§ 461-B — Provisions related to establishment of adult care facilities

§ 461-b. Provisions related to establishment of adult care facilities.\n1. (a) Only a natural person or partnership composed only of natural\npersons, a not-for-profit corporation, a public corporation, a business\ncorporation other than a corporation whose shares are traded on a\nnational securities exchange or are regularly quoted on a national\nover-the-counter market or a subsidiary of such corporation or a\ncorporation any of the stock of which is owned by another corporation, a\nlimited liability company provided that if a limited liability company\nhas a member that is a corporation, a limited liability company or a\npartnership, the shareholders of the member corporation, the members of\nthe member limited liability company, or the partners of the member\npartnership must be natural persons, a social services district or other\ngovernmental agency may be issued an operating certificate by the\ndepartment for the purpose of operating an adult care facility, except\nfamily type homes for adults, which may be issued operating certificates\nby the department or social services district only if such facilities\nare operated by a natural person or persons. The holder of an operating\ncertificate for the purposes of operating an adult home shall not be\nissued an operating certificate for the purposes of operating an\nenriched housing program if such adult home operator has not met\ncompliance standards during the most recent inspection cycle. Provided\nhowever, the department may deem an operator eligible to receive an\noperating certificate for the purposes of operating an enriched housing\nprogram upon the consideration of the results of previous inspections\nand whether the operator is meeting the needs of the residents and is\nproviding quality care.\n (b) A natural person may seek certification as an operator of a\nfamily-type home for adults to provide long-term residential care and\npersonal care and/or supervision to persons related to the operator,\nprovided that the relationship between the operator and resident is not\nthat of spouse, in-law, child or step-child.\n (c) An appropriation made available for the purposes of funding the\noperating assistance sub-program for enriched housing up to the amount\nappropriated for such purpose in the nineteen hundred\nninety-six--ninety-seven state fiscal year shall be limited to any\nenriched housing program operated by a public agency, public corporation\nor a not-for-profit corporation, which may be issued an operating\ncertificate by the department to operate an enriched housing program.\n 2. (a) No adult care facility shall be operated unless and until the\noperator obtains the written approval of the department. Such approval\nmay be granted only to an operator who satisfactorily demonstrates: that\nthe operator is of good moral character; that the operator is\nfinancially responsible; that there is a public need for the facility;\nthat the buildings, equipment, staff, standards of care and records to\nbe employed in the operation comply with applicable law and regulations\nof the department and that any license or permit required by law for the\noperation of such facility has been issued to such operation. In\ndetermining whether there is a public need for the facility, the\ndepartment shall give consideration to the relative concentration of\nsuch facilities in the area proposed to be serviced. Such approval for\nfamily type home for adults shall not be granted unless the appropriate\nsocial services official has made the required visitation and inspection\nand has submitted a report thereof to the department in accordance with\nthis article.\n (b) For existing licensed operators in good standing and their\naffiliates, the department shall develop a streamlined application\nreview and approval process, in collaboration with representatives of\nassociations of operators, to be available for use in relation to\napproval of an additional facility of the same type. Notwithstanding any\nprovision of law or regulation to the contrary, the streamlined\napplication review and approval process shall include, but not be\nlimited to, the following:\n (i) a certification process and form for the operator or its affiliate\nto attest that it will have sufficient financial resources, revenue and\nfinancing to meet facility expenses and resident needs, which shall\nsatisfy the statutory and regulatory financial component of the\napplication review and approval process;\n (ii) a certification process and form for the operator or its\naffiliate to attest that its legal, corporate and organizational\ndocuments comply in substance with department requirements, which shall\nsatisfy the statutory and regulatory legal component of the application\nreview and approval process;\n (iii) a certification process and form for the operator or its\naffiliate to attest that it is in substantial compliance with all\napplicable codes, rules and regulations in any other state in which it\noperates, and to disclose any enforcement or administrative action taken\nagainst it in any other state;\n (iv) issuance by the department of a conditional approval to operate\nthe facility for a specified period of time upon substantial completion\nof the character and competence, legal, financial and architectural\ncomponents of the application, so long as the operator or its affiliate\nagrees in writing to satisfy all pending conditions prior to the\nexpiration of the conditional approval period or a time frame\nestablished by the department;\n (v) issuance by the department of a conditional approval to construct\na facility, at the operator's or its affiliate's own risk, upon\nsubstantial