Bill Text: NJ A993 | 2026-2027 | Regular Session | Introduced
Bill Title: Establishes framework for appointment of receiver for provider of services to individuals with developmental disabilities.
Sponsorship: Partisan Bill (Democrat 2)
Status: (Introduced) 2026-01-13 - Introduced, Referred to Assembly Aging and Human Services Committee [A993 Detail]
Download: New_Jersey-2026-A993-Introduced.html
STATE OF NEW JERSEY
222nd LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION
Sponsored by:
Assemblywoman CAROL A. MURPHY
District 7 (Burlington)
SYNOPSIS
Establishes framework for appointment of receiver for provider of services to individuals with developmental disabilities.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning providers of services to individuals with developmental disabilities and supplementing Title 30 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in this act:
"Commissioner" means the Commissioner of the Department of Human Services.
"Covered service" means day habilitation, individual supports, or any long-term care service provided to an individual with developmental disabilities at a site owned or leased by a provider.
"Department" means the Department of Human Services.
"Division" means the Division of Developmental Disabilities.
"Owner" means the holder or holders of the title in fee simple to the property on which the site is located.
"Provider" means an individual or entity receiving reimbursement for provider-managed services at a site.
"Provider-managed services" means: a community residence for people with developmental disabilities licensed pursuant to P.L.1977, c.448 (30:11B-1 et seq.), a community residence for persons with head injuries licensed pursuant to P.L.1977, c.448 (30:11B-1 et seq.), a private residential facility for persons with developmental disabilities regulated pursuant to the "Health Care Facilities Planning Act," P.L.1971, c. 136 (C.26:2H-1 et seq.), a day habilitation site certified by the Division of Developmental Disabilities, or a covered service.
"Recipient" means an individual that is both eligible for Division of Developmental Disabilities services and has received a provider-managed service by a provider.
"Site" means the physical location at which provider-managed services are provided to recipients by a provider.
2. a. The department may file a motion in a court of competent jurisdiction for a judgment directing the appointment of a receiver for a provider. The motion for appointment of a receiver shall include the following:
(1) material facts showing that there exists at one or more sites: a condition, pattern, or practice in substantial violation of the standards of health, safety, or recipient care established under federal, State, or local law, regulations, or policy; or any other conditions dangerous to life, health, or safety of a recipient;
(2) documentation that the material facts provided pursuant to paragraph (1) of this subsection have been brought to the attention of the owner or provider associated with the site and that: the conditions have not been remedied within a reasonable time period, as specified by the department; or that the conditions, although periodically remedied, habitually exist at the site, pursuant to the provisions of subsection g. of this section;
(3) a brief description of what is necessary to remedy the condition; and
(4) the relief sought by the department.
b. It shall be a sufficient defense to a motion by the department for appointment of a receiver if the owner or provider establishes that the conditions alleged in the motion do not in fact exist, that such conditions have been remedied, or that such conditions, although periodically remedied, have not habitually existed, pursuant to the provisions of subsection g. of this section.
c. Following a motion by the department for appointment of a receiver, the court shall proceed in a summary manner and shall render a judgment on the motion either:
(1) dismissing the motion for failure by the department to affirmatively establish the allegations or because of the affirmative establishment by the owner or provider of a defense specified in subsection b. of this section;
(2) issuing an order for the appointment of a receiver approved by the department in accordance with the provisions of this act, as well as granting any other relief sought by the department; or
(3) granting such other relief as the court deems just and proper.
d. An order appointing a receiver, issued by the court pursuant to paragraph (2) of subsection c. of this section, shall include, but shall not be limited to, provisions regarding the following:
(1) the turnover of assets to the receiver by the owner and provider;
(2) the compensation of the receiver and its professionals and consultants from the receivership property;
(3) an injunction against interference by officers, directors, shareholders, agents, employees, representatives, and attorneys;
(4) the receiver's authority to pay reasonable salary expenses, including retention incentives for direct support professionals;
(5) the limitation of the receiver's liability;
(6) the receiver's authority to open bank accounts to fulfill receivership duties;
(7) the receiver's maintenance of a surety bond and fidelity and comprehensive crime bond, the cost of which shall be paid from the receivership property;
(8) the receiver's authority to maintain the insurance policies of the owner and provider;
(9) progress reports, if required by the court;
(10) any authorization required under the "Health Insurance Portability and Accountability Act of 1996," Pub.L.104-191; and
(11) an injunction against: disconnection or service change by utility suppliers, including entities providing alarm and fire protection services or equipment; attachment, levy, or service discontinuation by creditors, set off amounts held in accounts by banks or other financial institutions; any action by all lessors and lienholders with respect to real property or furniture, furnishings, equipment, vehicles, or other personal property; commencement of continuation of litigation; and cancellation of insurance policies for a period of 90 days.
