§ 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.