as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to health; modifying the provisions related 1.3 to the receivership of nursing homes; amending 1.4 Minnesota Statutes 1994, section 144A.15; proposing 1.5 coding for new law in Minnesota Statutes, chapter 1.6 144A; repealing Minnesota Statutes 1994, section 1.7 144A.14. 1.8 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.9 Section 1. [144A.141] [DEFINITIONS.] 1.10 Subdivision 1. [DEFINITIONS.] For the purposes of sections 1.11 144A.13, 144A.141, and 144A.142, the terms defined in this 1.12 section have the meanings given them. 1.13 Subd. 2. [LICENSEE.] "Licensee" means the person to whom a 1.14 license to operate a nursing home is issued. 1.15 Subd. 3. [PERSON.] "Person" means an individual, 1.16 corporation, partnership, association, trust, unincorporated 1.17 organization, government or political subdivision, or other 1.18 business entity. 1.19 Subd. 4. [PHYSICAL PLANT.] "Physical plant" means: (1) 1.20 the building or buildings in which a nursing home is located; (2) 1.21 equipment affixed to the building and not easily subject to 1.22 transfer, as specified in the building and fixed equipment 1.23 tables of the depreciation guidelines; and (3) auxiliary 1.24 buildings in the nature of sheds, garages, and storage buildings 1.25 located on the same site if used for purposes related to 1.26 resident care. 2.1 Sec. 2. [144A.142] [VOLUNTARY RECEIVERSHIP.] 2.2 Subdivision 1. [RECEIVERSHIP AGREEMENT.] (a) The licensee 2.3 of a nursing home may at any time request the commissioner of 2.4 health to assume the operation of the nursing home through the 2.5 appointment of a receiver. The licensee shall provide the 2.6 commissioner with written information explaining the need for 2.7 the receivership, to include a statement that: (1) other 2.8 alternatives for the continued operation of the facility such as 2.9 sale or a change in management have not been successful or that 2.10 there is not sufficient time to arrange for such alternatives; 2.11 and (2) the failure to place the home in receivership will 2.12 result in the closing of the facility. The licensee shall 2.13 provide to the commissioner the necessary information to 2.14 substantiate the request for receivership. If the commissioner 2.15 of health determines that the receivership is necessary to 2.16 protect the health, safety, comfort, and well-being of the 2.17 residents, the commissioner may enter into an agreement with the 2.18 licensee to appoint a receiver to take charge of the facility 2.19 under conditions deemed appropriate by both parties. 2.20 (b) The primary purpose of the receivership agreement shall 2.21 be to protect the health, safety, comfort, and well-being of the 2.22 residents by providing, for a limited period of time, ongoing 2.23 management and operation of the facility. The receivership 2.24 agreement shall specify all terms and conditions of the 2.25 receivership including the possible closure of the facility and 2.26 the loss of the facility license. The receiver shall become the 2.27 licensee of the facility. 2.28 (c) The commissioner of health may provide a period of time 2.29 for the licensee or other affected parties to arrange for the 2.30 continued operation of the facility as a nursing home. In 2.31 determining whether such a time period shall be provided, the 2.32 commissioner shall consider, but not be limited to, the 2.33 following factors: (1) the continued need for nursing home 2.34 beds; (2) the condition of the facility's physical plant; (3) 2.35 the facility's compliance history; and (4) whether there is a 2.36 reasonable probability that other alternatives to continued 3.1 operation of the nursing home are available. If the 3.2 commissioner determines that a period of time to arrange for the 3.3 continued operation of the facility is not in the best interests 3.4 of the residents, the minimum period of time for the 3.5 receivership shall be based on the commissioner's estimate of 3.6 the time required for a safe and orderly relocation of the 3.7 residents to other care settings. 3.8 (d) The receivership initiated in accordance with this 3.9 section shall terminate at the time a new license is issued to 3.10 the nursing home or upon the closure of the home by the receiver. 