NY Soc Serv L § 461-B (2021)
2021 New York Laws SOS - Social Services Article 7 - Residential Care Programs for Adults and Children Title 2 - Residential Programs for Adults 461-B - Provisions Related to Establishment of Adult Care Facilities.

§ 461-b. Provisions related to establishment of adult care facilities. 1.  (a)  Only  a  natural person or partnership composed only of natural persons, a not-for-profit corporation, a public corporation, a  business corporation  other  than  a  corporation  whose  shares  are traded on a national securities exchange or  are  regularly  quoted  on  a  national over-the-counter  market  or  a  subsidiary  of  such  corporation  or a corporation any of the stock of which is owned by another corporation, a limited liability company provided that if a limited  liability  company has  a  member  that  is a corporation, a limited liability company or a partnership, the shareholders of the member corporation, the members  of the  member  limited  liability  company,  or the partners of the member partnership must be natural persons, a social services district or other governmental agency may  be  issued  an  operating  certificate  by  the department  for  the purpose of operating an adult care facility, except family type homes for adults, which may be issued operating certificates by the department or social services district only  if  such  facilities are  operated by a natural person or persons. The holder of an operating certificate for the purposes of operating an adult  home  shall  not  be issued  an  operating  certificate  for  the  purposes  of  operating an enriched housing program  if  such  adult  home  operator  has  not  met compliance  standards  during the most recent inspection cycle. Provided however, the department may deem an  operator  eligible  to  receive  an operating  certificate for the purposes of operating an enriched housing program upon the consideration of the results  of  previous  inspections and  whether  the  operator is meeting the needs of the residents and is providing quality care.  (b) A natural person may  seek  certification  as  an  operator  of  a family-type  home  for  adults to provide long-term residential care and personal care and/or supervision to persons  related  to  the  operator, provided  that the relationship between the operator and resident is not that of spouse, in-law, child or step-child.  (c) An appropriation made available for the purposes  of  funding  the operating  assistance  sub-program for enriched housing up to the amount appropriated   for   such    purpose    in    the    nineteen    hundred ninety-six--ninety-seven  state  fiscal  year  shall  be  limited to any enriched housing program operated by a public agency, public corporation or a not-for-profit  corporation,  which  may  be  issued  an  operating certificate by the department to operate an enriched housing program.   2.  (a)  No adult care facility shall be operated unless and until the operator obtains the written approval of the department.  Such  approval may be granted only to an operator who satisfactorily demonstrates: that the   operator  is  of  good  moral  character;  that  the  operator  is financially responsible; that there is a public need for  the  facility; that  the  buildings, equipment, staff, standards of care and records to be employed in the operation comply with applicable law and  regulations of the department and that any license or permit required by law for the operation  of  such  facility  has  been  issued  to  such operation. In determining whether there  is  a  public  need  for  the  facility,  the department  shall  give  consideration  to the relative concentration of such facilities in the area proposed to be serviced. Such  approval  for family  type home for adults shall not be granted unless the appropriate social services official has made the required visitation and inspection and has submitted a report thereof to the department in accordance  with this article.  (b)  For  existing  licensed  operators  in  good  standing  and their affiliates, the  department  shall  develop  a  streamlined  application review  and  approval  process, in collaboration with representatives of associations of operators, to  be  available  for  use  in  relation  to  approval of an additional facility of the same type. Notwithstanding any provision  of  law  or  regulation  to  the  contrary,  the  streamlined application review and  approval  process  shall  include,  but  not  be limited to, the following:  (i) a certification process and form for the operator or its affiliate to  attest that it will have sufficient financial resources, revenue and financing to meet facility expenses  and  resident  needs,  which  shall satisfy   the  statutory  and  regulatory  financial  component  of  the application review and approval process;  (ii) a  certification  process  and  form  for  the  operator  or  its affiliate  to  attest  that  its  legal,  corporate  and  organizational documents comply in substance with department requirements, which  shall satisfy  the statutory and regulatory legal component of the application review and approval process;  (iii) a certification  process  and  form  for  the  operator  or  its affiliate  to  attest  that  it  is  in  substantial compliance with all applicable codes, rules and regulations in any other state in  which  it operates, and to disclose any enforcement or administrative action taken against it in any other state;  (iv)  issuance  by the department of a conditional approval to operate the facility for a specified period of time upon substantial  completion of  the  character  and  competence,  legal, financial and architectural components of the application, so long as the operator or its  affiliate agrees  in  writing  to  satisfy  all  pending  conditions  prior to the expiration  of  the  conditional  approval  period  or  a   time   frame