2023 New York Laws › SOS - Social Services › Article 7 - Residential Care Programs for Adults and Children › Title 2 - Residential Programs for Adults › 461-F - Operation of Facility in Receivership.

§  461-f.  Operation  of  facility in receivership.   1. As a means of
protecting the health, safety and welfare of the residents of  an  adult
care  facility  subject to inspection and supervision by the department,
it may become necessary under certain  circumstances  to  authorize  the
continuing  operation of such facility for a temporary period by a court
appointed receiver, at the discretion of the commissioner,  as  provided
in  this  section  or  with  respect  to an adult home, enriched housing
program or residence for adults, a receiver approved by  the  department
of  health  pursuant to written agreement between the department and the
operator or operators of such facility,  provided  that  such  agreement
shall  not  exceed  a  period  of  sixty days but may be extended for an
additional sixty day period upon agreement by the parties.
2. The operator or operators  of  any  adult  home,  enriched  housing
program  or  residence for adults may at any time request the department
of health to appoint a receiver to  take  over  the  operation  of  such
facility.  Upon  receiving such a request, the department of health may,
if it deems such action desirable, enter into an agreement with any such
operator or operators for the appointment of a receiver to  take  charge
of  the  facility under whatever conditions as shall be found acceptable
by the parties, provided that such agreement shall not exceed  a  period
of  sixty  days  but  may be extended for an additional sixty day period
upon agreement by the parties.
3. (a) In the event of a transfer of possession  of  the  premises  of
such facility from an approved operator to a court appointed receiver in
a  bankruptcy  or  mortgage  foreclosure  proceeding, the department may
authorize such court appointed receiver  to  continue  to  operate  such
facility  for  a  temporary  period  pending the filing and review of an
application to the department by such receiver or by another person  for
an  operating  certificate, provided, however, that such court appointed
receiver agrees to operate the facility during such temporary period  in
accordance  with  such  terms  and  conditions  as  may  be  set  by the
department, which terms and conditions shall include compliance with all
applicable provisions of law and  regulations  of  the  department,  and
which  shall  include a waiver by the receiver of any assessment of fees
against the department, the commissioner and the state. Such application
for an operating certificate shall be filed within ninety days after the
transfer of possession to the receiver, unless the time for such  filing
is extended by the department.
(b)  The  commissioner  may  make application to appear and advise the
court of any objections he may have to the transfer of  possession  from
the approved operator to any other person including a receiver or of any
objections  he  may have to continuing a receiver or any other person in
possession.
(c) After a receiver obtains  such  temporary  authorization,  he  may
operate  such  facility  only  so  long  as  he  continues  to  do so in
compliance with the applicable law, regulations of the  department,  and
the   terms  and  conditions  for  such  authorization  as  set  by  the
department.
4. (a)  When  the  department  revokes  or  temporarily  suspends  the
operating  certificate  of such facility and the commissioner determines
that appointment of a receiver  is  necessary  to  protect  the  health,
safety  and  welfare of the residents of a facility the commissioner may
apply to the supreme court in the county where the facility is  situated
for  an order directing the operators, owners and prime lessors, if any,
of the premises to show cause why the commissioner, or at the discretion
of the commissioner, his designee, should not be appointed  receiver  to
take  charge  of  the  facility.  Such  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 on which
it is based on the operators, owners and prime lessors, if any,  of  the
premises.  If  any  such operator, owner or prime lessor 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 operator, owner or
prime lessor  at  the  last  address  reported  to  the  department,  or
otherwise known to the department.
(b)  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, then the  commissioner,  or  at  the
discretion   of   the   commissioner,   any  person  designated  by  the
commissioner,  shall  be  appointed  receiver  to  take  charge  of  the
facility.  Except in the case where the receiver is assuming an existing
bona  fide  arms  length  lease,  the  commissioner  shall  determine  a
reasonable  monthly  rental  for the facility, based on consideration of
all appropriate factors, including the condition of such  facility.  The
rent  as determined by the commissioner shall be paid by the receiver to
the owners or prime lessors as may be directed by  the  court  for  each
month  that  the  receivership remains in effect, provided, however that
nothing contained herein shall be construed to  alter  or  diminish  any
obligation the operator may have under any currently valid lease.
(c) 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 six months after  the
date on which the receivership was ordered, unless otherwise extended by
the  court,  provide  for  the  orderly transfer of all residents in the
facility  to  other  facilities  or  make  other  provisions  for  their
continued  safety  and  care.  He shall, during this period, operate the
facility in compliance with the applicable law and  regulations  of  the
department,  and  shall  have  such  additional  powers, approved by the
commissioner, to incur expenses as may be necessary to  so  operate  the
facility.  The receiver shall not be required to file any bond. He shall
collect incoming payments from all sources and apply them to  the  costs
incurred  in  the performance of his functions as 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. 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 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 such owners have already been
reimbursed.
(d) (i) The receiver shall be entitled to a fee and reimbursement  for
expenses  as determined by the commissioner, based upon consideration of
all appropriate factors relating to the operation of the facility, to be
paid as  a  charge  against  the  operator,  not  to  exceed  the  fees,

