S T A T E   O F   N E W   Y O R K
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                                  7897

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                             April 28, 2009
                               ___________

Introduced  by  M.  of  A.  WEISENBERG  -- read once and referred to the
  Committee on Health

AN ACT to amend the public health law, in relation to the  ownership  by
  business  corporations  of  residential  health care facilities and to
  repeal subdivision 9 of section 2801-a of such law relating thereto

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Subparagraph  (i)  of  paragraph  (b) of subdivision 4 of
section 2801-a of the public health law, as amended by  chapter  667  of
the laws of 1997, is amended to read as follows:
  (i)  Any  transfer,  assignment or other disposition of ten percent or
more of an interest or voting rights in a partnership or limited liabil-
ity company, which is the operator of a hospital to  a  new  partner  or
member,  shall  be  approved  by the public health council in accordance
with the provisions of subdivisions two and three of  this  section,  OR
PARAGRAPH (I) OF THIS SUBDIVISION IN THE CASE WHERE THE NEW PARTNER IS A
CORPORATION  THE  STOCK  OF WHICH IS OWNED BY ANOTHER CORPORATION except
that: (A) any such change shall be subject to the approval by the public
health council in accordance with paragraph (b) of subdivision three  of
this  section  only  with  respect to the new partner or member, and any
remaining partners or members who have not been previously approved  for
that  facility  in  accordance  with such paragraph, and (B) such change
shall not be subject to paragraph  (a)  of  subdivision  three  of  this
section.
  S  2.  Paragraph  (c) of subdivision 4 of section 2801-a of the public
health law, as amended by chapter 538 of the laws of 1998, is amended to
read as follows:
  (c) Any transfer, assignment or other disposition of  ten  percent  or
more  of the stock or voting rights thereunder of a corporation which is
the operator of a hospital or which is a member of a  limited  liability
company which is the operator of a hospital to a new stockholder, or any

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11143-01-9
              

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transfer,  assignment or other disposition of the stock or voting rights
thereunder of such a corporation  which  results  in  the  ownership  or
control  of  more  than ten percent of the stock or voting rights there-
under  of  such corporation by any person not previously approved by the
public health council for that corporation shall be subject to  approval
by the public health council in accordance with the provisions of subdi-
visions two and three of this section and rules and regulations pursuant
thereto;  except  that:  any  such  transaction  shall be subject to the
approval by the public health council in accordance with  paragraph  (b)
of  subdivision three of this section, OR PARAGRAPH (I) OF THIS SUBDIVI-
SION IN THE CASE WHERE THE NEW STOCKHOLDER OR PRINCIPAL STOCKHOLDER IS A
CORPORATION WHICH IS OWNED BY ANOTHER CORPORATION, only with respect  to
a  new  stockholder  or  a  new  principal stockholder; and shall not be
subject to paragraph (a) of subdivision three of this  section.  In  the
absence  of  such  approval,  the operating certificate of such hospital
shall be subject to revocation or suspension. No prior approval  of  the
public  health  council  shall  be  required with respect to a transfer,
assignment or disposition of ten percent or more of the stock or  voting
rights  thereunder  of a corporation which is the operator of a hospital
or which is a member of a limited liability company which is  the  owner
of  a  hospital  to  any person previously approved by the public health
council for that corporation. However,  no  such  transaction  shall  be
effective  unless  at  least ninety days prior to the intended effective
date thereof, the stockholder completes and files with the public health
council notice on forms to be developed by the  public  health  council,
which shall disclose such information as may reasonably be necessary for
the  public health council to determine whether it should bar the trans-
action. Such transaction will be final as of the intended effective date
unless, prior thereto, the public health council  shall  state  specific
reasons  for  barring  such  transactions under this paragraph and shall
notify each party to the proposed transaction. Nothing in this paragraph
shall be construed as permitting a person not previously approved by the
public health council for that corporation to become the  owner  of  ten
percent or more of the stock of a corporation which is the operator of a
hospital  or  which  is a member of a limited liability company which is
the owner of a hospital without first  obtaining  the  approval  of  the
public health council.
  S  3. Paragraphs (d) and (e) of subdivision 4 of section 2801-a of the
public health law, as amended by chapter 667 of the laws  of  1997,  are
amended to read as follows:
  (d)    No  hospital shall be approved for establishment which would be
operated by a limited partnership[, or].  NO HOSPITAL, EXCEPT A RESIDEN-
TIAL HEALTH CARE FACILITY, SHALL BE  APPROVED  FOR  ESTABLISHMENT  WHICH
WOULD  BE  OPERATED by a partnership any of the members of which are not
natural persons.   A RESIDENTIAL HEALTH CARE  FACILITY  WHICH  WOULD  BE
OPERATED  BY A PARTNERSHIP ANY OF THE MEMBERS OF WHICH ARE CORPORATIONS,
THE STOCK OF WHICH IS OWNED BY ANOTHER CORPORATION, MAY BE APPROVED  FOR
ESTABLISHMENT IF THE CORPORATION MEETS THE REQUIREMENTS OF PARAGRAPH (I)
OF THIS SUBDIVISION.
  (e)  No  hospital, EXCEPT A RESIDENTIAL HEALTH CARE FACILITY, shall be
approved for establishment which would be operated by a corporation  any
of  the  stock  of  which  is  owned by another corporation or a limited
liability company if any of its corporate members'  stock  is  owned  by
another corporation.
  S  4.  Subdivision  4  of  section  2801-a of the public health law is
amended by adding a new paragraph (i) to read as follows:

