STATE OF MINNESOTA DISTRICT COURT

COUNTY OF RAMSEY SECOND JUDICIAL DISTRICT

Court File No. 62-CV-23-6752

Case Type: Other Civil

In the Matter of the Receivership TEMPORARY ORDER ESTABLISHING

of Bay View Nursing and A RECEIVERSHIP FOR BAY VIEW
Rehabilitation Center NURSING AND REHABILITATION
CENTER

This matter came before the Court on December 21, 2023, pursuant to the emergency

petition of the Commissioner of the Minnesota Department of Health (“Commissioner”) brought

under Minn. Stat. § 144A.15, subd. 2a.

Based on the emergency petition, the supporting declarations, and the entire record before

the Court in the above-captioned case, the Court makes the following:

FINDINGS

1. The Minnesota Commissioner of Health supervises and controls the Minnesota

Department of Health (“MDH”). MDH licenses and regulates nursing homes in

Minnesota pursuant to Minn. Stat. ch. 144A, Minnesota Rules chapter 4658, and other

applicable laws.

2. Bay View Nursing and Rehabilitation Center (“Bay View”) is a nursing home located at

1412 West 4th Street, Red Wing, Minnesota 55066. Bay View Nursing and

Rehabilitation Center is operated by Red Wing Health Center, LLC, which is majority

owned by Samuel Weinberg.

3. Red Wing Health Center, LLC has a skilled nursing home license issued by MDH

pursuant to Minn. Stat. § 144A.02.

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4. Bay View is certified by the federal government to participate in the federal Medicare

program and the combined state and federal Medicaid program. In Minnesota, the

Medicaid program is known as the “Medical Assistance” or “MA” program. Bay View is

licensed to house 110 residents but currently houses 61 residents with an additional 3

residents currently in hospital. Residents served by Bay View include residents with a

variety of medical diagnoses including chronic and acute issues, and several residents

require ventilators and tracheostomy care.

5. After receiving a report concerning financial issues at Bay View, MDH sent investigators

to the facility on December 13, 2023. MDH staff interviewed facility staff and the offsite

accounting firm of Bay View.

6. MDH obtained evidence demonstrating that Bay View has a pattern of failing to meet

ongoing financial obligations, including a failure to timely pay employee wages, a

pharmacy, a food vendor, staffing agencies, a medical supply company, and other

vendors. Bay View currently has numerous past due accounts, as detailed in the

declarations provided by MDH.

7. After conducting a survey of Bay View in December 2023, MDH found further evidence

that the financial situation at Bay View is precarious.

8. There is reason to believe care at the facility will become compromised due to the

financial situation at Bay View. Bay View is currently operating with limited staff who

have not been paid, several staff members have quit or refuse to work unless they are

paid, and a staffing agency has pulled its staff from the facility due to non-payment. Staff

have further expressed concern that the quality of patient care has been affected by the

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 current staffing levels and that staff will not be able to provide sufficient care to the

residents at the facility.

9. The Commissioner and Bay View agree that there is probable cause to believe that an

emergency exists at Bay View, and that it is appropriate to issue, pursuant to Minn. Stat.

§ 144A.15, subd. 2a, a temporary order appointing the Minnesota Commissioner of

Health as the receiver for Bay View.

NOW, THEREFORE, IT IS HEREBY ORDERED:

Petitioner Minnesota Commissioner of Health is appointed as Receiver of Bay View, a

nursing home located at 1412 West 4th Street, Red Wing, Minnesota 55066. The purpose of the

receivership is to make provisions for the continued safety and health care of Bay View’s

residents or, if necessary, to provide for the orderly transfer of nursing home residents. This

appointment is effective when this Order is signed and continues until further order of the Court

at a hearing currently scheduled for February 26, 2023 at 10:00 am, or until termination of the

receivership in accordance with Minn. Stat. § 144A.15, subd. 5 under the following terms:

1. USE OF RECEIVABLES.

a. The Commissioner, as Receiver for Bay View, may use all receivables paid to the

nursing homes on or after the effective date of this Order to pay any necessary expenses to

operate the facility, even if those expenses were incurred or arose prior to the date of this Order.

