Receivership Proceedings

V.S.A. tit. 33, ch. 71, subch. 4

in effect

33 V.S.A. § 7201 Policy

7201. Policy The purpose of this subchapter is to provide for the receivership of a long-term care facility in order to ensure safe surroundings, adequate care, and humane treatment; to safeguard the health of, safety of, and continuity of care to residents; and to protect residents from the adverse health effects caused by abrupt or unsuitable transfer of such persons cared for in these facilities. Added 2009, No. 36, § 2.

33 V.S.A. § 7202 Application for receiver

7202. Application for receiver (a) The Commissioner of Disabilities, Aging, and Independent Living or the Attorney General may file a complaint in the Superior Court of the county in which the licensing agency or the facility is located, requesting the appointment of a receiver when: (1) a licensee intends to close and has not secured suitable placements for its residents at least 30 days prior to closure; (2) a situation; a physical condition; or a practice, method, or operation that presents imminent danger of death or serious physical or mental harm to residents exists in a facility, including imminent or actual abandonment of a facility; (3) a facility is in substantial or habitual violation of the standards of health, safety, or resident care established under State rules or federal regulations to the detriment of the welfare of the residents or clients; (4) the facility is insolvent; or (5) the licensing agency has suspended, revoked, or modified the existing license of the facility. (b)(1) A resident or resident’s representative may petition the licensing agency or the Attorney General to seek a receivership under this section. If the licensing agency or Attorney General denies the petition or fails to file a complaint within five days, the party bringing the petition may file a complaint in the Superior Court of the county in which the licensing agency or the facility is located, requesting the appointment of a receiver on the same grounds listed in subsection (a) of this section. Prior to a hearing for the appointment of a receiver, the Commissioner of Disabilities, Aging, and Independent Living shall file an affidavit describing the results of any investigation conducted, including a statement of findings with respect to the resident’s petition and the reasons for not filing an action under this section. The Commissioner shall include the two most recent reports of deficiencies in the facility, if any. (2) If the court finds the grounds listed in subsection (a) of this section are not met, the court may dismiss the complaint without a hearing as provided for in the Vermont Rules of Civil Procedure. (c)(1) The licensing agency shall be deemed a necessary party under Rule 19(a) of the Vermont Rules of Civil Procedure. A temporary receiver shall be a necessary party after the temporary receiver is appointed and shall remain a party until a receiver is appointed under section 7204 of this chapter. A receiver appointed under section 7204 of this chapter shall be deemed a necessary party under Rule 19(a) of the Vermont Rules of Civil Procedure. (2) The entity filing the complaint shall notify the State Long-Term Care Ombudsman and the mortgage holder upon filing of the complaint. Added 2009, No. 36, § 2; amended 2021, No. 20, § 357.

33 V.S.A. § 7203 Appointment of temporary receiver

7203. Appointment of temporary receiver (a) A motion to appoint a temporary receiver may be filed with the complaint or at any time prior to the hearing on the merits provided for in section 7204 of this chapter. The motion shall be accompanied by an affidavit alleging facts necessary to show the grounds for the receivership and the necessity for appointing a temporary receiver prior to the hearing on the merits. A motion for prejudgment attachment under Rule of Civil Procedure 4.1(b)(3) may also be filed with the complaint or at any time prior to the hearing on the merits. (b) The court may appoint a temporary receiver ex parte when the court finds that there is a reasonable likelihood that: (1)(A) a licensee intends to close the facility and has not secured suitable placements for its residents prior to closure; or (B) a situation; a physical condition; or a practice, method, or operation presents imminent danger of death or serious physical or mental harm to residents; and (2) the situation must be remedied immediately to ensure the health, safety, and welfare of the residents of the facility. (c) If the order for temporary receivership is granted, the complaint and order shall be served on the owner, licensee, or administrator and shall be posted in a conspicuous place in the facility no later than 24 hours after issuance. Added 2009, No. 36, § 2.

