SB 109-FN - AS INTRODUCED
2015 SESSION
\t15-0458
\t01/09
SENATE BILL\t\t109-FN
AN ACT\trelative to receivership of nursing homes and other residential health care facilities.
COMMITTEE:\tHealth and Human Services
\tThis bill clarifies procedures for receivership of nursing homes and other residential care facilities.
\tThis bill is a request of the department of health and human services.
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Explanation:\tMatter added to current law appears in bold italics.
\t\tMatter removed from current law appears [in brackets and struckthrough.]
\t\tMatter which is either (a) all new or (b) repealed and reenacted appears in regular type.
\t15-0458
\t01/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Fifteen
AN ACT\trelative 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:
\t1 New Paragraph; Receivership of Nursing Homes and Other Residential Care Facilities; Definitions. Amend RSA 151-H:1 by inserting after paragraph I the following new paragraph:
\t\tI-a. “Administrative expense” means any operating cost deemed necessary for the safe and continuous operation of a facility during the pendency of a receivership action including, but not limited to, staffing cost or payroll, utilities, rent, food services, medical services, durable medical equipment, prescriptions, insurance, legal services and other professional services and/or court costs and filing fees.
\t2 Receivership of Nursing Homes and Other Residential Care Facilities. Amend RSA 151-H:3, V to read as follows:
\t\tV. No person shall impede the operation of a receivership created under this section. There shall be an automatic stay for a [60] 90-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.
\t3 Receivership of Nursing Homes and Other Residential Care Facilities; Authority of Receiver. Amend RSA 151-H:4, I to read as follows:
\t\tI. 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 to 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 preserve the property or assets of the residents, the owner or owners, and the licensee, and may use them only in the performance of the receiver’s powers and duties set forth in this section and by order of the court. The receiver shall have the authority of a common law receiver and any additional powers as the court may grant.
\t4 Receivership of Nursing Homes and Other Residential Care Facilities; Authority of Receiver. Amend RSA 151-H:4, III to read as follows:
\t\tIII. The receiver shall first apply the current revenues of the facility to current operating expenses and then, subject to the following provisions, to debts incurred by the licensee prior to the appointment of the receiver. The receiver shall motion the court for a ruling on 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] administrative expenses.
\t5 Receivership of Nursing Homes and Other Residential Care Facilities; Authority of Receiver. Amend RSA 151-H:4, VI to read as follows:
\t\tVI. 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 through the department’s civil monetary penalty fund] current revenues to meet current operating expenses, the receiver may borrow or receive such loans and advances from any public or private source funding for the proper administration of its duties under this chapter and may grant such liens on the property of the facility as may be necessary to secure the repayment thereof. Notice shall be given to the licensee, the owner or owners, the administrator, the department, and to any mortgagee and other secured parties and lienholders of record. After a hearing on the merits, the court shall authorize the receiver to apply for such assistance if it determines [by clear and convincing evidence, and] after certification from the commissioner, that [the repair or improvement is necessary to prevent or remove jeopardy to residents or to minimally qualify the facility for participation in the Medicaid or Medicare program; or it determines that the repair or improvement is necessary to prevent jeopardy to residents for the limited period of time that they are awaiting transfer of the residents] the loan or advance is necessary to protect the health and safety of the residents of the facility during the receivership. The purposes of this paragraph shall be to protect residents and to continue the viable operations of the facility. This paragraph shall not be used 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.
\t6 New Section; Receivership of Nursing Homes and Other Residential Care Facilities; Pendent and Ancillary Actions. Amend RSA 151-H by inserting after section 4 the following new section:
\t151-H:4-a Federal Bankruptcy and Concurrent Jurisdiction of Pendent and Ancillary Actions or Matters.
\t\tI. Nothing in this chapter shall be construed to prohibit a receiver from filing a petition with the federal bankruptcy court as otherwise authorized under law.
\t\tII. The court shall have concurrent jurisdiction over all pendent and ancillary actions or matters.