A. 7897                             3

  (I) NO RESIDENTIAL HEALTH CARE FACILITY SHALL BE APPROVED  FOR  ESTAB-
LISHMENT  WHICH  WOULD  BE OPERATED BY A CORPORATION ANY OF THE STOCK OF
WHICH IS OWNED BY ANOTHER CORPORATION UNLESS THE APPLICANT IS  A  CORPO-
RATION  ORGANIZED  UNDER  THE  BUSINESS  CORPORATION LAW, HAS FULL LEGAL
AUTHORITY  OVER  THE  OPERATION OF THE FACILITY, AND DESIGNATES AN AGENT
FOR SERVICE OF PROCESS PURSUANT TO SECTION THREE  HUNDRED  FIVE  OF  THE
BUSINESS CORPORATION LAW.
  REVIEW  OF  THE  CHARACTER,  COMPETENCE, AND STANDING IN THE COMMUNITY
OTHERWISE REQUIRED PURSUANT TO PARAGRAPH (B)  OF  SUBDIVISION  THREE  OF
THIS  SECTION SHALL BE GOVERNED BY THE PROVISIONS OF THIS PARAGRAPH. THE
APPLICANT SHALL:
  (I) SUBMIT THE NAME, RESIDENTIAL ADDRESS, BUSINESS TITLE AND  BUSINESS
ADDRESS  OF  EACH  OFFICER  OR  MEMBER  OF THE BOARD OF DIRECTORS OF THE
APPLICANT AND EACH NATURAL PERSON WHO IS A PRINCIPAL STOCKHOLDER OF  THE
APPLICANT.  THE  CORPORATION  SHALL  ALSO SUBMIT THE NAME AND ADDRESS OF
EACH HEALTH CARE INSTITUTION WHERE ANY SUCH PERSON SERVES AS AN  OFFICER
OR  MEMBER OF THE BOARD OF DIRECTORS, OR IS A PRINCIPAL STOCKHOLDER OF A
HEALTH CARE INSTITUTION. IN THE  EVENT  ANOTHER  CORPORATION  (A  PARENT
CORPORATION)  OWNS  TEN  PERCENT  OR  MORE  OF THE APPLICANT'S STOCK THE
INFORMATION REQUIRED BY THIS SUBPARAGRAPH SHALL ALSO BE PROVIDED FOR THE
OFFICERS AND MEMBERS OF THE BOARD OF DIRECTORS OF THE PARENT CORPORATION
AND PRINCIPAL STOCKHOLDERS OF THE PARENT CORPORATION. FOR  THE  PURPOSES
OF  THIS  SECTION,  THE  PUBLIC HEALTH COUNCIL MAY ADOPT RULES AND REGU-
LATIONS RELATIVE TO WHAT CONSTITUTES PARENT CORPORATIONS AND  SUBSIDIARY
CORPORATIONS.  ALL  PARENT  CORPORATIONS  SHALL  DESIGNATE  AN AGENT FOR
SERVICE OF PROCESS PURSUANT TO SECTION THREE HUNDRED FIVE OF  THE  BUSI-
NESS CORPORATION LAW.
  (II)  SUBMIT AN AFFIDAVIT FROM AN OFFICER OF THE APPLICANT CERTIFYING,
TO THE BEST OF HIS OR HER KNOWLEDGE PURSUANT TO DILIGENT  INQUIRY,  THAT
NO OFFICER OR DIRECTOR OF THE APPLICANT, NOR ANY NATURAL PERSON WHO IS A
PRINCIPAL STOCKHOLDER OF THE APPLICANT, HAS BEEN:
  (1) ADJUDICATED BANKRUPT OR INSOLVENT,
  (2)  CONVICTED  OF A CRIMINAL OFFENSE OTHER THAN TRAFFIC VIOLATIONS OR
OTHER MINOR OFFENSES NOT INVOLVING MORAL TURPITUDE, OR
  (3) THE SUBJECT OF AN ORDER,  JUDGMENT  OR  DECREE,  NOT  SUBSEQUENTLY
REVERSED,  SUSPENDED  OR VACATED, OF ANY COURT OF COMPETENT JURISDICTION
OF ANY STATE OR FEDERAL AUTHORITY, CONCERNING A VIOLATION OF ANY LAW  OR
REGULATION  RELATING  TO  HEALTH OR OTHER HEALTH CARE FACILITY LICENSING
PROVISIONS, QUALITY OF CARE PROVISIONS, OR RELATING TO ANY REIMBURSEMENT
PROGRAM FOR HEALTH CARE COSTS OR CHARGES, AND NO SUCH ACTION IS CURRENT-
LY PENDING.
  IN THE EVENT ANOTHER  CORPORATION  (A  PARENT  CORPORATION)  OWNS  TEN
PERCENT  OR  MORE  OF  THE  APPLICANT'S  STOCK, AN OFFICER OF THE PARENT
CORPORATION  SHALL  SUBMIT  AN  AFFIDAVIT  CONTAINING  SUCH  INFORMATION
CONCERNING  OFFICERS,  DIRECTORS  AND  NATURAL PERSONS WHO ARE PRINCIPAL
STOCKHOLDERS OF THE PARENT CORPORATION. IN THE EVENT THAT THE OFFICER IS
UNABLE TO CERTIFY THESE FACTS, THEN THE AFFIDAVIT SHALL  SET  FORTH  THE
CIRCUMSTANCES  OF  ANY  EXCEPTION  TO THIS CERTIFICATION, AND THE CORPO-
RATION SHALL DEMONSTRATE TO THE SATISFACTION OF THE PUBLIC HEALTH  COUN-
CIL  THE GOOD CHARACTER, COMPETENCE AND STANDING IN THE COMMUNITY OF ALL
SUCH PERSONS TO WHOM SUCH EXCEPTIONS PERTAIN.
  (III) SUBMIT AN AFFIDAVIT FROM AN OFFICER OF THE APPLICANT LISTING, TO
THE BEST OF HIS OR HER  KNOWLEDGE  PURSUANT  TO  DILIGENT  INQUIRY,  THE
HEALTH  CARE  FACILITIES  OWNED AND OPERATED IN THE UNITED STATES BY THE
APPLICANT, AND AN AFFIDAVIT FROM AN OFFICER OF THE  PARENT  CORPORATION,
IF  ANY,  LISTING  FACILITIES OWNED AND OPERATED IN THE UNITED STATES BY