33 V.S.A. § 7204 Appointment of receiver; notice

7204. Appointment of receiver; notice (a)(1) Unless the complaint is dismissed as provided for in section 7202 of this chapter or parties agree to a later date, the court shall hold a hearing on the merits to appoint a receiver within 10 days of filing the complaint. The court shall hold a hearing on the merits even when the court has appointed a temporary receiver as provided for in section 7203 of this chapter. (2) Notice of the hearing shall be served on the owner, the licensee, the mortgage holder, the State Long-Term Care Ombudsman, and the licensing agency not less than five days before the hearing. If the owner or the licensee cannot be served, the court shall specify an alternative form of notice. (b) The licensee shall post notice of the hearing, in a form approved by the court, in a conspicuous place in the facility for not less than five days before the date of the hearing. Added 2009, No. 36, § 2.

33 V.S.A. § 7205 Appointment of receiver; recommendations by licensing agency

7205. Appointment of receiver; recommendations by licensing agency Not less than two days prior to the hearing on the merits, the Commissioner shall file with the court a list of recommended persons to consider for appointment as the receiver, which may include licensed nursing home administrators or other qualified persons with experience in the delivery of health care services and the operation of a long-term care facility. The list shall include a minimum of three recommended persons and shall include the names and the qualifications of the persons. Added 2009, No. 36, § 2.

33 V.S.A. § 7206 Appointment of receiver; hearing and order

7206. Appointment of receiver; hearing and order (a) After the hearing on the merits, the court may appoint a receiver from the list provided by the licensing agency if it finds that one or more of the grounds set forth in section 7202 of this chapter is satisfied, and that the person is qualified to perform the duties of a receiver as provided for in section 7205 of this chapter. The court’s determination of whether one or more of the grounds set forth in section 7202 of this chapter is satisfied shall be based on the condition of the facility at the time the complaint requesting the appointment of a receiver was filed. (b) The court shall set a reasonable compensation for the receiver and may require the receiver to furnish a bond with surety as the court may require. Any expenditure, including the compensation of the receiver, shall be paid from the revenues of the facility. (c) The court may order limitations and conditions on the authority of the receiver provided for in section 7207 of this chapter. The order shall divest the owner and licensee of possession and control of the facility during the period of receivership under the conditions specified by the court. (d) An order issued pursuant to this section shall confirm on the receiver all rights and powers described in section 7207 of this chapter and shall provide the receiver with the authority to conduct any act authorized under this section, including managing the accounts, banking transactions, and payment of debts. (e) An order appointing a receiver under this chapter has the effect of a license for the duration of the receivership and of suspending the license of the licensee. The receiver shall be responsible to the court for the conduct of the facility during the receivership, and a violation of rules and regulations governing the conduct of the facility, if not promptly corrected, shall be reported by the licensing agency to the court. The order shall not remove the obligation of the receiver to comply with all relevant State rules and federal regulations applicable to the facility. (f) The court shall order regular accountings by the receiver at least semiannually. Added 2009, No. 36, § 2; amended 2019, No. 118 (Adj. Sess.), § 3, eff. June 23, 2020; 2021, No. 20, § 358.

33 V.S.A. § 7207 Powers and duties of receiver

7207. Powers and duties of receiver (a) A receiver shall not take any actions or assume any responsibilities inconsistent with the purposes of this subchapter or the duties specifically provided for in this section. (b) Unless otherwise ordered by the court and subject to the limitations provided for in sections 7208 through 7211 of this chapter, the receiver appointed under this subchapter shall: (1) notify residents of the receivership and shall provide written notice by first-class mail to the last known address of the next of kin after the facility is placed in receivership; (2) operate the facility; (3) remedy the conditions that constituted grounds for the receivership; (4) remedy violations of State rules and federal regulations governing the operation of the facility; (5) protect the health, safety, and welfare of the residents, including the correction or elimination of any deficiency of the facility that endangers the safety or health of the residents; (6) preserve the assets and property of the residents, the owner, and the licensee; (7) hire, direct, manage, and discharge any employees, including the administrator or manager of the facility; (8)(A) apply the revenues of the facility to current operating expenses; (B) receive and expend in a reasonable and prudent manner the revenues of the facility due during the 30-day period preceding the date of appointment and becoming due thereafter; and (C) to the extent possible, apply the revenues of the facility to debts incurred by the licensee prior to the appointment of the receiver; (9) continue the business of the facility and the care of residents; (10) file monthly reports containing information as required by the licensing agency to the owner and the licensing agency; and (11) exercise such additional powers and perform such additional duties as ordered by the court. Added 2009, No. 36, § 2; amended 2021, No. 20, § 359.

