1569.482
. (a) It is the intent of the Legislature in enacting this
section to authorize the department to take quick, effective action
to protect the health and safety of residents of residential care
facilities for the elderly and to minimize the effects of transfer
trauma that accompany the abrupt transfer of residents through a
system whereby the department may apply for a court order appointing
a receiver to temporarily operate a residential care facility for the
elderly. The receivership is not intended to punish a licensee or to
replace attempts to secure cooperative action to protect the
residents' health and safety. The receivership is intended to protect
the residents in the absence of other reasonably available
alternatives. The receiver shall assume the operation of the facility
in order to bring it into compliance with law, facilitate a transfer
of ownership to a new licensee, or ensure the orderly transfer of
residents should the facility be required to close.
(b) (1) Whenever circumstances exist indicating that continued
management of a residential care facility by the current licensee
would present a substantial probability or imminent danger of serious
physical harm or death to the residents, or the facility is closing
or intends to terminate operation as a residential care facility for
the elderly and adequate arrangements for the relocation of residents
have not been made at least 30 days prior to the closing or
termination, the director may petition the superior court for the
county in which the facility is located for an order appointing a
receiver to temporarily operate the facility in accordance with this
section.
(2) The petition shall allege the facts upon which the action is
based and shall be supported by an affidavit of the director. A copy
of the petition and affidavit together with an order to appear and
show cause why temporary authority to operate the residential care
facility for the elderly should not be vested in a receiver pursuant
to this section, shall be delivered to the licensee, administrator,
or a responsible person at the facility to the attention of the
licensee and administrator. The order shall specify a hearing date,
which shall be not less than 10, nor more than 15, days following
delivery of the petition and order upon the licensee, except that the
court may shorten or lengthen the time upon a showing of just cause.
(c) (1) If the director files a petition pursuant to subdivision
(b) for appointment of a receiver to operate a residential care
facility for the elderly, in accordance with Section 564 of the Code
of Civil Procedure, the director may also petition the court, in
accordance with Section 527 of the Code of Civil Procedure, for an
order appointing a temporary receiver. A temporary receiver appointed
by the court pursuant to this subdivision shall serve until the
court has made a final determination on the petition for appointment
of a receiver filed pursuant to subdivision (b). A receiver appointed
pursuant to this subdivision shall have the same powers and duties
as a receiver would have if appointed pursuant to subdivision (b).
Upon the director filing a petition for a receiver, the receiver
shall complete its application for a provisional license to operate a
residential care facility for the elderly. For purposes of a
provisional license issued to a receiver, the licensee's existing
fire safety clearance shall serve as the fire safety clearance for
the receiver's provisional license.
(2) At the time of the hearing, the department shall advise the
licensee of the name of the proposed receiver. The receiver shall be
a certified residential care facility for the elderly administrator
or other responsible person or entity, as determined by the court,
from a list of qualified receivers established by the department,
and, if need be, with input from providers of residential care and
consumer representatives. Persons appearing on the list shall have
experience in the delivery of care services to clients of community
care facilities, and, if feasible, shall have experience with the
operation of a residential care facility for the elderly, shall not
be the subject of any pending actions by the department or any other
state agency, and shall not have ever been excluded from a department
licensed facility nor have had a license or certification suspended
or revoked by an administrative action by the department or any other
state agency. The receivers shall have sufficient background and
experience in management and finances to ensure compliance with
orders issued by the court. The owner, licensee, or administrator
shall not be appointed as the receiver unless authorized by the
court.
(3) If at the conclusion of the hearing, which may include oral
testimony and cross-examination at the option of any party, the court
determines that adequate grounds exist for the appointment of a
receiver and that there is no other reasonably available remedy to
protect the residents, the court may issue an order appointing a
receiver to temporarily operate the residential care facility for the
elderly and enjoining the licensee from interfering with the
receiver in the conduct of his or her duties. In these proceedings,
the court shall make written findings of fact and conclusions of law
and shall require an appropriate bond to be filed by the receiver and
paid for by the licensee. The bond shall be in an amount necessary
to protect the licensee in the event of any failure on the part of
the receiver to act in a reasonable manner. The bond requirement may
be waived by the licensee.
(4) The court may permit the licensee to participate in the
continued operation of the facility during the pendency of any
receivership ordered pursuant to this section and shall issue an
order detailing the nature and scope of participation.
(5) Failure of the licensee to appear at the hearing on the
petition shall constitute an admission of all factual allegations
contained in the petition for purposes of these proceedings only.
