Part 5 - Monitors and Receivership - Illinois Statutes

      (210 ILCS 45/Art. III Pt. 5 heading)PART 5. MONITORS AND RECEIVERSHIP

    (210 ILCS 45/3‑501)(from Ch. 111 1/2, par. 4153‑501)
    Sec. 3‑501. The Department may place an employee or agent to serve as a monitor in a facility or may petition the circuit court for appointment of a receiver for a facility, or both, when any of the following conditions exist:
        (a) The facility is operating without a license;
        (b) The Department has suspended, revoked or refused

to renew the existing license of the facility;

(c) The facility is closing or has informed the

Department that it intends to close and adequate arrangements for relocation of residents have not been made at least 30 days prior to closure;

(d) The Department determines that an emergency

exists, whether or not it has initiated revocation or nonrenewal procedures, if because of the unwillingness or inability of the licensee to remedy the emergency the Department believes a monitor or receiver is necessary;

(e) The Department is notified that the facility is

terminated or will not be renewed for participation in the federal reimbursement program under either Title XVIII or Title XIX of the Social Security Act; or

(f) The facility has been designated a distressed

facility by the Department and does not have a consultant employed pursuant to subsection (f) of Section 3‑304.2 and an acceptable plan of improvement, or the Department has reason to believe the facility is not complying with the plan of improvement. Nothing in this paragraph (f) shall preclude the Department from placing a monitor in a facility if otherwise justified by law.

As used in subsection (d) and Section 3‑503, "emergency" means a threat to the health, safety or welfare of a resident that the facility is unwilling or unable to correct. (Source: P.A. 96‑1372, eff. 7‑29‑10.)

(210 ILCS 45/3‑502) (from Ch. 111 1/2, par. 4153‑502)     Sec. 3‑502. In any situation described in Section 3‑501, the Department may place a qualified person to act as monitor in the facility. The monitor shall observe operation of the facility, assist the facility by advising it on how to comply with the State regulations, and shall report periodically to the Department on the operation of the facility. (Source: P.A. 81‑223.)

(210 ILCS 45/3‑503) (from Ch. 111 1/2, par. 4153‑503)     Sec. 3‑503. Where a resident, a resident's representative or a resident's next of kin believes that an emergency exists each of them, collectively or separately, may file a verified petition to the circuit court for the county in which the facility is located for an order placing the facility under the control of a receiver. (Source: P.A. 81‑223.)

    (210 ILCS 45/3‑504)(from Ch. 111 1/2, par. 4153‑504)
    Sec. 3‑504. The court shall hold a hearing within 5 days of the filing of the petition. The petition and notice of the hearing shall be served on the owner, administrator or designated agent of the facility as provided under the Civil Practice Law, or the petition and notice of hearing shall be posted in a conspicuous place in the facility not later than 3 days before the time specified for the hearing, unless a different period is fixed by order of the court. The court shall appoint a receiver if it finds that:
        (a) The facility is operating without a license;
        (b) The Department has suspended, revoked or refused

to renew the existing license of a facility;

(c) The facility is closing or has informed the

Department that it intends to close and adequate arrangements for relocation of residents have not been made at least 30 days prior to closure; or

(d) An emergency exists, whether or not the

Department has initiated revocation or nonrenewal procedures, if because of the unwillingness or inability of the licensee to remedy the emergency the appointment of a receiver is necessary.

(Source: P.A. 96‑1372, eff. 7‑29‑10.)

(210 ILCS 45/3‑505) (from Ch. 111 1/2, par. 4153‑505)     Sec. 3‑505. If a petition filed under Section 3‑503 alleges that the conditions set out in subsection 3‑504 (d) exist within a facility, the court may set the matter for hearing at the earliest possible time. The petitioner shall notify the licensee, administrator of the facility, or registered agent of the licensee prior to the hearing. Any form of written notice may be used. A receivership shall not be established ex parte unless the court determines that the conditions set out in subsection 3‑504 (d) exist in a facility; that the licensee cannot be found; and that the petitioner has exhausted all reasonable means of locating and notifying the licensee, administrator or registered agent. (Source: P.A. 81‑223.)

(210 ILCS 45/3‑506) (from Ch. 111 1/2, par. 4153‑506)     Sec. 3‑506. The court may appoint any qualified person as a receiver, except it shall not appoint any owner or affiliate of the facility which is in receivership as its receiver. The Department shall maintain a list of such persons to operate facilities which the court may consider. The court shall give preference to licensed nursing home administrators in appointing a receiver. (Source: P.A. 81‑1349.)

