2023 New York Laws › MHY - Mental Hygiene › Title E - General Provisions › Article 32 - Regulation and Quality Control of Chemical Dependence Services and Compulsive Gambling Services. › 32.31 - Establishment or Incorporation of Facilities for Chemical Dependence Services.

§  32.31 Establishment  or  incorporation  of  facilities  for  chemical
dependence services.
(a) No provider of services or facility providing chemical  dependence
services  shall  be  established except with the written approval of the
commissioner. No certificate of incorporation of a business,  membership
or  not-for-profit  corporation or articles of organization of a limited
liability company shall hereafter be  filed  which  includes  among  its
corporate  purposes  or  powers  the  establishment  or  operation  of a
facility providing chemical dependence services or the  solicitation  of
contributions  for  any  such  purpose, or two or more of such purposes,
except with the written approval of the commissioner and, when otherwise
required by law, the approval of a justice of the supreme court endorsed
on or annexed to the certificate of incorporation.  Notwithstanding  any
other provision of law, the commissioner shall not require a corporation
to amend its certificate of incorporation or a limited liability company
to  amend its articles of organization which includes among the purposes
of the corporation or limited liability  company  the  establishment  or
operation  of a substance abuse program or alcoholism facility. Any such
corporate or limited liability company purposes, powers,  or  provisions
previously  approved by the office shall be deemed consent by the office
for such corporation or limited liability company  to  provide  chemical
dependence   services.   Nothing  herein  obviates  the  need  for  such
corporation or limited liability company to possess  a  valid  operating
certificate.
(b)  With  respect to the incorporation or establishment of a provider
or facility providing chemical  dependence  services,  the  commissioner
shall give written approval after all of the following requirements have
been met:
1.  An  application  for  approval  of  the  proposed  certificate  of
incorporation or articles  of  organization  shall  be  filed  with  the
commissioner  together with such other forms and information as shall be
prescribed  by,  or  acceptable  to,  him  or   her.   Thereafter,   the
commissioner  shall  forward  a  copy  of  the  proposed  certificate or
articles  or  organization  and  application   for   establishment   and
accompanying  documents,  to  the local governmental unit of the area in
which such facility is to be located. The  commissioner  shall  not  act
upon  such  application  until  the  local  governmental  unit has had a
reasonable time to submit their recommendations.
2. Upon receipt of the recommendations of the local governmental unit,
or the lapse of a reasonable time for comment,  the  commissioner  shall
submit  the  application  along  with  the  recommendations of the local
governmental unit to the advisory council on  alcoholism  and  substance
abuse services for its review and recommendation. The commissioner shall
not  act  upon  an  application  for establishment of a facility without
having first given such advisory council  a  reasonable  opportunity  to
make its recommendation on the application.
3.  The  commissioner  shall  not  take  any  action  contrary  to the
recommendation of the council unless he or she first appears before  the
council and explains his or her reasons therefor. The commissioner shall
not  take  any  action  contrary to the advice of the local governmental
unit until he or she affords, to such entity, an opportunity to  request
a  public hearing and if so requested, a public hearing shall be held in
accordance with subdivision (e) of section 32.29 of this article. If the
commissioner proposes to disapprove the  application  he  or  she  shall
afford  the  applicant  an  opportunity  to  request a public hearing in
accordance with subdivision (e) of section 32.29 of  this  article.  The
commissioner may hold such a public hearing on the application on his or
her own motion. Any public hearing held pursuant to this subdivision may

be  conducted by the commissioner or by any individual designated by the
commissioner.
(c)  The commissioner shall not approve a certificate of incorporation
or articles of organization or application for establishment unless  the
provisions of subdivision (a) of section 32.09 of this article have been
met  and  that  the commissioner is satisfied, insofar as applicable, as
to:
1. the public need for the existence of the facility at the  time  and
place  and  under  the  circumstances proposed taking into consideration
local, regional, and statewide need;
2. the absence of  availability  and  feasibility  of  development  of
facilities  or  services  which may serve as alternatives or substitutes
for the whole or any part of the proposed facility;
3. the character, competence and standing  in  the  community  of  the
proposed   incorporators,   directors,   members,   partners,  sponsors,
stockholders or operators; considering, with  respect  to  any  proposed
incorporator,   director,   member,  partner,  sponsor,  stockholder  or
operator who is already or  within  the  past  ten  years  has  been  an
incorporator,   director,   member,  partner,  sponsor,  stockholder  or
operator of any hospital, private proprietary home for adults, residence
for adults, or not-for-profit home for the aged or blind which has  been
issued  an  operating  certificate  by the office of children and family
services or a halfway house, hostel or other facility or institution for
the care, custody or treatment of the mentally disabled which is subject
to approval by an office of the department, the level of care  being  or
having  been  rendered  in  each such hospital, home, residence, halfway
house, hostel, or other residential facility or institution  with  which
such person is or was affiliated;
4. the overall financial condition of the applicant, through review of
audited  financial  statements,  taking into consideration the financial
resources of  the  proposed  facility  and  of  its  sources  of  future
revenues; and
5.  the  sufficiency  of such other matters as he or she shall deem in
the public interest.
