STATE OF NEW YORK
________________________________________________________________________
11170
IN ASSEMBLY
June 12, 2018
___________
Introduced by COMMITTEE ON RULES -- (at request of M. of A. Gottfried)
-- (at request of the Department of Health) -- read once and referred
to the Committee on Health
AN ACT to amend the public health law, in relation to streamlining and
adding criteria to the certificate of need process
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision 3 of section 2801-a of the public health law,
2 as amended by section 57 of part A of chapter 58 of the laws of 2010, is
3 amended to read as follows:
4 3. The public health and health planning council shall not approve a
5 certificate of incorporation, articles of organization or application
6 for establishment unless it is satisfied, insofar as applicable, as to
7 (a) the public need for the existence of the institution at the time and
8 place and under the circumstances proposed, provided, however, that in
9 the case of an institution proposed to be established or operated by an
10 organization defined in subdivision one of section one hundred seventy-
11 two-a of the executive law, the needs of the members of the religious
12 denomination concerned, for care or treatment in accordance with their
13 religious or ethical convictions, shall be deemed to be public need; (b)
14 the character, competence, and standing in the community[,] of the
15 proposed incorporators, directors, sponsors, members, principal members,
16 stockholders, [members] principal stockholders, or operators; with
17 respect to any proposed incorporator, director, sponsor, member, princi-
18 pal member, stockholder, [member] principal stockholder, or operator who
19 is already or within the past [ten] seven years has been an incorpora-
20 tor, director, sponsor, member, principal member, principal stockholder,
21 [principal member,] or operator of any hospital, private proprietary
22 home for adults, residence for adults, or non-profit home for the aged
23 or blind which has been issued an operating certificate by the state
24 department of social services, or a halfway house, hostel or other resi-
25 dential facility or institution for the care, custody or treatment of
26 the mentally disabled which is subject to approval by the department of
27 mental hygiene, no approval shall be granted unless the public health
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14492-01-8
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1 and health planning council, having afforded an adequate opportunity to
2 members of health systems agencies, if any, having geographical juris-
3 diction of the area where the institution is to be located to be heard,
4 shall affirmatively find by substantial evidence as to each such incor-
5 porator, director, sponsor, member, principal member, principal stock-
6 holder, or operator that a substantially consistent high level of care
7 is being or was being rendered in each such hospital, home, residence,
8 halfway house, hostel, or other residential facility or institution with
9 which such person is or was affiliated; for the purposes of this para-
10 graph, the public health and health planning council shall adopt rules
11 and regulations, subject to the approval of the commissioner, to estab-
12 lish the criteria to be used to determine whether a substantially
13 consistent high level of care has been rendered, provided, however, that
14 there shall not be a finding that a substantially consistent high level
15 of care has been rendered where there have been violations of the state
16 hospital code, or other applicable rules and regulations, that (i)
17 threatened to directly affect the health, safety or welfare of any
18 patient or resident, and (ii) were recurrent or were not promptly
19 corrected, unless the proposed incorporator, director, sponsor, member,
20 principal member, stockholder, principal stockholder, or operator demon-
21 strates, and the public health and health planning council finds, that
22 the violations cannot be attributed to the action or inaction of such
23 proposed incorporator, director, sponsor, member, principal member,
24 stockholder, principal stockholder, or operator due to the timing,
25 extent or manner of such affiliation; (c) the financial resources of the
26 proposed institution and its sources of future revenues; and (d) such
27 other matters as it shall deem pertinent.
28 § 2. Section 2801-a of the public health law is amended by adding a
29 new subdivision 3-b to read as follows:
30 3-b. Notwithstanding any other provisions of this chapter to the
31 contrary, the public health and health planning council may approve the
32 establishment of diagnostic or treatment centers to be issued operating
33 certificates for the purpose of providing primary care, as defined by
34 the commissioner in regulations, without regard to the requirements of
35 public need and financial resources as set forth in subdivision three of
36 this section.