3.11 Upon the closure of the home by the receiver, the license shall 3.12 be considered void and not subject to the provisions of section 3.13 144A.11 relating to suspension, revocation, or nonrenewal of a 3.14 nursing home license. The loss of the license shall not be 3.15 considered as an involuntary decision to delicense or decertify 3.16 beds as specified in section 144A.071, subdivision 3, clause 3.17 (c). During the term of the receivership, the former licensee 3.18 may request that the agreement be terminated and that the 3.19 commissioner issue a license to the former licensee. The 3.20 request shall be accompanied by sufficient information to 3.21 establish that the need for the receivership no longer exists 3.22 and that the licensee has sufficient resources and ability to 3.23 assume the operation of the facility. 3.24 Subd. 2. [MANAGEMENT AGREEMENT.] When the commissioner 3.25 agrees to become the receiver of a nursing home, the 3.26 commissioner may enter into a management agreement with another 3.27 entity to act as the managing agent during the receivership 3.28 period. The managing agent shall be responsible for the 3.29 day-to-day operations of the nursing home subject at all times 3.30 to the review and approval of the commissioner. A reasonable 3.31 fee may be paid to the managing agent for the performance of 3.32 these services. 3.33 Subd. 3. [LIABILITY.] The licensee of a nursing home 3.34 placed into receivership remains liable for claims made against 3.35 the nursing home that arose from incidents or events that 3.36 occurred prior to the commencement of the receivership period or 4.1 for claims arising as the result of the licensee's request for a 4.2 voluntary receivership. Neither the commissioner nor the 4.3 managing agent of the commissioner assumes liability. The 4.4 receiver and the managing agent shall be liable only in an 4.5 official capacity for injury to person or property resulting 4.6 from the conditions of the facility. The receiver or the 4.7 managing agent shall not be personally liable, except for gross 4.8 negligence and intentional acts. 4.9 Subd. 4. [LIABILITY FOR FINANCIAL OBLIGATIONS.] Neither 4.10 the commissioner nor the managing agent of the commissioner 4.11 shall be liable for payment of financial obligations of the 4.12 nursing home, its licensee, or its controlling persons which 4.13 were incurred prior to the commencement of the receivership 4.14 period unless liability is expressly assumed in the receivership 4.15 agreement. The financial obligations remain the liability of 4.16 the nursing home, its licensee, and its controlling persons. 4.17 Financial obligations of the nursing home incurred after the 4.18 commencement of the receivership period are the responsibility 4.19 of the commissioner or the managing agent of the commissioner to 4.20 the extent the obligations are expressly assumed by each in the 4.21 receivership or management agreements. The licensee or the 4.22 controlling persons of the nursing home remain liable for 4.23 financial obligations incurred after the commencement of the 4.24 receivership period to the extent the obligations are not 4.25 reimbursed in the rate paid to the nursing home and are 4.26 reasonable and necessary to the operation of the nursing home. 4.27 Financial obligations incurred by the nursing home prior to the 4.28 commencement of the receivership period which are necessary to 4.29 the continued operation of the nursing home may be deducted from 4.30 any rental payments owed to the licensee or the controlling 4.31 persons of the nursing home as part of the receivership 4.32 agreement. The closure of the nursing home and subsequent loss 4.33 of the license as a result of the provisions of the receivership 4.34 agreement shall not be construed as to impair or diminish in 4.35 priority any security interest in real or personal property 4.36 comprising the facility or in a fixture of the physical plant. 5.1 Subd. 5. [PHYSICAL PLANT OF THE NURSING HOME.] (a) 5.2 Occupation of the physical plant after commencement of the 5.3 receivership period shall be controlled by paragraphs (b) and 5.4 (c). 5.5 (b) If the physical plant of a nursing home placed in 5.6 receivership is owned by the licensee or a controlling person, 5.7 the commissioner or the managing agent may use the physical 5.8 plant for purposes of the receivership as long as the 5.9 receivership period continues. The commissioner or managing 5.10 agent shall pay the owner of the physical plant a fair monthly 5.11 rental for the physical plant. The fair monthly rental shall be 5.12 determined by considering all relevant factors necessary to meet 5.13 required obligations of the controlling persons such as mortgage 5.14 payments owed on the physical plant, real estate taxes, and 5.15 special assessments. Rental shall not include any allowance for 5.16 profit or be based on any formula that includes an allowance for 5.17 profit. 