On and after the time a participating nursing home is required pursuant to the terms of its agreement with the authority to fund the working capital fund reserve account at the working capital requirement and the renewal and replacement fund at the renewal and replacement requirement, if the combined balance of the working capital fund reserve account and the renewal and replacement fund for a participating nursing home is equal to or less than ninety days of debt service, or when a participating nursing home is in default under its agreement with the authority or when the authority has reasonable grounds to predict that the entity is likely to become in default on any obligations to the authority occasioned by the failure of a nursing home to make any payment to the authority or the trustee for the bonds or notes of the authority, the authority shall send a notice in writing to the Commissioner of Social Services stating that one of the conditions stated in this section has occurred. Upon receipt of such notice from the authority the commissioner shall withhold the amount of any funds in the state's custody that are due or payable to such participating nursing home that are deemed as the allowance for property costs until the authority certifies the nursing home is no longer in default or satisfactory arrangements to secure payment in full and in a timely fashion of all such obligations of the participating nursing home under the agreement have been made. Funds subject to withholding under this section shall include, but are not limited to, federal and state grants, contracts, allocation or appropriations and shall not exceed the portion of the fair rent or capital depreciation plus interest expense receivable by the participating nursing home from the department. If the authority subsequently notifies the commissioner in writing that the participating nursing home is unable to cure its default under the agreement with the authority or arrangements satisfactory to the authority to secure payment in full and in a timely fashion have not been made after a reasonable period of negotiations, the commissioner shall make available to the authority any funds withheld by the commissioner from the participating nursing home under this section. The authority shall apply such funds to the payments required to be made to the authority or trustee by the participating nursing home to satisfy its obligations to the authority under its agreement with the authority or to satisfy the obligations of the authority with respect to any bonds issued by the authority for the benefit of such participating nursing home or required by the terms of any other law or contract to be paid to the authority or trustees for the benefit of holders or owners of bonds issued on behalf of the participating nursing home upon default of the participating nursing home. Concurrent with any notice from the authority to the commissioner under this section, the authority shall give notice to any other agency, department or authority of the state that exercises regulatory, supervisory or statutory control over the operations of the participating nursing home. Upon notification, such agency, department or authority shall immediately undertake reviews to determine what action, if any, that agency, department or authority should undertake to assure the continued prudent operation of such participating nursing home or provision of services to the people served by such participating nursing home.

(P.A. 92-261, S. 12, 17; P.A. 93-102, S. 1; 93-262, S. 1, 87; 93-435, S. 59, 95.)

History: P.A. 93-102 amended section to clarify provisions re default of a participating nursing home; P.A. 93-262 and P.A. 93-435 authorized substitution of commissioner and department of social services for commissioner and department of income maintenance, effective July 1, 1993.