N.Y. Public Health Law § 2801-a: Establishment or incorporation of hospitals

§ 2801-a. Establishment or incorporation of hospitals. 1. No hospital,

as defined in this article, shall be established except with the written

approval of the public health and health planning council. No

certificate of incorporation of a business membership or not-for-profit

corporation shall hereafter be filed which includes among its corporate

purposes or powers the establishment or operation of any hospital, as

defined in this article, or the solicitation of contributions for any

such purpose, or two or more of such purposes, except with the written

approval of the public health and health planning council, and when

otherwise required by law of a justice of the supreme court, endorsed on

or annexed to the certificate of incorporation. No articles of

organization of a limited liability company established pursuant to the

New York limited liability company law which includes among its powers

or purposes the establishment or operation of any hospital as defined in

this article, shall be filed with the department of state except upon

the approval of the public health and health planning council.

2. With respect to the incorporation or establishment of any hospital,

as defined in this article, the public health and health planning

council shall give written approval after all of the following

requirements have been met. An application for approval of the proposed

certificate of incorporation, articles of organization or establishment

shall be filed with the public health and health planning council

together with such other forms and information as shall be prescribed

by, or acceptable to, the public health and health planning council.

Thereafter, the public health and health planning council shall forward

a copy of the proposed certificate or application for establishment, and

accompanying documents, to the health systems agency, if any, having

geographical jurisdiction of the area where the proposed institution is

to be located. The public health and health planning council shall act

upon such application after the health systems agency has had a

reasonable time to submit their recommendations. At the time members of

the public health and health planning council are notified that an

application is scheduled for consideration, the applicant and the health

systems agency shall be so notified in writing. The public health and

health planning council shall afford the applicant an opportunity to

present information in person concerning the application to a committee

designated by the council. The public health and health planning council

shall not take any action contrary to the advice of the health systems

agency until it affords to the health systems agency an opportunity to

request a public hearing and, if so requested, a public hearing shall be

held. If the public health and health planning council proposes to

disapprove the application it shall afford the applicant an opportunity

to request a public hearing. The public health and health planning

council may hold a public hearing on the application on its own motion.

Any public hearing held pursuant to this subdivision may be conducted by

the public health and health planning council, or by any individual

designated by the public health and health planning council. Beginning

on January first, nineteen hundred ninety-four, and each year

thereafter, a complete application received between January first and

June thirtieth of each year shall be reviewed by the appropriate health

systems agency and the department and presented to the public health and

health planning council for its consideration prior to June thirtieth of

the following year and a complete application received between July

first and December thirty-first of each year shall be reviewed by the

appropriate health systems agency and the department presented to the

public health and health planning council for consideration prior to

December thirty-first of the following year.

2-a. (a) Notwithstanding any provision of law to the contrary, the

commissioner is authorized to approve a certificate of incorporation or

articles of organization for establishment of a hospital, provided that:

(i) 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 public health and health

planning council or its predecessor; and (ii) every incorporator,

stockholder, member, director and sponsor of the new entity shall have

been an owner, partner, incorporator, stockholder, member, director or

sponsor of the existing entity; and (iii) the distribution of ownership,

interests and voting rights in the new entity shall be the same as in

the existing entity; and (iv) there shall be no change in the operator

of a hospital other than the form of its business organization, as a

result of the approval of such certificate of incorporation or articles

of organization. Any approval by the public health and health planning

council of a person as an owner, incorporator, stockholder, member,

director or sponsor in the existing entity shall be deemed to be

approval for the same degree of participation in the new entity. If the

proposal is acceptable to the commissioner an amended operating

certificate shall be issued. In the event the commissioner determines

that the proposed transfer is not approvable the application shall be

referred to the public health and health planning council for its review

and action. If the public health and health planning council proposes to

disapprove the application, it shall afford the applicant an opportunity

to request a public hearing and, if so requested, a public hearing shall

be held. Any public hearing held pursuant to this subdivision may be

conducted by the public health and health planning council, or by any

individual designated by the public health and health planning council.