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THE PARENT CORPORATION OR OTHER SUBSIDIARIES OF THE PARENT  CORPORATION;
THE ADDRESS OF EACH SUCH FACILITY; AND THE DATES OF OWNERSHIP AND OPERA-
TION OF EACH SUCH FACILITY. IN THE EVENT THAT ANY SUCH FACILITY HAS BEEN
SUBJECTED,  WHILE OWNED AND OPERATED BY THE APPLICANT, ITS PARENT CORPO-
RATION, OR OTHER SUBSIDIARIES OF ITS PARENT  CORPORATION,  TO  FINANCIAL
PENALTIES  OR  SUSPENSION  OR REVOCATION OF ITS OPERATING CERTIFICATE OR
LICENSE, OR HAS HAD ITS ACCREDITATION BY THE JOINT COMMISSION ON ACCRED-
ITATION OF HOSPITALS REVOKED OR SUSPENDED, BECAUSE OF FAILURE TO  COMPLY
WITH PROVISIONS GOVERNING THE CONDUCT AND OPERATION OF THE FACILITY, THE
AFFIDAVIT  MUST DESCRIBE THE NATURE OF THE VIOLATION, THE AGENCY OR BODY
ENFORCING THE VIOLATION (INCLUDING ITS  NAME  AND  ADDRESS),  THE  STEPS
TAKEN  BY  THE  FACILITY  TO  REMEDY THE VIOLATION, AND AN INDICATION OF
WHETHER THE SUSPENSION OR REVOCATION HAS BEEN  TERMINATED,  OR  ACCREDI-
TATION  HAS  SINCE  BEEN RESTORED. THE CORPORATION AND ANY PARENT CORPO-
RATIONS SHALL DEMONSTRATE TO THE SATISFACTION OF THE PUBLIC HEALTH COUN-
CIL  THAT  DESPITE  ANY  SUCH   FINANCIAL   PENALTIES,   SUSPENSION   OR
REVOCATIONS, THAT A SUBSTANTIALLY CONSISTENT HIGH LEVEL OF CARE IS BEING
OR WAS BEING RENDERED AT EACH HOSPITAL OR HEALTH CARE FACILITY.
  THE  AFFIDAVIT  MUST  DEMONSTRATE  TO  THE  SATISFACTION OF THE PUBLIC
HEALTH  COUNCIL,  AFTER  MEMBERS  OF  HEALTH  SYSTEMS  AGENCIES   HAVING
GEOGRAPHICAL  JURISDICTION  OF  THE  AREA WHERE THE INSTITUTION IS TO BE
LOCATED HAVE BEEN AFFORDED AN ADEQUATE OPPORTUNITY TO BE HEARD, THAT THE
APPLICANT, ITS PARENT CORPORATION, AND OTHER SUBSIDIARIES OF ITS  PARENT
CORPORATION,  ARE  NOT ENGAGED IN OPERATING HEALTH CARE FACILITIES WHERE
THE CARE RENDERED IS LESS THAN A SUBSTANTIALLY HIGH LEVEL OF CARE.
  ANY TRANSFER, ASSIGNMENT OR OTHER DISPOSITION OF TEN PERCENT  OR  MORE
OF  THE  STOCK OR VOTING RIGHTS THEREUNDER OF A CORPORATION WHICH IS THE