5.18 (c) If the owner of the physical plant of a nursing home 5.19 placed in receivership is not the licensee or a controlling 5.20 person, the licensee or controlling person shall continue as the 5.21 lessee of the property. However, during the receivership 5.22 period, the commissioner or managing agent shall make rental 5.23 payments to the owner of the physical plant on behalf of the 5.24 licensee or controlling person. Neither the commissioner nor 5.25 the managing agent assumes the obligations of the lease, 5.26 mortgage, or other document unless expressly stated in the 5.27 receivership agreement. Should a lease expire or other action 5.28 against the property occur during the receivership, the 5.29 commissioner or the managing agent may negotiate a new lease for 5.30 the term of the receivership period or take other necessary 5.31 action to continue in possession of the property as required to 5.32 protect the health, safety, comfort, and well-being of the 5.33 residents. 5.34 Sec. 3. Minnesota Statutes 1994, section 144A.15, is 5.35 amended to read: 5.36 144A.15 [INVOLUNTARY RECEIVERSHIP.] 6.1 Subdivision 1. [PETITION, NOTICE.] In addition to any 6.2 other remedy provided by law, the commissioner of health may 6.3 petition the district court in Ramsey or Hennepin county or in 6.4 the district in which a nursing home or certified boarding care 6.5 home is located for an order directing the controlling persons 6.6 of the nursing home or certified boarding care home to show 6.7 cause why the commissioner of health or a designee should not be 6.8 appointed receiver to operate the facility. The petition to the 6.9 district court shall contain proof by affidavit: (1) that the 6.10 commissioner of health has either commenced license suspension 6.11 or revocation proceedings, suspended or revoked a license, or 6.12 decided not to renew thenursing homelicense, or; (2) that 6.13 violations ofsection 1919(b), (c), or (d), ofthe Social 6.14 Security Act, or the regulations adopted under thatsectionact 6.15 which provide for the federal certification of nursing homes or 6.16 boarding care homes, or violations of state law or rules, create 6.17 an emergency; or (3) that the health, safety, or welfare of the 6.18 residents may be in jeopardy because of the manner in which the 6.19 nursing home or certified boarding care home may close or 6.20 because of its financial condition. The order to show cause 6.21 shall be returnable not less than five days after service is 6.22 completed and shall provide for personal service of a copy to 6.23 the nursing home administrator and to the persons designated as 6.24 agents by the controlling persons to accept service on their 6.25 behalf pursuant to section 144A.03, subdivision 2. 6.26 Subd. 2. [APPOINTMENT OF RECEIVER, RENTAL.] If, after 6.27 hearing, the court finds that involuntary receivership is 6.28 necessary as a means of protecting the health, safety, or 6.29 welfare of a resident of anursing homefacility, the court 6.30 shall appoint the commissioner of health, or any other person6.31designated by the commissioner of health,as a receiver to take 6.32 charge of the facility.The court shall determine a fair6.33monthly rental for the facility, taking into account all6.34relevant factors including the condition of the facility. This6.35rental fee shall be paid by the receiver to the appropriate6.36controlling persons for each month that the receivership remains7.1in effect. Notwithstanding any other law to the contrary, no7.2payment made to a controlling person by any state agency during7.3a period of involuntary receivership shall include any allowance7.4for profit or be based on any formula which includes an7.5allowance for profit.The commissioner as receiver may contract 7.6 with another entity to act as the managing agent during the 7.7 receivership period. The managing agent shall be responsible 7.8 for the day-to-day operations of the nursing home or certified 7.9 boarding care home subject at all times to the review and 7.10 approval of the commissioner. 7.11 Subd. 2a. [EMERGENCY PROCEDURE.] If it appears from the 7.12 petition filed under subdivision 1, or from an affidavit or 7.13 affidavits filed with the petition, or from testimony of 7.14 witnesses under oath when the court determines that this is 7.15 necessary, that there is probable cause to believe that an 7.16 emergency exists in a nursing home or certified boarding care 7.17 home, the court shall issue a temporary order for appointment of 7.18 a receiver within five days after receipt of the petition. 