§ 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.