established by the department;  (v)  issuance by the department of a conditional approval to construct a facility,  at  the  operator's  or  its  affiliate's  own  risk,  upon substantial   completion   of   the   architectural   component  of  the application;  (vi)  elimination  of  duplicative  submission  and  review   of   any application  information which has been previously reviewed and approved by the department or any of its regional offices  within  the  past  two years  through  a certification process and form whereby the operator or its  affiliate  will  attest  that  such  application   information   is duplicative;  (vii)  with  respect to any programmatic application information to be reviewed by the regional office, such review shall be conducted  on-site by  the  regional office during the pre-opening inspection or first full annual  inspection,  if  the  department  has  previously  approved  the operator or its affiliate to operate the same type of program at another facility within the past two years;  (viii) electronic submission of applications; and  (ix)  a  combined application for licensure as an adult care facility, assisted living residence and/or assisted living program, to the  extent the department determines such a combined application is feasible.  (b-1)  For  purposes of paragraph (b) of this subdivision, "affiliate" shall mean  an  entity,  for  which  a  majority  of  the  ownership  or controlling  interest  is  the  same  as  the  ownership  or controlling interest in an existing licensed operator under this  section  (provided that an affiliate may have different percentages of ownership or control or  fewer  natural  persons  with  ownership or control than an existing operator) and, further:  (i) for any entity owned, directly or indirectly, by natural persons:  (A) at all times, more than half of  the  ownership  interest  of  the entity  shall  be  owned, directly or indirectly, by natural persons who have  previously  been  determined  to  have  undergone  a  satisfactory determination of character, competence and standing in the community;  (B)  at  all  times,  any  owner  with  a direct or indirect ownership interest  who  has  not  undergone  a  satisfactory   determination   of character,  competence and standing in the community review must possess a less than ten percent direct or indirect interest in the entity, until a satisfactory determination has been made; and  (C)  for  any  natural  person  proposed  to  be an owner, directly or indirectly, of the entity who is a controlling person, member, director, or officer of an existing licensed operator  under  this  section,  such existing licensed operator must be in good standing with the department; and  (ii)  for  any  not-for-profit  corporation  or other entity not under subparagraph (i) of this paragraph:  (A) more than half of the entity's  total  board  members,  directors, officers  and  controlling  persons  shall  have  previously undergone a satisfactory determination of character, competence and standing in  the community; and  (B)  if any natural person proposed to be a board member, director, or officer of the entity has an ownership interest, directly or indirectly, or is a board member, director, officer, or controlling  person,  in  an existing  licensed  operator  under this section, such existing licensed operator must also be in good standing with the department.  (b-2) For  purposes  of  paragraph  (b)  of  this  subdivision,  "good standing"  shall  mean  the  operator  and  its  affiliates have not (A) received any official written notice from the department of  a  proposed revocation,   suspension,   denial   or   limitation  on  the  operating certificate of the facility or residence; (B) within the previous  three years,  been assessed a civil penalty after a hearing conducted pursuant to subparagraph one of paragraph (b) of  subdivision  seven  of  section four  hundred  sixty-d of this article for a violation that has not been rectified; (C) within the previous year, received any  official  written notice  from  the department of a proposed assessment of a civil penalty for a violation described  in  subparagraph  two  of  paragraph  (b)  of subdivision  seven  of section four hundred sixty-d of this article; (D) within the previous three  years,  been  issued  an  order  pursuant  to subdivision  two,  five, six or eight of section four hundred sixty-d of this article; (E) within the previous three years, been placed  on,  and if placed on, removed from the department's "do not refer list" pursuant to  subdivision fifteen of section four hundred sixty-d of this article. Provided, however, that in the case of an operator or affiliate that  is not  in  good standing as provided in this paragraph, the department may permit the operator or affiliate  to  use  the  streamlined  application process,  in  its  discretion,  if  it determines that the disqualifying violation was an isolated occurrence that was promptly corrected by  the operator or affiliate.  (c)  After  an  operator  obtains  approval  of the department for the operation of an adult care facility he may operate such facility only so long as he continues to do so in compliance  with  the  requirements  of such approval, applicable law, and the regulations of the department.  (d)  The knowing operation of an adult care facility without the prior written approval of the department shall be a class A misdemeanor.   3.  (a)  The  department  shall  not  approve   an   application   for establishment  of  an adult care facility unless it is satisfied insofar as applicable, as to (i) the character, competence and standing  in  the community, of the applicant; provided, however, with respect to any such applicant  who  is  already  or  within  the  past ten years has been an incorporator, director, sponsor, stockholder,  operator,  administrator, member  or  owner  of  any  adult care facility which has been issued an operating certificate by the board or the department, or  of  a  halfway  house,  hostel or other residential facility or of a program or facility licensed or operated by a health, mental  hygiene,  social  services  or education  agency  or  department  of  this  or  any state, or a program serving   persons  with  mental  disabilities,  or  other  persons  with disabilities as defined in subdivision twenty-one of section two hundred ninety-two of the executive law, the aged,  children  or  other  persons receiving  health,  mental  hygiene,  residential, social or educational services, no approval of such application shall be  granted  unless  the department  shall  affirmatively find by substantial evidence as to each such applicant that a substantially consistent high  level  of  care  is being  or  was  being rendered in each such facility or institution with which such person is  or  was  affiliated;  for  the  purposes  of  this paragraph,  there  may be a finding that a substantially consistent high level of care has been rendered where  there  have  been  violations  of applicable  rules and regulations, that (1) did not threaten to directly affect the health, safety or welfare of any patient or resident, and (2) were promptly corrected and not recurrent; (ii) the financial  resources of  the  proposed  facility and its sources of future revenue; and (iii) such other matters as it shall deem pertinent.  (b) Any  natural  person  or  partnership  composed  only  of  natural persons,   not-for-profit   corporation,  public  corporation,  business corporation other than a  corporation  whose  shares  are  traded  on  a national  securities  exchange  or  are  regularly  quoted on a national over-the-counter market  or  a  subsidiary  of  such  corporation  or  a corporation any of the stock of which is owned by another corporation, a limited  liability  company provided that if a limited liability company has a member that is a corporation, a limited  liability  company  or  a partnership,  the shareholders of the member corporation, the members of the member limited liability company, or  the  partners  of  the  member partnership  must  be natural persons, social services district or other governmental agency filing an application  for  approval  to  operate  a residence for adults, adult home or enriched housing program, shall file with  the  department  such information on the ownership of the property interest  in  such  facility  as  shall  be  prescribed  by  regulation, including the following:  (i)  The  name  and  address and a description of the interest held by each of the following persons:  (1) any person, who directly  or  indirectly,  beneficially  owns  any interest in the land on which the facility is located;  (2)  any  person  who,  directly  or indirectly, beneficially owns any interest in the building in which the facility is located;  (3) any person who, directly  or  indirectly,  beneficially  owns  any interest  in  any  mortgage,  note,  deed  of  trust or other obligation secured in whole or in part by the land on which or  building  in  which the facility is located; and  (4) any person who, directly or indirectly, has any interest as lessor or lessee in any lease or sub-lease of the land on which or the building in which the facility is located.  (ii)  If  any  person  named  in  response to subparagraph (i) of this paragraph is a partnership or limited liability company, then  the  name and address of each partner or member.  (iii)  If  any  person  named  in response to subparagraph (i) of this subdivision is a corporation, other than a corporation whose shares  are traded  on  a national securities exchange or are regularly quoted in an over-the-counter market or which is a commercial bank, savings  bank  or savings and loan association, then the name and address of each officer, director,  stockholder  and,  if  known,  each principal stockholder and controlling person of such corporation.  (iv) If any corporation named in response to subparagraph (i) of  this subdivision  is  a  corporation  whose  shares  are traded on a national securities exchange or  are  regularly  quoted  in  an  over-the-counter market  or  which is a commercial bank, savings bank or savings and loan association,  then  the  name  and  address  of  the principal executive officers and each director and, if known, each principal stockholder  of such corporation.  (v)  For  the  purpose  of  this section the term "controlling person" shall mean any person who by reason of a direct  or  indirect  ownership interest  (whether  of  record  or  beneficial)  has the ability, acting either alone or in concert with  others  with  ownership  interests,  to direct  or  cause  the  direction  of the management or policies of said corporation, partnership or other entity. Neither the department nor any employee of the department shall, by  reason  of  his  or  her  official position, be deemed a controlling person of any corporation, partnership or  other  entity,  nor  shall  any  person  who  serves  as an officer, administrator or other employee of any corporation, partnership or other entity or as a member of  a  board  of  directors  or  trustees  of  any corporation  be  deemed  to be a controlling person of such corporation, partnership or other entity as a result of such position or his  or  her official  actions  in  such  position.  The term "principal stockholder" shall mean any person who beneficially owns, holds or has the  power  to vote,  ten  percent  or  more  of any class of securities issued by said corporation.  (c) No  articles  of  organization  of  a  limited  liability  company established  pursuant  to  the  New  York  limited  liability  law which includes among its powers or purposes the establishment or operation  of any  adult  home,  residence  for  adults or enriched housing program as defined in section  two  of  this  chapter,  shall  be  filed  with  the department  of  state  unless  the written approval of the department is annexed to the articles of organization.   