Legislation

§ 4670. Receiverships. 1. The commissioner may, upon a determination
that serious operational deficiencies exist or serious financial
problems exist and such action is desirable, enter into an agreement
with the operator or owners of a fee-for-service continuing care
retirement community with respect to the appointment of a receiver to
take charge of the community 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 it wishes to terminate such receivership.

2. The commissioner shall, at the time of revocation, suspension or
temporary suspension of a certificate of authority, apply to the supreme
court where the community is situated for an order directing the owner
of the land and/or structure on or in which the community is located, to
show cause why a receiver should not be appointed to take charge of the
community. In those cases where the certificate of authority has been
revoked, suspended or temporarily suspended, the supreme court shall
appoint a receiver that, where reasonably possible, is a legal entity
that holds a valid certificate of authority. Such application shall
contain proof by affidavit that the facility has had its certificate of
authority revoked, suspended or temporarily suspended. 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 owner or owners of the land
and/or structures on or in which the community is located. If any such
owner and manager 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 community in question, and by
sending a copy thereof by registered mail, return receipt requested, to
such owner at the last address registered by such owner with the
department or in the absence of such registration to the address set
forth in the last recorded deed with respect to the 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.

3. On the return of said order to show cause, the matter shall have
precedence over every other business of the court unless the court shall
find that some other pending proceeding, having a 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 the
facts warrant the granting thereof, then any such qualified and approved
agency, person or corporation, or the commissioner or any person
designated by the commissioner, shall be appointed receiver to take
charge and assume operation of the community. However, such receiver may
make application to the appointing court for decision, reformation or
such other relief as may be appropriate to protect the best interests of
the residents residing within such community. No security interest in
any real or personal property comprising the community 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 or she uses or causes to be used by reimbursing the costs of such
goods, except that no such compensation shall be made for any goods for
which the owners or operators of the community have already been
reimbursed.

4. Any receiver appointed pursuant to this section 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 granted and imposed pursuant to this section. The receiver
may correct or eliminate those deficiencies in the facility that
seriously endanger the life, health, safety or finances of such
residents subject to such terms as the court may direct. The receiver
shall operate the community in such a manner as intended to assure
safety and adequate care for such residents. Any receiver who is an
official or employee of the state shall not be required to file any
bond. 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 community.

5. The appointing court, upon application of the receiver, may make
such provision as justice may require for reasonable compensation and
reimbursement of the reasonable expenses of the receiver. The receiver
shall be liable only in his or her official capacity for injury to
person and property by reason of conditions of the community in a case
where an owner would have been liable; provided that he or she operates
such facility in compliance with the terms of his or her appointment,
the receiver shall not have any liability in his or her personal
capacity, except for gross negligence and intentional acts.

6. a. The court shall terminate the receivership only under the
following circumstances:

(i) when the community is issued a new certificate of authority; or

(ii) at such time as all of the residents in the community have been
provided alternate residential and health care 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 discretion of the court.

7. 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
community, or services rendered by the community, 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 such payments made
to him or her. The receipt provided by the receiver for any sum paid to
him or her shall, in all suits and proceedings and for every other
purpose, be as effectual in favor of any person holding the receipt as
actual payment of the amount thereof to the operator or other person or
persons who would, but for the provisions of this section, have been
entitled to receive the sum to be 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 operator, owner, contractor or other person any sum so paid to the
receiver.

8. Any other provision of this article notwithstanding, the
commissioner may, if such commissioner deems appropriate, grant to any
community operating or scheduled to operate under a receivership
authorized by this section a certificate of authority, the duration of
which shall be limited to the duration of the receivership.

9. a. No provision of this section shall be deemed to relieve the
operator, owner or manager of any civil or criminal liability incurred,
or any duty imposed by law, by reason of acts or omissions of the
operator, owner or manager prior to the appointment of any receiver
pursuant to this section, nor shall anything in this section be
construed to suspend during the receivership any obligation of the owner
for the payment of taxes or other operating and maintenance expenses of
the community nor of the owner or any other person for the payment of
mortgages or liens.

b. The receiver shall not be responsible for any obligations incurred
by the owner, manager or prime lessor, if any, prior to the appointment
of the receiver, other than those obligations to residents pursuant to
the fee-for-service continuing care contracts.

c. The receiver shall be entitled to use for operating and maintenance
expenses and the basic needs of the residents of the community 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.