completion of the architectural component of the\napplication;\n (vi) elimination of duplicative submission and review of any\napplication information which has been previously reviewed and approved\nby the department or any of its regional offices within the past two\nyears through a certification process and form whereby the operator or\nits affiliate will attest that such application information is\nduplicative;\n (vii) with respect to any programmatic application information to be\nreviewed by the regional office, such review shall be conducted on-site\nby the regional office during the pre-opening inspection or first full\nannual inspection, if the department has previously approved the\noperator or its affiliate to operate the same type of program at another\nfacility within the past two years;\n (viii) electronic submission of applications; and\n (ix) a combined application for licensure as an adult care facility,\nassisted living residence and/or assisted living program, to the extent\nthe department determines such a combined application is feasible.\n (b-1) For purposes of paragraph (b) of this subdivision, "affiliate"\nshall mean an entity, for which a majority of the ownership or\ncontrolling interest is the same as the ownership or controlling\ninterest in an existing licensed operator under this section (provided\nthat an affiliate may have different percentages of ownership or control\nor fewer natural persons with ownership or control than an existing\noperator) and, further:\n (i) for any entity owned, directly or indirectly, by natural persons:\n (A) at all times, more than half of the ownership interest of the\nentity shall be owned, directly or indirectly, by natural persons who\nhave previously been determined to have undergone a satisfactory\ndetermination of character, competence and standing in the community;\n (B) at all times, any owner with a direct or indirect ownership\ninterest who has not undergone a satisfactory determination of\ncharacter, competence and standing in the community review must possess\na less than ten percent direct or indirect interest in the entity, until\na satisfactory determination has been made; and\n (C) for any natural person proposed to be an owner, directly or\nindirectly, of the entity who is a controlling person, member, director,\nor officer of an existing licensed operator under this section, such\nexisting licensed operator must be in good standing with the department;\nand\n (ii) for any not-for-profit corporation or other entity not under\nsubparagraph (i) of this paragraph:\n (A) more than half of the entity's total board members, directors,\nofficers and controlling persons shall have previously undergone a\nsatisfactory determination of character, competence and standing in the\ncommunity; and\n (B) if any natural person proposed to be a board member, director, or\nofficer of the entity has an ownership interest, directly or indirectly,\nor is a board member, director, officer, or controlling person, in an\nexisting licensed operator under this section, such existing licensed\noperator must also be in good standing with the department.\n (b-2) For purposes of paragraph (b) of this subdivision, "good\nstanding" shall mean the operator and its affiliates have not (A)\nreceived any official written notice from the department of a proposed\nrevocation, suspension, denial or limitation on the operating\ncertificate of the facility or residence; (B) within the previous three\nyears, been assessed a civil penalty after a hearing conducted pursuant\nto subparagraph one of paragraph (b) of subdivision seven of section\nfour hundred sixty-d of this article for a violation that has not been\nrectified; (C) within the previous year, received any official written\nnotice from the department of a proposed assessment of a civil penalty\nfor a violation described in subparagraph two of paragraph (b) of\nsubdivision seven of section four hundred sixty-d of this article; (D)\nwithin the previous three years, been issued an order pursuant to\nsubdivision two, five, six or eight of section four hundred sixty-d of\nthis article; (E) within the previous three years, been placed on, and\nif placed on, removed from the department's "do not refer list" pursuant\nto subdivision fifteen of section four hundred sixty-d of this article.\nProvided, however, that in the case of an operator or affiliate that is\nnot in good standing as provided in this paragraph, the department may\npermit the operator or affiliate to use the streamlined application\nprocess, in its discretion, if it determines that the disqualifying\nviolation was an isolated occurrence that was promptly corrected by the\noperator or affiliate.\n (c) After an operator obtains approval of the department for the\noperation of an adult care facility he may operate such facility only so\nlong as he continues to do so in compliance with the requirements of\nsuch approval, applicable law, and the regulations of the department.\n (d) The knowing operation of an adult care facility without the prior\nwritten approval of the department shall be a class A misdemeanor.