Revision: Jan. 5, 2012, midnight
HB 479-FN – AS AMENDED BY THE HOUSE
23Feb2011… 0291h
2011 SESSION
01/04
HOUSE BILL 479-FN
AN ACT relative to receivership of nursing homes and other residential health care facilities.
SPONSORS: Rep. Harding, Graf 11; Rep. Millham, Belk 5; Rep. MacKay, Merr 11; Sen. Houde, Dist 5
COMMITTEE: Health, Human Services and Elderly Affairs
This bill reestablishes the RSA chapter regarding procedures for receivership of nursing homes and other residential care facilities which was repealed on July 1, 2010.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
23Feb2011… 0291h
11-0558
01/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT relative to receivership of nursing homes and other residential health care facilities.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Chapter; Receivership of Nursing Homes and Other Residential Care Facilities. Amend RSA by inserting after chapter 151-G the following new chapter:
CHAPTER 151-H
AND OTHER RESIDENTIAL CARE FACILITIES
151-H:1 Definitions. In this chapter:
I. “Commissioner” means the commissioner of the department of health and human services.
II. “Department” means the department of health and human services.
III. “Emergency” means a situation or condition which presents imminent danger of death or serious physical harm to residents, including but not limited to, imminent or actual abandonment of an occupied facility, and excluding a crisis due solely to a natural disaster beyond the control of the licensee where the licensee is taking appropriate remedial steps. An organized labor activity conducted for union recognition or as a tactic in contract negotiations shall not, of itself, constitute an emergency. Voluntary withdrawal from participation as a provider of services under the Medicaid program, established under Title XIX of the Social Security Act, or under the Medicare program established under Title XVIII of the Social Security Act where such withdrawal was not occasioned by the denial of certification to the facility, shall not, of itself, constitute an “emergency.”
IV. “Facility” means any nursing home or other residential care facility subject to licensing under RSA 151:2.
151-H:2 Appointment of Receiver. The probate court, upon petition of the department, as hereinafter provided, may appoint a receiver for any facility; provided, that the court finds that lives, health, safety, or welfare of the residents cannot be adequately assured without the appointment of a receiver and either that an emergency exists, or that the facility is operating without a valid license.
151-H:3 Action to Appoint Receiver; Hearing; Purpose of Receivership.
I. The department may petition the probate court for the appointment of a receiver, after notification to the attorney general, requesting the appointment of a receiver to operate a facility. Before the department files such a petition, the commissioner shall consult with a facility administrator. The administrator shall have appropriate experience as a nursing home or other residential care facility administrator and shall have no financial ties or affiliation with the facility that is the subject of the proposed receivership. When the petition concerns a nursing home, the administrator shall be chosen from a list provided by the New Hampshire Health Care Association. The administrator may submit his or her recommendations concerning the facility proposed for receivership within 2 business days after receiving all relevant information from the commissioner. The consulting administrator shall be immune from any damages action arising out of these recommendations. After the 2-day period, the department, in its sole discretion may file a petition in the probate court. Nothing in this chapter shall be construed as abrogating or superseding any common law or statutory right of any person to bring an action requesting appointment of a receiver to operate a facility.
II. The court shall immediately issue an order of notice and set the matter for hearing not less than 5 days and not more than 14 days after filing of the action. The petition and notice of the hearing shall be served on both the licensee and the owner of the real estate where the facility is located not less than 3 days before the date of the hearing, unless a different period is specified by the court. A receiver may be appointed immediately, on an ex parte basis, if the court determines by verified complaint or by affidavit that there are grounds for the appointment of a receiver and that immediate appointment is necessary to prevent immediate, irreparable harm to the residents, and that there is no adequate alternative remedy. The licensee shall be given prior notice of the ex parte hearing unless such notice is impossible. If a receiver is appointed on an ex parte basis, service shall be made on the licensee and owner and a hearing held within 5 days of the date the order was issued.
III. The court shall appoint as a receiver any person appearing on a list of names maintained by the commissioner. The list for purposes of receiverships involving nursing homes shall be established by the New Hampshire Health Care Association and provided to the commissioner. If those persons are unwilling or unable to serve, the commissioner may provide other appropriate candidates’ names to the court. Persons appearing on any such list shall have experience in the delivery of health care services, and, if feasible, shall have experience with the operation of long-term care facilities. A receiver shall not have a financial interest in or any affiliation with the facility that is the subject of the receivership.
IV. The purpose of a receivership created under this section shall be to safeguard the health, safety, and continuity of care to residents and to protect them from the adverse health effects and increased risk of death caused by abrupt or unsuitable transfer. A receiver appointed under this section shall not take any actions or assume any responsibilities inconsistent with this purpose.
