NY State Senate Bill 2019-S1815

Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to corporations, authorities and commissions
Jan 16, 2019	referred to corporations, authorities and commissions

2019-S1815 (ACTIVE) - Details

See Assembly Version of this Bill:: A2993
Current Committee:: Senate Corporations, Authorities And Commissions
Law Section:: Not-for-Profit Corporation Law
Laws Affected:: Amd §1412, N-PC L
Versions Introduced in 2017-2018 Legislative Session:: S8612, A10997

2019-S1815 (ACTIVE) - Summary

Relates to university faculty practice corporations; permits medical staff at certain hospitals to form tax exempt practice corporations.

2019-S1815 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S1815

SPONSOR: RIVERA
 
TITLE OF BILL:

An act to amend the not-for-profit corporation law, in relation to
university faculty practice corporations

 
PURPOSE:

To permit the medical staff of a general hospital as defined by Article
28 of the Public Health Law or a facility authorized by Article 16 of
the Mental Hygiene Law to organize practice corporations under the
State's Not-for-Profit Corporation Law Section 1412.

 
SUMMARY OF PROVISIONS:

Section one amends Not-for-Profit Corporation Law § 1412 to permit indi-
viduals who are authorized to render the same professional service and
who are members of the medical staff of general hospitals as defined by
New York Public Health Law Section 2801 or a facility authorized by

Article 16 of the Mental Hygiene Law to organize practice corporations
in the same manner and form as faculty of an accredited medical school
or other enumerated medical education entities are permitted to organize
under § 1412. All such practice organizations would be referred to as
"university faculty practice corporations" under § 1412, as it would be
amended, and qualifying existing corporations would be permitted to
reincorporate under § 1412 if desired.

In furtherance of the foregoing, § 1412(a) would be amended to permit
members of a medical staff to organize or cause to be organized a prac-
tice corporation for the purpose of supporting the mission of the gener-
al hospital by providing care to individuals the hospitals are author-
ized to serve. In addition, such practice corporations would be required
to operate in compliance with Section 501(c)(3) of the Internal Revenue
Code. Individuals on the staff of one or more general hospitals would be
permitted to form a single practice corporation under Section 1412 if
such hospitals are commonly controlled or one of the hospitals controls
the others. Lastly this section would amend § 1412(g) to specifically
permit all "university faculty practice corporations" to operate under
the name (or portion thereof) or initials of the affiliated school,
education entity, hospital or hospitals or under the name (or portion
thereof) or initials of the system with which the affiliated school,
education entity, hospital or hospitals is/are publicly identified.

Section two provides that the act shall take effect immediately.

 
JUSTIFICATION:

Section 1412 of the State's Not-for-Profit Corporation Law currently
permits individuals who are authorized by law to practice the same
professional service and who are members of the faculty of the same
accredited medical school or other medical education entity to form
practice corporations known as "university faculty practice corpo-
rations." Such corporations are organized for the purpose of supporting
the mission of the related medical school or medical education entity
and must be operated in compliance with Section 501(c)(3) of the Inter-
nal Revenue Code and the practice plan associated with the affiliate
medical school or medical education entity.
In contrast, individuals who are similarly authorized by law to practice
the same professional service and who are members of the medical staff
of a general hospital are not currently permitted to organize a practice
corporation under Not-For-Profit Law Section 1412. Instead, they must
organize under Section 1503 of New York State's Business Corporation
Law. However, most such practice organizations have assumed (or desire
to assume) the same roles and attributes of practice organizations
organized under Section 1412 of the Not-for-Profit Law: they support the
mission of their related not-for-profit hospital; they operate in
compliance with Section 501(c)(3) of the Internal Revenue Code (and in
many cases actually obtain 501(c)(3) status). Thus these practices have
arranged what are commonly referred to as captive PC arrangements with a
general hospital or facility authorized under Article 16 of the Mental
Hygiene Law.

In reviewing new applicants and renewals, the New York State Education
Department (SED) has recently raised questions about the ability of such
medical staff practice organizations to assume these not-for-profit
attributes, namely, supporting their related hospital and operating in
compliance with Section 501(c)(3), given the fact that they are organ-
ized under Section 1503 of the Business Corporation Law. In addition,
SED has raised questions about the use of all or some portion of the
name of the related hospital or system in the name of the medical staff
practice organization. In taking these positions, SED indicates it is
constrained by State law, and has begun denying renewals for applica-
tions that had previously been approved.

