N.Y. Public Health Law § 4604: Certificate of authority required; application and approval

§ 4604. Certificate of authority required; application and approval.

1. No person shall construct, expand, acquire, maintain, or operate a

continuing care retirement community, or enter into a contract as an

operator, or solicit the execution of any contract for continuing care

retirement community services to be provided within the state or

advertise itself or otherwise hold itself as a "continuing care

retirement community", without obtaining a certificate of authority

pursuant to this article; provided, however, nothing in this subdivision

shall prohibit a person, authorized pursuant to section forty-six

hundred twenty-one or forty-six hundred twenty-two of this article, from

entering into priority reservation agreements, soliciting, collecting or

receiving priority reservation fees, or constructing and maintaining

sales offices and model units with respect to a proposed continuing care

retirement community.

2. In order to receive a certificate of authority to enter into

contracts with respect to a particular community, a person or persons,

hereinafter designated as the applicant, shall apply for a certificate

of authority on forms prescribed by the commissioner and, in addition,

shall submit the following:

a. a feasibility study, including a market analysis describing the

characteristics of the population to be served;

b. an actuarial study;

c. an initial disclosure statement as provided pursuant to section

forty-six hundred six of this title;

d. a copy of the proposed forms of contracts to be entered into with

residents;

e. complete details of any agreements with a licensed insurer,

including copies of proposed contracts, requiring the insurer to assume,

wholly or in part, the cost of medical or health related services to be

provided to a resident pursuant to a continuing care retirement contract

or continuing care at home contract;

f. a copy of each of the basic organizational documents and agreements

of the applicant of all participating entities;

g. a copy of the bylaws, rules and regulations and internal governing

documents of the applicant;

h. architectural program and sketches for the community;

i. the proposed community plan, including the number of independent

living units, skilled nursing facility beds, adult care facility beds,

if any, and a description of other social and health services provided

by the community;

j. copies of financial and personal disclosure information as required

by the council for the applicant and members of the board, officers, and

controlling persons of the proposed continuing care retirement

community, including:

(i) information necessary for the determination by the council of

character, competence, and experience, where information adequate to

make such determinations is not otherwise available to the council,

(ii) a list of continuing care retirement communities, adult care

facilities and health care facilities owned or operated by the

applicant, by any controlling persons of the applicant, or by entities

with which the members of the applicant's board are affiliated; the

address of each such facility; and the dates of ownership or operation

of each such facility,

(iii) in the event that any such community or facility specified in

this subdivision while under the control or operation of the applicant,

or any controlling person has been subjected to a limitation,

withdrawal, or refusal to grant accreditation by a recognized

accreditation organization, because of failure to comply with standards

governing the conduct and operation of the facility, information that

describes the nature of the violation, the agency or body enforcing the

standard (including its name and address), the steps taken by the

facility to remedy the violation, and an indication of whether any

accreditation has since been restored, and

(iv) a statement as to whether the applicant or any of its officers,

directors, partners, managers or a principal, parent or subsidiary

corporation:

(A) has been convicted of a crime or pleaded nolo contendere to a

felony charge, or been held liable or enjoined in a civil action by

final judgment if the criminal or civil action involved fraud,

embezzlement, fraudulent conversion, or misappropriation of property,

(B) had a prior discharge in bankruptcy or was found insolvent in any

court action,

(C) is or was subject to a currently effective injunctive or

restrictive order or federal or state administrative order relating to

business activity or health care as a result of an action brought by a

public agency or department, including, without limitation, actions

affecting a license to operate a hospital as defined by section

twenty-eight hundred one of this chapter, or a facility required to be

licensed or certified by the department. The statement shall set forth

the court or agency, date of conviction or judgment, the penalty imposed

or damages assessed, or the date, nature and issuer of the order;

k. information which describes the populations to be served; and

l. any other information as may be required by regulations adopted

pursuant to this article.

3. Nothing in this article shall be construed to enlarge, diminish or

modify: a social services district's otherwise valid recovery under

section three hundred sixty-nine of the social services law, nor medical

assistance eligibility under title eleven of article five of the social

services law nor applicable provisions of the estates, powers and trusts

law. Except as otherwise provided in this article, the activities of

continuing care retirement communities shall be subject to any other law

governing such activities including but not limited to article

twenty-eight of this chapter and article seven of the social services

law and regulations promulgated thereunder; provided, however, that the

provisions of paragraphs (d) and (e) of subdivision four of section

twenty-eight hundred one-a and section twenty-eight hundred two of this

chapter shall not apply, and provided that the provisions of paragraph

(a) of subdivision one and the provisions of subdivision two of section

four hundred sixty-one-b of the social services law with respect to

public need and the provisions of subdivision one of section four

hundred sixty-one-c of the social services law shall not apply to

residents who have been admitted in accordance with a contract provided

that, upon admission to the adult care facility, such residents shall be

given a notice which shall include, at a minimum, information regarding

facility services, resident responsibilities, supplemental services,

resident rights and protections and circumstances that warrant transfer.

The number of residential health care facility beds available pursuant

to subdivision five of this section, without proof of public need

therefor, shall be reduced by the number of residential health care

demonstration facility beds that are approved pursuant to this article.