\n 3. (a) The department shall not approve an application for\nestablishment of an adult care facility unless it is satisfied insofar\nas applicable, as to (i) the character, competence and standing in the\ncommunity, of the applicant; provided, however, with respect to any such\napplicant who is already or within the past ten years has been an\nincorporator, director, sponsor, stockholder, operator, administrator,\nmember or owner of any adult care facility which has been issued an\noperating certificate by the board or the department, or of a halfway\nhouse, hostel or other residential facility or of a program or facility\nlicensed or operated by a health, mental hygiene, social services or\neducation agency or department of this or any state, or a program\nserving persons with mental disabilities, or other persons with\ndisabilities as defined in subdivision twenty-one of section two hundred\nninety-two of the executive law, the aged, children or other persons\nreceiving health, mental hygiene, residential, social or educational\nservices, no approval of such application shall be granted unless the\ndepartment shall affirmatively find by substantial evidence as to each\nsuch applicant that a substantially consistent high level of care is\nbeing or was being rendered in each such facility or institution with\nwhich such person is or was affiliated; for the purposes of this\nparagraph, there may be a finding that a substantially consistent high\nlevel of care has been rendered where there have been violations of\napplicable rules and regulations, that (1) did not threaten to directly\naffect the health, safety or welfare of any patient or resident, and (2)\nwere promptly corrected and not recurrent; (ii) the financial resources\nof the proposed facility and its sources of future revenue; and (iii)\nsuch other matters as it shall deem pertinent.\n (b) Any natural person or partnership composed only of natural\npersons, not-for-profit corporation, public corporation, business\ncorporation other than a corporation whose shares are traded on a\nnational securities exchange or are regularly quoted on a national\nover-the-counter market or a subsidiary of such corporation or a\ncorporation any of the stock of which is owned by another corporation, a\nlimited liability company provided that if a limited liability company\nhas a member that is a corporation, a limited liability company or a\npartnership, the shareholders of the member corporation, the members of\nthe member limited liability company, or the partners of the member\npartnership must be natural persons, social services district or other\ngovernmental agency filing an application for approval to operate a\nresidence for adults, adult home or enriched housing program, shall file\nwith the department such information on the ownership of the property\ninterest in such facility as shall be prescribed by regulation,\nincluding the following:\n (i) The name and address and a description of the interest held by\neach of the following persons:\n (1) any person, who directly or indirectly, beneficially owns any\ninterest in the land on which the facility is located;\n (2) any person who, directly or indirectly, beneficially owns any\ninterest in the building in which the facility is located;\n (3) any person who, directly or indirectly, beneficially owns any\ninterest in any mortgage, note, deed of trust or other obligation\nsecured in whole or in part by the land on which or building in which\nthe facility is located; and\n (4) any person who, directly or indirectly, has any interest as lessor\nor lessee in any lease or sub-lease of the land on which or the building\nin which the facility is located.\n (ii) If any person named in response to subparagraph (i) of this\nparagraph is a partnership or limited liability company, then the name\nand address of each partner or member.\n (iii) If any person named in response to subparagraph (i) of this\nsubdivision is a corporation, other than a corporation whose shares are\ntraded on a national securities exchange or are regularly quoted in an\nover-the-counter market or which is a commercial bank, savings bank or\nsavings and loan association, then the name and address of each officer,\ndirector, stockholder and, if known, each principal stockholder and\ncontrolling person of such corporation.\n (iv) If any corporation named in response to subparagraph (i) of this\nsubdivision is a corporation whose shares are traded on a national\nsecurities exchange or are regularly quoted in an over-the-counter\nmarket or which is a commercial bank, savings bank or savings and loan\nassociation, then the name and address of the principal executive\nofficers and each director and, if known, each principal stockholder of\nsuch corporation.\n (v) For the purpose of this section the term "controlling person"\nshall mean any person who by reason of a direct or indirect ownership\ninterest (whether of record or beneficial) has the ability, acting\neither alone or in concert with others with ownership interests, to\ndirect or cause the direction of the management or policies of said\ncorporation, partnership or other entity. Neither the department nor any\nemployee of the department shall, by reason of his or her official\nposition, be deemed a controlling person of any corporation, partnership\nor other entity, nor shall any person who serves as an officer,\nadministrator or other employee of any corporation, partnership or other\nentity or as a member of a board of directors or trustees of any\ncorporation be deemed to be a controlling person of such corporation,\npartnership or other entity as a result of such position or his or her\nofficial actions in such position. The term "principal stockholder"\nshall mean any person who beneficially owns, holds or has the power to\nvote, ten percent or more of any class of securities issued by said\ncorporation.\n (c) No articles of organization of a limited liability company\nestablished pursuant to the New York limited liability law which\nincludes among its powers or purposes the establishment or operation of\nany adult home, residence for adults or enriched housing program as\ndefined in section two of this chapter, shall be filed with the\ndepartment of state unless the written approval of the department is\nannexed to the articles of organization.