To address this situation, this legislation ensures that general hospi-
tals and Article 16 facilities that have a long standing practice of the
state approving, and in many cases encouraging, these arrangements, can
continue. These proposed amendment will help serve the goals of health
reform by eliminating barriers to system development, encouraging clin-
ical integration among affiliated providers, and advancing care coordi-
nation and collaboration among providers. The amendment will also
provide a vehicle for practice organizations that most closely reflect
the actual relationships among members of the medical staff and their
affiliated hospitals and facilities, their actual form and not-for-pro-
fit status.

 
LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
Immediately

2019-S1815 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   1815
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             January 16, 2019
                                ___________
 
 Introduced  by  Sen.  RIVERA -- read twice and ordered printed, and when
   printed to be committed to the Committee on Corporations,  Authorities
   and Commissions
 
 AN  ACT  to  amend  the  not-for-profit  corporation law, in relation to
   university faculty practice corporations

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Section  1412  of  the not-for-profit corporation law, as
 added by and paragraph (f) as amended by chapter  555  of  the  laws  of
 1993,  paragraphs (a), (c) and (e) as amended by chapter 323 of the laws
 of 2012, paragraph (d) as amended by chapter 549 of the  laws  of  2013,
 and  subparagraph  2  of  paragraph (f) as amended by chapter 172 of the
 laws of 1999, is amended to read as follows:
 § 1412. University faculty practice corporations.
   (a) Organization. Notwithstanding any other provision of law,  one  or
 more  individuals  who  are  duly  authorized  by law to render the same
 professional service, which shall be the practice of medicine, the prac-
 tice of dentistry, the practice of chiropractics, the practice of  phys-
 ical  therapy  or  the practice of optometry, and who are members of the
 faculty OR MEDICAL STAFF of the same accredited medical  school,  dental
 school,  chiropractic  college, college or university with an accredited
 doctor of physical therapy program  or  optometry  college,  A  "GENERAL
 HOSPITAL",  AS DEFINED IN SECTION TWENTY-EIGHT HUNDRED ONE OF THE PUBLIC
 HEALTH LAW, (PROVIDED, HOWEVER, THAT INDIVIDUALS ON THE STAFF OF ONE  OR
 MORE GENERAL HOSPITALS CAN FORM A SINGLE ENTITY HEREUNDER IF SUCH HOSPI-
 TALS  ARE  COMMONLY  CONTROLLED  OR  ONE  OF  THE HOSPITALS CONTROLS THE
 OTHER), OR A FACILITY AUTHORIZED TO OPERATE PURSUANT TO SECTION 16.03 OF
 THE MENTAL HYGIENE LAW, as applicable, in the  state  of  New  York  may
 organize,  or  cause  to  be  organized, a [university faculty] practice
 corporation under this article (1) for the  purpose  of  supporting  the
 [educational  mission  of  such  school  by  providing]  MISSION OF SUCH
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD04006-01-9

