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245A.12 VOLUNTARY RECEIVERSHIP FOR RESIDENTIAL PROGRAMS.
    Subdivision 1. Definitions. For purposes of this section and section 245A.13, the following
terms have the meanings given them.
(a) "Controlling individual" has the meaning in section 245A.02, subdivision 5a. When used
in this section and section 245A.13, it means only those individuals controlling the residential
program prior to the commencement of the receivership period.
(b) "Physical plant" means the building or buildings in which a residential program is
located; all equipment affixed to the building and not easily subject to transfer as specified in the
building and fixed equipment tables of the depreciation guidelines; and auxiliary buildings in
the nature of sheds, garages, and storage buildings located on the same site if used for purposes
related to resident care.
(c) "Related party" means a person who is a close relative of a provider or a provider group;
an affiliate of a provider or a provider group; a close relative of an affiliate of a provider or
provider group; or an affiliate of a close relative of an affiliate of a provider or provider group. For
the purposes of this paragraph, the following terms have the meanings given them.
(1) "Affiliate" means a person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with another person.
(2) "Person" means an individual, a corporation, a partnership, an association, a trust, an
unincorporated organization, or a government or political subdivision.
(3) "Close relative of an affiliate of a provider or provider group" means an individual whose
relationship by blood, marriage, or adoption to an individual who is an affiliate to a provider or a
provider group is no more remote than first cousin.
(4) "Control" includes the terms "controlling," "controlled by," and "under common control
with" and means the possession, direct or indirect, of the power to direct or cause the direction of
the management, operations, or policies of a person, whether through the ownership of voting
securities, by contract, or otherwise.
(5) "Provider or provider group" means the license holder or controlling individual prior to
the effective date of the receivership.
    Subd. 2. Receivership agreement. A majority of controlling individuals of a residential
program may at any time ask the commissioner to assume operation of the residential program
through appointment of a receiver. On receiving the request for a receiver, the commissioner may
enter into an agreement with a majority of controlling individuals and become the receiver and
operate the residential program under conditions acceptable to both the commissioner and the
majority of controlling individuals. The agreement must specify the terms and conditions of the
receivership and preserve the rights of the persons being served by the residential program.
A receivership set up under this section terminates at the time specified by the parties to the
agreement.
    Subd. 3. Management agreement. When the commissioner agrees to become the receiver
of a residential program, the commissioner may enter into a management agreement with another
entity or group to act as the managing agent during the receivership period. The managing agent
will be responsible for the day-to-day operations of the residential program subject at all times
to the review and approval of the commissioner. A reasonable fee may be paid to the managing
agent for the performance of these services.
    Subd. 4. Rate adjustment. The provisions of section 245A.13, subdivisions 7 and 8, shall
also apply to voluntary receiverships.
    Subd. 5. Controlling individuals; restrictions on licensure. No controlling individual of
a residential program placed into receivership under this section shall apply for or receive a
license to operate a residential program for five years from the commencement of the receivership
period. This subdivision does not apply to residential programs that are owned or operated by
controlling individuals, that were in existence prior to the date of the receivership agreement, and
that have not been placed into receivership.
    Subd. 6. Liability. The controlling individuals of a residential program placed into
receivership remain liable for any claims made against the residential program that arose from
incidents or events that occurred prior to the commencement of the receivership period. Neither
the commissioner nor the managing agent of the commissioner assumes this liability.
    Subd. 7. Liability for financial obligations. Neither the commissioner nor the managing
agent of the commissioner shall be liable for payment of any financial obligations of the
residential program or of its controlling individuals incurred prior to the commencement of the
receivership period unless such liability is expressly assumed in the receivership agreement.
Those financial obligations remain the liability of the residential program and its controlling
individuals. Financial obligations of the residential program incurred after the commencement of
the receivership period are the responsibility of the commissioner or the managing agent of the
commissioner to the extent such obligations are expressly assumed by each in the receivership or
management agreements. The controlling individuals of the residential program remain liable for
any financial obligations incurred after the commencement of the receivership period to the extent
these obligations are not reimbursed in the rate paid to the residential program and are reasonable
and necessary to the operation of the residential program. These financial obligations, or any
other financial obligations incurred by the residential program prior to the commencement of the
receivership period which are necessary to the continued operation of the residential program,
may be deducted from any rental payments owed to the controlling individuals of the residential
program as part of the receivership agreement.
    Subd. 8. Physical plant of the residential program. Occupation of the physical plant after
commencement of the receivership period shall be controlled by paragraphs (a) and (b).
(a) If the physical plant of a residential program placed in receivership is owned by a
controlling individual or related party, the physical plant may be used by the commissioner or the
managing agent for purposes of the receivership as long as the receivership period continues. A
fair monthly rental for the physical plant shall be paid by the commissioner or managing agent to
the owner of the physical plant. This fair monthly rental shall be determined by considering all
relevant factors necessary to meet required arm's-length obligations of controlling individuals
such as the mortgage payments owed on the physical plant, the real estate taxes, and special
assessments. This rental shall not include any allowance for profit or be based on any formula
that includes an allowance for profit.
(b) If the owner of the physical plant of a residential program placed in receivership is not
a related party, the controlling individual shall continue as the lessee of the property. However,
during the receivership period, rental payments shall be made to the owner of the physical plant
by the commissioner or the managing agent on behalf of the controlling individual. Neither the
commissioner nor the managing agent assumes the obligations of the lease unless expressly stated
in the receivership agreement. Should the lease expire during the receivership, the commissioner
or the managing agent may negotiate a new lease for the term of the receivership period.
    Subd. 9. Receivership accounting. The commissioner may use the medical assistance
account and funds for receivership cash flow and accounting purposes.
    Subd. 10. Receivership costs. The commissioner may use the accounts and funds that
would have been available for the room and board, services, and program costs of persons in the
residential program for costs, cash flow, and accounting purposes related to the receivership.
History: 1987 c 333 s 13; 1989 c 282 art 2 s 82; 1990 c 568 art 2 s 48; 1994 c 434 s 4

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Revisor of Statutes