(d) 1. Any change in the  person  who  or  partnership  which  is  the
provider of services shall be approved by the commissioner in accordance
with the provisions of this subdivision and subdivisions (a) through (c)
of this section.
2.  Any  transfer,  assignment  or other disposition of ten percent or
more of the stock, membership interest or voting rights thereunder of  a
corporation  or  a  limited  liability  company which is the provider of
services  providing  chemical  dependence  services  or  any   transfer,
assignment or other disposition of the stock, ownership or voting rights
thereunder  of  such  a corporation or a limited liability company which
results in the ownership or control of more  than  ten  percent  of  the
stock,  ownership  or  voting  rights  thereunder of such corporation or
limited liability company by any person shall be subject to approval  by
the  commissioner  in accordance with the provisions of this subdivision
and  subdivisions  (a)  through  (c)  of  this  section  and  rules  and
regulations  promulgated  pursuant  thereto.  In  the  absence  of  such
approval, the operating certificate of such facility shall be subject to
revocation or suspension.
3. No facility shall be approved  for  establishment  which  would  be
operated  by  a  partnership  or  limited  liability  company any of the
members of which are not natural persons.
4. No facility shall be approved  for  establishment  which  would  be
operated  by a corporation any of the stock of which is owned by another
corporation.
5. No corporation having power to solicit contributions for charitable
purposes shall be deemed to have authority to solicit contributions  for
any  purposes  for  which  the  approval of the commissioner is required
pursuant to subdivision (a) of this section, unless the  certificate  of
incorporation  or articles of organization specifically makes provisions
therefor, and the written approval of the commissioner is endorsed on or
annexed to such certificate or  articles  of  organization.  Where  such
approval  has  not  been  obtained  the  commissioner  may institute and
maintain an action in the supreme court through the attorney general  to
procure  a judgment dissolving and vacating or annulling the certificate
of incorporation or articles of organization of any such corporation  or
limited liability company.
6.  Only  a  natural  person  or  a  partnership  existing  under  the
partnership law may hereafter undertake to engage  in  the  business  of
operating   or  conducting  a  facility  providing  chemical  dependence
services  for  profit,  except  that:  (i)  a  person,  partnership   or
corporation which owned and was operating such a facility on July first,
nineteen  hundred  eighty-three  may  continue  to  own and operate such
facility; (ii) a business corporation organized pursuant to the business
corporation law or a limited liability company organized pursuant to the
limited liability company law may, with the approval of the commissioner
and in accordance with the provisions  of  this  section,  undertake  to
engage  in  the  business  of  operating  or  conducting such a facility
provided that such corporation or limited liability  company  shall  not
discriminate  because  of race, color, creed, national origin or sponsor
in admission or retention of  patients;  (iii)  any  person  who,  or  a
partnership  which,  is  operating  a  private  proprietary  facility in
accordance with applicable provisions of law may, with the  approval  of
the  commissioner, and in accordance with the provisions of this section
and any rules and regulations thereunder, form a business corporation to
engage in  the  business  of  operating  or  conducting  such  facility,
provided,  however, that such corporation shall not discriminate because
of race, color, creed,  national  origin  or  sponsor  in  admission  or
retention of patients.
(e)  The  commissioner  shall adopt and amend rules and regulations to
effectuate the provisions and purposes of this section, and  to  provide
for   the   revocation,   limitation   or   annulment  of  approvals  of
establishment  or  formation   of   limited   liability   companies   or
incorporation of corporations.
(f) Where the approval required by subdivision (a) of this section has
not been obtained, the commissioner may institute and maintain an action
in  the supreme court through the attorney general to procure a judgment
dissolving and vacating or annulling:
1. the  certificate  of  incorporation  of  any  such  corporation  or
articles of organization of any such limited liability company, or
2.  the  certificate  of  incorporation of any such corporation or the
articles of organization of any such limited liability company hereafter
incorporated or formed, the name, purposes, objectives, or activities of
which in  any  manner  may  reasonably  lead  to  the  belief  that  the
corporation  or  limited liability company possesses or may exercise any
of such purposes.