Specifically, the Receiver may pay expenses such as salaries, wages, payroll taxes, utilities,

insurance premiums, taxes, food, medical supplies, medical services, and all other expenses

which in the Receiver’s discretion are necessary to operate the facilities in a manner that

guarantees the safety and health care of the residents.

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 b. For the purposes of this Order, the term “receivables” includes, but is not limited

to, Medical Assistance or MA (also known as Medicaid) payments that have been paid or will be

paid by the Commissioner of Human Services (“DHS Commissioner”) for services provided at

Bay View, money paid to Bay View or Red Wing Health Center, LLC by health plan companies

or by residents of Bay View whose care is not paid for by MA (i.e., private pay residents), and

by other government insurance programs, such as Medicare. The Receiver is specifically

authorized to contact the DHS Commissioner and arrange for any future MA payments to be

made to an account controlled by the Receiver or her managing agent.

2. LIMITATION OF STATE’S LIABILITY.

a. Neither the Receiver nor her managing agent shall be liable for debts, leases,

contracts for deed, or other obligations or liabilities of any kind entered into or incurred by Red

Wing Health Center, LLC by another company or entity in which Red Wing Health Center, LLC

has an interest, or by any other company or entity which holds an interest in Red Wing Health

Center, LLC or Bay View. Neither this Receivership nor any actions by the Receiver or

managing agent pursuant to this Receivership creates a fiduciary relationship of any kind

between the Receiver or her managing agent and Red Wing Health Center, LLC or any other

person referenced in this Receivership or any other persons claiming to have a financial interest

in any real or personal property owned, possessed or controlled by Red Wing Health Center,

LLC or its agents or representatives. Moreover, the Receiver assumes no fiduciary duty or

transferee responsibility for pre-receivership leases, contracts for deed, or other commitments or

debts entered into by Red Wing Health Center, LLC or its agents or representatives or by another

company or entity in which Red Wing Health Center, LLC has an interest, or any other company

or entity which holds an interest in Red Wing Health Center, LLC.

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 b. Neither the Receiver nor her managing agent shall be liable to Red Wing Health

Center, LLC, its agents or representatives, its creditors or anyone claiming to have an interest in

any real or personal property owned, possessed or controlled by Red Wing Health Center, LLC

or its agents or representatives, due to financial commitments or decisions made by Red Wing

Health Center, LLC or its agents or representatives or by another company or entity in which

Red Wing Health Center, LLC has an interest, or any other company or entity which holds an

interest in Red Wing Health Center, LLC, in connection with the Receivership. The liability of

the Receiver or her managing agent is governed by the State Tort Claims Act, Minn. Stat. §

3.736.

3. DUTIES OF RED WING HEALTH CENTER, LLC

a. Red Wing Health Center, LLC or its owners or agents shall make available to the

Receiver or her managing agent all resident, personnel, financial and other records relating to the

ownership and operation of Bay View that are requested by the Receiver or her managing agent.

Such records may include: the names of the banks where Red Wing Health Center LLC’s

accounts are located, its account numbers, the type of account, and a list of all withdrawals made

from these accounts during the period specified in the request. Red Wing Health Center, LLC

shall immediately make available such payroll information as is requested by the Receiver or her

managing agent. Red Wing Health Center, LLC shall prepare a list of the records turned over to

the Receiver or her managing agent. Additional such records that come into the possession of

Red Wing Health Center, LLC shall immediately be made available and shall be included in the

list of records provided. Red Wing Health Center, LLC and its agents shall not alter, destroy, or

otherwise spoliate any records relating to the ownership and operation of Bay View following

issuance of this Order.