(6) The licensee shall receive notice and a copy of the
application each time the receiver applies to the court or the
department for instructions regarding his or her duties under this
section, when an accounting pursuant to subdivision (i) is submitted,
and when any other report otherwise required under this section is
submitted. The licensee shall have an opportunity to present
objections or otherwise participate in those proceedings.
(d) A person shall not impede the operation of a receivership
created under this section. The receiver's access to, or possession
of, the property shall not be interfered with during the term of the
receivership. 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
licensees, termination of utility services, attachments, or setoffs
of resident trust funds and working capital accounts and repossession
of equipment in the facility.
(e) When a receiver is appointed, the licensee may, at the
discretion of the court, be divested of possession and control of the
facility in favor of the receiver. If the court divests the licensee
of possession and control of the facility in favor of the receiver,
the department shall immediately issue a provisional license to the
receiver. Notwithstanding the applicable sections of this code
governing the revocation of a provisional license, the provisional
license issued to a receiver shall automatically expire upon the
termination of the receivership. The receiver shall possess the
provisional license solely for purposes of carrying out the
responsibilities authorized by this section and the duties ordered by
the court. The receiver shall have no right to appeal the expiration
of the provisional license.
(f) A receiver appointed pursuant to this section:
(1) May exercise those powers and shall perform those duties
ordered by the court, in addition to other duties provided by
statute.
(2) Shall operate the facility in a manner that ensures the safety
and adequate care for the residents.
(3) 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 and administrator would have had if the receiver had not
been appointed.
(4) May use the funds, building, fixtures, furnishings, and any
accompanying consumable goods in the provision of care and services
to residents and to any other persons receiving services from the
facility at the time the petition for receivership was filed.
(5) Shall take title to all revenue coming to the facility in the
name of the receiver who shall use it for the following purposes in
descending order of priority:
(A) To pay wages to staff. The receiver shall have full power to
hire, direct, manage, and discharge employees of the facility,
subject to any contractual rights they may have. The receiver shall
pay employees at the same rate of compensation, including benefits,
that the employees would have received from the licensee or wages
necessary to provide adequate staff for the protection of the clients
and compliance with the law.
(B) To preserve resident funds. The receiver shall be entitled to,
and shall take, possession of all property or assets of residents
that are in the possession of the licensee or operator of the
facility. The receiver shall preserve all property, assets, and
records of residents of which the receiver takes possession.
(C) To contract for outside services as may be needed for the
operation of the residential care facility for the elderly. A
contract for outside services in excess of five thousand dollars
($5,000) shall be approved by the court.
(D) To pay commercial creditors of the facility to the extent
required to operate the facility. Except as provided in subdivision
(h), the receiver shall honor all leases, mortgages, and secured
transactions affecting the building in which the facility is located
and all goods and fixtures in the building of which the receiver has
taken possession, but only to the extent of payments which, in the
case of a rental agreement, are for the use of the property during
the period of receivership, or which, in the case of a purchase
agreement, come due during the period of receivership.
(E) To receive a salary, as approved by the court.
(F) To do all things necessary and proper to maintain and operate
the facility in accordance with sound fiscal policies. The receiver
shall take action as is reasonably necessary to protect or conserve
the assets or property of which the receiver takes possession and may
use those assets or property only in the performance of the powers
and duties set out in this section and by order of the court.
(G) To ask the court for direction in the treatment of debts
incurred prior to the appointment, if the licensee's debts appear
extraordinary, of questionable validity, or unrelated to the normal
and expected maintenance and operation of the facility, or if payment
of the debts will interfere with the purposes of receivership.
(g) (1) A person who is served with notice of an order of the
court appointing a receiver and of the receiver's name and address
shall be liable to pay the receiver, rather than the licensee, for
any goods or services provided by the residential care facility for
the elderly after the date of the order. The receiver shall give a
receipt for each payment and shall keep a copy of each receipt on
file. The receiver shall deposit amounts received in a special
account and shall use this account for all disbursements. Payment to
the receiver pursuant to this subdivision shall discharge the
obligation to the extent of the payment and shall not thereafter be
the basis of a claim by the licensee or any other person. A resident
shall not be evicted nor may any contract or rights be forfeited or
impaired, nor may any forfeiture be effected or liability increased,
by reason of an omission to pay the licensee, operator, or other
person a sum paid to the receiver pursuant to this subdivision.
(2) This section shall not be construed to suspend, during the
temporary management by the receiver, any obligation of the licensee
for payment of local, state, or federal taxes. A licensee shall not
be held liable for acts or omissions of the receiver during the term
of the temporary management.