4. No certificate of authority shall be issued unless an application

meeting the requirements of this section and all other requirements

established by law has been approved by:

a. (i) the superintendent of financial services as to the actuarial

principles involved, the financial feasibility of the facility, the form

and content of the proposed contracts to be entered into with residents

and insurance contracts between an operator and an insurer requiring the

insurer to assume, wholly or in part, the cost of medical or health

related services to be provided to a resident;

(ii) the superintendent of financial services as to the rates and

rating methodology, if any, to be used by the operator to determine any

entrance fee, monthly care fee and/or any separate charges for the

housing component of the continuing care contract including but not

limited to a cooperative or condominium fee charged to the resident as

proposed in said operator's application for certificate of authority.

Subsequent increases in any entrance or monthly care fee in excess of

fees calculated pursuant to the approved rating methodology shall

require approval of the superintendent. The term "rating methodology" as

used herein shall incorporate a combination of variables including but

not limited to a pricing structure for comparable services, projected

operating and health care costs and the applicable inflationary impact

thereon, projected income and occupancy rates and the refundability

component of the continuing care retirement contract;

(iii) the superintendent of financial services as to any monthly care

fee charged to a resident which may be increased or decreased subject to

approval by the superintendent of financial services, provided, that

monthly care fees may be increased or decreased without specific

approval as long as such increase or decrease does not exceed a relevant

cost index or indices which reflect all components of continuing care

including the costs associated with provision of health care as

determined and promulgated at least annually by the superintendent, and

provided further that the superintendent is notified of any such

increase or decrease prior to its taking effect;

(iv) an individual resident's monthly care fee shall not be modified

because of the increased need for services of that resident;

b. the commissioner as to those aspects of the application relating to

adult care facility beds, if any;

c. the public health and health planning council as to the

establishment of a skilled nursing facility by the applicant and as to

such other facilities and services as may require the public health and

health planning council's approval of the application; provided,

however, that the recommendations of the health systems agency having

geographical jurisdiction of the area where the continuing care

retirement community is located shall not be required with respect to

the establishment of an on-site or affiliated residential health care

facility to serve residents as part of the continuing care retirement

community, for up to the total number of residential health care

facility beds provided for in subdivision five of this section in

communities statewide;

d. the commissioner under section twenty-eight hundred two of this

chapter; provided, however, that, the recommendations of the public

health and health planning council and the health systems agency having

geographical jurisdiction of the area where the continuing care

retirement community is located shall not be required with respect to

the construction of an on-site or affiliated residential health care

facility to serve residents as part of the continuing care retirement

community, for up to the total number of residential health care

facility beds provided for in subdivision five of this section in

communities statewide; and

e. the attorney general, as to those aspects of the application

relating to a cooperative, condominium or other equity arrangement for

the independent living unit, if any.

5. Up to two thousand residential health care facility beds, as

authorized herein, that may be approved as components of continuing care

retirement communities shall not be considered by the department and the

health systems agencies in the determination of public need for

residential health care facility services; provided, however, that if

the community seeking to construct such beds does not provide life care

to all residents, it must adequately make the assurances required by

subdivision two of section forty-six hundred twenty-four of this

article.

6. If the approvals required by subdivision four of this section have

been obtained, the commissioner shall either approve or reject the

application. In order to approve the application, the commissioner shall

have determined that:

a. the proposed community will meet a need and will fulfill the

purposes of this article;

b. the applicant has satisfied the requirements of this article;

c. the applicant has demonstrated to the satisfaction of the council

that the applicant and members of the board, officers, and controlling

persons of the applicant, are of such character, experience, competence

and standing in the community as to give reasonable assurance of their

ability to conduct the affairs of the proposed continuing care

retirement community in the best interest of the community and in the

public interest, and to provide proper care to residents. In the case of

an applicant that is controlled, the council must be satisfied that the

controlling person has also acted in a manner that is consistent with

the public interest;

d. the applicant has otherwise demonstrated the capability to

organize, market, manage, promote and operate the community and can be

expected to meet its obligations in accordance with this article and in

accordance with its contracts with residents;

e. the applicant has demonstrated that the total number of beds for

the nursing facility component and the adult care facility bears a

reasonable relation to the number of independent living units proposed

for such community; and

f. with respect to communities which include a residential health care

facility which does not require establishment approval under section

twenty-eight hundred one-a of this chapter, the applicant has sufficient

financial resources and sources of future revenues for the operation of

the residential health care facility component.

7. Any change in the legal entity operating the continuing care

retirement community, or in a controlling person of the community shall

require approval in the same manner as an original application;

provided, however, that the commissioner may waive any requirement to

provide information that is not relevant to such change and provided,

further, that the continued public need for the community shall be

presumed.

8. The operator shall designate and make knowledgeable personnel

available to prospective residents to answer questions about any

information contained in the disclosure statement or contract. The

disclosure statement and the contract shall each state on the cover or

top of the first page in bold twelve point print the following "This

matter involves a substantial financial investment and a legally binding

contract. In evaluating the disclosure statement and the contract prior

to any commitment, it is recommended that you consult with an attorney

and financial advisor of your choice, if you so elect, who can review

these documents with you."

9. The commissioner shall issue the certificate of authority to the

applicant upon approval of the application.