V. No person shall impede the operation of a receivership created under this section. There shall be an automatic stay for a 60-day period subsequent to the appointment of a receiver, of any action that would interfere with the functioning of the facility, including but not limited to cancellation of insurance policies executed by the licensee, termination of utility services, attachments or set-offs of resident trust funds and working capital accounts, and repossession of equipment used in the facility.
151-H:4 Authority of Receiver; Duties; Closure of Facility.
I. When a receiver is appointed, the licensee shall be divested of possession and control of the facility in favor of the receiver. The receiver shall have the same rights to possession of the building in which the facility is located and of all goods and fixtures in the building at the time the petition for receivership is filed as the licensee would have had if the receiver had not been appointed. The receiver shall take such action as is reasonably necessary to protect or conserve the tangible assets or property of which the receiver takes possession, or the proceeds of any transfer thereof, and may use them only in the performance of the powers and duties set forth in this section and by order of the court.
II. 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.
III. 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, medications, social services, dietary services, and housekeeping.
IV. 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.
V. The receiver shall not close the facility without leave of the court. In ruling on the issue of closure, the court shall consider:
(a) The best interest of the residents and the possibility of transferring them to suitable, alternative placements.
(b) The rights, interests, and obligations of the licensee, the owner, the mortgagees, and other secured parties and lienholders.
(c) The licensure status of the facility.
(d) The condition of the real estate with respect to state and federal construction requirements.
(e) Any other factor which the court deems relevant.
VI. The receiver may make repairs to the facility 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 Medicaid program, established under Title XIX of the Social Security Act, or in the Medicare program, under Title XVIII of the Social Security Act; provided that the total cost of repair does not exceed $3,000. Expenditures for this purpose in excess of $3,000 may be made by agreement of all parties or upon order of the court after motion by the receiver.
VII. In the event that the facility does not have sufficient capital 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 the Medicaid or Medicare program; 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 paragraph 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. In no case shall funds advanced by the department under this paragraph exceed funds available in the department’s civil monetary penalty fund.
VIII. The licensee or the facility owner may apply to the court to determine the reasonableness of any expenditure by the receiver.
151-H:5 Leases, Mortgages or Secured Transactions.
I. A receiver shall not be required to honor any lease, mortgage, or secured transaction entered into by the licensee of the facility if the court finds that the lessor, lender, or secured party entered into the agreement with the lessee for a fraudulent purpose or to hinder or delay creditors or the agreement is unrelated to the operation of the facility. If the court finds that the rental, price or rate of interest required to be paid under the agreement is in excess of a reasonable market-based rent, price or rate of interest at the time the agreement was entered into based on the specific circumstances of the licensee and the facility, the receiver shall not be required to pay the excess amount.
II. If the receiver is in possession of real or personal property subject to a lease, mortgage or security interest which the receiver is permitted to avoid, and if the possession of such property is necessary for the continued operation of the facility, the receiver shall apply to the court to set a reasonable rental price or rate of interest to be paid by the receiver to the person entitled thereto during the duration of the receivership. The court shall hold a hearing on the application within 15 days. The receiver shall send notice of the application to any owners of record and to mortgagees and other secured parties and lienholders of record of the property involved at least 10 days prior to the hearing. In no event shall the amount set by the court exceed what is reasonable for the facility in light of the usual regulations of the department and the private census of the facility. Payment by the receiver of the amount determined by the court to be reasonable shall be a defense to any action against the receiver for payment or for the possession of said property subject to the lease, mortgages, or security interest involved by any person who received such notice, but the payment shall not relieve the owner or operator of the facility of any liability following the termination of the receivership for the difference between the amount paid by the receiver and the amount due under the original lease, mortgage, or other agreement.
III. Notwithstanding paragraphs I and II, there shall be no foreclosure or eviction during the receivership period where such foreclosure or eviction would, in the view of the court, serve to defeat the purpose of the receivership.
151-H:6 Compensation of Receiver; Recoupment of State Expenditures.
I. The court shall set a reasonable compensation for the receiver that is consistent with the regulations of the department, and may require the receiver to furnish a bond. Such expenses shall be paid from the revenues of the facility.
II. The state shall have a lien for any loan under RSA 151-H:4, VII upon the following property: the building in which the facility is located; the land on which the facility is located; and any fixtures, equipment or goods used in the operation of the facility. Such lien shall be prior to any mortgage or lien which the court finds does not have to be honored by the receiver because it has been obtained for a fraudulent purpose, hinders or delays creditors or is unrelated to the operation of the facility, as provided in RSA 151-H:5, I. Such lien shall also be prior to a mortgage or lien held by any person with an ownership interest in the facility; or any person which controls or has the ability to directly or indirectly control to any significant degree the management of policies of the licensee or the facility; or any person related to the licensee or to the facility by any significant degree of common ownership or common control. The receiver shall cause notice of any lien created hereunder to be duly filed.
151-H:7 Termination of Receivership.
