Colorado § 25-3-108 - Receivership.

§ 25-3-108. Receivership.

(1) It is the purpose of this section to establish a receivership mechanism that will be available as a remedy for such violations of applicable laws and regulations by a licensee of a long-term health-care facility that require facility closure by the department of public health and environment in order to safeguard against potential transfer trauma resulting from relocation of its residents as a result of closure of the facility.

(2) The department of public health and environment, the licensee or owner of a long-term health-care facility, or the lessee of such facility with the approval of the owner may apply to the district court for the appointment of a receiver to operate the long-term health-care facility when:

(a) The department of public health and environment has refused to issue a renewal license or has revoked the license of such facility and the action of the department is final; or

(b) The department of public health and environment, through the executive director thereof, has taken summary action to suspend the license of any such facility in accordance with the provisions of section 24-4-104 (4), C.R.S.

(3) The action of the department of public health and environment with respect to nonrenewal or revocation of a license and recommendation for certification for medicaid participation shall not be final for the purposes of paragraph (a) of subsection (2) of this section until all administrative hearings and judicial appeals sought by a licensee of a long-term health-care facility have been exhausted or the time permitted for the same has expired and until the decisions resulting from any such appeals, if any, sustain the action of said department.

(4) Application for the appointment of a receiver pursuant to this section shall be to the district court for the county where the long-term health-care facility is located. No hearing on such application shall be held sooner than seventy-two hours after the licensee of such facility has been served with notice thereof, as provided in the Colorado rules of civil procedure; except that when the department exercises its summary powers, an emergency receiver may be appointed upon agreement in writing between the department and licensee, with the approval of the owner, until a hearing for appointment of a receiver as provided in this section. Notice shall also be served upon any owner and any lessee of a long-term health-care facility and any holder of a security interest of record in said facility. An application for appointment of a receiver pursuant to this section shall have precedence and priority over any civil or criminal case pending in the district court wherein the application is filed.

(5) For the purposes of this section, the action of the department of public health and environment exercised pursuant to subsection (2) of this section shall become effective upon appointment of the receiver of the court.

(6) Prior to ordering the appointment of a receiver for the operation of a long-term health-care facility, the district court must find:

(a) That grounds for the appointment of a receiver exist as provided in subsection (2) of this section; and

(b) That proper notice as required by subsection (4) of this section has been served; and

(c) That there is a necessity to continue care on a temporary basis at the facility to avoid potential transfer trauma which would serve the best interests of the residents of the facility pending arrangements for the lease, sale, or closure of the facility.

(7) The department of public health and environment shall grant the receiver a license pursuant to section 25-3-102 and shall recommend certification for medicaid participation, and the department of health care policy and financing and the Colorado healthcare affordability and sustainability enterprise shall reimburse the receiver for the long-term health-care facility's medicaid residents pursuant to sections 25.5-6-204 and 25.5-4-402.4 (5.7).

(8) The appointment of the receiver shall be in accordance with and governed by the provisions of rule 66 of the Colorado rules of civil procedure. The court shall enter an order of appointment and fix the fees and expenses of the receiver. The receiver shall be a licensed nursing home administrator and shall post a bond with adequate sureties as determined by the court, and the receiver may be sued upon the same in the name of the people of the state of Colorado at the instance and for the use of any party injured. The receiver shall perform duties, assume responsibilities, and preserve the long-term health-care facility property in accordance with established principles of law for receivers of real property. Such duties and responsibilities shall be determined by the court following a hearing, at which time the parties may appear and be heard. The court shall specify the duties and responsibilities of the receiver in the order of appointment. No security interest in any real or personal property comprising said facility or contained within the facility nor any fixture of the facility shall be impaired or diminished by the receiver, but the receiver shall comply with the standards of the department of public health and environment in providing health care to patients.

(9) Nothing in this section shall prevent the court from altering or amending the terms and conditions of the receivership or the receiver's responsibilities and duties following a hearing, at which time the parties may appear and be heard; and nothing in this section shall prohibit the parties from stipulating to the terms and conditions of the receivership and the responsibilities and duties of the receiver, including the duration thereof, and such stipulation shall be submitted to the court for approval.

(10) A receivership established pursuant to this section may be terminated by the court upon application therefor by the licensee of a long-term health-care facility, the department of public health and environment, or the receiver. The receivership may be terminated upon a finding by the court that the receivership is no longer necessary, but in no case shall the receivership continue for longer than one hundred eighty days from the date of the initial appointment of the receiver unless extended by written agreement of the parties as provided in subsection (9) of this section.

(11) Upon termination of the receivership, the court shall order a final accounting and finally fix the fees and expenses of the receiver following a hearing, at which time the parties may appear and be heard.

Source: L. 79: Entire section added, p. 1003, § 1, effective June 7. L. 91: (7) amended, p. 1857, § 15, effective April 11. L. 94: (1), (2), (3), (5), (7), (8), and (10) amended, pp. 2752, 2624, §§ 409, 43, effective July 1. L. 2006: (7) amended, p. 2015, § 89, effective July 1. L. 2007: (1) amended, p. 2040, § 64, effective June 1. L. 2025: (7) amended, (SB 25-270), ch. 151, p. 603, § 8, effective May 1.

Editor's note: Amendments to subsection (7) by sections 43 and 409 of House Bill 94-1029 were harmonized.

Cross references: For the legislative declaration contained in the 1994 act amending subsections (1), (2), (3), (5), (7), (8), and (10), see section 1 of chapter 345, Session Laws of Colorado 1994.

ANNOTATION

Law reviews. For article, "Smith v. O'Halloran: Nursing Home Reform in the Courts", see 13 Colo. Law. 2248 (1984).

This section modifies the general rule that a receiver stands in the shoes of the entity in receivership and may assert no greater rights than the entity whose property the receiver was appointed to receive. Rather, to implement the statutory purpose to avoid "transfer trauma" from relocation of patients, the Department of Social Services is required to reimburse a receiver appointed pursuant to this section for its medicaid residents in accordance with § 26-4-110 (5). Thus, despite an apparent conflict with its regulations, the Department may not withhold the final month's payment claimed by a receiver pending completion of audits. Good Shepherd v. Dept. of Health, 789 P.2d 423 (Colo. App. 1989).

Applied in State ex rel. State Dept. of Health v. I.D.I., Inc., 642 P.2d 14 (Colo. App. 1981); In re Estate of Smith v. O'Halloran, 557 F. Supp. 289 (D. Colo. 1983).