e. (1) If, after a trial, the court determines that the evidence presented by the department warrants the appoint of a receiver and any other relief sought by the department, the owner or provider may apply to the court for permission to remedy the conditions specified in the motion submitted by the department, which application shall demonstrate the ability of the owner or provider to promptly undertake and complete the work required. After review of the application, the court, in lieu of rendering judgment for the appointment of a receiver or other relief, may issue an order permitting the owner or provider to perform the work in accordance with a time schedule and subject to conditions, as determined by the court, including the posting of a bond as security for the performance of the work, as may be fixed by the court.
(2) The department may apply to the court for a hearing to determine whether judgment should be rendered immediately if, after the issuance of an order pursuant to paragraph (1) of this subsection, the department can demonstrate that the owner or provider is not proceeding in accordance with the time schedule, or in accordance with the conditions, imposed by the court order.
(3) If, upon a hearing authorized under paragraph (2) of this subsection, the court determines the owner or provider is not proceeding in accordance with the time schedule or with the conditions imposed by the court order, the court shall issue a final judgment appointing a receiver as authorized under this act, as well as any other relief sought by the department. If the owner or provider has posted a bond to secure completion of the work, the security, or such part of the security as is necessary, may be used by the receiver to remedy the conditions.
f. If, after a trial, the court determines that the evidence presented by the department warrants the appoint of a receiver and any other relief sought by the department, the department may request the relief to include a requirement that the owner and provider transfer its ownership interest in the site and the provider-managed services to an entity or entities approved by the department.
g. Any of the following occurrences or conditions shall establish a rebuttable presumption that a condition, pattern, or practice of habitual violation exists:
(1) the appointment of an independent monitor by the department or division;
(2) the issuance of provisional licenses or certifications by the department for more than 10 percent of an owner's or provider's programs;
(3) the suspension of admissions or enrollment in a covered service by the department or division;
(4) the debarment, suspension, or termination by any federal, State, or local government agency of an owner's or provider's: eligibility to provide or be paid for a provider-managed services; or necessary qualification to provide or be paid for a provider-managed services;
(5) notice of any compliance or enforcement action taken by any federal, State, or local agency with respect to a provider-managed service;
(6) repeat hospitalization of a recipient within a two-month period for injuries or neglect sustained at sites managed by an owner or provider;
(7) any use of unauthorized mechanical or chemical restraints;
(8) inability to maintain the supervision levels as required in service plans, as determined by in-person or record reviews by the department or division, including the presence of specialized behavioral or medical staff for individuals with an assessed need;
(9) inadequate maintenance or falsification of employee or client records, service documentation, financial or business records, or requests for payment from the division; department; any federal, State, or local government agency; lender; vendor; or contract counterparty;
(10) forecasts of ongoing negative income or cash flow by the owner, provider, department, or authorized third-party;
(11) failure to meet payroll obligations in any pay period;
(12) inability to purchase or lease equipment, materials, services, and supplies required for the provision of services to recipients, or the existence of any financial liabilities outstanding for more than 60 days regarding equipment, materials, services, and supplies required for the provision of services to recipients;
(13) inability to make full payment on any obligation of a contract, lease, debt, or other financial instrument or contract, regardless of formal notice of default; or
(14) the encumbrance of appliances, furniture, fixtures, equipment, and personal property at the site with liens or security interests, unless such encumbrance is related to a bona fide purchase from a retailer or entity issuing consumer-goods credit on behalf of a retailer.
3. a. If a judgment for the appointment of a receivership is rendered, the court shall be authorized to appoint as a receiver any responsible person or entity approved by the department.
b. The receiver, in the receiver's discretion, may either:
(1) assume the role of administrator or manager of a site and take control of all day-to-day operations of the provider, or
(2) direct the existing administrator or manager on actions and procedures to be taken to eliminate or rectify the conditions specified in the complaint.
c. The receiver shall oversee the management of the provider-managed services as would a prudent person, holding a department license, taking into account the effect of the receiver's oversight or the oversight of the department, to protect the interests and care of the recipients.
