2023 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.