  receiver, or other voluntary agency or not-for-profit corporation satisfactory to the commissioner, has (A) agreed to continue the operation of the facility, (B) entered into a satisfactory long-term (not less than two years) arrangement  reached  on  a  bona  fide  arm's length  basis with the owner or owners of land and/or structure on or in which the facility is or is to be  located,  and  (C)  applied  for  and received  from  the commissioner a new operating certificate or license, as appropriate, for the continued operation of the facility; or  (iii) at such times as all of the persons served by the facility  have been provided alternative services.  (b)  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.  (9)  (a)  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.  (b) 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 it. The receipt of the receiver for any sum paid to it 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 to be paid. No person 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.  (10) (a) No provision contained herein shall be deemed to relieve  the owner  or  operator  of any civil or criminal liability incurred, or any duty imposed by law, by reason of acts or  omissions  of  the  owner  or operator  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 operator for the payment of mortgages or liens.  (b) The receiver shall not be responsible for any obligations incurred by  the  owner,  operator,  or  prime  lessor,  if  any,  prior  to  the appointment of the receiver.  (c)   The  receiver  shall  be  entitled  to  use  for  operating  and maintenance expenses and the  basic  needs  of  persons  served  by  the facility  a portion of the revenues due the operator during the month in which the receiver is appointed, which portion shall be  established  on the  basis  of  the  amounts  of  the  unpaid  operating and maintenance expenses for such month.  (d) Any sums determined to be due and owing by  the  receiver  to  the owner,  operator,  or  prime  lessor  shall  be  off-set  by any charges determined to be the  obligations  of  the  owner,  operator,  or  prime lessor.   c.  (1)  Subject  to paragraph two of this subdivision, and subject to the approval  of  the  director  of  the  budget,  the  commissioner  is authorized  to  make  payments  to  receivers  appointed pursuant to the provisions of subdivision  b  of  this  section  only  if  the  receiver demonstrates to the satisfaction of the commissioner that the facility's funds  which  are  available  are insufficient to meet the operating and maintenance expenses of the facility and the basic needs of those served by the facility.  (2) Notwithstanding any inconsistent provisions of law, payments  made pursuant  to this section shall be made from funds appropriated therefor and such payments shall be made only if a certificate of allocation  and a  schedule  of amounts to be available therefore shall have been issued by the director of the budget and a copy of such certificate filed  with the  comptroller,  the  chairman of the senate fiance committee, and the chairman of the assembly ways and means committee. Such certificate  may be  amended  from time to time by the director of the budget, and a copy of each such amendment shall be filed with the comptroller, the chairman of the senate finance committee, and the chairman of the  assembly  ways and means committee.