Paxton Bill Lets Courts Hand Failing Foster Contractors To Receivers

The text as introduced · 1,896 words

89R9872 AMF-F

By: Paxton
S.B. No. 2034

A BILL TO BE ENTITLED

AN ACT

relating to the receivership of a single-source continuum

contractor providing child welfare services.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 64.001(a), Civil Practice and Remedies

Code, is amended to read as follows:

(a) A court of competent jurisdiction may appoint a

receiver:

(1) in an action by a vendor to vacate a fraudulent

purchase of property;

(2) in an action by a creditor to subject any property

or fund to his claim;

(3) in an action between partners or others jointly

owning or interested in any property or fund;

(4) in an action by a mortgagee for the foreclosure of

the mortgage and sale of the mortgaged property;

(5) for a corporation that is insolvent, is in

imminent danger of insolvency, has been dissolved, or has forfeited

its corporate rights;

(6) for a single-source continuum contractor as

provided by Subchapter B-2, Chapter 264, Family Code; or

(7) [ (6) ] in any other case in which a receiver may be

appointed under the rules of equity.

SECTION 2. Chapter 264, Family Code, is amended by adding

Subchapter B-2 to read as follows:

SUBCHAPTER B-2. RECEIVER FOR SINGLE-SOURCE CONTINUUM CONTRACTOR

Sec. 264.191. DEFINITIONS. In this subchapter:

(1) "Catchment area" has the meaning assigned by

Section 264.152.

(2) "Community-based care contract" means a contract

between a single-source continuum contractor and the department or

the Health and Human Services Commission under Subchapter B-1.

(3) "Single-source continuum contractor" means an

entity that has entered into a contract with the department or the

Health and Human Services Commission under Subchapter B-1.

Sec. 264.1915. RECEIVER OF SINGLE-SOURCE CONTINUUM

CONTRACTOR. A court of competent jurisdiction may appoint a

receiver for a single-source continuum contractor or any of its

parts, divisions, components, or companies on the petition of the

department if:

(1) after being subject to a quality improvement plan,

corrective action plan, or other remedial statutory or contract

measures, the contractor continues to fail to satisfactorily

perform under the community-based care contract;

(2) the contractor:

(A) provides the department notice of the

contractor's intent to cease operations not later than the 60th day

before the date the contractor intends to cease operations; and

(B) has not made arrangements for another

single-source continuum contractor or the department to continue

the uninterrupted provision of services under the community-based

care contract;

(3) conditions exist, as determined by the department,

within the contractor that present an imminent danger to the

health, safety, or welfare of the children under the

conservatorship of the department in the contractor's care;

(4) the contractor has failed to provide adequate

information to the department regarding a child under the

conservatorship of the department in the contractor's care;

(5) the contractor has failed to comply with a court

order or incurred a sanction against the department due to failure

to comply with a court order; or

(6) the contractor cannot meet or is unlikely to be

able to meet financial obligations related to services provided

under the community-based care contract, including financial

obligations to employees, contractors, or foster parents.

Sec. 264.192. PROCEEDING TO APPOINT RECEIVER. (a) Except

as otherwise provided by law, a court shall give precedence to a

petition for the appointment of a receiver under this subchapter

over other matters.

(b) A court shall conduct an evidentiary hearing on a

petition for the appointment of a receiver under this subchapter

not later than the fifth day after the date the petition is filed.

The department shall make reasonable efforts to notify the

single-source continuum contractor of the hearing under this

subsection.

(c) A court shall grant a petition for the appointment of a

receiver under this subchapter on finding that:

(1) one of the conditions described by Section

264.1915 exists; and

(2) the continued existence of the condition

jeopardizes the health, safety, or welfare of a child under the

conservatorship of the department.

(d) A court may grant a petition for the appointment of a

receiver under this subchapter ex parte.

(e) The issuance of a check without sufficient money by the

single-source continuum contractor or the existence of delinquent

obligations for salaries, utilities, or essential services or

commodities for the contractor is prima facie evidence that the

contractor cannot meet or is unlikely to be able to meet financial

obligations related to services provided under the community-based

care contract as provided by Section 264.1915(6).

Sec. 264.1925. QUALIFICATIONS. (a) To be appointed as a

receiver under this subchapter, a person must be qualified by

education, training, or experience to carry out the duties of the

receiver under this subchapter. Notwithstanding Section 64.021,

Civil Practice and Remedies Code, a receiver appointed under this

subchapter may be an employee of the department.

(b) A court must appoint a receiver selected from a list of

qualified persons developed by the department and filed with the

court.

Sec. 264.193. LIMITED DURATION; ASSESSMENT. (a) A

receivership under this subchapter expires on the 90th day after

the date a receiver is appointed, unless the department files a

petition for a 60-day extension of the receivership with the

appointing court on or before the date the receivership expires.

The department may request multiple extensions under this

subsection.

(b) On or before the 60th day after the date a receiver is

appointed under this subchapter and every 60 days thereafter until

the expiration or termination of the receivership, the department

shall file with the appointing court an assessment of ability of the

single-source continuum contractor under receivership to ensure

the health, safety, and welfare of the children under the

conservatorship of the department in the contractor's care.

