§ 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.