\n 3-a. (a) Every person who is a controlling person of any adult care\nfacility liable under any provision of this article to any person or\nclass of persons for damages or to the state for any civil fine,\npenalty, assessment of damages, shall also be liable, jointly and\nseverally, with and to the same extent as such adult care facility, to\nsuch person or class of persons for damages or to the state for any such\ncivil fine, penalty, assessment or damages.\n (b) For the purposes of this section the term "controlling person"\nshall mean any person who by reason of a direct or indirect ownership\ninterest (whether of record or beneficial) has the ability, acting\neither alone or in concert with others with ownership interests, to\ndirect or cause the direction of the management or policies of said\ncorporation, partnership or other entity. Neither the department nor any\nemployee of the department shall, by reason of his or her official\nposition, be deemed a controlling person of any corporation, partnership\nor other entity, nor shall any person who serves as an officer,\nadministrator or other employee of any corporation, partnership or other\nentity or as a member of a board of directors or trustees of any\ncorporation be deemed to be a controlling person of such corporation,\npartnership or other entity as a result of such position or his or her\nofficial actions in such position. The term "principal stockholder"\nshall mean any person who beneficially owns, holds or has the power to\nvote, ten percent or more of any class of securities issued by said\ncorporation.\n 4. No person, corporation, home, institution, hotel or other\nresidential facility or accommodation other than a facility or agency\nwhich possesses a valid operating certificate, as required under the\nprovisions of this chapter, the mental hygiene law or public health law\nshall hold itself out, advertise or otherwise in any form or manner\nrepresent that it is a facility offering accommodations and services for\ndependent, aged or disabled adults.\n 5. Any adult care facility subject to the provisions of this section\nthat possesses a valid operating certificate as of October first,\nnineteen hundred seventy-seven shall be deemed to have department\napproval to continue operation of such facility for the duration or the\nperiod for which such certificate was issued, provided such facility\ncontinues to be operated in accordance with applicable provisions of law\nand department regulations.\n 6. (a) The department, prior to making a final determination with\nrespect to approving the establishment of, or the certificate of\nincorporation of, or the articles of organization of, or an operating\ncertificate for a residence for adults, adult home, or enriched housing\nprogram, shall in addition to any other requirements of law take into\nconsideration and be empowered to request information and advice as to\nthe availability of facilities or services such as ambulatory, home care\nor other services which may serve as alternatives or substitutes for the\nwhole or any part of a proposed facility and the possible economies and\nimprovements in services to be anticipated from the operation of\ncentralized facilities and services reasonably available in the regional\nservices area.\n (b) In determining whether there is a public need for a residence for\nadults or an adult home, the department shall consider the advice of the\nstate health planning and development agency designated pursuant to the\nprovisions of the national health planning and resources development act\nof nineteen hundred seventy-four and any amendments thereto.\n (c) Notwithstanding any other provision of this article, the\ndepartment shall not consider public need in determining whether to\napprove any proprietary adult home that was in existence and operating\non September first, nineteen hundred seventy-five as a family care home\nunder the mental hygiene law or an adult care facility operated by a\nsocial services district.\n 7. (a) The department shall suspend, limit, modify or revoke an\noperating certificate of a shelter for adults, residence for adults or\nadult home upon determining that such action would be in the public\ninterest in order to conserve resources by restricting the number of\nbeds, or the level of services, or both, to those which are actually\nneeded, after taking into consideration the total number of beds\nnecessary to meet the public need, and the availability of facilities or\nservices such as ambulatory, home care or other services which may serve\nas alternatives or substitutes for the whole or any part of a facility,\nand in the case of modification, the level of care and the nature and\ntype of services provided by a facility or required by all or some of\nthe residents in or seeking admission to such facility, and whether such\nlevel of care is consistent with the operating certificate of the\nfacility.\n (b) Wherever any finding as described in this subdivision is under\nconsideration with respect to any particular facility, the department\nshall cause to be published in a newspaper of general circulation in the\ngeographic area of the facility at least thirty days prior to making\nsuch a finding an announcement that such a finding is under\nconsideration and an address to which interested persons can write to\nmake their views known. The department shall take all public comments\ninto consideration in making such a finding.