OPERATOR OF A RESIDENTIAL HEALTH CARE FACILITY OR OF ITS  PARENT  CORPO-
RATION, OR ANY TRANSFER, ASSIGNMENT OR OTHER DISPOSITION OF THE STOCK OR
VOTING  RIGHTS  THEREUNDER OF SUCH A CORPORATION OR OF ITS PARENT CORPO-
RATION WHICH RESULTS IN THE  OWNERSHIP  OR  CONTROL  OF  MORE  THAN  TEN
PERCENT  OF THE STOCK OR VOTING RIGHTS THEREUNDER OF SUCH CORPORATION OR
ITS PARENT CORPORATION BY ANY PERSON OR CORPORATION SHALL BE SUBJECT  TO
APPROVAL  BY THE PUBLIC HEALTH COUNCIL IN ACCORDANCE WITH THE PROVISIONS
OF THIS SECTION. IN THE ABSENCE OF SUCH APPROVAL, THE APPLICATION  SHALL
BE SUBJECT TO REVOCATION OR SUSPENSION.
  S  5.  Subdivision  9  of  section  2801-a of the public health law is
REPEALED and a new subdivision 9 is added to read as follows:
  9. (A) ONLY A NATURAL PERSON, PARTNERSHIP OR LIMITED LIABILITY COMPANY
MAY HEREAFTER UNDERTAKE TO  ENGAGE  IN  THE  BUSINESS  OF  OPERATING  OR
CONDUCTING  A HOSPITAL, AS DEFINED IN THIS ARTICLE, EXCEPT A RESIDENTIAL
HEALTH CARE FACILITY, FOR PROFIT, EXCEPT THAT: (I) A PERSON, PARTNERSHIP
OR CORPORATION WHICH OWNED AND WAS OPERATING A HOSPITAL ON APRIL FOURTH,
NINETEEN HUNDRED FIFTY-SIX, MAY CONTINUE TO OWN AND OPERATE SUCH  HOSPI-
TAL;  (II)  A  BUSINESS CORPORATION MAY, WITH THE APPROVAL OF THE PUBLIC
HEALTH COUNCIL, AND IN ACCORDANCE WITH THE  PROVISIONS  OF  SUBDIVISIONS
TWO  AND  THREE  OF THIS SECTION, UNDERTAKE TO ENGAGE IN THE BUSINESS OF
OPERATING OR CONDUCTING A HOSPITAL,  AS  DEFINED  IN  THIS  ARTICLE  FOR
PROFIT, PROVIDED THAT SUCH CORPORATION SHALL NOT DISCRIMINATE BECAUSE OF
RACE, COLOR, CREED, NATIONAL ORIGIN OR SPONSOR IN ADMISSION OR RETENTION
OF PATIENTS.
  (B)  A NATURAL PERSON, BUSINESS CORPORATION OR A PARTNERSHIP MAY HERE-
AFTER UNDERTAKE TO ENGAGE IN THE BUSINESS OF OPERATING OR  CONDUCTING  A
RESIDENTIAL  HEALTH  CARE  FACILITY,  AS  DEFINED  IN  THIS ARTICLE, FOR
PROFIT, EXCEPT THAT: (I) A  PERSON,  PARTNERSHIP  OR  CORPORATION  WHICH
OWNED  AND  WAS  OPERATING  A  RESIDENTIAL HEALTH CARE FACILITY ON APRIL