33 V.S.A. § 7208 Limitations; corrections of conditions

7208. Limitations; corrections of conditions (a)(1) Except as provided in subsection (b) of this section, if the total cost of correcting conditions that constituted grounds for the receivership and violations of State rules and federal regulations governing the operation of the facility or of other health and safety issues exceeds $5,000.00, the receiver shall notify the mortgage holder, licensee, and owner of the conditions needing correcting and the estimated amount needed to correct the condition. (2) The mortgage holder, owner, or licensee shall have five days from the date of mailing of the notice to apply to the court to determine the reasonableness of the expenditure by the receiver. (3) If the mortgage holder, owner, or licensee files a motion objecting to the corrections, the receiver shall not correct the conditions until ordered by the court. (b) If the condition constitutes a situation; physical condition; or a practice, method, or operation that presents imminent danger of death or serious physical or mental harm to residents and the estimate of the total cost of the correction exceeds $10,000.00, the receiver shall notify the mortgage holder, owner, and licensee who may object to the court as provided in subsection (a) of this section. The receiver may proceed with the corrections pending a hearing and order of the court. Added 2009, No. 36, § 2; amended 2021, No. 20, § 360.

33 V.S.A. § 7209 Limitations; payment of debts

7209. Limitations; payment of debts The receiver shall petition the court when debts incurred prior to appointment of the receiver appear extraordinary, of questionable validity, or unrelated to the normal and expected maintenance and operation of the facility, or where payment of the debts will interfere with the purposes of the receivership. The court shall determine the order of priority of debts, with first priority given to expenditures for direct care of current residents. Added 2009, No. 36, § 2.

33 V.S.A. § 7210 Limitations; authority to borrow

7210. Limitations; authority to borrow (a) In the event that the receiver does not have sufficient funds to cover expenses needed to prevent or remove jeopardy to the residents or to pay the debts accruing to the facility, the receiver may petition the court for permission to borrow for these purposes. (b) Notice of the receiver’s petition to the court for permission to borrow must be given to the owner, the licensee, the mortgage holder, and the licensing agency. (c) The court may, after hearing, authorize the receiver to borrow money upon specified terms of repayment and to pledge security, if necessary, if the court determines that the facility should not be closed and that the loan is reasonably necessary to prevent or remove jeopardy, or if it determines that the facility should be closed and that the expenditure is necessary to prevent or remove jeopardy to residents for the limited period of time when they are awaiting transfer. Added 2009, No. 36, § 2.

33 V.S.A. § 7211 Limitations; closure of the facility

7211. Limitations; closure of the facility (a) The receiver shall not close the facility without leave of the court. (b) The court shall consider the protection of residents and shall prevent the closure of facilities that, under proper management, are likely to be financially viable. This section shall not be construed as a method of financing major repair or capital improvements to facilities that have been allowed to deteriorate because the owner or licensee has been unable or unwilling to secure financing by conventional means. (c) In ruling on a motion to close the facility, the court shall consider: (1) the rights and best interests of the residents; (2) the availability of suitable alternative placements; (3) the rights, interest, and obligations of the owner and licensee; (4) the licensure status of the facility; and (5) the need for the facility in the geographic area. (d) When a facility is closed, the receiver shall provide for the orderly transfer of residents to mitigate trauma caused by the transfer to another facility. Added 2009, No. 36, § 2; amended 2021, No. 20, § 361.

33 V.S.A. § 7212 Writ of possession

7212. Writ of possession After notice and a hearing, the court may issue a writ of possession as provided for in 12 V.S.A. § 4854 on behalf of the receiver for specific real or personal property related or pertaining to the facility. Added 2009, No. 36, § 2.