I. The court may terminate a receivership under the following conditions:
(a) The department grants a license to operate the facility to the licensee divested of possession and control by the receiver;
(b) There is a transfer of ownership or management of the facility to a transferee approved for licensure by the department; or
(c) All residents of the facility have been provided appropriate alternative placements, either in another facility or otherwise, and the subject facility is closed.
II. Notwithstanding the provisions of paragraph I, a receivership shall not be terminated in favor of the former licensee, or, in the discretion of the court, a related person, unless such person assumes all obligations incurred by the receiver and provides collateral or other assurance of payment deemed sufficient by the department.
III. As an additional precondition to termination in favor of the former licensee, or in the discretion of the court, a related person, the court may require the posting of a bond in an amount fixed by the court as security for maintaining compliance with the laws and regulations governing the operation of the facility. If it shall appear that the licensee fails to maintain the facility in substantial compliance with such laws and regulations, the court, after notice to those persons who have appeared in the proceeding, and after hearing, shall reinstate its order appointing a receiver. A receiver thus appointed may use the security, or such part of the security as is necessary, to remedy the deficient conditions.
IV. The receivership shall be reviewed after 30, 60, and 90 days by the probate court. If the receivership has not been terminated within 90 days of the appointment of the receiver, the court shall, after hearing, order either that the facility shall be closed, after an orderly transfer of the residents to appropriate alternative placements; or the facility shall be transferred, under reasonable terms approved by the court, to a new owner or operator approved for licensure by the department. The receivership period may be extended by the court following the 90-day review only with the agreement of all of the parties involved or as necessary to protect the health and safety of the residents.
V. Within 30 days after termination of the receivership, or such time as the court may allow, the receiver shall submit to the court a final accounting of all property of which the receiver has taken possession, of all funds collected under this section and all expenses of the receivership. The court shall fix the fees and expenses of the receiver and issue orders for the disposition of funds held by the receiver following a hearing, at which time the following parties may appear and be heard: the licensee at the time the receivership was established, the current licensee, the owner of the real estate, the department, and any mortgagee or lienholder whose interests could be impacted by the court’s order. Following the court’s determination of the receiver’s fees and expenses, and the disposition of funds held by the receiver, control of the facility shall be relinquished by the receiver to the current licensee or owner subject to the rights of any third parties.
151-H:8 Actions Against Receiver; Liability. No person shall bring an action against a receiver appointed under RSA 151-H:3 without first securing leave of the court. The receiver shall be liable in his or her personal capacity for gross negligence or intentional wrongdoing. In all other cases, the receiver shall be liable in his or her official capacity only, and any judgment rendered shall be satisfied out of the receivership assets.
151-H:9 Effect of Appointment; Violation of Regulations. An order appointing a receiver under RSA 151-H:3 shall have the effect of a license for the duration of the receivership. The receiver shall comply with all state and federal laws and regulations governing the rights of residents and provision of health care services. The receiver shall be responsible to the court for the conduct of the facility during the receivership, and any violation of regulations governing the conduct of the facility, if not promptly corrected, shall be reported by the department to the court.
151-H:10 The department shall adopt rules, pursuant to RSA 541-A and necessary for the implementation of this chapter.
2 Effective Date. This act shall take effect upon its passage.
LBAO
11-0558
Amended 09/08/11
HB 479 FISCAL NOTE
AN ACT relative to receivership of nursing homes and other residential health care facilities.
FISCAL IMPACT:
The Department of Health and Human Services states this bill, as amended by the House (Amendment #2011-0291h), may increase state revenues and expenditures by an indeterminable amount in FY 2012 and each year thereafter. There will be no fiscal impact on county and local revenues or expenditures.
The Office of Legislative Budget Assistant is awaiting information from the Judicial Branch and the New Hampshire Association of Counties relative to the potential fiscal impact of this bill as amended. The Branch and the Association were initially contacted on 2/24/11 and most recently contacted on 06/12/11.
METHODOLOGY:
The Department of Health and Human Services states this bill reestablishes the RSA chapter regarding procedures for receivership of nursing homes and other residential care facilities which was repealed on July 1, 2010. The Department states the bill provides that current facility revenues will be applied to the operating expenses of the facility if placed under receivership. However, the Department cannot predict whether those revenues will be sufficient to cover operating expenses. Additionally, the bill authorizes the Department to loan the receiver federal funds for capital improvements to be repaid with interest charged at a reasonable rate set by the court. However, the Department cannot determine whether, how often, or by what amount such loans will be issued, therefore, the fiscal impact to federal revenues and expenditures cannot be determined at this time. Also, the Department states a facility under receivership would require additional oversight by the Department’s Health Facilities Licensing and Certification section, which may increase state restricted revenues and expenditures. However, as the Department cannot determine whether the increased oversight would require additional expenditures, the fiscal impact cannot be determined at this time.