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FOURTH, NINETEEN HUNDRED FIFTY-SIX, MAY CONTINUE TO OWN AND OPERATE SUCH
RESIDENTIAL HEALTH CARE FACILITY; (II) A BUSINESS CORPORATION MAY,  WITH
THE  APPROVAL  OF  THE PUBLIC HEALTH COUNCIL, AND IN ACCORDANCE WITH THE
PROVISIONS  OF  SUBDIVISIONS TWO AND THREE OF THIS SECTION, UNDERTAKE TO
ENGAGE IN THE BUSINESS OF OPERATING OR CONDUCTING A  RESIDENTIAL  HEALTH
CARE FACILITY, AS DEFINED IN THIS ARTICLE FOR PROFIT, PROVIDED THAT SUCH
CORPORATION  SHALL  NOT  DISCRIMINATE  BECAUSE  OF  RACE,  COLOR, CREED,
NATIONAL ORIGIN OR SPONSOR IN ADMISSION OR RETENTION OF PATIENTS;  (III)
A  BUSINESS CORPORATION OWNING AND OPERATING A NURSING HOME ON MAY TWEN-
TY-SECOND, NINETEEN HUNDRED NINETY-NINE, IN ACCORDANCE  WITH  APPLICABLE
PROVISIONS  OF  LAW,  MAY CONTINUE TO OWN AND OPERATE SUCH NURSING HOME;
(IV) A PERSON WHO, OR  A  PARTNERSHIP  WHICH,  IS  OPERATING  A  PRIVATE
PROPRIETARY NURSING HOME IN ACCORDANCE WITH APPLICABLE PROVISIONS OF LAW
MAY,  WITH  THE APPROVAL OF THE PUBLIC HEALTH COUNCIL, AND IN ACCORDANCE
WITH THE PROVISIONS OF SUBDIVISION THREE OF THIS SECTION AND  ANY  RULES
AND  REGULATIONS THEREUNDER FORM A BUSINESS CORPORATION TO ENGAGE IN THE
BUSINESS OF OPERATING OR CONDUCTING SUCH NURSING HOME, PROVIDED,  HOWEV-
ER, THAT SUCH CORPORATION SHALL NOT DISCRIMINATE BECAUSE OF RACE, COLOR,
CREED, NATIONAL ORIGIN OR SPONSOR IN ADMISSION OR RETENTION OF PATIENTS;
(V)  A  BUSINESS CORPORATION OPERATING A NURSING HOME, WHICH CORPORATION
WAS FORMED WITH THE APPROVAL OF THE STATE BOARD OF SOCIAL  WELFARE,  MAY
CONTINUE TO OWN AND OPERATE SUCH NURSING HOME.
  S  6. This act shall take effect on the first of January next succeed-
ing the date on which it shall have become a law.