 S. 1815                             2
 
 SCHOOL, HOSPITAL OR HOSPITALS, OR FACILITY, BY, (A) IN THE  CASE  OF  AN
 ACCREDITED  MEDICAL SCHOOL, DENTAL SCHOOL, CHIROPRACTIC COLLEGE, COLLEGE
 OR UNIVERSITY WITH AN ACCREDITED DOCTOR OF PHYSICAL THERAPY  PROGRAM  OR
 OPTOMETRY COLLEGE, PROVIDING HOSPITAL OR MEDICAL STAFF clinical instruc-
 tion  and  supervision of students of such school, interns and residents
 and, incident thereto, rendering professional services; (B) IN THE  CASE
 OF A GENERAL HOSPITAL OR HOSPITALS, OR FACILITY, PROVIDING CARE TO INDI-
 VIDUALS  THAT THE GENERAL HOSPITAL OR HOSPITALS, OR FACILITY ARE AUTHOR-
 IZED TO SERVE and (2) which shall be operated  in  compliance  with  (A)
 section 501(c)(3) of the United States internal revenue code and (B) the
 [faculty]  practice  plan  with  which members of the faculty OR MEDICAL
 STAFF of such school, GENERAL HOSPITAL OR  HOSPITALS,  OR  FACILITY  are
 required to comply, AS APPLICABLE, as amended from time to time.
   (b)  Definition.  "University  faculty practice corporation" means [a]
 ANY PRACTICE corporation organized or reincorporated under this section.
 SUCH CORPORATIONS SHALL BE REFERRED TO  HEREIN  AS  "UNIVERSITY  FACULTY
 PRACTICE CORPORATIONS".
   (c)  Certificate of incorporation. The certificate of incorporation of
 a university faculty practice corporation shall meet the requirements of
 this chapter and shall have attached thereto a  certificate  or  certif-
 icates  issued  by  the  licensing authority certifying that each of the
 proposed members, if any, directors and officers is authorized by law to
 practice the profession which the  corporation  is  being  organized  to
 practice.  The  certificate shall also state (1) the name of the medical
 school, dental school, chiropractic college, college or university  with
 an  accredited  doctor of physical therapy program or optometry college,
 OR THE NAME OF THE GENERAL HOSPITAL OR HOSPITALS OR FACILITY  AUTHORIZED
 TO  OPERATE  PURSUANT  TO  SECTION  16.03  OF THE MENTAL HYGIENE LAW, as
 applicable, in the state of New York of which the proposed  members,  if
 any,  directors and officers are faculty OR MEMBERS OF MEDICAL STAFF, AS
 APPLICABLE; and (2) that such corporation shall  operate  in  compliance
 with  (A)  section  501(c)(3) of the United States internal revenue code
 and (B) the [faculty] practice plan with which members of the faculty of
 such school OR MEMBERS OF THE MEDICAL STAFF OF SUCH GENERAL HOSPITAL  OR
 HOSPITALS,  OR  FACILITY are required to comply, as amended from time to
 time.
   (d) Type. A university faculty practice corporation  is  a  charitable
 corporation under this chapter.
   (e) Applicability of laws; members, directors and officers. This chap-
 ter  shall  be  applicable  to a university faculty practice corporation
 except to the extent that the  provisions  thereof  conflict  with  this
 section.  A  university  faculty practice corporation may consolidate or
 merge only with another university  faculty  practice  corporation.  The
 following  provisions of article fifteen of the business corporation law
 shall be applicable to a university faculty practice corporation  except
 that  each  reference  in  such  provisions  to a "shareholder" shall be
 deemed to be a reference to  a  "member"  and  each  reference  in  such
 provisions  to  "shareholders" shall be deemed a reference to "members":
 paragraphs (a), (b), (c) and (e) of section fifteen hundred  one;  para-
 graphs  (b),  (c)  and  (d) of section fifteen hundred three; paragraphs
 (a), (c) and (g)  of  section  fifteen  hundred  four;  section  fifteen
 hundred  five;  section  fifteen  hundred nine except to the extent such
 section refers to section fifteen hundred ten; paragraph (a) of  section
 fifteen  hundred  twelve;  section fifteen hundred fourteen; and section
 fifteen hundred fifteen.  No individual may be  a  member,  director  or
 officer  of  a university faculty practice corporation unless such indi-

 S. 1815                             3
 
 vidual is authorized by law to practice in  this  state  the  profession
 which  such corporation is authorized to practice and is a member of the
 faculty OR MEDICAL STAFF of the medical school, dental  school,  chirop-
 ractic college, college or university with an accredited doctor of phys-
 ical therapy program or optometry college, OR OF THE GENERAL HOSPITAL OR
 HOSPITALS,  OR  OF  A FACILITY AUTHORIZED TO OPERATE PURSUANT TO SECTION
 16.03 OF THE MENTAL HYGIENE LAW which such corporation is  organized  to
 support.
   (f)  Corporations  heretofore incorporated. Any corporation heretofore
 incorporated under article fifteen of the business corporation  law  and
 operated in compliance with the requirements of section 501(c)(3) of the
 United  States internal revenue code may amend its certificate of incor-
 poration and be reincorporated as a university faculty  practice  corpo-
 ration  organized  under this section by making and filing in the office
 of the secretary of state a certificate entitled "Certificate  of  Rein-
 corporation  of...(name of incorporation) under section 1412 of the Not-
 for-Profit Corporation Law." (1) Such reincorporation certificate  shall
 contain  the provisions required, and any other provisions permitted, by
 section [402] FOUR HUNDRED TWO of this chapter and shall also set  forth
 (A)  a  statement  that  such corporation is filing such reincorporation
 certificate under this section, (B) if the name of such corporation  has
 been  changed,  the  name  under  which  such corporation was originally
 incorporated, (C) the date of incorporation of such corporation, (D) the
 names and post-office addresses of the holders of record of all  of  the
 outstanding shares of such corporation entitled to vote, (E) a statement
 that  such corporation has elected to become and be a university faculty
 practice corporation organized and operated  under  by  virtue  of  this
 section  and  (F)  the  statements  required  by  paragraph  (c) of this
 section. (2)  Such  reincorporation  certificate  shall  be  either  (A)
 subscribed  in person or by proxy by all of the holders of record of all
 of the outstanding shares of such corporation entitled to vote and shall
 have annexed an affidavit of the secretary  or  an  assistant  secretary
 that  the  persons  who  have  executed the certificate, in person or by
 proxy, constitute all of the holders of record of all of the outstanding
 shares of the corporation entitled to vote  or  (B)  subscribed  by  the
 president  or  a vice president and the secretary or an assistant secre-
 tary and shall have annexed an affidavit of such officers  stating  that
 they  have  been  authorized  to  execute  and file such reincorporation
 certificate by the votes, cast in person or by  proxy,  of  all  of  the
 holders  of  record of all of the outstanding shares of such corporation
 entitled to vote at the meeting at which such votes were cast, and  that
 such  votes were cast at a meeting of shareholders held on a date speci-
 fied, upon notice pursuant to section six hundred five of  the  business
 corporation  law. (3) A reincorporation pursuant to this paragraph shall
 not effect a dissolution of such corporation,  but  shall  be  deemed  a
 continuation  of its corporate existence, without affecting its then-ex-
 isting property rights or liabilities, or the liabilities of its  share-
 holders,  directors  or  officers  as such, but thereafter it shall have
 only such rights, powers and privileges, and it and  such  shareholders,
 directors  and  officers  shall be subject only to such other duties and
 liabilities, as a university faculty practice corporation  and  members,
 directors and officers thereof. (4) Upon the filing of a reincorporation
 certificate  in the office of the secretary of state, (A) any issued and
 outstanding shares of such corporation shall be purchased by such corpo-
 ration at a purchase price equal to the price for which such shares were
 originally issued, or such other price as such corporation  shall  agree