37 § 3. Section 2801-a of the public health law is amended by adding a
38 new subdivision 3-c to read as follows:
39 3-c. Notwithstanding any other provisions of this chapter to the
40 contrary, the commissioner is authorized to establish in regulation
41 minimum thresholds for the level of experience that must be met as part
42 of the public health and health planning council's consideration of the
43 character, competence and standing in the community of the proposed
44 incorporators, directors, sponsors, stockholders, members or operators
45 of a residential health care facility pursuant to paragraph (b) of
46 subdivision three of this section. Such thresholds may include but are
47 not limited to: (a) defining the type of prior experience required; (b)
48 establishing a minimum period of time during which such prior experience
49 was obtained; and (c) establishing a minimum percentage of the ownership
50 interest and/or voting rights of the applicant that must be held by an
51 individual who meets such minimum experience requirements.
52 § 4. Paragraphs (b) and (c) of subdivision 4 of section 2801-a of the
53 public health law, as amended by section 57 of part A of chapter 58 of
54 the laws of 2010, are amended to read as follows:
55 (b) [(i)] Any transfer, assignment or other disposition of ten percent
56 or more of [an] direct or indirect interest or voting rights in [a part-
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1 nership or limited liability company, which is the] an operator of a
2 hospital to a new partner [or], member, or stockholder, or any transfer,
3 assignment or other disposition of a direct or indirect interest or
4 voting rights of such an operator which results in the ownership or
5 control of more than ten percent of the interest or voting rights of
6 such operator by any partner, member, or stockholder not previously
7 approved by the public health and health planning council for that oper-
8 ator shall be approved by the public health and health planning council,
9 in accordance with the provisions of subdivisions two and three of this
10 section, except that: (A) any such change shall be subject to the
11 approval by the public health and health planning council in accordance
12 with paragraph (b) of subdivision three of this section only with
13 respect to the new partner [or], member, or stockholder, and any remain-
14 ing partners [or], members, or stockholders who have not been previously
15 approved for that facility in accordance with such paragraph, and (B)
16 such change shall not be subject to paragraph (a) of subdivision three
17 of this section. In the absence of such approval, the operating certif-
18 icate of such hospital shall be subject to revocation or suspension.
19 [(ii)] (c)(i) With respect to a transfer, assignment or disposition
20 involving less than ten percent of [an] a direct or indirect interest or
21 voting rights in [such partnership or limited liability company] an
22 operator of a hospital to a new stockholder, partner or member, no prior
23 approval of the public health and health planning council shall be
24 required. However, no such transaction shall be effective unless at
25 least ninety days prior to the intended effective date thereof, the
26 [partnership or limited liability company] operator fully completes and
27 files with the public health and health planning council notice on a
28 form, to be developed by the public health and health planning council,
29 which shall disclose such information as may reasonably be necessary for
30 the public health and health planning council to determine whether it
31 should bar the transaction for any of the reasons set forth in item (A),
32 (B), (C) or (D) below. Within ninety days from the date of receipt of
33 such notice, the public health and health planning council may bar any
34 transaction under this subparagraph: (A) if the equity position of the
35 [partnership or limited liability company] operator, determined in
36 accordance with generally accepted accounting principles, would be
37 reduced as a result of the transfer, assignment or disposition; (B) if
38 the transaction would result in the ownership of a [partnership or
39 membership] direct or indirect interest or voting rights by any persons
40 who have been convicted of a felony described in subdivision five of
41 section twenty-eight hundred six of this article; (C) if there are
42 reasonable grounds to believe that the proposed transaction does not
43 satisfy the character and competence criteria set forth in subdivision
44 three of this section; or (D) upon the recommendation of the department,
45 if the transaction, together with all transactions under this subpara-
46 graph for the [partnership] operator, or successor, during any five year
47 period would, in the aggregate, involve twenty-five percent or more of
48 the interest in the [partnership] operator. The public health and health
49 planning council shall state specific reasons for barring any trans-
50 action under this subparagraph and shall so notify each party to the
51 proposed transaction.