2-b. (a) This subdivision applies with respect to an application under

this section relating to the incorporation or establishment of any

nursing home, in addition to subdivision two of this section.

(b) The department shall provide notice, in writing or electronically,

of an application for establishment to the state office of long-term

care ombudsman, within thirty days of acknowledgement of the application

by the department. Thereafter, the state office of the long-term care

ombudsman shall submit its recommendation to the department and to the

public health and health planning council for consideration about such

application. At the time members of such council are notified that an

application is scheduled for consideration by a committee designated by

the public health and health planning council, the department shall also

notify the state office of the long-term care ombudsman, in writing or

electronically.

(c) In the case of an application for establishment relating to an

existing nursing home, the established operator and applicant shall

provide notice of the application, in writing or electronically, to

residents of the nursing home and their representatives and the staff of

the nursing home, including their union representatives, within thirty

days of acknowledgment of the application by the department. The

established operator and applicant shall also immediately notify

residents of the nursing home and their representatives and the staff of

the nursing home, including their union representatives, when the

established operator and applicant is notified that its application is

scheduled for consideration by a committee designated by the public

health and health planning council.

3. The public health and health planning council shall not approve a

certificate of incorporation, articles of organization or application

for establishment unless it is satisfied, insofar as applicable, as to

(a) the public need for the existence of the institution at the time and

place and under the circumstances proposed, provided, however, that in

the case of an institution proposed to be established or operated by an

organization defined in subdivision one of section one hundred

seventy-two-a of the executive law, the needs of the members of the

religious denomination concerned, for care or treatment in accordance

with their religious or ethical convictions, shall be deemed to be

public need; (b) the character, competence, and standing in the

community, of the proposed incorporators, directors, sponsors,

stockholders, members or operators; with respect to any proposed

incorporator, director, sponsor, stockholder, member or operator who is

already or within the past ten years has been an incorporator, director,

sponsor, member, principal stockholder, principal member, or operator of

any hospital, private proprietary home for adults, residence for adults,

or non-profit home for the aged or blind which has been issued an

operating certificate by the state department of social services, or a

halfway house, hostel or other residential facility or institution for

the care, custody or treatment of the mentally disabled which is subject

to approval by the department of mental hygiene, no approval shall be

granted unless the public health and health planning council, having

afforded an adequate opportunity to members of health systems agencies,

if any, having geographical jurisdiction of the area where the

institution is to be located to be heard, shall affirmatively find by

substantial evidence as to each such incorporator, director, sponsor,

principal stockholder or operator that a substantially consistent high

level of care is being or was being rendered in each such hospital,

home, residence, halfway house, hostel, or other residential facility or

institution with which such person is or was affiliated; for the

purposes of this paragraph, the public health and health planning

council shall adopt rules and regulations, subject to the approval of

the commissioner, to establish the criteria to be used to determine

whether a substantially consistent high level of care has been rendered,

provided, however, that there shall not be a finding that a

substantially consistent high level of care has been rendered where

there have been violations of the state hospital code, or other

applicable rules and regulations, that (i) threatened to directly affect

the health, safety or welfare of any patient or resident, and (ii) were

recurrent or were not promptly corrected; (c) the financial resources of

the proposed institution and its sources of future revenues; and (d)

such other matters as it shall deem pertinent.

3-a. Notwithstanding any other provisions of this chapter, the public

health council is hereby empowered to approve the establishment, for

demonstration purposes, of not more than one existing hospital within

the geographical jurisdiction of each health systems agency established

under the provisions of subdivision (c) of section twenty-nine hundred

four of this chapter. The purposes of such hospitals shall be to offer

and provide nursing home services, board and lodging to persons

requiring such services within one hospital. The public health council

may approve the establishment of such hospitals without regard to the

requirement of public need as set forth in subdivision three of this

section.

3-b. (a) This subdivision applies to an application under this section

relating to a nursing home, and applies in addition to subdivision three

of this section.