7.19 Notice of the petition shall be served personally on the nursing 7.20 home administrator and on the persons designated as agents by 7.21 the controlling persons to accept service on their behalf 7.22 according to section 144A.03, subdivision 2. A hearing on the 7.23 petition shall be held within five days after notice is served 7.24 unless the administrator or designated agent consents to a later 7.25 date. After the hearing, the court may continue, modify, or 7.26 terminate the temporary order. 7.27 Subd. 3. [POWERS AND DUTIES OF RECEIVER.] A nursing home 7.28 receiver appointed pursuant to this section shall with all 7.29 reasonable speed, but in any case, within 18 months after the 7.30 receivership order, provide for the orderly transfer of all the 7.31nursing home'sfacility's residents to other facilities and the 7.32 closure of the facility or make other provisions fortheirthe 7.33 residents' continued safety and health care. Upon closure of 7.34 the facility by the receiver, the license shall be considered 7.35 void and not subject to the provisions of section 144.55 or 7.36 144A.11 relating to suspension, revocation, or nonrenewal of the 8.1 license. The loss of the license shall not be considered as an 8.2 involuntary decision to delicense or decertify beds as specified 8.3 in section 144A.071, subdivision 3, clause (c). The receiver or 8.4 managing agent may correct or eliminate those deficiencies in 8.5 the facility which seriously endanger the life, health or safety 8.6 of the residents unless the correction or elimination of 8.7 deficiencies involves major alterations in the physical 8.8 structure of thenursing homefacility. If the correction or 8.9 elimination of the deficiencies requires major alterations in 8.10 the structure of the physical plant, the receiver shall take 8.11 necessary actions to protect the health and safety of the 8.12 residents and initiate actions designed to result in the 8.13 immediate transfer of the residents. The receiver or managing 8.14 agent shall, during this period, operate thenursing home8.15 facility in a manner designed to guarantee the safety and 8.16 adequate health care of the residents. The receiver or managing 8.17 agent shall take no action which impairs the legal rights of a 8.18 resident of thenursing homefacility. The receiver or managing 8.19 agent shall have power to make contracts and incur lawful 8.20 expenses. The receiver or managing agent shall collect incoming 8.21 payments from all sources and apply them to the cost incurred in 8.22 the performance of the receiver's or managing agent's 8.23 functions. No security interest in any real or personal 8.24 property comprising thenursing homefacility or contained 8.25 within it, or in any fixture of the facility, shall be impaired 8.26 or diminished in priority by the receiver or managing agent. 8.27 The receiver or managing agent shall pay all valid obligations 8.28 of thenursing homefacility and shall deduct these expenses, if 8.29 appropriate, from rental payments owed to any controlling person 8.30 by virtue of the receivership. 8.31 Subd. 3a. [LIABILITY.] The provisions contained in section 8.32 144A.142, subdivision 3, shall also apply to receiverships 8.33 ordered according to this section. 8.34 Subd. 3b. [LIABILITY FOR FINANCIAL OBLIGATIONS.] The 8.35 provisions contained in section 144A.142, subdivision 4, also 8.36 apply to receiverships ordered according to this section. 9.1 Subd. 3c. [PHYSICAL PLANT OF THE RESIDENTIAL PROGRAM.] (a) 9.2 Occupation of the physical plant under an involuntary 9.3 receivership shall be governed by paragraphs (b) and (c). 9.4 (b) The physical plant owned by the licensee or controlling 9.5 person of the facility must be made available for the use of the 9.6 receiver or managing agent throughout the receivership period. 9.7 The court shall determine a fair monthly rental for the physical 9.8 plant, taking into account all relevant factors necessary to 9.9 meet required obligations of controlling persons such as 9.10 mortgage payments, real estate taxes, and special assessments. 9.11 The rental fee must be paid by the receiver or managing agent to 9.12 the appropriate party for each month that the receivership 9.13 remains in effect. No payment made to the licensee or 9.14 controlling person by the receiver, the managing agent, or any 9.15 state agency during a period of the receivership shall include 9.16 an allowance for profit or be based on a formula that includes 9.17 an allowance for profit. 