(210 ILCS 45/3‑507) (from Ch. 111 1/2, par. 4153‑507)     Sec. 3‑507. The receiver shall make provisions for the continued health, safety and welfare of all residents of the facility. (Source: P.A. 81‑223.)

    (210 ILCS 45/3‑508)(from Ch. 111 1/2, par. 4153‑508)
    Sec. 3‑508. A receiver appointed under this Act:
        (a) Shall exercise those powers and shall perform

those duties set out by the court.

(b) Shall operate the facility in such a manner as to

assure safety and adequate health care for the residents.

(c) 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 owner would have had if the receiver had not been appointed, and of all assets of the facility. The receiver shall take such action as is reasonably necessary to protect or conserve the assets or property of which the receiver takes possession, or the proceeds from 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.

(d) May use the 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. The receiver shall collect payments for all goods and services provided to residents or others during the period of the receivership at the same rate of payment charged by the owners at the time the petition for receivership was filed.

(e) May correct or eliminate any deficiency in the

structure or furnishings of the facility which endangers the safety or health of residents while they remain in the facility, provided the total cost of correction does not exceed $3,000. The court may order expenditures for this purpose in excess of $3,000 on application from the receiver after notice to the owner and hearing.

(f) May let contracts and hire agents and employees

to carry out the powers and duties of the receiver under this Section.

(g) Except as specified in Section 3‑510, shall honor

all leases, mortgages and secured transactions governing 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 the receivership, or which, in the case of a purchase agreement, come due during the period of the receivership.

(h) Shall have full power to direct and manage and to

discharge employees of the facility, subject to any contract 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 owner. Receivership does not relieve the owner of any obligation to employees not carried out by the receiver.

(i) Shall, if any resident is transferred or

discharged, follow the procedures set forth in Part 4 of this Article.

(j) Shall be entitled to and shall take possession of

all property or assets of residents which are in the possession of a facility or its owner. The receiver shall preserve all property, assets and records of residents of which the receiver takes possession and shall provide for the prompt transfer of the property, assets and records to the new placement of any transferred resident.

(k) Shall report to the court on any actions he has

taken to bring the facility into compliance with this Act or with Title XVIII or XIX of the Social Security Act that he believes should be continued when the receivership is terminated in order to protect the health, safety or welfare of the residents.

(Source: P.A. 95‑331, eff. 8‑21‑07.)

(210 ILCS 45/3‑509) (from Ch. 111 1/2, par. 4153‑509)     Sec. 3‑509. (a) 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 for any goods or services provided by the receiver after the date of the order if the person would have been liable for the goods or services as supplied by the owner. 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 separate account and shall use this account for all disbursements.     (b) The receiver may bring an action to enforce the liability created by subsection (a) of this Section.     (c) A payment to the receiver of any sum owing to the facility or its owner shall discharge any obligation to the facility to the extent of the payment. (Source: P.A. 81‑223.)

(210 ILCS 45/3‑510) (from Ch. 111 1/2, par. 4153‑510)     Sec. 3‑510. (a) A receiver may petition the court that he not be required to honor any lease, mortgage, secured transaction or other wholly or partially executory contract entered into by the owner of the facility if the rent, price or rate of interest required to be paid under the agreement was substantially in excess of a reasonable rent, price or rate of interest at the time the contract was entered into, or if any material provision of the agreement was unreasonable.     (b) If the receiver is in possession of real estate or goods subject to a lease, mortgage or security interest which the receiver has obtained a court order to avoid under subsection (a) of this Section, and if the real estate or goods are necessary for the continued operation of the facility under this Section, the receiver may apply to the court to set a reasonable rental, price or rate of interest to be paid by the receiver 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 known persons who own the property involved at least 10 days prior to the hearing. 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 for possession of the goods or real estate subject to the lease, security interest or mortgage involved by any person who received such notice, but the payment does not relieve the owner of the facility of any liability for the difference between the amount paid by the receiver and the amount due under the original lease, security interest or mortgage involved. (Source: P.A. 81‑223.)

(210 ILCS 45/3‑511) (from Ch. 111 1/2, par. 4153‑511)     Sec. 3‑511. If funds collected under Sections 3‑508 and 3‑509 are insufficient to meet the expenses of performing the powers and duties conferred on the receiver, or if there are insufficient funds on hand to meet those expenses, the Department may reimburse the receiver for those expenses from funds appropriated for its ordinary and contingent expenses by the General Assembly after funds contained in the Long Term Care Monitor/Receiver Fund have been exhausted. (Source: P.A. 86‑663.)