\n (c) The department shall, upon such finding described in this\nsubdivision with respect to any facility or project, cause such facility\nto be notified of the finding at least thirty days in advance of taking\nthe proposed action to revoke, suspend, limit, or modify the facility's\noperating certificate. Upon receipt of any such notification and before\nthe expiration of the thirty days or such longer period as may be\nspecified in the notice, the facility may request a public hearing to be\nheld in the county in which the facility is located. In no event shall\nthe revocation, suspension, limitation, or modification take effect\nprior to the thirtieth day after the date of the notice or prior to the\neffective date specified in the notice or prior to the date of the\nhearing decision, whichever is later.\n (d) Except as otherwise provided by law, all appeals from a finding of\nthe department made pursuant to this subdivision shall be directly to\nthe appellate division of the supreme court in the third department.\nExcept as otherwise expressly provided by law, such appeals shall have\npreference over all issues in all courts.\n 8. No adult care facility certified by the department which is\noperating in compliance with this chapter and regulations shall be\nrequired to be certified by the office of mental health as a residential\ncare center for adults.\n 9. (a) The prior written approval of the department is required for:\n(i) any transfer, assignment or other disposition of ten percent or more\nof an interest or voting rights in a partnership, business corporation\nor limited liability company which is the operator of an adult care\nfacility to a new partner, shareholder or member; or (ii) any transfer,\nassignment or other disposition of interest or voting rights in a\npartnership, business corporation or limited liability company which is\nthe operator of an adult care facility which results in the ownership or\ncontrol of more than ten percent of the interest or voting rights\nthereunder by any person who has not been previously approved by the\ndepartment for that operator.\n (b) With respect to a transfer, assignment or disposition involving\nless than ten percent of an interest or voting rights in such\npartnership, business corporation or limited liability company to a new\npartner, shareholder or member, no prior approval of the department\nshall be required except where required by paragraph (a) of this\nsubdivision. However, no such transaction shall be effective unless at\nleast ninety days prior to the intended effective date thereof, the\npartnership, business corporation or limited liability company fully\ncompletes and files with the department notice on a form, to be\ndeveloped by the department, which shall disclose such information as\nmay reasonably be necessary for the department to determine whether it\nshould prohibit the transaction. Within ninety days from the date of\nreceipt of such notice, the department may prohibit any such transaction\nunder this subparagraph if it finds: (i) there are reasonable grounds to\nbelieve the proposed transaction does not satisfy the character and\ncompetence review, as may be appropriate; or (ii) if the transaction,\ntogether with all other such transactions during any five year period,\nwould in the aggregate, involve twenty-five percent or more of the\ninterest in the entity that constitutes the operator. The department\nshall state the specific reasons for prohibiting any transaction under\nthis subparagraph and shall so notify each party to the proposed\ntransaction.\n (c) With respect to a transfer, assignment or disposition of an\ninterest or voting rights in a partnership, business corporation or\nlimited liability company to any existing partner, shareholder or\nmember, no prior approval of the department shall be required. However,\nif the transaction involves the withdrawal of the transferor from the\npartnership, business corporation or limited liability company, no such\ntransaction shall be effective unless at least ninety days prior to the\nintended effective date thereof, the partnership, business corporation\nor limited liability company fully completes and files with the\ndepartment notice of such transaction. Within ninety days from the date\nof receipt of such notice, the department may prohibit any such\ntransaction under this paragraph if the equity position of the\npartnership, business corporation or limited liability company,\ndetermined in accordance with generally accepted accounting principles,\nwould be reduced as a result of the transfer, assignment or disposition.\nThe department shall state the specific reason for prohibiting any\ntransaction under this paragraph and shall so notify each party to the\nproposed transaction.\n 10. Notwithstanding any provision of law to the contrary, the\ndepartment is authorized to approve a certificate of incorporation or\narticles of organization for establishment of an adult care facility on\nan expedited basis where: (a) the certificate of incorporation or\narticles of organization reflects solely a change in the form of the\nbusiness organization of an existing entity which had been approved by\nthe department to operate an adult care facility; (b) every\nincorporator, stockholder, member and director of the new entity shall\nhave been an owner, partner, incorporator, stockholder, member or\ndirector of the existing entity; (c) the distribution of ownership\ninterests and voting rights in the new entity shall be the same as in\nthe existing entity; and (d) there shall be no change in the operator of\nthe adult care facility other than the form of its business\norganization, as a result of the approval of such certificate of\nincorporation or articles of organization. Upon submission, if the\ndepartment does not object to the proposal within ninety days of the\nreceipt of a complete application, the proposal will be deemed\nacceptable to the department and an amended operating certificate shall\nbe issued.\n