Sec. 264.1935. BOND. Notwithstanding Section 64.023, Civil

Practice and Remedies Code, a receiver appointed under this

subchapter who is an employee of the department is not required to

execute a bond.

Sec. 264.194. POWERS AND DUTIES OF RECEIVER. (a) A

receiver appointed under this subchapter shall take all actions:

(1) ordered by the appointing court; and

(2) necessary to ensure the continued health, safety,

and welfare of children under the conservatorship of the department

in the care of the single-source continuum contractor under

receivership, which may include:

(A) taking actions reasonably necessary to

protect or conserve the assets or property of the contractor;

(B) using of the property of the contractor for

the provision of care and services to children under the

conservatorship of the department and their families in the

applicable catchment area;

(C) entering into contracts with or hiring agents

or employees to carry out the powers and duties of the receiver;

(D) directing, managing, hiring, or discharging

employees or agents of the contractor; and

(E) honoring leases, mortgages, and contractual

obligations of the contractor as those payments become due during

the period of the receivership.

(b) Notwithstanding any other law and to ensure continuous

provision of necessary services to children under the

conservatorship of the department and their families, a contract

entered into by a receiver acting in accordance with the receiver's

duties under this section is not subject to advertising,

competitive bidding, or proposal evaluation requirements.

(c) A receiver shall compensate an employee hired in

accordance with this section at a rate of compensation, including

benefits, approved by the appointing court.

(d) A receiver may petition the appointing court for

temporary relief from obligations under a contract entered into by

the single-source continuum contractor under receivership if:

(1) the rent, price, or rate of interest substantially

exceeds a reasonable rent, price, or rate of interest at the time

the contractor entered into the contract; or

(2) any material provision of the contract is

unreasonable when compared to contracts negotiated under similar

conditions.

(e) Any relief granted by a court under Subsection (d) is

limited to the life of the receivership, unless otherwise

determined by the court.

(f) A receiver appointed under this subchapter shall

deposit all money related to the receivership in a separate account

and shall use that account for all disbursements related to the

receivership. A payment to a receiver of a sum owed to the

single-source continuum contractor under receivership shall be

considered a payment to the contractor with respect to the

discharge of the obligation.

(g) A receiver who is not a department employee shall

coordinate with the department to ensure:

(1) the continued health, safety, and welfare of the

children in the department's conservatorship; and

(2) compliance with all state and federal laws

relating to child welfare.

(h) A receiver shall make a reasonable effort to facilitate

the continued operation of the community-based care program under

Subchapter B-1 in the applicable catchment area.

Sec. 264.1945. COMPENSATION OF RECEIVER. The appointing

court shall order compensation for a receiver appointed under this

subchapter to be paid by the single-source continuum contractor

under receivership. If the receiver is a department employee, the

department shall pay the receiver the compensation ordered under

this section and the single-source continuum contractor shall

reimburse the department.

Sec. 264.195. LIABILITY OF RECEIVER. (a) A person does not

have a cause of action against a receiver appointed under this

subchapter for an action taken within the scope of the receivership

unless the cause of action arises from a breach of fiduciary duty or

the gross negligence or intentional acts of the receiver.

(b) Notwithstanding Subsection (a), this section does not

waive the sovereign immunity to suit and from liability of the

department or a department employee acting in an official capacity.

Sec. 264.1955. OBLIGATIONS AND LIABILITY OF SINGLE-SOURCE

CONTINUUM CONTRACTOR; SALE OR LEASE OF PROPERTY BY SINGLE-SOURCE

CONTINUUM CONTRACTOR. (a) The appointment of a receiver under this

subchapter does not relieve the single-source continuum contractor

under receivership or any employee or agent of the contractor of:

(1) civil or criminal liability arising out of an act

or omission that occurred before the appointment of the receiver;

(2) an obligation for the payment of taxes,

operational or maintenance expenses, mortgages, leases,

contractual obligations, or liens; or

(3) a duty imposed by law.

(b) A single-source continuum contractor under receivership

may sell or lease a facility under receivership, subject to the

approval of the appointing court.

Sec. 264.196. TERMINATION OF RECEIVERSHIP. (a) The

appointing court may terminate a receivership if:

(1) the court determines that the receivership is no

longer necessary because the conditions that gave rise to the

receivership no longer exist;

(2) the department has entered into a new contract

with a single-source continuum contractor and that contractor is

ready and able to assume the duties of the single-source continuum

contractor under receivership; or

(3) the department is ready and able to assume the

duties of the single-source continuum contractor under

receivership.

(b) Not later than the 60th day after the date a

receivership is terminated or expires under this subchapter, unless

such time is extended by order of the appointing court, the receiver

shall file with the clerk of the appointing court a full and final

and sworn account of:

(1) all property received by the receiver;

(2) all money collected and disbursed; and

(3) the expenses of the receivership.

SECTION 3. This Act takes effect immediately if it receives

a vote of two-thirds of all the members elected to each house, as

provided by Section 39, Article III, Texas Constitution. If this

Act does not receive the vote necessary for immediate effect, this

Act takes effect September 1, 2025.