(3) Upon petition of the receiver, the court may order immediate
payment to the receiver for past services that have been rendered and
billed, and the court may also order a sum not to exceed one month's
advance payment to the receiver of any sums that may become payable
under the Medi-Cal program.
(h) (1) A receiver shall not be required to honor a lease,
mortgage, or secured transaction entered into by the licensee of the
facility and another party if the court finds that the agreement
between the parties was entered into for a collusive, fraudulent
purpose or that the agreement is unrelated to the operation of the
facility.
(2) A lease, mortgage, or secured transaction or an agreement
unrelated to the operation of the facility that the receiver is
permitted to dishonor pursuant to this subdivision shall only be
subject to nonpayment by the receiver for the duration of the
receivership, and the dishonoring of the lease, mortgage, security
interest, or other agreement, to this extent, by the receiver shall
not relieve the owner or operator of the facility from any liability
for the full amount due under the lease, mortgage, security interest,
or other agreement.
(3) If the receiver is in possession of real estate or goods
subject to a lease, mortgage, or security interest that the receiver
is permitted to dishonor pursuant to paragraph (1), and if the real
estate or goods are necessary for the continued operation of the
facility, the receiver may apply to the court to set a reasonable
rent, price, or rate of interest to be paid by the receiver during
the duration of the receivership. The court shall hold a hearing on
this application within 15 days. The receiver shall send notice of
the application to any known owner of the property involved at least
10 days prior to the hearing.
(4) Payment by the receiver of the amount determined by the court
to be reasonable is a defense to any action against the receiver for
payment or possession of the goods or real estate, subject to the
lease or mortgage, which is brought by any person who received the
notice required by this subdivision. However, payment by the receiver
of the amount determined by the court to be reasonable does not
relieve the owner or operator of the facility from any liability for
the difference between the amount paid by the receiver and the amount
due under the original lease, mortgage, or security interest.
(i) A monthly accounting shall be made by the receiver to the
department of all moneys received and expended by the receiver on or
before the 15th day of the following month or as ordered by the
court, and the remainder of income over expenses for that month shall
be returned to the licensee. A copy of the accounting shall be
provided to the licensee. The licensee or owner of the residential
care facility for the elderly may petition the court for a
determination as to the reasonableness of any expenditure made
pursuant to paragraph (5) of subdivision (f).
(j) (1) The receiver shall be appointed for an initial period of
not more than three months. The initial three-month period may be
extended for additional periods not exceeding three months, as
determined by the court pursuant to this section. At the end of one
month, the receiver shall report to the court on its assessment of
the probability that the residential care facility for the elderly
will meet state standards for operation by the end of the initial
three-month period and will continue to maintain compliance with
those standards after termination of the receiver's management. If it
appears that the facility cannot be brought into compliance with
state standards within the initial three-month period, the court
shall take appropriate action as follows:
(A) Extend the receiver's management for an additional three
months if there is a substantial likelihood that the facility will
meet state standards within that period and will maintain compliance
with the standards after termination of the receiver's management.
The receiver shall report to the court in writing upon the facility's
progress at the end of six weeks of any extension ordered pursuant
to this paragraph.
(B) Order the director to revoke or temporarily suspend, or both,
the license pursuant to Section 1569.50 and extend the receiver's
management for the period necessary to transfer clients in accordance
with the transfer plan, but for not more than three months from the
date of initial appointment of a receiver, or 14 days, whichever is
greater. An extension of an additional three months may be granted if
deemed necessary by the court.
(2) If it appears at the end of six weeks of an extension ordered
pursuant to subparagraph (A) of paragraph (1) that the facility
cannot be brought into compliance with state standards for operation
or that it will not maintain compliance with those standards after
the receiver's management is terminated, the court shall take
appropriate action as specified in subparagraph (B) of paragraph (1).
(3) In evaluating the probability that a residential care facility
for the elderly will maintain compliance with state standards of
operation after the termination of receiver management ordered by the
court, the court shall consider at least the following factors:
(A) The duration, frequency, and severity of past violations in
the facility.
(B) History of compliance in other care facilities operated by the
proposed licensee.
(C) Efforts by the licensee to prevent and correct past
violations.
(D) The financial ability of the licensee to operate in compliance
with state standards.
(E) The recommendations and reports of the receiver.
(4) Management of a residential care facility for the elderly
operated by a receiver pursuant to this section shall not be returned
to the licensee, to any person related to the licensee, or to any
person who served as a member of the facility's staff or who was
employed by the licensee prior to the appointment of the receiver
unless both of the following conditions are met:
(A) The department believes that it would be in the best interests
of the residents of the facility, requests that the court return the
operation of the facility to the former licensee, and provides clear
and convincing evidence to the court that it is in the best
interests of the facility's residents to take that action.
