2023 New York Laws › MHY - Mental Hygiene › Title C - Developmental Disabilties Act › Article 16 - Regulation and Quality of Services › 16.27 - Residential Facilities; Receivership.

§ 16.27 Residential facilities; receivership.
(a) The operator 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 operators
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 one hundred twenty days after the receipt  by
either  party of written notice that the other party wishes to terminate
such receivership.
(b) (1) a. If the commissioner  has  reason  to  believe  that  it  is
necessary  to protect the health, safety and welfare of the persons with
developmental disabilities in a residential facility,  at  the  time  of
temporary  suspension of the operating certificate of such a facility or
upon issuance of  a  notice  of  intention  to  revoke  or  suspend  the
operating  certificate  of  such a facility pursuant to section 16.17 of
this article, or at  the  time  of  any  notice  of  disapproval  of  an
application  for  issuance  or  renewal  of such certificate pursuant to
section 16.05 of this article, the commissioner may apply to the supreme
court in the county where the facility is situated for an order to  show
cause  why  a  receiver  should  not  be appointed to take charge of the
facility. The supreme court shall, upon the request of the commissioner,
and upon determining that the notice was properly issued  and  that  the
health,   safety   and   welfare   of  the  persons  with  developmental
disabilities would be served by the appointment of a receiver to operate
the facility, appoint a receiver to commence operating the facility upon
the effective date of the revocation, suspension, temporary  suspension,
denial or nonrenewal of the operating certificate of such facility.
b.  The  receiver  should,  where  reasonably possible, be a voluntary
association or  not-for-profit  corporation  which  holds  a  valid  and
current  operating  certificate  for  a residential facility pursuant to
section 16.05 of this article (or which shall satisfactorily demonstrate
its lawful qualifications  for  such  operating  certificate)  with  the
approval  of  the  commissioner,  an  employee  of  the  office or other
designee.
c. Such application for an order to show cause, shall contain proof by
affidavit that the commissioner has temporarily suspended the facility's
operating certificate or has issued a notice  of  intention  to  revoke,
suspend, or deny issuance or renewal of its operating certificate.
d.  In the case of a temporary suspension of an operating certificate,
a temporary receiver may be appointed and a temporary restraining  order
may  be  granted.  If  the  commissioner  demonstrates  that,  unless  a
temporary receiver is appointed and a  temporary  restraining  order  is
granted before a hearing can be held, the health or safety of any person
with  developmental  disabilities  will  be  in  imminent danger or that
property necessary to the operation of the facility will be in  imminent
danger  of  removal  or  destruction,  a  temporary  receivership  and a
temporary restraining order may be granted without notice. The temporary
receivership and temporary restraining order shall be in effect  pending
a determination of the order to show cause.
e.  The  order  to  show  cause why a receiver should not be appointed
shall be returnable not less than five days after service is  completed;
provided,  however,  that  in  the case of an appointment of a temporary
receiver  without  notice  to  the  owner  or   operator   pursuant   to
subparagraph  d  of  this  paragraph,  the  order to show cause shall be

returnable no  more  than  fourteen  days  from  the  appointment  of  a
temporary receiver.
f.  The  order  to  show cause shall provide for personal service of a
copy thereof and the papers on which it is based on the owner or  owners
of  the  real property on or in which the facility is located and on the
facility operator. In the case of an appointment of a temporary receiver
without notice to the owner or operator pursuant to  subparagraph  d  of
this  paragraph,  such  order  to  show cause shall provide for personal
service upon such owner and operator within thirty-six hours  after  the
appointment  of  the temporary receiver. If any owner or operator 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 certified mail, return receipt requested, to such operator at
the last address registered by him with the department and such owner to
the  address  set  forth  in the last recorded deed with respect to such
real property on or in which the facility is located.  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) 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  whether  the health, safety and welfare of the
residents  with  developmental  disabilities  will  be  served  by   the
appointment  of  a  receiver to operate the facility. If the court shall
find that  the  facts  warrant  the  granting  thereof,  then  any  such
qualified  and approved agency, person or corporation, the commissioner,
or any  person  designated  by  the  commissioner,  shall  be  appointed
receiver  to  take  charge and assume operation of the facility, and the
court shall determine a fair monthly rental for the facility  consistent
with  its  usage  as  such  facility,  taking  into account all relevant
factors, including the condition of 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 under the medical  assistance  program  for  real  property
costs  if  each  resident  in  the  facility were a recipient of medical
assistance.  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 lease.
(3) 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 to provide for the
orderly transfer of all persons with developmental disabilities  in  the
facility  to  other  facilities  or  make  other  provisions  for  their
continued safety and care. During the interim period when  such  persons
with  developmental  disabilities  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 persons with
developmental disabilities 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  persons  with  developmental  disabilities.  The
receiver  shall  have  the  power  to  let  contracts  therefor or incur
expenses in accordance with the provisions of  local  laws,  ordinances,
rules  and  regulations  applicable to contracts for public works except
that advertisement  shall  not  be  required  for  each  such  contract.
Notwithstanding  any  such  laws,  ordinances, rules or regulations, the
receiver may let contracts or incur expenses  for  individual  items  of
repairs, improvements or supplies without the procurement of competitive
bids  where the total amount of any such individual item does not exceed
five thousand dollars. Any receiver who is an official  or  employee  of
the  state  of  New  York  shall  not  be required to file any bond. The
receiver shall collect incoming payments from all sources and apply them
to the costs incurred in the performance of  the  receiver's  functions.
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 recission, 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 persons with developmental disabilities residing within
such  facility.  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 receiver. The receiver shall compensate the owner or owners  of  any
goods  held  in  inventory for those goods which he uses or causes to be
used by reimbursing the  costs  of  such  goods,  except  that  no  such
compensation  shall  be  made for any such goods for which the owners 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.
(4) 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 the receiver's 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 the receiver
operates such facility in compliance with the terms of  the  appointment
the receiver shall not have any liability in a personal capacity, except
for gross negligence and intentional acts.
(5)  a.  The  court shall terminate the receivership only under any of
the following circumstances:
(i) eighteen months after the date on which it was ordered;
(ii) when the office grants the facility a new operating  certificate,
whether the structure of the facility or the land on which it is located
shall be under the same or different ownership; or
(iii)   at  such  time  as  all  of  the  persons  with  developmental
disabilities in the facility have been provided alternative  residential
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.
(6)  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 him. The receipt of the receiver for any sum paid to him  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 with developmental disabilities 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.
(7)  Any  other  provision of this chapter notwithstanding, the office
may, if it  deems  appropriate,  grant  to  any  facility  operating  or
scheduled to operate under a receivership authorized by this subdivision
an  operating  certificate the duration of which shall be limited to the
duration of the receivership.
(8) (i) 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
taxes or other operating and maintenance expenses of the facility nor of
the owner or any other person for the payment of mortgages or liens.
(ii) 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.
(iii) The  receiver  shall  be  entitled  to  use  for  operating  and
maintenance  expenses  and  the  basic  needs  of  the  residents of 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.
(iv)  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  operating and
maintenance expenses  of  the  facility  and  the  basic  needs  of  the
residents of 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 therefor 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  finance  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.
(d)  This  section  shall  apply  only  to  the  facilities  under the
jurisdiction of the office for people with  developmental  disabilities.
Reference   to   the   commissioner  in  this  section  shall  mean  the
commissioner of developmental disabilities.