\t7 Receivership of Nursing Homes and Other Residential Care Facilities; Leases, Mortgages or Secured Transactions. Amend RSA 151-H:5, I(a) and (b) to read as follows:
\t\t\t(a) Makes a determination in writing, upon the filing of a motion by the receiver to avoid or subordinate any such lease, mortgage or security agreement and a hearing at which interested persons are allowed to participate, that based on clear and convincing evidence presented by the receiver that such avoidance is necessary for the payment of administrative expenses, as defined in RSA 151-H:1, I-a and/or the lessor, lender, or secured party entered into such agreement with the licensee, the owner or owners, or the administrator for a fraudulent purpose or to hinder or delay creditors or the agreement is unrelated to the operation of the facility, or that the lien is not valid; and
\t\t\t(b) Orders the receiver to avoid or subordinate such agreement. The court shall hold a hearing on any such motion within 15 days of the date of filing. At least 10 days prior to the hearing, the receiver shall provide a copy of the motion to the licensee, owner or owners, administrator, lessees, mortgagees, secured parties, and lienholder of record of the property.
\t8 Receivership of Nursing Homes and Other Residential Care Facilities; Leases, Mortgages or Secured Transactions. Amend RSA 151-H:5, II to read as follows:
\t\tII. If the receiver is in possession of real or personal property subject to a lease which the receiver is permitted to avoid or subordinate, as provided in paragraph I of this section, and if the possession of such property is necessary for the continued operation of the facility, the receiver shall motion the court to set a reasonable rent 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 motion within 15 days of the date of filing. 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. 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 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.
\t9 New Paragraph; Receivership of Nursing Homes and Other Residential Care Facilities; Leases, Mortgages or Secured Transactions. Amend RSA 151-H:5 by inserting after paragraph IV the following new paragraph:
\t\tV. The receiver may recover from property securing a pre-receivership claim the reasonable, necessary costs and expenses of preserving. or disposing of such property to the extent of any benefit to the holder of such claim, including the payment of all ad valorem property taxes, with respect to the property and any insurance premiums.
\t10 Receivership of Nursing Homes and Other Residential Care Facilities; Compensation of Receiver. Amend RSA 151-H:6 to read as follows:
\t151-H:6 Compensation of Receiver. The court shall set a reasonable compensation for the receiver, and may require the receiver to furnish a bond; provided that no bond shall be required if the receiver is a state official. Such expenses shall be paid from the revenues of the facility.
\t11 Receivership of Nursing Homes and Other Residential Care Facilities; Termination of Receivership. Amend RSA 151-H:8, II-IV to read as follows:
\t151-H:8 Termination of Receivership.
\t\tII. Notwithstanding the provisions of paragraph I of this section, a receivership shall not be terminated in favor of the former licensee, unless such person assumes all obligations incurred by the receiver, repays any funds loaned or advanced by the state, and provides collateral or other assurance of payment.
\t\tIII. If the receivership has not been terminated within 90 days of the appointment of the receiver, the court shall, after a hearing on the merits, order either the 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, upon a showing [by clear and convincing evidence,] that such action is necessary to protect the health and safety of the residents.
\t\tIV. 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 or owners, the administrator, 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 unless such fees and expenses have been waived or modified by agreement or otherwise.
\t12 Effective Date. This act shall take effect upon its passage.
\t\t\t\t\t\t\t\t\t\t\t\t\tLBAO
\t\t\t\t\t\t\t\t\t\t\t15-0458
\t\t\t\t\t\t\t\t\t\t\t02/02/15
SB 109-FN - FISCAL NOTE
AN ACT\trelative to receivership of nursing homes and other residential health care facilities.
FISCAL IMPACT:
The Department of Health and Human Services and the New Hampshire Association of Counties state this bill, as introduced, may have an indeterminable fiscal impact on state and county expenditures in FY 2016 and each year thereafter. There will be no fiscal impact on state, county and local revenue or local expenditures.
METHODOLOGY:
The Department of Health and Human Services states this bill would make several changes to the New Hampshire receivership statute, RSA 151-H. These changes include:
The Department states the impact on state and county expenditures is indeterminable since there is no way of predicting when the appointment of a receiver will be necessary and whether there would be an insufficient stream of revenue to cover the cost of administration.
The New Hampshire Association of Counties states this bill could produce a potential liability to the county to provide funds needed to continue the operation of a nursing home. The Association is not able to determine the potential impact on county expenditures, but states there would be no impact on county revenue.