 S. 1815                             4
 
 to,  such price to be paid out of the surplus of the corporation, where-
 upon such shares shall be deemed cancelled as of the date of such filing
 and (B) such reincorporation certificate shall be deemed to replace  the
 certificate  of  incorporation  of  such  corporation. The department of
 state shall not file such  certificate  of  reincorporation  unless  the
 consent of the commissioner of taxation and finance is attached thereto.
 Such  certificate  of consent shall only be given if the commissioner of
 taxation and finance ascertains that all  taxes  imposed  under  article
 nine-A of the tax law, as well as penalties and interest charges related
 thereto, accrued against the corporation have been paid.
   (g) Effect of section. University faculty practice corporations incor-
 porated  or  reincorporated  under  this  section shall be organized and
 operated exclusively for the purposes set forth in paragraph (a) of this
 section and shall be subject to the restrictions and limitations imposed
 by or pursuant to paragraphs (a) and (e) of this section.  ALL UNIVERSI-
 TY FACULTY PRACTICE CORPORATIONS INCORPORATED  OR  REINCORPORATED  UNDER
 THIS SECTION MAY OPERATE UNDER THE NAME (OR PORTION THEREOF) OR INITIALS
 OF  THE  AFFILIATED SCHOOL, HOSPITAL OR HOSPITALS, OR FACILITY, OR UNDER
 THE NAME (OR PORTION THEREOF) OR INITIALS OF THE SYSTEM WITH WHICH  SUCH
 AFFILIATED SCHOOL, HOSPITAL OR HOSPITALS, OR FACILITY ARE PUBLICLY IDEN-
 TIFIED. Notwithstanding anything to the contrary in article twenty-eight
 of the public health law or the regulations adopted pursuant thereto, no
 corporation  organized  under  this section shall be deemed to be estab-
 lishing or operating a  hospital,  diagnostic  center  and/or  treatment
 center requiring establishment or construction approval solely by reason
 of  being  organized  as  a  not-for-profit  corporation. Insofar as the
 provisions of this section are inconsistent with the provisions  of  any
 other  law,  general or special, the provisions of this section shall be
 controlling as to the corporations incorporated or reincorporated  here-
 under.
   § 2. This act shall take effect immediately.

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Senate Bill S1815

Sponsored By

Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

2019-S1815 (ACTIVE) - Details

2019-S1815 (ACTIVE) - Summary

2019-S1815 (ACTIVE) - Sponsor Memo

2019-S1815 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S1815

Share this bill

Sponsored By

Gustavo Rivera

Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

2019-S1815 (ACTIVE) - Details

2019-S1815 (ACTIVE) - Summary

2019-S1815 (ACTIVE) - Sponsor Memo

2019-S1815 (ACTIVE) - Bill Text download pdf

Comments