commissions and necessary expenses authorized to be paid to receivers in
an action to foreclose a mortgage.
(ii)  The  receiver  shall be liable only in his 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;  he  shall  not  have  any
liability  in  his  personal  capacity,  except for gross negligence and
intentional acts.
(iii) The receiver appointed pursuant to this subdivision may, subject
to approval  by  the  commissioner,  ratify  any  collective  bargaining
agreement  in  effect  between  the  operator  and  the  employees  of a
facility, or suspend  such  collective  bargaining  agreement,  provided
however,  that he remain liable for payment of wages and salaries at the
rates and levels in effect at the time of his appointment.
(iv) (A) The receiver shall notify the commissioner  of  any  lien  or
conveyance  made  in  contemplation  of  receivership  with an intent to
remove an asset of the facility from the jurisdiction  and  use  of  the
receiver,  or  to  hinder  or delay the receiver in the execution of his
duties and responsibilities as receiver; such notice shall be  forwarded
to  the  commissioner in a manner to be determined by regulations of the
department.
(B) With respect to any such  lien  or  conveyance,  the  commissioner
shall  have  available any remedy available to a trustee in a bankruptcy
proceeding  pursuant  to  the  federal  bankruptcy  act  or  any  remedy
available  to  a creditor in a proceeding pursuant to article ten of the
debtor and creditor law and may apply to the court to have such lien  or
conveyance  set  aside,  or  to  have the court make any order which the
circumstances of the case may require.
(e) (i) The court shall terminate the receivership only under  any  of
the following circumstances:
a.  six months after the date on which it was ordered, except that the
court may extend such period for good cause shown;
b.  when  the  department  grants  the  facility   a   new   operating
certificate; or
c.  at  such  time  as  all of the residents in the facility have been
provided alternative modes  of  care,  either  in  another  facility  or
otherwise;  provided,  that  the residents shall not be removed from the
facility unless it is required for the protection of the health,  safety
or welfare of the residents.
(ii)  At  the  time  of  termination of the receivership, the receiver
shall render a full and complete  accounting  to  the  court  and  shall
dispose of any profit or surplus money at the direction of the court.
(f)  (i)  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.
(ii) 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 so

paid.  No resident 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.
(g)   Any   other  provision  of  this  chapter  notwithstanding,  the
department 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.
(h) (i) No provision contained herein shall be deemed to  relieve  the
operators,  owners  or  prime  lessors, if any, of any civil or criminal
liability or obligation incurred, or any duty imposed by law, by  reason
of  acts  or  omissions  of such persons prior to the appointment of any
receiver hereunder. During the  period  a  facility  is  operated  by  a
receiver, the operator, owner or prime lessor, if any, shall continue to
be  liable  for  all  obligations  for  the  payment  of  taxes or other
operating and maintenance expenses of the  facility  and  the  owner  or
other  appropriate person shall continue to be liable for the payment of
mortgages or liens.
(ii) Expenses incurred  by  a  receiver  to  meet  the  operating  and
maintenance  expenses  of  the  facility  and  the  basic  needs  of the
residents of the  facility  shall  be  deemed  the  obligations  of  the
operator, and not the obligation of the receiver or the state.
(iii)  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.
(iv)  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 operating and maintenance expenses for
such month.
(v) 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.
5. (a) Subject to paragraph (c) of this subdivision, the  commissioner
is  authorized  to  make payments to receivers appointed pursuant to the
provisions of subdivision three 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.
(b)  The operator of a facility operated by a receiver pursuant to the
provisions of subdivision three of this section shall be liable for  all
monies  made  available  to  the  receiver pursuant to the provisions of
paragraph (a) of this subdivision.
(c) To the extent funds are appropriated, payments  made  pursuant  to
this  section  shall  be  made  from  the local assistance fund 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, upon the recommendation of the  commissioner
of  social  services,  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,  upon  the
recommendation  of  the  commissioner  of social services, 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)  Any payments made by the department to a receiver pursuant to the
provisions of this section shall be made without any obligation  on  the
part  of  the  social  services  district in which the receiver-operated
facility is located to reimburse the department for any such payments.
6. Nothing contained in this section shall be construed to require the
commissioner to seek the appointment of a  receiver  or  to  assume  the
responsibilities  of  a  receiver  directly  or  indirectly  through his
designee; nor shall this section  authorize  any  court  to  compel  the
commissioner  to assume the responsibilities of a receiver or to appoint
a designee to assume such responsibilities.