Section 3216 - Rehabilitation or liquidation(a) If, at any time, the commissioner shall determine, after notice and an opportunity for the provider to be heard, that: (1) a portion of a reserve fund escrow required under this act has been or is proposed to be released;(2) a provider has been or will be unable, in such a manner as may endanger the ability of the provider to fully perform its obligations pursuant to contracts for continuing care, to meet the pro forma income or cash flow projections previously filed by the provider;(3) a provider has failed to maintain the reserves required under this act; or(4) a provider is bankrupt or insolvent, or in imminent danger of becoming bankrupt or insolvent; the commissioner may apply to the appropriate court of this Commonwealth or to the Federal bankruptcy court which may have previously taken jurisdiction over the provider or facility for an order directing the commissioner or authorizing the commissioner to appoint a trustee to rehabilitate or to liquidate a facility.
(b) An order to rehabilitate a facility shall direct the commissioner or trustee to take possession of the property of the provider and to conduct the business thereof, including the employment of such managers or agents as the commissioner or trustee may deem necessary and to take such steps as the court may direct toward removal of the causes and conditions which have made rehabilitation necessary.(c) If, at any time, the court finds, upon petition of the commissioner, trustee or provider, or on its own motion, that the objectives of an order to rehabilitate a provider have been accomplished and that the facility can be returned to the provider's management without further jeopardy to the residents of the facility, creditors, owners of the facility and the public, the court may, upon a full report and accounting of the conduct of the facility's affairs during the rehabilitation and of the facility's current financial condition, terminate the rehabilitation and, by order, return the facility and its assets and affairs to the provider's management.(d) If, at any time, the commissioner determines that further efforts to rehabilitate the provider would be useless, the commissioner may apply to the court for an order of liquidation.(e) An order to liquidate a facility:(1) May be issued upon application of the commissioner whether or not there has been issued a prior order to rehabilitate the facility.(2) Shall act as a revocation of the certificate of authority of the facility under this act.(3) Shall include an order directing the commissioner or a trustee to marshal and liquidate all of the provider's assets located within this Commonwealth.(f) In applying for an order to rehabilitate or liquidate a facility, the commissioner shall give due consideration in the application to the manner in which the welfare of persons who have previously contracted with the provider for continuing care may be best served. In furtherance of this objective, the proceeds of any lien obtained by the commissioner pursuant to this act may be:(1) used in full or partial payment of entrance fees;(2) used on behalf of residents of a facility being liquidated; or(3) paid to other facilities operated by providers who have registered such facilities under this act.(g) An order for rehabilitation under this section shall be refused or vacated if the provider posts a bond, by a recognized surety authorized to do business in this Commonwealth and executed in favor of the commissioner on behalf of persons who may be found entitled to a refund of entrance fees from the provider or other damages in the event the provider is unable to fulfill its contracts to provide continuing care at the facility, in an amount determined by the court to be equal to the reserve funding which would otherwise need to be available to fulfill such obligations.1984, June 18, P.L. 391, No. 82, § 16, effective in 6 months.