(B) The court finds that the licensee has fully cooperated with
the department in the appointment and ongoing activities of a
receiver appointed pursuant to this section, and, if applicable, any
temporary manager appointed pursuant to Section 1569.481.
(5) The owner of the facility may at any time sell, lease, or
close the facility, subject to the following provisions:
(A) If the owner closes the facility, or the sale or lease results
in the closure of the facility, the court shall determine if a
transfer plan is necessary. If the court so determines, the court
shall adopt and implement a transfer plan consistent with the
provisions of Section 1569.682.
(B) If the licensee proposes to sell or lease the facility and the
facility will continue to operate as a residential care facility for
the elderly, the court and the department shall reevaluate any
proposed transfer plan. If the court and the department determine
that the sale or lease of the facility will result in compliance with
licensing standards, the transfer plan and the receivership shall,
subject to those conditions that the court may impose and enforce, be
terminated upon the effective date of the sale or lease.
(k) (1) The salary of the receiver shall be set by the court
commensurate with community care facility industry standards, giving
due consideration to the difficulty of the duties undertaken, and
shall be paid from the revenue coming to the facility. If the revenue
is insufficient to pay the salary in addition to other expenses of
operating the facility, the receiver's salary shall be paid from the
emergency resident contingency account as provided in Section
1569.48. State advances of funds in excess of five thousand dollars
($5,000) shall be approved by the director. Total advances for
encumbrances and expenditures shall not exceed the sum of forty-nine
thousand nine hundred ninety-nine dollars ($49,999) unless approved
by the director in writing.
(2) To the extent state funds are advanced for the salary of the
receiver or for other expenses in connection with the receivership,
as limited by subdivision (g), the state shall be reimbursed from the
revenues accruing to the facility or to the licensee or an entity
related to the licensee. Reimbursement received by the state shall be
redeposited in the account from which the state funds were advanced.
If the revenues are insufficient to reimburse the state, the
unreimbursed amount shall constitute grounds for a monetary judgment
in civil court and a subsequent lien upon the assets of the facility
or the proceeds from the sale thereof. Pursuant to Chapter 2
(commencing with Section 697.010) of Division 2 of Title 9 of Part 2
of the Code of Civil Procedure, a lien against the personal assets of
the facility or an entity related to the licensee based on the
monetary judgment obtained shall be filed with the Secretary of State
on the forms required for a notice of judgment lien. A lien against
the real property of the facility or an entity related to the
licensee based on the monetary judgment obtained shall be recorded
with the county recorder of the county where the facility of the
licensee is located or where the real property of the entity related
to the licensee is located. The lien shall not attach to the
interests of a lessor, unless the lessor is operating the facility.
The authority to place a lien against the personal and real property
of the licensee for the reimbursement of any state funds expended
pursuant to this section shall be given judgment creditor priority.
(3) For purposes of this subdivision, "entity related to the
licensee" means an entity, other than a natural person, of which the
licensee is a subsidiary or an entity in which any person who was
obligated to disclose information under Section 1569.15 possesses an
interest that would also require disclosure pursuant to Section
1569.15.
(l) (1) This section does not impair the right of the owner of a
residential care facility for the elderly to dispose of his or her
property interests in the facility, but any facility operated by a
receiver pursuant to this section shall remain subject to that
administration until terminated by the court. The termination shall
be promptly effectuated, provided that the interests of the residents
have been safeguarded as determined by the court.
(2) This section does not limit the power of the court to appoint
a receiver under any other applicable provision of law or to order
any other remedy available under law.
(m) (1) Notwithstanding any other provision of law, the receiver
shall be liable only for damages resulting from gross negligence in
the operation of the facility or intentional tortious acts.
(2) All governmental immunities otherwise applicable to the State
of California shall also apply in the use of a receiver in the
operation of a facility pursuant to this section.
(3) The licensee is not liable for any occurrences during the
receivership except to the extent that the occurrences are the result
of the licensee's conduct.
(n) The department may adopt regulations for the administration of
this section. This section does not impair the authority of the
department to temporarily suspend licenses under Section 1569.50 or
to reach a voluntary agreement with the licensee for alternate
management of a community care facility including the use of a
temporary manager under Section 1569.481. This section does not
authorize the department to interfere in a labor dispute.
(o) This section does not apply to a residential care facility for
the elderly that serves six or fewer persons and is also the
principal residence of the licensee.
(p) This section does not apply to a licensee that has obtained a
certificate of authority to offer continuing care contracts, as
defined in paragraph (8) of subdivision (c) of Section 1771.