3-a. (a) Every person who is a controlling person of  any  adult  care facility  liable  under  any  provision of this article to any person or class of persons for damages  or  to  the  state  for  any  civil  fine, penalty,  assessment  of  damages,  shall  also  be  liable, jointly and severally, with and to the same extent as such adult care  facility,  to such person or class of persons for damages or to the state for any such civil fine, penalty, assessment or damages.  (b)  For  the  purposes  of this section the term "controlling person" shall mean any person who by reason of a direct  or  indirect  ownership interest  (whether  of  record  or  beneficial)  has the ability, acting either alone or in concert with  others  with  ownership  interests,  to direct  or  cause  the  direction  of the management or policies of said corporation, partnership or other entity. Neither the department nor any employee of the department shall, by  reason  of  his  or  her  official position, be deemed a controlling person of any corporation, partnership or  other  entity,  nor  shall  any  person  who  serves  as an officer, administrator or other employee of any corporation, partnership or other entity or as a member of  a  board  of  directors  or  trustees  of  any corporation  be  deemed  to be a controlling person of such corporation, partnership or other entity as a result of such position or his  or  her official  actions  in  such  position.  The term "principal stockholder" shall mean any person who beneficially owns, holds or has the  power  to vote,  ten  percent  or  more  of any class of securities issued by said corporation.   4.  No  person,  corporation,  home,  institution,  hotel   or   other residential  facility  or  accommodation other than a facility or agency which possesses a valid operating certificate,  as  required  under  the  provisions  of this chapter, the mental hygiene law or public health law shall hold itself out, advertise or otherwise  in  any  form  or  manner represent that it is a facility offering accommodations and services for dependent, aged or disabled adults.   5.  Any  adult care facility subject to the provisions of this section that possesses a  valid  operating  certificate  as  of  October  first, nineteen  hundred  seventy-seven  shall  be  deemed  to  have department approval to continue operation of such facility for the duration or  the period  for  which  such  certificate was issued, provided such facility continues to be operated in accordance with applicable provisions of law and department regulations.   6. (a) The department, prior to  making  a  final  determination  with respect  to  approving  the  establishment  of,  or  the  certificate of incorporation of, or the articles of organization of,  or  an  operating certificate  for a residence for adults, adult home, or enriched housing program, shall in addition to any other requirements of  law  take  into consideration  and  be empowered to request information and advice as to the availability of facilities or services such as ambulatory, home care or other services which may serve as alternatives or substitutes for the whole or any part of a proposed facility and the possible economies  and improvements  in  services  to  be  anticipated  from  the  operation of centralized facilities and services reasonably available in the regional services area.  (b) In determining whether there is a public need for a residence  for adults or an adult home, the department shall consider the advice of the state  health planning and development agency designated pursuant to the provisions of the national health planning and resources development act of nineteen hundred seventy-four and any amendments thereto.  (c)  Notwithstanding  any  other  provision  of  this   article,   the department  shall  not  consider  public  need in determining whether to approve any proprietary adult home that was in existence  and  operating on  September first, nineteen hundred seventy-five as a family care home under the mental hygiene law or an adult care  facility  operated  by  a social services district.   7.  (a)  The  department  shall  suspend,  limit,  modify or revoke an operating certificate of a shelter for adults, residence for  adults  or adult  home  upon  determining  that  such action would be in the public interest in order to conserve resources by  restricting  the  number  of beds,  or  the  level  of services, or both, to those which are actually needed, after  taking  into  consideration  the  total  number  of  beds necessary to meet the public need, and the availability of facilities or services such as ambulatory, home care or other services which may serve as  alternatives or substitutes for the whole or any part of a facility, and in the case of modification, the level of care and  the  nature  and type  of  services  provided by a facility or required by all or some of the residents in or seeking admission to such facility, and whether such level of care is  consistent  with  the  operating  certificate  of  the facility.  (b)  Wherever  any  finding  as described in this subdivision is under consideration with respect to any particular  facility,  the  department shall cause to be published in a newspaper of general circulation in the geographic  area  of  the  facility at least thirty days prior to making such  a  finding  an  announcement  that  such  a   finding   is   under consideration  and  an  address to which interested persons can write to make their views known. The department shall take  all  public  comments into consideration in making such a finding.  (c)  The  department  shall,  upon  such  finding  described  in  this subdivision with respect to any facility or project, cause such facility  to be notified of the finding at least thirty days in advance of  taking the  proposed action to revoke, suspend, limit, or modify the facility's operating certificate. Upon receipt of any such notification and  before the  expiration  of  the  thirty  days  or  such longer period as may be specified in the notice, the facility may request a public hearing to be held in the county in which the facility is located. In no  event  shall the  revocation,  suspension,  limitation,  or  modification take effect prior to the thirtieth day after the date of the notice or prior to  the effective  date  specified  in  the  notice  or prior to the date of the hearing decision, whichever is later.  (d) Except as otherwise provided by law, all appeals from a finding of the department made pursuant to this subdivision shall  be  directly  to the  appellate  division  of  the supreme court in the third department. Except as otherwise expressly provided by law, such appeals  shall  have preference over all issues in all courts.   8.  No  adult  care  facility  certified  by  the  department which is operating in compliance with  this  chapter  and  regulations  shall  be required to be certified by the office of mental health as a residential care center for adults.   9.  (a)  The prior written approval of the department is required for: (i) any transfer, assignment or other disposition of ten percent or more of an interest or voting rights in a partnership,  business  corporation or  limited  liability  company  which  is the operator of an adult care facility to a new partner, shareholder or member; or (ii) any  transfer, assignment  or  other  disposition  of  interest  or  voting rights in a partnership, business corporation or limited liability company which  is the operator of an adult care facility which results in the ownership or control  of  more  than  ten  percent  of  the interest or voting rights thereunder by any person who has not been  previously  approved  by  the department for that operator.  (b)  With  respect  to a transfer, assignment or disposition involving less  than  ten  percent  of  an  interest  or  voting  rights  in  such partnership,  business corporation or limited liability company to a new partner, shareholder or member, no  prior  approval  of  the  department shall  be  required  except  where  required  by  paragraph  (a) of this subdivision.  However, no such transaction shall be effective unless  at least  ninety  days  prior  to  the intended effective date thereof, the partnership, business corporation or  limited  liability  company  fully completes  and  files  with  the  department  notice  on  a  form, to be developed by the department, which shall disclose  such  information  as may  reasonably  be necessary for the department to determine whether it should prohibit the transaction. Within ninety days  from  the  date  of receipt of such notice, the department may prohibit any such transaction under this subparagraph if it finds: (i) there are reasonable grounds to believe  the  proposed  transaction  does  not satisfy the character and competence review, as may be appropriate; or (ii)  if  the  transaction, together  with  all other such transactions during any five year period, would in the aggregate, involve  twenty-five  percent  or  more  of  the interest  in  the  entity  that constitutes the operator. The department shall state the specific reasons for prohibiting any  transaction  under this  subparagraph  and  shall  so  notify  each  party  to the proposed transaction.  (c) With respect to  a  transfer,  assignment  or  disposition  of  an interest  or  voting  rights  in  a partnership, business corporation or limited liability  company  to  any  existing  partner,  shareholder  or member,  no prior approval of the department shall be required. However, if the transaction involves the withdrawal of the  transferor  from  the partnership,  business corporation or limited liability company, no such  transaction shall be effective unless at least ninety days prior to  the intended  effective  date thereof, the partnership, business corporation or  limited  liability  company  fully  completes  and  files  with  the department  notice of such transaction. Within ninety days from the date of receipt  of  such  notice,  the  department  may  prohibit  any  such transaction   under  this  paragraph  if  the  equity  position  of  the partnership,  business  corporation  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 department shall state  the  specific  reason  for  prohibiting  any transaction  under  this paragraph and shall so notify each party to the proposed transaction.   10.  Notwithstanding  any  provision  of  law  to  the  contrary,  the department  is  authorized  to approve a certificate of incorporation or articles of organization for establishment of an adult care facility  on an  expedited  basis  where:  (a)  the  certificate  of incorporation or articles of organization reflects solely a change in  the  form  of  the business  organization  of an existing entity which had been approved by the  department  to  operate  an  adult   care   facility;   (b)   every incorporator,  stockholder,  member and director of the new entity shall have been  an  owner,  partner,  incorporator,  stockholder,  member  or director  of  the  existing  entity;  (c)  the distribution of ownership interests and voting rights in the new entity shall be the  same  as  in the existing entity; and (d) there shall be no change in the operator of the   adult   care   facility  other  than  the  form  of  its  business organization, as a  result  of  the  approval  of  such  certificate  of incorporation  or  articles  of  organization.  Upon  submission, if the department does not object to the proposal within  ninety  days  of  the receipt   of  a  complete  application,  the  proposal  will  be  deemed acceptable to the department and an amended operating certificate  shall be issued.