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 b. As soon as possible, but no later than 72 hours from the issuance of this Order,

Red Wing Health Center, LLC must turn over or make available to the Receiver or her managing

agent all funds in its checking account and any other bank accounts for Bay View, as well as

checks or other funds related to the operation of Bay View currently in its possession. After the

issuance of this Order, Red Wing Health Center, LLC shall make no withdrawals or draws on

these accounts.

c. As soon as possible, but no later than 72 hours from the issuance of this Order,

Red Wing Health Center, LLC shall make available to the Receiver or her managing agent

resident trust account records. At the time such records are turned over, the trust account funds

shall be transferred to the Receiver or her managing agent, as appropriate. Red Wing Health

Center, LLC and its agents shall not alter, destroy, or otherwise spoliate any trust account records

following issuance of this order.

d. Within 72 hours of the date of issuance of this Order, or as soon as possible

thereafter, Red Wing Health Center, LLC shall provide to the Receiver or her managing agent a

complete listing of its Accounts Payable and all other liabilities incurred through operation and

management of Bay View, including disclosure of all secured and unsecured creditors.

e. Red Wing Health Center, LLC shall allow the Receiver or her managing agent to

utilize the personal property, furniture and equipment at Bay View for no rental fee or cost

during the period of the Receivership. Upon the request of the Receiver or her managing agent,

Red Wing Health Center, LLC shall direct its onsite staff to assist the Receiver with the

inventory of this property at the commencement of the receivership period.

f. Red Wing Health Center, LLC may proceed with all rate and survey appeals that

involve reporting periods and surveys that preceded the receivership period at its election and

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expense. Red Wing Health Center, LLC shall be liable for any paybacks to the Department of

Human Services (“DHS”) involving the reporting periods that precede the receivership period. If

Red Wing Health Center, LLC ultimately prevails or settles an appeal and recovers any payment

amounts, the payment amounts shall be used to pay any bed surcharge owed to the State, and

only after all bed surcharges are fully paid may any remaining amount be paid to Red Wing

Health Center, LLC.

g. Red Wing Health Center, LLC shall continue to be the employer of all persons

working at Bay View. The only exception shall be those employees solely on the payroll of the

Receiver or her managing agent who perform services for Bay View and for whom the Receiver

or her managing agent is reimbursed through the Receivership. Red Wing Health Center, LLC

delegates its authority as employer to the Receiver and her managing agent; however, it is

understood that the Receiver and her managing agent are only acting on behalf of Red Wing

Health Center, LLC in making employment decisions necessary for the potential orderly closure

of Bay View, or to make other provisions for the residents’ continued safety and health care, and

are not to be considered separate employers for unemployment compensation purposes, worker’s

compensation purposes or other employment-related purposes.

h. Red Wing Health Center, LLC shall maintain throughout the receivership period

any existing insurance policies incident to the prudent operation and conduct of Bay View,

including but not limited to the following:

1. Comprehensive General Liability Policy, with the Receiver and her

managing agent included as insureds;

2. Professional liability insurance policy;

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 3. Worker’s Compensation and Employees’ Liability insurance and other

similar insurance to the extent required by law, on behalf of Red Wing Health Center, LLC as

the employer;

4. Insurance on buildings and contents; and

5. Such other insurance as is customary and usual in the operation of a

nursing home in Minnesota.

Red Wing Health Center, LLC shall be included as an insured on all insurance policies

obtained but such policies shall not satisfy obligations imposed on Red Wing Health Center,

LLC by creditors or any other party to secure independent coverage. The costs of obtaining this

insurance shall be included as an allowable expense of operating Bay View.

4. DUTIES OF THE RECEIVER. The duties of the Receiver shall expressly,

include, but are not limited to:

a. Assumption of the operation of Bay View in the capacity of licensee for the sole

purpose of providing for the continued safety and health care of Bay View’s residents or, if

necessary, to provide for the orderly transfer of nursing home residents. In doing so, the Receiver

shall not act in a manner inconsistent with the health, safety and well-being of the residents of

Bay View.

b. Pursuant to Minn. Stat. §§ 144A.154 and 256R.52, the Receiver shall recommend

to the DHS Commissioner that a review of the MA rate be completed in order to establish a daily

payment rate to the Receiver for the period that the receivership is in effect. The Receiver shall

provide consultation to DHS on the Receivership fee payment. Such consultation shall include

providing information on additional costs require to correct deficiencies, if necessary, and

