Section 31.28. 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 notified the other in  writing  that  he
  wishes to terminate such receivership.
    (b)  (1)  Upon  issuing  a  notice  that  he will revoke or suspend an
  operating certificate in accordance  with  subdivision  (a)  of  section
  31.16  of  this  article,  or that he will disapprove an application for
  renewal of such certificate pursuant to section 31.05  of  this  article
  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  person  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  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 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
  for  up  to  sixty  days pursuant to subdivision (b) of section 31.16 of
  this  article,  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  has  reasonable  grounds for finding that continued operating of the
  facility presents an immediate 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  not-for-profit  corporation
  recommended  by  the  commissioner  which  holds  a  valid  and  current
  operating certificate for  a  similar  type  facility,  or  which  shall
  satisfactorily  demonstrate  to  the commissioner its qualifications for
  such operating certificate.
    (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,  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  patient  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.
    (5)  If  the  operating certificate of the operator of the facility is
  revoked or suspended, then the receiver shall apply for the issuance  of
  an  operating certificate for the facility and shall for the duration of
  the receivership comply with all applicable statute and regulations  for
  such operating certificate.
    (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 facilities or make
  other provisions for their continued  safety  and  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. He shall,  during  this  period  operate  the
  facility  in  such a manner as to guarantee safety and adequate care for
  such clients. He 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 hundred dollars. Any receiver who is an official or employee of the
  state of New York 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. 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
  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 in reimbursing the costs of such goods,
  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 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; provided that he operates such facility in
  compliance  with  the  terms  of  his  appointment he shall not have any
  liability in his 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 was 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 owner's 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 for the
  continued operation of the facility; or
    (iii) at such time 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 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 persons 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 of  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  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 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  of  mental  health.  Reference   to   the
  commissioner  in  this  section  shall  mean  the commissioner of mental
  health.