(b) The application shall provide information as to the character,

competence and standing in the community of every individual and entity

of the applicant and specify the identity of every nursing home in which

each of those individuals and entities is, or in the preceding seven

years has held a controlling interest or has been a controlling person,

principal stockholder or principal member; and the nature of that

interest. As used in this subdivision, "individual and entity of the

applicant" shall include but not be limited to an individual or entity

that is a controlling person, principal stockholder, or principal member

of the applicant. The council shall not approve the application unless

it finds that each individual and entity, in relation to ownership of a

nursing home located in the United States, for at least the previous

seven years, demonstrated satisfactory character, competence and

standing in the community and the nursing home provided a consistently

high level of care. The council shall adopt rules and regulations,

subject to the approval of the commissioner, to establish the criteria

to be used to determine whether a consistently high level of care has or

has not been rendered by an applicant at such nursing home. The council

shall consider, at a minimum, the following occurrences to determine

whether a consistently high level of care has been delivered at a

facility, and shall require the applicant to disclose and provide an

explanation for any of the following occurrences: (i) a facility that

has earned a two-star rating or less by the federal centers for Medicare

and Medicaid Services (CMS) (or a comparable rating under a successor

CMS rating system);(ii) where there have been violations of the state or

federal nursing home code, or other applicable rules and regulations,

that threatened to directly affect the health, safety or welfare of any

patient or resident, including but not limited to a finding of immediate

jeopardy, or actual harm, and were recurrent or were not promptly

corrected, including but not limited to repeat deficiencies for the same

or similar violations over a three year period or during the entire

duration of ownership if less than three years, or any facility which

has been in receivership; (iii) where a facility has closed as a result

of a settlement agreement from a decertification action or licensure

revocation; or (iv) has been involuntarily terminated from the Medicare

or Medicaid program in the prior five years, provided however, that

where an applicant has taken over a facility and promptly corrected such

deficiencies, the council may consider the application.

4. (a) Any change in the person who is the operator of a hospital

shall be approved by the public health and health planning council in

accordance with the provisions of subdivisions two and three of this

section. Notwithstanding any inconsistent provision of this paragraph,

any change by a natural person who is the operator of a hospital seeking

to transfer part of his or her interest in such hospital to another

person or persons so as to create a partnership shall be approved in

accordance with the provisions of paragraph (b) of this subdivision.

(b) (i) Any transfer, assignment or other disposition of ten percent

or more of an interest or voting rights in a partnership or limited

liability company, which is the operator of a hospital to a new partner

or member, shall be approved by the public health and health planning

council, in accordance with the provisions of subdivisions two and three

of this section, except that: (A) any such change shall be subject to

the approval by the public health and health planning council in

accordance with paragraph (b) of subdivision three of this section only

with respect to the new partner or member, and any remaining partners or

members who have not been previously approved for that facility in

accordance with such paragraph, and (B) such change shall not be subject

to paragraph (a) of subdivision three of this section.

(ii) With respect to a transfer, assignment or disposition involving

less than ten percent of an interest or voting rights in such

partnership or limited liability company to a new partner or member, no

prior approval of the public health and health planning council shall be

required. However, no such transaction shall be effective unless at

least ninety days prior to the intended effective date thereof, the

partnership or limited liability company fully completes and files with

the public health and health planning council notice on a form, to be

developed by the public health and health planning council, which shall

disclose such information as may reasonably be necessary for the public

health and health planning council to determine whether it should bar

the transaction for any of the reasons set forth in item (A), (B), (C)

or (D) below. Within ninety days from the date of receipt of such

notice, the public health and health planning council may bar any

transaction under this subparagraph: (A) if the equity position of the

partnership or limited liability company, determined in accordance with

generally accepted accounting principles, would be reduced as a result

of the transfer, assignment or disposition; (B) if the transaction would

result in the ownership of a partnership or membership interest by any

persons who have been convicted of a felony described in subdivision

five of section twenty-eight hundred six of this article; (C) if there

are reasonable grounds to believe that the proposed transaction does not

satisfy the character and competence criteria set forth in subdivision

three of this section; or (D) if the transaction, together with all

transactions under this subparagraph for the partnership, or successor,

during any five year period would, in the aggregate, involve twenty-five

percent or more of the interest in the partnership. The public health

and health planning council shall state specific reasons for barring any

transaction under this subparagraph and shall so notify each party to

the proposed transaction.

