S T A T E O F N E W Y O R K
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11170
I N A S S E M B L Y
June 12, 2018
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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:
Section 1. Subdivision 3 of section 2801-a of the public health law,
as amended by section 57 of part A of chapter 58 of the laws of 2010, is
amended to read as follows:
3. The public health and health planning council shall not approve a
certificate of incorporation, articles of organization or application
for establishment unless it is satisfied, insofar as applicable, as to
(a) the public need for the existence of the institution at the time and
place and under the circumstances proposed, provided, however, that in
the case of an institution proposed to be established or operated by an
organization defined in subdivision one of section one hundred seventy-
two-a of the executive law, the needs of the members of the religious
denomination concerned, for care or treatment in accordance with their
religious or ethical convictions, shall be deemed to be public need; (b)
the character, competence, and standing in the community[,] of the
proposed incorporators, directors, sponsors, MEMBERS, PRINCIPAL MEMBERS,
stockholders, [members] PRINCIPAL STOCKHOLDERS, or operators; with
respect to any proposed incorporator, director, sponsor, MEMBER, PRINCI-
PAL MEMBER, stockholder, [member] PRINCIPAL STOCKHOLDER, or operator who
is already or within the past [ten] SEVEN years has been an incorpora-
tor, director, sponsor, member, PRINCIPAL MEMBER, principal stockholder,
[principal member,] or operator of any hospital, private proprietary
home for adults, residence for adults, or non-profit home for the aged
or blind which has been issued an operating certificate by the state
department of social services, or a halfway house, hostel or other resi-
dential facility or institution for the care, custody or treatment of
the mentally disabled which is subject to approval by the department of
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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and health planning council, having afforded an adequate opportunity to
members of health systems agencies, if any, having geographical juris-
diction of the area where the institution is to be located to be heard,
shall affirmatively find by substantial evidence as to each such incor-
porator, director, sponsor, MEMBER, PRINCIPAL MEMBER, principal stock-
holder, or operator that a substantially consistent high level of care
is being or was being rendered in each such hospital, home, residence,
halfway house, hostel, or other residential facility or institution with
which such person is or was affiliated; for the purposes of this para-
graph, the public health and health planning council shall adopt rules
and regulations, subject to the approval of the commissioner, to estab-
lish the criteria to be used to determine whether a substantially
consistent high level of care has been rendered, provided, however, that
there shall not be a finding that a substantially consistent high level
of care has been rendered where there have been violations of the state
hospital code, or other applicable rules and regulations, that (i)
threatened to directly affect the health, safety or welfare of any
patient or resident, and (ii) were recurrent or were not promptly
corrected, UNLESS THE PROPOSED INCORPORATOR, DIRECTOR, SPONSOR, MEMBER,
PRINCIPAL MEMBER, STOCKHOLDER, PRINCIPAL STOCKHOLDER, OR OPERATOR DEMON-
STRATES, AND THE PUBLIC HEALTH AND HEALTH PLANNING COUNCIL FINDS, THAT
THE VIOLATIONS CANNOT BE ATTRIBUTED TO THE ACTION OR INACTION OF SUCH
PROPOSED INCORPORATOR, DIRECTOR, SPONSOR, MEMBER, PRINCIPAL MEMBER,
STOCKHOLDER, PRINCIPAL STOCKHOLDER, OR OPERATOR DUE TO THE TIMING,
EXTENT OR MANNER OF SUCH AFFILIATION; (c) the financial resources of the
proposed institution and its sources of future revenues; and (d) such
other matters as it shall deem pertinent.
§ 2. Section 2801-a of the public health law is amended by adding a
new subdivision 3-b to read as follows:
3-B. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS CHAPTER TO THE
CONTRARY, THE PUBLIC HEALTH AND HEALTH PLANNING COUNCIL MAY APPROVE THE
ESTABLISHMENT OF DIAGNOSTIC OR TREATMENT CENTERS TO BE ISSUED OPERATING
CERTIFICATES FOR THE PURPOSE OF PROVIDING PRIMARY CARE, AS DEFINED BY
THE COMMISSIONER IN REGULATIONS, WITHOUT REGARD TO THE REQUIREMENTS OF
PUBLIC NEED AND FINANCIAL RESOURCES AS SET FORTH IN SUBDIVISION THREE OF
THIS SECTION.
