N.Y. Mental Hygiene Law § 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.