d. All incoming money, credits, payments, or other income from any source to the owner and provider shall be made available to the receiver for the receiver's use in operating the owner's and provider's businesses throughout the course of the receivership, subject to the provider's budget. Except to the extent that the receiver directs otherwise, and subject to the provider's budget, none of owner's or provider's related or affiliated entities, lenders, landlords, or similar entities shall be paid during the time of the receivership until the needs of the recipients have been and continue to be met, pending further order of the court. No funds associated with the post-receivership funding shall be used for owner's or provider's related entities, lenders, landlords, or similar entities unless it can be demonstrated to the court that any such payments directly affect the needs of recipients.
e. The receiver shall continue for such time until the court enters an order terminating the receivership period and discharging the receiver, provided that to the extent the receiver no longer desires to serve in that capacity, the receiver may apply to the court for termination of the receiver's appointment.
4. a. A receiver appointed pursuant to subsection a. of section 3 of this act, under the approval of the court, shall have all powers and authority authorized by section 5 of P.L.1968, c.350 (C.14A:14-5) in order to manage control and operate the business affairs of the owner or provider so as to provide for the health, safety, and welfare of the recipients and, if directed by the department, to transition ownership interests and recipient care to an entity or entities approved by the department. The receiver shall undertake such action in accordance with relevant federal, State, and local laws.
b. The receiver shall have full power and authority, subject to a cash flow forecast acceptable to the receiver and the department, to:
(1) take into the receiver's possession all of the property of the owner and provider, including its books, records and papers, as well as all cash, real property, including leasehold interests, bank accounts, accounts receivable and other assets, tangible or intangible, now held or hereafter acquired, and to open, transfer, and change all such bank accounts into the name of the receiver, if appropriate, or otherwise take such actions as necessary to ensure such bank accounts are under the control of the receiver;
(2) institute, prosecute, defend, and settle by or on behalf of the owner and provider any claims or causes of action that the receiver deems necessary;
(3) sell, assign, convey, or otherwise dispose of all or any part of the property of the owner and provider, including to solicit and to entertain offers for the purchase of those assets, and to negotiate with purchasers;
(4) settle or compromise with any debtor or creditor of the owner and provider, including any taxing authority;
(5) continue the business of the owner and provider and to enter into contracts, to borrow money, and to pledge, mortgage or otherwise encumber the property of the owner and provider;
(6) take action necessary to fulfill the purposes of the receivership pursuant to section 5 of P.L.1968, c.350 (C.14A:14-5);
(7) hire any professionals, such as attorneys or accountants, to assist the receiver as well as such other consultants to undertake any studies or modification of the provider-managed services it deems appropriate;
(8) make any repairs, improvements, or expenditures to eliminate the conditions specified in the motion, made pursuant to subsection a. of section 2 of this action, and to direct the method or procedures by which this shall be accomplished;
(9) hire or discharge any employees, including the administrator or manager, which shall include the power to:
(a) employ, discharge, assign, supervise, and fix the compensation, salaries, and wages for all officers, managers, agents, and employees of the owner and provider as the receiver may deem necessary and advisable for the proper operation of the business and management, preservation, and protection of the owner and provider's property and clients; and
(b) pay wages due to existing employees of the owner and provider for the purpose of retaining their services during the period of the receivership;
(10) receive or expend in a reasonable and prudent manner the revenues of the owner and provider, including, in the receiver's sole discretion to:
(a) pay, and satisfy any obligations from funds now or hereafter coming into the possession of the owner and provider for services rendered;
(b) buy and sell merchandise, supplies, and other property and to render services for cash or on credit for the owner and provider;
(c) purchase or otherwise acquire on credit such materials, equipment, machinery, supplies, services, or other property as the receiver may deem necessary and advisable in connection with the provider-managed services and the management and preservation of the business;
(d) collect and receive all payments, income, and profits, and to take possession of all outstanding accounts, insurance proceeds, things-in-action, and credits due or to become due to the owner and provider;
(e) take possession and control of all payments that are due or pending to the owner and provider and yet to be deposited into their accounts; and
(f) expend those funds required to maintain the conditions of the provider-managed services in compliance with the standards required by the department in accordance with the provider's budget;
(11) enter into a contract to accept funding from the department to pay actual and necessary expenses associated with the care of the recipients and the transitioning of the recipients to alternate providers, and, in exchange for that post-receivership funding, to grant the department:
(a) validly perfected first-priority liens on the owner's and provider's receivables and accounts, which may expressly include all rights to payment with respect to specifically identified payments, income, or refunds, created after the date of the first funding provided by the department;
(b) validly perfected first-priority liens on the net proceeds of any and all causes of action initiated by the receiver, including but not limited to potential causes of actions against third parties, avoidance-type actions, or other similar causes of action; and