§ 3. Section 2801-a of the public health law is amended by adding a
new subdivision 3-c to read as follows:
3-C. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS CHAPTER TO THE
CONTRARY, THE COMMISSIONER IS AUTHORIZED TO ESTABLISH IN REGULATION
MINIMUM THRESHOLDS FOR THE LEVEL OF EXPERIENCE THAT MUST BE MET AS PART
OF THE PUBLIC HEALTH AND HEALTH PLANNING COUNCIL'S CONSIDERATION OF THE
CHARACTER, COMPETENCE AND STANDING IN THE COMMUNITY OF THE PROPOSED
INCORPORATORS, DIRECTORS, SPONSORS, STOCKHOLDERS, MEMBERS OR OPERATORS
OF A RESIDENTIAL HEALTH CARE FACILITY PURSUANT TO PARAGRAPH (B) OF
SUBDIVISION THREE OF THIS SECTION. SUCH THRESHOLDS MAY INCLUDE BUT ARE
NOT LIMITED TO: (A) DEFINING THE TYPE OF PRIOR EXPERIENCE REQUIRED; (B)
ESTABLISHING A MINIMUM PERIOD OF TIME DURING WHICH SUCH PRIOR EXPERIENCE
WAS OBTAINED; AND (C) ESTABLISHING A MINIMUM PERCENTAGE OF THE OWNERSHIP
INTEREST AND/OR VOTING RIGHTS OF THE APPLICANT THAT MUST BE HELD BY AN
INDIVIDUAL WHO MEETS SUCH MINIMUM EXPERIENCE REQUIREMENTS.
§ 4. Paragraphs (b) and (c) of subdivision 4 of section 2801-a of the
public health law, as amended by section 57 of part A of chapter 58 of
the laws of 2010, are amended to read as follows:
(b) [(i)] Any transfer, assignment or other disposition of ten percent
or more of [an] DIRECT OR INDIRECT interest or voting rights in [a part-
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nership or limited liability company, which is the] AN operator of a
hospital to a new partner [or], member, OR STOCKHOLDER, OR ANY TRANSFER,
ASSIGNMENT OR OTHER DISPOSITION OF A DIRECT OR INDIRECT INTEREST OR
VOTING RIGHTS OF SUCH AN OPERATOR WHICH RESULTS IN THE OWNERSHIP OR
CONTROL OF MORE THAN TEN PERCENT OF THE INTEREST OR VOTING RIGHTS OF
SUCH OPERATOR BY ANY PARTNER, MEMBER, OR STOCKHOLDER NOT PREVIOUSLY
APPROVED BY THE PUBLIC HEALTH AND HEALTH PLANNING COUNCIL FOR THAT OPER-
ATOR shall be approved by the public health and health planning council,
in accordance with the provisions of subdivisions two and three of this
section, except that: (A) any such change shall be subject to the
approval by the public health and health planning council in accordance
with paragraph (b) of subdivision three of this section only with
respect to the new partner [or], member, OR STOCKHOLDER, and any remain-
ing partners [or], members, OR STOCKHOLDERS 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. IN THE ABSENCE OF SUCH APPROVAL, THE OPERATING CERTIF-
ICATE OF SUCH HOSPITAL SHALL BE SUBJECT TO REVOCATION OR SUSPENSION.
[(ii)] (C)(I) With respect to a transfer, assignment or disposition
involving less than ten percent of [an] A DIRECT OR INDIRECT interest or
voting rights in [such partnership or limited liability company] AN
OPERATOR OF A HOSPITAL to a new STOCKHOLDER, partner or member, no prior
approval of the public health and health planning council shall be
required. However, no such transaction shall be effective unless at
least ninety days prior to the intended effective date thereof, the
[partnership or limited liability company] OPERATOR fully completes and
files with the public health and health planning council notice on a
form, to be developed by the public health and health planning council,
which shall disclose such information as may reasonably be necessary for
the public health and health planning council to determine whether it
should bar the transaction for any of the reasons set forth in item (A),
(B), (C) or (D) below. Within ninety days from the date of receipt of
such notice, the public health and health planning council may bar any
transaction under this subparagraph: (A) if the equity position of the
[partnership or limited liability company] OPERATOR, determined in
accordance with generally accepted accounting principles, would be
reduced as a result of the transfer, assignment or disposition; (B) if
the transaction would result in the ownership of a [partnership or
membership] DIRECT OR INDIRECT interest OR VOTING RIGHTS by any persons
who have been convicted of a felony described in subdivision five of
section twenty-eight hundred six of this article; (C) if there are
reasonable grounds to believe that the proposed transaction does not
satisfy the character and competence criteria set forth in subdivision
three of this section; or (D) UPON THE RECOMMENDATION OF THE DEPARTMENT,
if the transaction, together with all transactions under this subpara-
graph for the [partnership] OPERATOR, or successor, during any five year
period would, in the aggregate, involve twenty-five percent or more of
the interest in the [partnership] OPERATOR. The public health and health
planning council shall state specific reasons for barring any trans-
action under this subparagraph and shall so notify each party to the
proposed transaction.