52 [(iii) With respect to a transfer, assignment or disposition of an
53 interest or voting rights in such partnership or limited liability
54 company to any remaining partner or member, which transaction involves
55 the withdrawal of the transferor from the partnership or limited liabil-
56 ity company, no prior approval of the public health and health planning
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1 council shall be required. However, no such transaction shall be effec-
2 tive unless at least ninety days prior to the intended effective date
3 thereof, the partnership or limited liability company fully completes
4 and files with the public health and health planning council notice on a
5 form, to be developed by the public health and health planning council,
6 which shall disclose such information as may reasonably be necessary for
7 the public health and health planning council to determine whether it
8 should bar the transaction for the reason set forth below. Within ninety
9 days from the date of receipt of such notice, the public health and
10 health planning council may bar any transaction under this subparagraph
11 if the equity position of the partnership or limited liability company,
12 determined in accordance with generally accepted accounting principles,
13 would be reduced as a result of the transfer, assignment or disposition.
14 The public health and health planning council shall state specific
15 reasons for barring any transaction under this subparagraph and shall so
16 notify each party to the proposed transaction.
17 (c) Any transfer, assignment or other disposition of ten percent or
18 more of the stock or voting rights thereunder of a corporation which is
19 the operator of a hospital or which is a member of a limited liability
20 company which is the operator of a hospital to a new stockholder, or any
21 transfer, assignment or other disposition of the stock or voting rights
22 thereunder of such a corporation which results in the ownership or
23 control of more than ten percent of the stock or voting rights there-
24 under of such corporation by any person not previously approved by the
25 public health and health planning council, or its predecessor, for that
26 corporation shall be subject to approval by the public health and health
27 planning council, in accordance with the provisions of subdivisions two
28 and three of this section and rules and regulations pursuant thereto;
29 except that: any such transaction shall be subject to the approval by
30 the public health and health planning council in accordance with para-
31 graph (b) of subdivision three of this section only with respect to a
32 new stockholder or a new principal stockholder; and shall not be subject
33 to paragraph (a) of subdivision three of this section. In the absence of
34 such approval, the operating certificate of such hospital shall be
35 subject to revocation or suspension.]
36 (ii) No prior approval of the public health and health planning coun-
37 cil shall be required with respect to a transfer, assignment or disposi-
38 tion of ten percent or more of [the stock] a direct or indirect interest
39 or voting rights [thereunder of a corporation which is the] in an opera-
40 tor of a hospital [or which is a member of a limited liability company
41 which is the owner of a hospital] to any person previously approved by
42 the public health and health planning council, or its predecessor, for
43 that [corporation] operator. However, no such transaction shall be
44 effective unless at least ninety days prior to the intended effective
45 date thereof, the [stockholder] operator fully completes and files with
46 the public health and health planning council notice on forms to be
47 developed by the public health and health planning council, which shall
48 disclose such information as may reasonably be necessary for the public
49 health and health planning council to determine whether it should bar
50 the transaction. Such transaction will be final as of the intended
51 effective date unless, prior thereto, the public health and health plan-
52 ning council shall state specific reasons for barring such transactions
53 under this paragraph and shall notify each party to the proposed trans-
54 action. Nothing in this paragraph shall be construed as permitting a
55 person not previously approved by the public health and health planning
56 council for that [corporation] operator to become the owner of ten
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1 percent or more of the [stock of a corporation which is] interest or
2 voting rights, directly or indirectly, in the operator of a hospital [or
3 which is a member of a limited liability company which is the owner of a
4 hospital] without first obtaining the approval of the public health and
5 health planning council.
6 (iii) In the absence of approval by the public health or planning
7 council or the provision of notice to such council as required under
8 this paragraph, the operating certificate of such hospital shall be
9 subject to revocation or suspension.