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estimates of additional Receivership expenses above those supported by the current payment

rates. Estimated resident days for the receivership period will also be reported.

c. The Receiver or her managing agent shall have access to existing Bay View

accounts and, to the extent permitted by applicable law and regulation, shall open separate

account(s) into which all incoming payments for all services rendered at Bay View from any

source, shall be deposited. The funds in these accounts shall be utilized by the Receiver or her

managing agent in operating Bay View.

d. The Receiver or her managing agent, with the assistance of the on-site staff at Bay

View, shall inventory, or cause to be inventoried, the personal property, furniture, equipment,

food on hand or other supplies, petty cash accounts and all other items provided Red Wing

Health Center, LLC at the beginning of the receivership period. The Receiver shall take

possession of this property and utilize it for the benefit of the residents of Bay View until the

termination of the Receivership. Neither the Receiver nor her managing agent shall be

responsible for wear and tear of the property by the residents, nor shall they be required to

reimburse Red Wing Health Center, LLC for the use or loss of the personal property, furniture or

equipment, for the consumption of food on hand, or for the expenditure of the petty cash funds.

e. The Receiver or her managing agent is authorized to ratify, assume, and enter into

all contracts, including labor agreements and insurance contracts, and leases necessary to the

operation of Bay View and may purchase any necessary goods and services so as to ensure the

operation of Bay View in a manner designed to preserve the safety and adequate care of the

residents.

f. Appropriate licensure and certification shall be in the name of the Commissioner,

which shall expire at the termination of the Receivership.

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 g. On behalf of Red Wing Health Center, LLC, the Receiver or her managing agent

shall have appropriate control and supervision of all employees of Bay View and the work done

by such employees. The Receiver or her managing agent has the responsibility and authority to

hire and terminate employees and to assign employees to the positions it determines necessary at

salary levels that are reasonable and cost conscious. The Receiver or her managing agent shall

make the necessary tax withholdings and make the required tax filings for these employees

beginning with the commencement of the receivership period.

h. The Receiver and her managing agent shall exercise the same standards and

degree of care as is normal, customary and reasonable for the administration and operation of

nursing homes in the State of Minnesota. The Receiver and her managing agent shall comply

with all local, state and federal regulations and laws governing the operation of nursing facilities.

At the end of the receivership period, the Receiver shall return to Red Wing Health Center, LLC

any interest the Receiver assumed in the real estate, personal property, furniture, and equipment

which is the subject of the Receivership in the same condition in which it was received, ordinary

wear and tear excepted.

i. The Receiver or her managing agent may contract with a public accounting firm

to prepare a financial review of the financial records for Bay View for the period of December 1,

2023, through the term of this Receivership. The costs of obtaining these services shall be

included as part of the expenses of the Receivership.

j. If it is determined by the Receiver that the residents of Bay View are to be

transferred to other placements, transfers shall be handled in accordance with the laws and

regulations cited herein. Such relocation shall be completed prior to the expiration of the

receivership period. Transfers shall be handled in such a manner to preserve the health, safety,

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rights and adequate care of the residents and shall be in accordance with Minn. Stat. § 144A.161

and the transfer and discharge provisions contained in federal law and regulations, §§ 1819(c)(2)

and 1919(c)(2) of the Social Security Act, 42 U.S.C. § 1395i-3(c)(2) and 42 U.S.C. §1396r(c)(2)

and 42 C.F.R. § 483.12.

5. DELEGATION OF DUTIES. The duties of the Receiver may be delegated by the

Receiver to her managing agent.

6. TERMINATION OF RECEIVERSHIP. This Receivership may be terminated by

further order of the Court or otherwise in accordance with the provisions of Minn. Stat. §

144A.15, subd. 5.

7. RIGHTS OF OTHER PERSONS.

Nothing in this Order impairs the rights Red Wing Health Center, LLC’s creditors or any

other person to seek any and all remedies they have against Red Wing Health Center, LLC.

Dated:
Assistant Chief Judge Sara Grewing

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