(iii) With respect to a transfer, assignment or disposition of an

interest or voting rights in such partnership or limited liability

company to any remaining partner or member, which transaction involves

the withdrawal of the transferor from the partnership or limited

liability company, no prior approval of the public health and health

planning council shall be required. However, no such transaction shall

be effective unless at least ninety days prior to the intended effective

date thereof, the partnership or limited liability company fully

completes and files with the public health and health planning council

notice on a form, to be developed by the public health and health

planning council, which shall disclose such information as may

reasonably be necessary for the public health and health planning

council to determine whether it should bar the transaction for the

reason set forth below. Within ninety days from the date of receipt of

such notice, the public health and health planning council may bar any

transaction under this subparagraph if the equity position of the

partnership 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 public health and health

planning council shall state specific reasons for barring any

transaction under this subparagraph and shall so notify each party to

the proposed transaction.

(c) Any transfer, assignment or other disposition of ten percent or

more of the stock or voting rights thereunder of a corporation which is

the operator of a hospital or which is a member of a limited liability

company which is the operator of a hospital to a new stockholder, or any

transfer, assignment or other disposition of the stock or voting rights

thereunder of such a corporation which results in the ownership or

control of more than ten percent of the stock or voting rights

thereunder of such corporation by any person not previously approved by

the public health and health planning council, or its predecessor, for

that corporation shall be subject to approval by the public health and

health planning council, in accordance with the provisions of

subdivisions two and three of this section and rules and regulations

pursuant thereto; except that: any such transaction shall be subject to

the approval by the public health and health planning council in

accordance with paragraph (b) of subdivision three of this section only

with respect to a new stockholder or a new principal stockholder; and

shall not be subject to paragraph (a) of subdivision three of this

section. In the absence of such approval, the operating certificate of

such hospital shall be subject to revocation or suspension. No prior

approval of the public health and health planning council shall be

required with respect to a transfer, assignment or disposition of ten

percent or more of the stock or voting rights thereunder of a

corporation which is the operator of a hospital or which is a member of

a limited liability company which is the owner of a hospital to any

person previously approved by the public health and health planning

council, or its predecessor, for that corporation. However, no such

transaction shall be effective unless at least ninety days prior to the

intended effective date thereof, the stockholder completes and files

with the public health and health planning council notice on forms to be

developed by the public health and health planning council, which shall

disclose such information as may reasonably be necessary for the public

health and health planning council to determine whether it should bar

the transaction. Such transaction will be final as of the intended

effective date unless, prior thereto, the public health and health

planning council shall state specific reasons for barring such

transactions under this paragraph and shall notify each party to the

proposed transaction. Nothing in this paragraph shall be construed as

permitting a person not previously approved by the public health and

health planning council for that corporation to become the owner of ten

percent or more of the stock of a corporation which is the operator of a

hospital or which is a member of a limited liability company which is

the owner of a hospital without first obtaining the approval of the

public health and health planning council.

(d) No hospital shall be approved for establishment which would be

operated by a limited partnership, or by a partnership any of the

members of which are not natural persons.

(e) No hospital shall be approved for establishment which would be

operated by a corporation any of the stock of which is owned by another

corporation or a limited liability company if any of its corporate

members' stock is owned by another corporation.

(f) No corporation shall be a member of a limited liability company

authorized to operate a hospital unless its proposed incorporators,

directors, stockholders or principal stockholders shall have been

approved in accordance with the provisions of subdivision three of this

section applicable to the approval of the proposed incorporators,

directors or stockholders of any other corporation requiring approval

for establishment.