10 § 5. Subdivisions 2 and 3 of section 2802 of the public health law,
11 subdivision 2 as amended by section 6 of part R of chapter 59 of the
12 laws of 2016, subdivision 3 as amended by chapter 609 of the laws of
13 1982 and paragraph (e) of subdivision 3 as amended by chapter 731 of the
14 laws of 1993, are amended to read as follows:
15 2. The commissioner shall not act upon an application for construction
16 of a hospital until the public health and health planning council and
17 the health systems agency have had a reasonable time to submit their
18 recommendations, and unless (a) the applicant has obtained all approvals
19 and consents required by law for its incorporation or establishment
20 (including the approval of the public health and health planning council
21 pursuant to the provisions of this article) provided, however, that the
22 commissioner may act upon an application for construction by an appli-
23 cant possessing a valid operating certificate when the application qual-
24 ifies for review without the recommendation of the council pursuant to
25 regulations adopted by the council and approved by the commissioner, or
26 as otherwise authorized by this section; and (b) the commissioner is
27 satisfied as to the public need for the construction, at the time and
28 place and under the circumstances proposed, provided however that, in
29 the case of an application by a hospital established or operated by an
30 organization defined in subdivision one of section four hundred eighty-
31 two-b of the social services law, the needs of the members of the reli-
32 gious denomination concerned, for care or treatment in accordance with
33 their religious or ethical convictions, shall be deemed to be public
34 need; and further provided that: (i) an application by a general hospi-
35 tal or diagnostic and treatment center, established under this article,
36 to construct a facility to provide primary care services, as defined in
37 regulation, may be approved without regard for public need; or (ii) an
38 application by a general hospital or a diagnostic and treatment center,
39 established under this article, to undertake construction that does not
40 involve a change in capacity, the types of services provided, major
41 medical equipment, facility replacement, or the geographic location of
42 services, may be approved without regard for public need.
43 3. Subject to the provisions of paragraph (b) of subdivision two of
44 this section, the commissioner in approving the construction of a hospi-
45 tal shall take into consideration and be empowered to request informa-
46 tion and advice as to (a) the availability of facilities or services
47 such as preadmission, ambulatory or home care services which may serve
48 as alternatives or substitutes for the whole or any part of the proposed
49 hospital construction;
50 (b) the need for special equipment in view of existing utilization of
51 comparable equipment at the time and place and under the circumstances
52 proposed;
53 (c) the possible economies and improvements in service to be antic-
54 ipated from the operation of joint central services including, but not
55 limited to laboratory, research, radiology, pharmacy, laundry and
56 purchasing;
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1 (d) the adequacy of financial resources and sources of future revenue,
2 provided that the commissioner may, but is not required to, consider the
3 adequacy of financial resources and sources of future revenue in
4 relation to completed applications under subparagraphs (i) and (ii) of
5 paragraph (b) of subdivision two of this section; and
6 (e) whether the facility is currently in substantial compliance with
7 all applicable codes, rules and regulations, provided, however, that the
8 commissioner shall not disapprove an application solely on the basis
9 that the facility is not currently in substantial compliance, if the
10 application is specifically:
11 (i) to correct life safety code or patient care deficiencies;
12 (ii) to correct deficiencies which are necessary to protect the life,
13 health, safety and welfare of facility patients, residents or staff;
14 (iii) for replacement of equipment that no longer meets the generally
15 accepted operational standards existing for such equipment at the time
16 it was acquired; and
17 (iv) for decertification of beds and services.
18 § 6. Subdivision 4 of section 3605 of the public health law, as
19 amended by section 62 of part A of chapter 58 of the laws of 2010, is
20 amended to read as follows:
21 4. The public health and health planning council shall not approve an
22 application for licensure unless it is satisfied as to the character,
23 competence and standing in the community of the applicant's incorpora-
24 tors, directors, sponsors, stockholders or operators. The commissioner
25 is authorized to establish in regulation minimum thresholds for the
26 level of experience that must be met as part of the public health and
27 health planning council's consideration of character, competence and
28 standing for purposes of this subdivision, and subdivision two of
29 section thirty-six hundred six, and subdivision two of section thirty-
30 six hundred eleven of this article. Such thresholds may include but are
31 not limited to: (a) defining the type of prior experience required; (b)
32 establishing a minimum period of time during which such prior experience
33 was obtained; and (c) establishing a minimum percentage of the ownership
34 interest and/or voting rights of the applicant that must be held by an
35 individual who meets such minimum experience requirements.
