SECTION 72O. Authority of receiver; duties; closure of facility; repairs; financial assistance

When a receiver is appointed, the licensee shall be divested of possession and control of the facility in favor of the receiver. With the approval of the court, the receiver shall have authority to remedy violations of federal and state law and regulations governing the operation of the facility; to hire, direct, manage and discharge any consultant or employees, including the administrator of the facility; to receive and expend in a reasonable and prudent manner the revenues of the facility; to continue the business of the facility and the care of the residents; to perform those acts necessary or desirable to accomplish the purpose of the receivership; to perform regular accountings and make periodic reports to the court; and to exercise such additional powers and perform such additional duties, as the court may deem appropriate.

The receiver shall apply the current revenues of the facility to current operating expenses and, subject to the following provisions, to debts incurred by the licensee prior to the appointment of the receiver. The receiver shall ask the court for direction in the treatment of debts incurred prior to this appointment where such debts appear extraordinary, of questionable validity, or unrelated to the normal and expected maintenance and operation of the facility, or where payment of such debts will interfere with the purposes of the receivership. Priority shall be given by the receiver to expenditures for current, direct resident care, including nursing care, social services, dietary services, and housekeeping.

Revenues held by or owing to the receiver in connection with the operation of the facility shall be exempt from attachment and trustee process. Any retroactive payment that may be due or owing to the facility as the result of a retroactive rate adjustment shall be disposed of in accordance with the orders of the court, after it considers competing claims to said payments.

The receiver shall not close the facility without leave of court. In ruling on the issue of closure, the court shall consider the best interest of the residents and the possibility of transferring them to suitable, alternative placements; the rights, interests and obligations of the licensee, the owner, the mortgagees, and other secured parties and lienholders; the licensure status of the facility; the condition of the real estate with respect to state and federal construction requirements and any other factor which the court deems relevant.

If the court has approved closure of the facility, the receiver shall make major repairs to the real or personal property of the facility but only to the extent necessary to prevent or remove jeopardy to the health, safety or welfare of the residents. If the court has not directed closure of the facility, the receiver may make such repairs but only to the extent necessary to prevent or remove jeopardy to the health, safety or welfare of the residents or to minimally qualify the facility for continuing participation in the medical care and assistance programs, established under chapter one hundred and eighteen E, or in the program of health insurance for the aged and disabled under Title XVIII of the Social Security Act (P.L.—89–97).

In the event that a receiver appointed under section seventy-two N does not have sufficient capital to advance for major repairs or improvements, the receiver may petition the court for permission to apply to the department for a loan. Notice shall be given to the owner of the real estate, the licensee, the department, and to any mortgagee and other secured parties and lienholders of record. The court shall after hearing, authorize the receiver to apply for such assistance if it determines that the facility should not be closed, and the commissioner certifies that the repair or improvement is necessary to prevent or remove jeopardy to patients or to minimally qualify the facility for participation in said medical care and assistance program and said program of health insurance for the aged and disabled; or it determines that the facility should be closed and the commissioner certifies that the repair or improvement is necessary to prevent jeopardy to residents for the limited period of time that they are awaiting transfer. The purposes of this provision shall be to protect residents and to prevent the closure of facilities which, given proper management, are likely to be viable operations. This section shall not be construed as a method of financing major repairs or capital improvements to facilities which have been abandoned because the licensee has been unable to secure financing by conventional means.

Upon court approval, application for financial assistance shall be made to the department, which shall administer such funds as the legislature may appropriate for this purpose. The court may set a reasonable rate of interest to be paid by the receiver to the department.

The licensee or the owner may apply to the court to determine the reasonableness of any expenditure by the receiver.