(g) A natural person appointed as trustee of an express testamentary

trust, created by a deceased sole proprietor, partner or shareholder in

the operation of a hospital for the benefit of a person of less than

twenty-five years of age, may, as the trustee, apply pursuant to

subdivision two of this section for approval to operate or participate

in the operation of a facility or interest therein which is included in

the corpus of such trust until such time as all beneficiaries attain the

age of twenty-five, unless the trust instrument provides for earlier

termination, or such beneficiaries receive establishment approval in

their own right, or until a transfer of the trust corpus is approved by

the public health and health planning council, in accordance with this

subdivision and subdivisions two and three of this section, whichever

first occurs. The public health and health planning council shall not

approve any such application unless it is satisfied as to:

(i) the character, competence and standing in the community of each

proposed trustee operator pursuant to the provisions of paragraph (b) of

subdivision three of this section; and

(ii) the ability of the trustee under the terms of the trust

instrument to operate or participate in the operation of the hospital in

a manner consistent with this chapter and regulations promulgated

pursuant thereto.

(h) A natural person appointed conservator pursuant to article

eighty-one of the mental hygiene law, or a natural person appointed

committee of the property of an incompetent pursuant to article

eighty-one of the mental hygiene law or a sole proprietor, partner or

shareholder of a hospital, may apply pursuant to subdivision two of this

section for approval to operate a hospital owned by the conservatee or

incompetent for a period not exceeding two years or until a transfer of

the hospital is approved by the public health and health planning

council in accordance with subdivisions two and three of this section,

whichever occurs first. The public health and health planning council

shall not approve any such application unless it is satisfied as to:

(i) the character, competence and standing in the community of the

proposed conservator operator or committee operator pursuant to the

provisions of paragraph (b) of subdivision three of this section; and

(ii) the ability of the conservator or committee under the terms of

the court order to operate the hospital in a manner consistent with this

chapter and regulations promulgated pursuant thereto.

(i) Upon recommendation by the commissioner, if the public health and

health planning council finds by substantial evidence that an improper

delegation of management authority by a governing authority or operator

of a general hospital has occurred as defined by paragraph (g) of

subdivision one of section twenty-eight hundred six-a of this article,

the establishment approval of such hospital shall be subject to

revocation or suspension.

5. Except as otherwise hereinafter provided, no county, city, town,

village or other governmental subdivision shall establish or create any

agency concerned with the establishment of any hospital as defined in

this article without securing the written approval of the public health

and health planning council in accordance with the requirements and

procedures of subdivisions two and three of this section with respect to

certificates of incorporation, articles of organization and

establishment, except that the requirements relating to the proposed

incorporators, directors and sponsors shall not apply. The preceding

shall not apply to the establishment of state hospitals by the state of

New York or to the establishment of municipal hospitals by the city of

New York.

6. No corporation having power to solicit contributions for charitable

purposes shall be deemed to have authority to solicit contributions for

any purpose for which the approval of the public health and health

planning council is required, unless the certificate of incorporation

specifically makes provision therefor, and the written approval of the

public health and health planning council, or its predecessor is

endorsed on or annexed to such certificate.

7. Where such approval has not been obtained the public health and

health planning council 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 of

(a) any such corporation, or

(b) any corporation hereafter incorporated, the name, purposes,

objects or the activities of which in any manner may lead to the belief

that the corporation possesses or may exercise any of such purposes.

8. No corporation heretofore formed, having among its powers the power

to solicit contributions for charitable purposes, may solicit or

continue to solicit contributions for a purpose for which the approval

of the public health and health planning council is required without the

written approval of the public health and health planning council,

except: (a) a corporation which, prior to June first, nineteen hundred

seventy, had received the approval of the state board of social welfare

of a certificate of incorporation containing such power; or (b) a

corporation, which prior to December first, two thousand ten, had

received the approval of the public health council of a certificate of

incorporation containing such power. If such approval is not obtained

and the corporation continues to solicit or to receive contributions for

such purpose or advertises that it has obtained such approval, the

public health and health planning council 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 of any such corporation.