33 V.S.A. § 7213 Attachment; trustee process

7213. Attachment; trustee process Revenues held by or owing to the receiver in connection with the operation of the facility are exempt from attachment as provided for in 12 V.S.A. chapter 123 and trustee process as provided for in 12 V.S.A. chapter 121, including process served prior to the institution of receivership proceedings. Added 2009, No. 36, § 2.

33 V.S.A. § 7214 Avoidance of contracts

7214. Avoidance of contracts (a) The court may grant a motion filed by the receiver to avoid a lease, mortgage, secured transaction, or other contract entered into by the owner or licensee of the facility if the court finds that the agreement: (1) was entered into for a fraudulent purpose or to hinder or delay creditors; (2) including a rental amount, price, or rate of interest, was unreasonable or excessive at the time the agreement was entered into; or (3) is unrelated to the operation of the facility. (b)(1) The receiver shall send notice of the motion to any known owners and mortgage holder of the property, the licensing agency, and the State Long-Term Care Ombudsman at the time of filing. (2) The court shall hold a hearing on the receiver’s motion to avoid a contract within 15 days. (c) If the receiver is in possession of real estate or goods subject to a contract or security interest that the receiver is permitted to avoid under this section and if the real estate or goods are necessary for the continued operation of the facility, the court may set a reasonable rental amount, price, rate of interest, or replacement contract term to be paid by the receiver during the term of the receivership. (d) Payment by the receiver of the amount determined by the court to be reasonable is a defense to an action against the receiver for payment or for the possession of the subject goods or real estate by a person who received notice. (e) Notwithstanding any provision of this section to the contrary, there shall not be a foreclosure or eviction during the receivership by any person if the foreclosure or eviction would, in view of the court, serve to defeat the purpose of the receivership. Added 2009, No. 36, § 2; amended 2021, No. 20, § 362.

33 V.S.A. § 7215 Obligations of the owner or licensee

7215. Obligations of the owner or licensee (a) A licensee, owner, manager, employee, or such person’s agent shall cooperate with the receiver in any proceeding under this chapter, including replying promptly to any inquiry from the receiver or the licensing agency requesting a reply and making available to the receiver any books, accounts, documents, or other records or information or property pertaining to operation of the facility in his or her possession, custody, or control. A person shall not obstruct or interfere with the receiver in the conduct of any receivership. (b) This section shall not be construed to abridge otherwise existing legal rights, including the right to resist a petition for receivership or revocation or suspension of licensure. (c)(1) After notice of the receiver’s appointment, a person who fails to cooperate with the receiver or any person who obstructs or interferes with the receiver in the conduct of the receivership shall be assessed a civil penalty of not more than $10,000.00. (2) A person who violates this subsection may be subject to the revocation or suspension of a nursing home administrator’s license or a license to operate a facility. Added 2009, No. 36, § 2.

33 V.S.A. § 7216 Review and termination

7216. Review and termination (a) The court shall review the necessity of the receivership at least semiannually. (b) Either party or the Commissioner of Disabilities, Aging, and Independent Living may petition the court to terminate the receivership. The petition shall include a certification from the Commissioner or designee that the conditions that prompted the appointment have been corrected or, in the case of a discontinuance of operation, when the residents are safely relocated. (c) The petitioner shall send notice of the petition to terminate the receivership to the mortgage holder, the licensing agency, and the State Long-Term Care Ombudsman at the time of filing. (d) A receivership shall not be terminated in favor of the former or the new licensee unless that person assumes all obligations incurred by the receiver and provides collateral or other assurances of payment considered sufficient by the court. (e) At the time of termination of the receivership, the court shall lift the suspension or revoke the license of the licensee. Added 2009, No. 36, § 2; amended 2021, No. 20, § 363.

33 V.S.A. § 7217 Duties of licensing agency

7217. Duties of licensing agency The licensing agency shall have the duty to provide information to residents of long-term care facilities for which a receiver has been appointed by the court. When applicable, the licensing agency shall assist in the process of transferring residents to another long-term care facility, including providing information about facilities with available openings. Added 2009, No. 36, § 2.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/33/071Fetched: 10/21/2026