(210 ILCS 45/3‑512) (from Ch. 111 1/2, par. 4153‑512)     Sec. 3‑512. The court shall set the compensation of the receiver, which will be considered a necessary expense of a receivership under Section 3‑516. (Source: P.A. 81‑223.)

(210 ILCS 45/3‑513) (from Ch. 111 1/2, par. 4153‑513)     Sec. 3‑513. (a) In any action or special proceeding brought against a receiver in the receiver's official capacity for acts committed while carrying out powers and duties under this Article, the receiver shall be considered a public employee under the "Local Governmental and Governmental Employees Tort Immunity Act", as now or hereafter amended.     (b) A receiver may be held liable in a personal capacity only for the receiver's own gross negligence, intentional acts or breach of fiduciary duty.     (c) The court may require a receiver to post a bond. (Source: P.A. 81‑223.)

(210 ILCS 45/3‑514) (from Ch. 111 1/2, par. 4153‑514)     Sec. 3‑514. Other provisions of this Act notwithstanding, the Department may issue a license to a facility placed in receivership. The duration of a license issued under this Section is limited to the duration of the receivership. (Source: P.A. 81‑223.)

(210 ILCS 45/3‑515) (from Ch. 111 1/2, par. 4153‑515)     Sec. 3‑515. The court may terminate a receivership:         (a) If the time period specified in the order

appointing the receiver elapses and is not extended;

(b) If the court determines that the receivership is

no longer necessary because the conditions which gave rise to the receivership no longer exist; or the Department grants the facility a new license, whether the structure of the facility, the right to operate the facility, or the land on which it is located is under the same or different ownership; or

(c) If all of the residents in the facility have

been transferred or discharged.

Before terminating a receivership, the court may order the Department to require any licensee to comply with the recommendations of the receiver made under subsection (k) of Section 3‑508. A licensee may petition the court to be relieved of this requirement. (Source: P.A. 87‑549.)

(210 ILCS 45/3‑516) (from Ch. 111 1/2, par. 4153‑516)     Sec. 3‑516. (a) Within 30 days after termination, the receiver shall give the court a complete accounting of all property of which the receiver has taken possession, of all funds collected, and of the expenses of the receivership.     (b) If the operating funds collected by the receiver under Sections 3‑508 and 3‑509 exceed the reasonable expenses of the receivership, the court shall order payment of the surplus to the owner, after reimbursement of funds drawn from the contingency fund under Section 3‑511. If the operating funds are insufficient to cover the reasonable expenses of the receivership, the owner shall be liable for the deficiency. Payment recovered from the owner shall be used to reimburse the contingency fund for amounts drawn by the receiver under Section 3‑511.     (c) The Department shall have a lien for any payment made under Section 3‑511 upon any beneficial interest, direct or indirect, of any owner in the following property:     (1) The building in which the facility is located;     (2) Any fixtures, equipment or goods used in the operation of the facility;     (3) The land on which the facility is located; or     (4) The proceeds from any conveyance of property described in subparagraphs (1), (2) or (3) above, made by the owner within one year prior to the filing of the petition for receivership.     (d) The lien provided by this Section is prior to any lien or other interest which originates subsequent to the filing of a petition for receivership under this Article, except for a construction or mechanic's lien arising out of work performed with the express consent of the receiver.     (e) The receiver shall, within 60 days after termination of the receivership, file a notice of any lien created under this Section. If the lien is on real property, the notice shall be filed with the recorder. If the lien is on personal property, the lien shall be filed with the Secretary of State. The notice shall specify the name of the person against whom the lien is claimed, the name of the receiver, the dates of the petition for receivership and the termination of receivership, a description of the property involved and the amount claimed. No lien shall exist under this Article against any person, on any property, or for any amount not specified in the notice filed under this subsection (e). (Source: P.A. 83‑358.)

(210 ILCS 45/3‑517) (from Ch. 111 1/2, par. 4153‑517)     Sec. 3‑517. Nothing in this Act shall be deemed to relieve any owner, administrator or employee of a facility placed in receivership of any civil or criminal liability incurred, or any duty imposed by law, by reason of acts or omissions of the owner, administrator, or employee prior to the appointment of a receiver; nor shall anything contained in this Act be construed to suspend during the receivership any obligation of the owner, administrator, or employee for payment of taxes or other operating and maintenance expenses of the facility nor of the owner, administrator, employee or any other person for the payment of mortgages or liens. The owner shall retain the right to sell or mortgage any facility under receivership, subject to approval of the court which ordered the receivership. (Source: P.A. 81‑223.)