[(iii) With respect to a transfer, assignment or disposition of an
interest or voting rights in such partnership or limited liability
company to any remaining partner or member, which transaction involves
the withdrawal of the transferor from the partnership or limited liabil-
ity company, no prior approval of the public health and health planning
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council shall be required. However, no such transaction shall be effec-
tive unless at least ninety days prior to the intended effective date
thereof, the partnership or limited liability company fully completes
and files with the public health and health planning council notice on a
form, to be developed by the public health and health planning council,
which shall disclose such information as may reasonably be necessary for
the public health and health planning council to determine whether it
should bar the transaction for the reason set forth below. Within ninety
days from the date of receipt of such notice, the public health and
health planning council may bar any transaction under this subparagraph
if the equity position of the partnership or limited liability company,
determined in accordance with generally accepted accounting principles,
would be reduced as a result of the transfer, assignment or disposition.
The public health and health planning council shall state specific
reasons for barring any transaction under this subparagraph and shall so
notify each party to the proposed transaction.
(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
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 and health planning council, or its predecessor, for that
corporation shall be subject to approval by the public health and health
planning council, in accordance with the provisions of subdivisions 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 and health planning council in accordance with para-
graph (b) of subdivision three of this section 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.]
(II) No prior approval of the public health and health planning coun-
cil shall be required with respect to a transfer, assignment or disposi-
tion of ten percent or more of [the stock] A DIRECT OR INDIRECT INTEREST
or voting rights [thereunder of a corporation which is the] IN AN opera-
tor 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 and health planning council, or its predecessor, for
that [corporation] OPERATOR. However, no such transaction shall be
effective unless at least ninety days prior to the intended effective
date thereof, the [stockholder] OPERATOR FULLY completes and files with
the public health and health planning council notice on forms to be
developed by the public health and health planning council, which shall
disclose such information as may reasonably be necessary for the public
health and health planning council to determine whether it should bar
the transaction. Such transaction will be final as of the intended
effective date unless, prior thereto, the public health and health plan-
ning council shall state specific reasons for barring such transactions
under this paragraph and shall notify each party to the proposed trans-
action. Nothing in this paragraph shall be construed as permitting a
person not previously approved by the public health and health planning
council for that [corporation] OPERATOR to become the owner of ten
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percent or more of the [stock of a corporation which is] INTEREST OR
VOTING RIGHTS, DIRECTLY OR INDIRECTLY, IN 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 and
health planning council.
(III) IN THE ABSENCE OF APPROVAL BY THE PUBLIC HEALTH OR PLANNING
COUNCIL OR THE PROVISION OF NOTICE TO SUCH COUNCIL AS REQUIRED UNDER
THIS PARAGRAPH, THE OPERATING CERTIFICATE OF SUCH HOSPITAL SHALL BE
SUBJECT TO REVOCATION OR SUSPENSION.