(c) administrative expense claims;
(12) continue the business of providing services to the recipients in all its aspects, including to:
(a) enter into any contracts incidental or as necessary or appropriate to consummate transactions authorized by an order of the court;
(b) keep the assets and business of the owner and provider insured in such manner and to such an extent as the receiver may deem necessary and advisable, and to purchase such other insurance in the name of the receiver as the receiver may deem appropriate or as directed by the court to procure;
(c) collect and to open any mail intended for or directed to the owner or provider; and
(d) open new bank accounts on behalf of the owner and provider as the receiver deems necessary to allow for the collection of any income and disbursements of any necessary payments;
(13) take all necessary action, in consultation with the department, to conserve the receivership property and promote the health, safety, or resident care of the recipients and to comply with all applicable rules and regulations governing the operations of the provider-managed services and to transition services and care for the clients of the programs, if such relief is granted, to new providers, which the selection of the new provider shall be in the sole discretion of the department;
(14) employ, without further order of the court, such medical and clinical behavioral professionals as determined necessary to meet the staffing requirements for providing adequate care to the recipients, including the hiring of such consultants to conduct inspections, examinations, and provide reports to the receiver of any deficiencies in site or provider-managed services;
(15) hire, without further order of the court, such consultants as needed to assist with coordination and transition of care of the recipients to new providers, if such relief is granted;
(16) apply to the court at any time during the receivership period, at the receiver's discretion, for further direction and guidance to assist the receiver in fulfilling its functions, including the submission of further proposed orders as the receiver deems necessary, including an order to clarify or enumerate any rights or duties in the matter; and
(17) exercise such other power as the receiver deems necessary or appropriate to implement the court's order and to take action consistent with the terms and conditions of the order.
c. If such relief is granted by the court, during the pendency of the receivership, the receiver shall consult with, and take direction from, the department in executing the plans for the transition of recipient care to new providers, of which the selection of such new providers shall be at the sole discretion of the department, with respect to: the financial performance of the owner and provider; the sale of owner's and provider's assets; the wind down of owner's and provider's business; and any other items or topics as the department shall reasonably request. The receiver shall undertake all actions in accordance with relevant federal, State, or local laws including but not limited to all laws governing the licensing of the owner and provider, the owner and provider's facilities, and provider-managed services.
5. The failure of the State or department to seek relief or otherwise exercise its rights and remedies during the receivership, as applicable, shall not constitute a waiver of any of the department's rights. Notwithstanding anything herein, the entry of a motion or court order is without prejudice to, and does not constitute a waiver of, expressly or implicitly, or otherwise impair any of the rights or remedies of the State or department under applicable law.
6. This act shall take
effect on the first day of the sixth month next following enactment.
STATEMENT
This bill provides protections for individuals with developmental disabilities by establishing a framework that allows the Department of Human Services (department) to request the appointment of a receiver to certain low performing service providers of this community. Under the bill, an appointed receiver is to oversee the management of the provider-managed services, which includes both financial and operational components, to protect the interests and care of the individuals with developmental disabilities receiving services. Absent this bill, the department must rely on non-performing provider agencies to move for receivership, which creates substantial risk for care recipients if a provider is failing financially or otherwise unable or unwilling to remedy dangerous conditions in its programs.
Similar to authority held by the State's Office of the Attorney General and the Department of Health, this bill provides the department with authority to make a motion to a court of competent jurisdiction for the appointment of a receiver for a provider of services to individuals with development disabilities if: there exists a pattern or practice in substantial violation of the standards of health, safety, or recipient care established under federal, State, or local law, regulations, or policy; or if any other condition dangerous to life, health, or safety of a recipient exists. Under the bill, a recipient means an individual that is both eligible for Division of Developmental Disabilities services and has received an applicable service by a provider. Applicable services include community residence services, private residential facility services, day habilitation services, individual supports, or any long-term care services.
This bill: sets standards for a motion to request, and a court order and court proceedings to appoint, a receiver, as well as the responsibilities and rights of providers and the department during those proceedings; outlines the authority of the appointed receiver and the termination of the receivership when the objectives of the court order are met; establishes a method for the department to request the transfer of ownership of a site and provider-managed services to a new provider; and creates standards for provider agency defenses. These provisions are based on both existing authority held by the Department of Health for oversight of licensees, as well as a court order recently used by the department to successfully wind down a low-performing provider agency of services to individuals with developmental disabilities.