9. Only a natural person, a partnership or limited liability company

may hereafter undertake to engage in the business of operating or

conducting a hospital, as defined in this article, for profit, except

that: (a) a person, partnership or corporation which owned and was

operating a hospital on April fourth, nineteen hundred fifty-six, may

continue to own and operate such hospital; (b) a business corporation

may, with the approval of the public health council, and in accordance

with the provisions of subdivisions two and three of this section,

undertake to engage in the business of operating or conducting a

hospital, as defined in this article for profit, provided that such

corporation shall not discriminate because of race, color, creed,

national origin or sponsor in admission or retention of patients; (c) a

business corporation owning and operating a nursing home on May

twenty-second, nineteen hundred sixty-nine, in accordance with

applicable provisions of law, may continue to own and operate such

nursing home; (d) a person who, or a partnership which, is operating a

private proprietary nursing home in accordance with applicable

provisions of law may, with the approval of the public health and health

planning council, and in accordance with the provisions of subdivision

three of this section and any rules and regulations thereunder form a

business corporation to engage in the business of operating or

conducting such nursing home, provided, however, that such corporation

shall not discriminate because of race, color, creed, national origin or

sponsor in admission or retention of patients; (e) a business

corporation operating a nursing home, which corporation was formed with

the approval of the state board of social welfare, may continue to own

and operate such nursing home.

10. (a) The public health and health planning council, by a majority

vote of its members, 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.

(b) (i) No approval of establishment shall be revoked, limited or

annulled without first offering the person who received such approval

the opportunity of requesting a public hearing. (ii) The commissioner,

at the request of the public health and health planning council, shall

fix a time and place for any such hearing requested. (iii) Notice of the

time and place of the hearing shall be served in person or mailed by

registered mail to the person who has received establishment approval at

least twenty-one days before the date fixed for the hearing. (iv) Such

person shall file with the department, not less than eight days prior to

the hearing, a written answer. (v) All orders or determinations

hereunder shall be subject to review as provided in article

seventy-eight of the civil practice law and rules. Application for such

review must be made within sixty days after service in person or by

registered mail of a copy of such order or determination.

11. Any person filing a proposed certificate of incorporation,

articles of organization or an application for establishment of a

residential health care facility for approval of the public health and

health planning council shall file with the commissioner such

information as may be prescribed by regulation, including, but not

limited to, the following:

(a) The name and address and a description of the interest held by

each of the following persons:

(i) any person, who directly or indirectly, beneficially owns any

interest in the land on which the facility is located;

(ii) any person who, directly or indirectly, beneficially owns any

interest in the building in which the facility is located;

(iii) 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

(iv) 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.

(b) If any person named in response to paragraph (a) of this

subdivision is a partnership or limited liability company, then the name

and address of each partner or member.

(c) If any person named in response to paragraph (a) 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.

(d) If any corporation named in response to paragraph (a) 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.

* (e) Information pertaining to staffing, the source of staffing, and

staff skill mix.

* NB Effective October 21, 2021

12. The following definitions shall be applicable to this section:

(a) "Controlling person" of any corporation, partnership, limited

liability company or other entity means 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 or membership interests, to direct or cause the direction of

the management or policies of said corporation, partnership, limited

liability company or other entity. Neither the commissioner nor any

employee of the department nor any member of a local legislative body of

a county or municipality, nor any county or municipal official except

when acting as the administrator of a residential health care facility,

shall, by reason of his or her official position, be deemed a

controlling person of any corporation, partnership, limited liability

company or other entity, nor shall any person who serves as an officer,

administrator or other employee of any corporation, partnership, limited

liability company 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, limited liability company or other entity

as a result of such position or his or her official actions in such

position.

(b) "Principal stockholder" of a corporation means 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) "Principal member" of a limited liability company means any person

who beneficially owns, holds or has the power to vote, ten percent or

more interest determined by such member's share in the current profits

of the limited liability company.

13. Any person who operates a hospital without the written approval of

the public health and health planning council shall be liable to the

people of the state for a civil penalty not to exceed ten thousand

dollars for every such violation.

14. (a) The public health and health planning council may approve the

establishment of not-for-profit rural health networks as defined in

article twenty-nine-A of this chapter, pursuant to the provisions of

subdivisions two and three of this section, except that the public

health and health planning council shall not consider the public need

for and financial resources and sources of future revenues of such

networks which do not seek approval to operate a hospital. In addition

to character and competence, the public health and health planning

council may take into consideration available network plans.