§ 5. Subdivisions 2 and 3 of section 2802 of the public health law,
subdivision 2 as amended by section 6 of part R of chapter 59 of the
laws of 2016, subdivision 3 as amended by chapter 609 of the laws of
1982 and paragraph (e) of subdivision 3 as amended by chapter 731 of the
laws of 1993, are amended to read as follows:
2. The commissioner shall not act upon an application for construction
of a hospital until the public health and health planning council and
the health systems agency have had a reasonable time to submit their
recommendations, and unless (a) the applicant has obtained all approvals
and consents required by law for its incorporation or establishment
(including the approval of the public health and health planning council
pursuant to the provisions of this article) provided, however, that the
commissioner may act upon an application for construction by an appli-
cant possessing a valid operating certificate when the application qual-
ifies for review without the recommendation of the council pursuant to
regulations adopted by the council and approved by the commissioner, or
as otherwise authorized by this section; and (b) the commissioner is
satisfied as to the public need for the construction, at the time and
place and under the circumstances proposed, provided however that, in
the case of an application by a hospital established or operated by an
organization defined in subdivision one of section four hundred eighty-
two-b of the social services law, the needs of the members of the reli-
gious denomination concerned, for care or treatment in accordance with
their religious or ethical convictions, shall be deemed to be public
need; AND FURTHER PROVIDED THAT: (I) AN APPLICATION BY A GENERAL HOSPI-
TAL OR DIAGNOSTIC AND TREATMENT CENTER, ESTABLISHED UNDER THIS ARTICLE,
TO CONSTRUCT A FACILITY TO PROVIDE PRIMARY CARE SERVICES, AS DEFINED IN
REGULATION, MAY BE APPROVED WITHOUT REGARD FOR PUBLIC NEED; OR (II) AN
APPLICATION BY A GENERAL HOSPITAL OR A DIAGNOSTIC AND TREATMENT CENTER,
ESTABLISHED UNDER THIS ARTICLE, TO UNDERTAKE CONSTRUCTION THAT DOES NOT
INVOLVE A CHANGE IN CAPACITY, THE TYPES OF SERVICES PROVIDED, MAJOR
MEDICAL EQUIPMENT, FACILITY REPLACEMENT, OR THE GEOGRAPHIC LOCATION OF
SERVICES, MAY BE APPROVED WITHOUT REGARD FOR PUBLIC NEED.
3. Subject to the provisions of paragraph (b) of subdivision two OF
THIS SECTION, the commissioner in approving the construction of a hospi-
tal shall take into consideration and be empowered to request informa-
tion and advice as to (a) the availability of facilities or services
such as preadmission, ambulatory or home care services which may serve
as alternatives or substitutes for the whole or any part of the proposed
hospital construction;
(b) the need for special equipment in view of existing utilization of
comparable equipment at the time and place and under the circumstances
proposed;
(c) the possible economies and improvements in service to be antic-
ipated from the operation of joint central services including, but not
limited to laboratory, research, radiology, pharmacy, laundry and
purchasing;
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(d) the adequacy of financial resources and sources of future revenue,
PROVIDED THAT THE COMMISSIONER MAY, BUT IS NOT REQUIRED TO, CONSIDER THE
ADEQUACY OF FINANCIAL RESOURCES AND SOURCES OF FUTURE REVENUE IN
RELATION TO COMPLETED APPLICATIONS UNDER SUBPARAGRAPHS (I) AND (II) OF
PARAGRAPH (B) OF SUBDIVISION TWO OF THIS SECTION; and
(e) whether the facility is currently in substantial compliance with
all applicable codes, rules and regulations, provided, however, that the
commissioner shall not disapprove an application solely on the basis
that the facility is not currently in substantial compliance, if the
application is specifically:
(i) to correct life safety code or patient care deficiencies;
(ii) to correct deficiencies which are necessary to protect the life,
health, safety and welfare of facility patients, residents or staff;
(iii) for replacement of equipment that no longer meets the generally
accepted operational standards existing for such equipment at the time
it was acquired; and
(iv) for decertification of beds and services.
§ 6. Subdivision 4 of section 3605 of the public health law, as
amended by section 62 of part A of chapter 58 of the laws of 2010, is
amended to read as follows:
4. The public health and health planning council shall not approve an
application for licensure unless it is satisfied as to the character,
competence and standing in the community of the applicant's incorpora-
tors, directors, sponsors, stockholders or operators. THE COMMISSIONER
IS AUTHORIZED TO ESTABLISH IN REGULATION MINIMUM THRESHOLDS FOR THE
LEVEL OF EXPERIENCE THAT MUST BE MET AS PART OF THE PUBLIC HEALTH AND
HEALTH PLANNING COUNCIL'S CONSIDERATION OF CHARACTER, COMPETENCE AND
STANDING FOR PURPOSES OF THIS SUBDIVISION, AND SUBDIVISION TWO OF
SECTION THIRTY-SIX HUNDRED SIX, AND SUBDIVISION TWO OF SECTION THIRTY-
SIX HUNDRED ELEVEN OF THIS ARTICLE. SUCH THRESHOLDS MAY INCLUDE BUT ARE
NOT LIMITED TO: (A) DEFINING THE TYPE OF PRIOR EXPERIENCE REQUIRED; (B)
ESTABLISHING A MINIMUM PERIOD OF TIME DURING WHICH SUCH PRIOR EXPERIENCE
WAS OBTAINED; AND (C) ESTABLISHING A MINIMUM PERCENTAGE OF THE OWNERSHIP
INTEREST AND/OR VOTING RIGHTS OF THE APPLICANT THAT MUST BE HELD BY AN
INDIVIDUAL WHO MEETS SUCH MINIMUM EXPERIENCE REQUIREMENTS.