36 § 7. Subdivisions 1 and 2 of section 3611-a of the public health law,
37 as amended by section 67 of part A of chapter 58 of the laws of 2010,
38 are amended to read as follows:
39 1. Any change in the person who, or any transfer, assignment, or other
40 disposition of an interest or voting rights of ten percent or more, or
41 any transfer, assignment or other disposition which results in the
42 ownership or control of an interest or voting rights of ten percent or
43 more, in a limited liability company [or], a partnership, or a corpo-
44 ration which is the operator of a licensed home care services agency or
45 a certified home health agency, or any transfer, assignment or other
46 disposition of a direct or indirect interest or voting rights of such an
47 operator which results in the ownership or control of more than ten
48 percent of the interest or voting rights of such operator by any part-
49 ner, member, or stockholder shall be approved by the public health and
50 health planning council, in accordance with the provisions of subdivi-
51 sion four of section thirty-six hundred five of this article relative to
52 licensure or subdivision two of section thirty-six hundred six of this
53 article relative to certificate of approval, except that:
54 (a) Public health and health planning council approval shall be
55 required only with respect to the person, or the member or partner that
56 is acquiring the interest or voting rights; and
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1 (b) With respect to certified home health agencies, such change shall
2 not be subject to the public need assessment described in paragraph (a)
3 of subdivision two of section thirty-six hundred six of this article.
4 (c) (i) No prior approval of the public health and health planning
5 council shall be required with respect to a transfer, assignment or
6 disposition of:
7 [(i)] (A) an interest or voting rights to any person previously
8 approved by the public health and health planning council, or its prede-
9 cessor, for that operator; or
10 [(ii)] (B) an interest or voting rights of less than ten percent in
11 the operator. [However, no]
12 (ii) No such transaction under subparagraph (i) of this paragraph
13 shall be effective unless at least ninety days prior to the intended
14 effective date thereof, the [partner or member] operator completes and
15 files with the public health and health planning council notice on forms
16 to be developed by the public health council, which shall disclose such
17 information as may reasonably be necessary for the public health and
18 health planning council to determine whether it should bar the trans-
19 action. Such transaction will be final as of the intended effective date
20 unless, prior thereto, the public health and health planning council
21 shall state specific reasons for barring such transactions under this
22 paragraph and shall notify each party to the proposed transaction.
23 2. [Any transfer, assignment or other disposition of ten percent or
24 more of the stock or voting rights thereunder of a corporation which is
25 the operator of a licensed home care services agency or a certified home
26 health agency, or any transfer, assignment or other disposition of the
27 stock or voting rights thereunder of such a corporation which results in
28 the ownership or control of more than ten percent of the stock or voting
29 rights thereunder of such corporation by any person shall be subject to
30 approval by the public health and health planning council in accordance
31 with the provisions of subdivision four of section thirty-six hundred
32 five of this article relative to licensure or subdivision two of section
33 thirty-six hundred six of this article relative to certificate of
34 approval, except that:
35 (a) Public health and health planning council approval shall be
36 required only with respect to the person or entity acquiring such stock
37 or voting rights; and
38 (b) With respect to certified home health agencies, such change shall
39 not be subject to the public need assessment described in paragraph (a)
40 of subdivision two of section thirty-six hundred six of this article. In
41 the absence of such approval, the license or certificate of approval
42 shall be subject to revocation or suspension.
43 (c) No prior approval of the public health and health planning council
44 shall be required with respect to a transfer, assignment or disposition
45 of an interest or voting rights to any person previously approved by the
46 public health and health planning council, or its predecessor, for that
47 operator. However, no such transaction shall be effective unless at
48 least one hundred twenty days prior to the intended effective date ther-
49 eof, the partner or member completes and files with the public health
50 and health planning council notice on forms to be developed by the
51 public health and health planning council, which shall disclose such
52 information as may reasonably be necessary for the public health and
53 health planning council to determine whether it should bar the trans-
54 action. Such transaction will be final as of the intended effective date
55 unless, prior thereto, the public health and health planning council
56 shall state specific reasons for barring such transactions under this
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1 paragraph and shall notify each party to the proposed transaction.] In
2 the absence of approval by the public health or planning council or the
3 provision of notice to such council as required under this section, the
4 license or certificate of approval shall be subject to revocation or
5 suspension.
6 § 8. This act shall take effect immediately.