(b) The board of directors or trustees of a not-for-profit rural

health network shall be comprised of a representative or representatives

of participating providers and members of the general public residing in

the area served by such network.

15. (a) Diagnostic or treatment centers established exclusively to

provide end stage renal disease services may be operated by corporations

and limited liability companies formed under the laws of New York whose

stockholders or members, as applicable, are not natural persons if such

corporations and limited liability companies and its principal

stockholders and members, as applicable, and controlling persons comply

with all applicable requirements of this section and demonstrate, to the

satisfaction of the public health and health planning council,

sufficient experience and expertise in delivering high quality end stage

renal disease care. For purposes of this subdivision, the public health

and health planning council shall adopt and amend rules and regulations,

notwithstanding any inconsistent provision of this section, to address

any matter it deems pertinent to the establishment and operation of

diagnostic or treatment centers pursuant to this subdivision; provided

that such rules and regulations shall include, but not be limited to

provisions governing or relating to: (i) any direct or indirect changes

or transfers of ownership interests or voting rights in such

corporations and limited liability companies or their stockholders or

members, as applicable, and provide for public health and health

planning council approval of any change in controlling interests,

principal stockholders, principal members, controlling persons, parent

company or sponsors; (ii) oversight of the operator and its stockholders

or members, as applicable, including local governance of the diagnostic

or treatment centers; and (iii) relating to the character and competence

and qualifications of, and changes relating to, the directors, managers

and officers of the operator and its principal stockholders, principal

members, controlling persons, parent company or sponsors.

(b) The following provisions of this section shall not apply to

diagnostic or treatment centers operated pursuant to this subdivision:

(i) paragraph (b) of subdivision three of this section, relating to

stockholders and members; (ii) paragraph (c) of subdivision four of this

section, relating to the disposition of stock or voting rights; and

(iii) paragraph (e) of subdivision four of this section, relating to the

ownership of stock or membership.

16. (a) The commissioner shall charge to applicants for the

establishment of hospitals the following application fee:

(i) For general hospitals: $3,000

(ii) For nursing homes: $3,000

(iii) For safety net diagnostic and treatment centers

as defined in paragraph (c) of this subdivision: $1,000

(iv) For all other diagnostic and treatment centers: $2,000

(b) An applicant for both establishment and construction of a hospital

shall not be subject to this subdivision and shall be subject to fees

and charges as set forth in section twenty-eight hundred two of this

article.

(c) The commissioner may designate a diagnostic and treatment center

or proposed diagnostic and treatment center as a "safety net diagnostic

and treatment center" if it is operated or proposes to be operated by a

not-for-profit corporation or local health department; participates or

intends to participate in the medical assistance program; demonstrates

or projects that a significant percentage of its visits, as determined

by the commissioner, were by uninsured individuals; and principally

provides primary care services as defined by the commissioner.

(d) The fees and charges paid by an applicant pursuant to this

subdivision for any application for establishment of a hospital approved

in accordance with this section shall be deemed allowable capital costs

in the determination of reimbursement rates established pursuant to this

article. The cost of such fees and charges shall not be subject to

reimbursement ceiling or other penalties used by the commissioner for

the purpose of establishing reimbursement rates pursuant to this

article. All fees pursuant to this section shall be payable to the

department of health for deposit into the special revenue funds - other,

miscellaneous special revenue fund - 339, certificate of need account.

17. (a) Diagnostic or treatment centers or other facilities managed

and administered by a local health department for the purpose of

providing limited health care services as defined by the commissioner

may be operated by a local health department. Such facilities shall be

referred to in this subdivision as "municipal limited health care

service facilities".

(b) The commissioner shall promulgate regulations for municipal

limited health care service facilities, which may be different from the

regulations otherwise applicable to hospitals, including, but not

limited to: designating or limiting the diagnoses and services that may

be provided; employee health requirements; and requirements or

guidelines for advertising and signage, disclosure of ownership

interests, informed consent, record keeping, referral for treatment,

case reporting to the patient's primary care or other health care

providers, design, construction, fixtures, and equipment.