§ 7. Subdivisions 1 and 2 of section 3611-a of the public health law,
as amended by section 67 of part A of chapter 58 of the laws of 2010,
are amended to read as follows:
1. Any change in the person who, or any transfer, assignment, or other
disposition of an interest or voting rights of ten percent or more, or
any transfer, assignment or other disposition which results in the
ownership or control of an interest or voting rights of ten percent or
more, in a limited liability company [or], a partnership, OR A CORPO-
RATION which is the operator of a licensed home care services agency or
a certified home health agency, OR ANY TRANSFER, ASSIGNMENT OR OTHER
DISPOSITION OF A DIRECT OR INDIRECT INTEREST OR VOTING RIGHTS OF SUCH AN
OPERATOR WHICH RESULTS IN THE OWNERSHIP OR CONTROL OF MORE THAN TEN
PERCENT OF THE INTEREST OR VOTING RIGHTS OF SUCH OPERATOR BY ANY PART-
NER, MEMBER, OR STOCKHOLDER shall be approved by the public health and
health planning council, in accordance with the provisions of subdivi-
sion four of section thirty-six hundred five of this article relative to
licensure or subdivision two of section thirty-six hundred six of this
article relative to certificate of approval, except that:
(a) Public health and health planning council approval shall be
required only with respect to the person, or the member or partner that
is acquiring the interest or voting rights; and
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(b) With respect to certified home health agencies, such change shall
not be subject to the public need assessment described in paragraph (a)
of subdivision two of section thirty-six hundred six of this article.
(c) (I) No prior approval of the public health and health planning
council shall be required with respect to a transfer, assignment or
disposition of:
[(i)] (A) an interest or voting rights to any person previously
approved by the public health and health planning council, or its prede-
cessor, for that operator; or
[(ii)] (B) an interest or voting rights of less than ten percent in
the operator. [However, no]
(II) NO such transaction UNDER SUBPARAGRAPH (I) OF THIS PARAGRAPH
shall be effective unless at least ninety days prior to the intended
effective date thereof, the [partner or member] OPERATOR completes and
files with the public health and health planning 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 and
health planning 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 and health planning council
shall state specific reasons for barring such transactions under this
paragraph and shall notify each party to the proposed transaction.
2. [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 licensed home care services agency or a certified home
health agency, or any 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 thereunder of such corporation by any person shall be subject to
approval by the public health and health planning council in accordance
with the provisions of subdivision four of section thirty-six hundred
five of this article relative to licensure or subdivision two of section
thirty-six hundred six of this article relative to certificate of
approval, except that:
(a) Public health and health planning council approval shall be
required only with respect to the person or entity acquiring such stock
or voting rights; and
(b) With respect to certified home health agencies, such change shall
not be subject to the public need assessment described in paragraph (a)
of subdivision two of section thirty-six hundred six of this article. In
the absence of such approval, the license or certificate of approval
shall be subject to revocation or suspension.
(c) No prior approval of the public health and health planning council
shall be required with respect to a transfer, assignment or disposition
of an interest or voting rights to any person previously approved by the
public health and health planning council, or its predecessor, for that
operator. However, no such transaction shall be effective unless at
least one hundred twenty days prior to the intended effective date ther-
eof, the partner or member completes and files with the public health
and health planning council notice on forms to be developed by the
public health and health planning council, which shall disclose such
information as may reasonably be necessary for the public health and
health planning 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 and health planning council
shall state specific reasons for barring such transactions under this
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paragraph and shall notify each party to the proposed transaction.] IN
THE ABSENCE OF APPROVAL BY THE PUBLIC HEALTH OR PLANNING COUNCIL OR THE
PROVISION OF NOTICE TO SUCH COUNCIL AS REQUIRED UNDER THIS SECTION, THE
LICENSE OR CERTIFICATE OF APPROVAL SHALL BE SUBJECT TO REVOCATION OR
SUSPENSION.
§ 8. This act shall take effect immediately.