9.18 (c) If the owner of the physical plant of the facility is 9.19 not the licensee or a controlling person, the court shall order 9.20 the licensee or controlling person to continue as the lessee of 9.21 the property during the receivership period. The receiver or 9.22 the managing agent shall make rental payments during the 9.23 receivership period to the owner of the physical plant on behalf 9.24 of the licensee or controlling person. 9.25 Subd. 4. [RECEIVER'S OR MANAGER'S FEE;LIABILITY;9.26 COMMISSIONER ASSISTANCE.] Anursing homereceiver appointed 9.27 pursuant to this section or the managing agent shall be entitled 9.28 to a reasonable receiver's or manager's fee as determined by the 9.29 court.The receiver shall be liable only in an official9.30capacity for injury to person and property by reason of the9.31conditions of the nursing home. The receiver shall not be9.32personally liable, except for gross negligence and intentional9.33acts.The commissioner of health shall assist the receiver in 9.34 carrying out these duties. 9.35 Subd. 5. [TERMINATION.] An involuntary receivership 9.36 imposed pursuant to this section shall terminate 18 months after 10.1 the date on which it was ordered or at any other time designated 10.2 by the court or upon the occurrence of any of the following 10.3 events: 10.4 (a) A determination by the commissioner of health that the 10.5nursing home'sfacility's license should be renewed or should 10.6 not be suspended or revoked; 10.7 (b) The granting of a new license to thenursing home10.8 facility; or 10.9 (c) A determination by the commissioner of health that all 10.10 of the residents of thenursing homefacility have been provided 10.11 alternative health care, either in another facility or otherwise. 10.12 Sec. 4. [144A.153] [PAYMENT OF RECEIVERSHIP COSTS.] 10.13 If the commissioner of health determines that there are not 10.14 sufficient funds available from other sources to cover the costs 10.15 of a receivership under sections 144A.141 to 144A.15, the 10.16 commissioner is authorized to use funds from the state 10.17 government special revenue fund for this purpose. Money 10.18 expended from this fund shall be used only to cover the 10.19 necessary costs for the receivership and for the operation of 10.20 the facility during the time period necessary to relocate 10.21 residents from the facility. The commissioner of health shall 10.22 suspend admissions to the nursing home effective as of the date 10.23 of the commencement of the receivership. Notwithstanding the 10.24 provisions of section 144A.16 and Minnesota Rules, parts 10.25 4655.6810 to 4655.6830, the commissioner of health shall 10.26 relocate residents within 45 days from the commencement of the 10.27 receivership if the receivership costs are covered by this 10.28 section. The nursing home license shall expire when relocation 10.29 of the residents is completed. Notwithstanding the provisions 10.30 of section 144A.071, subdivision 3, clause (c), the commissioner 10.31 may issue a new license to operate a facility as a nursing home 10.32 or certified boarding care home within 120 days from the 10.33 commencement of the receivership provided that: (1) the 10.34 licensed and certified capacity does not exceed the capacity of 10.35 the former facility; and (2) the licensee repays all money 10.36 expended from the state government special revenue account to 11.1 the commissioner prior to the issuance of the license. Any 11.2 unrecovered costs to the fund shall be included as costs to the 11.3 activity under section 16A.1285. The commissioner shall report 11.4 any use of this authority to the commissioner of finance, the 11.5 chair of the senate health care and family services finance 11.6 division, and the chair of the house human services finance 11.7 division. 11.8 Sec. 5. [SUPERSEDING EFFECT.] 11.9 Minnesota Statutes, section 144A.153, as added by this act, 11.10 supersedes Laws 1995, chapter 207, article 1, section 2, 11.11 subdivision 3. 11.12 Sec. 6. [REVISOR INSTRUCTION.] 11.13 The revisor of statutes shall delete the reference to 11.14 section 144A.14 found in section 256B.495, subdivision 1, and 11.15 insert a reference to section 144A.142. The reference to 11.16 section 144A.142 may be changed by the revisor to the section of 11.17 Minnesota Statutes in which the bill section is compiled. 11.18 Sec. 7. [REPEALER.] 11.19 Minnesota Statutes 1994, section 144A.14, is repealed.