NY State Senate Bill 2017-S8612

Archive: Last Bill Status - In Assembly Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

Please enter your contact information

First Name

Last Name

Email Address

A valid email address is required.

Home address is used to determine the senate district in which you reside. Your support or opposition to this bill is then shared immediately with the senator who represents you.

Optional services from the NY State Senate:

Create an account. An account allows you to officially support or oppose key legislation, sign petitions with a single click, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Include a custom message for your Senator? (Optional)

Enter a message to your senator. Many New Yorkers use this to share the reasoning behind their support or opposition to the bill. Others might share a personal anecdote about how the bill would affect them or people they care about.

Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 13, 2018	referred to higher education delivered to assembly passed senate ordered to third reading cal.1776 committee discharged and committed to rules
May 10, 2018	referred to corporations, authorities and commissions

2017-S8612 (ACTIVE) - Details

See Assembly Version of this Bill:: A10997
Current Committee:: Assembly Higher Education
Law Section:: Not-for-Profit Corporation Law
Laws Affected:: Amd §1412, N-PC L
Versions Introduced in 2019-2020 Legislative Session:: S1815, A2993

2017-S8612 (ACTIVE) - Summary

Relates to university faculty practice corporations; permits medical staff at certain hospitals to form tax exempt practice corporations.

2017-S8612 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S8612

SPONSOR: HANNON
 
TITLE OF BILL:  An act to amend the not-for-profit corporation law, in
relation to university faculty practice corporations

 
PURPOSE:

To permit the medical staff of a general hospital as defined by Article
28 of the Public Health Law or a facility authorized by Article 16 of
the Mental Hygiene Law to organize practice corporations under the
State's Not-for-Profit Corporation Law Section 1412.

 
SUMMARY OF PROVISIONS:

Section one amends Not-for-Profit Corporation Law § 1412 to permit indi-
viduals who are authorized to render the same professional service and
who are members of the medical staff of general hospitals as defined by
New York Public Health Law Section 2801 or a facility authorized by
Article 16 of the Mental Hygiene Law to organize practice corporations
in the same manner and form as faculty of an accredited medical school

or other enumerated medical education entities are permitted to organize
under § 1412. All such practice organizations would be referred to as
"university faculty practice corporations" under § 1412, as it would be
amended, and qualifying existing corporations would be permitted to
reincorporate under § 1412 if desired.

In furtherance of the foregoing, § 1412(a) would be amended to permit
members of a medical staff to organize or cause to be organized a prac-
tice corporation for the purpose of supporting the mission of the gener-
al hospital by providing care to individuals the hospitals are author-
ized to serve. In addition, such practice corporations would be required
to operate in compliance with Section 501(c)(3) of the Internal Revenue
Code. Individuals on the staff of one or more general hospitals would be
permitted to form a single practice corporation under Section 1412 if
such hospitals are commonly controlled or one of the hospitals controls
the others.  Lastly this section would amend § 1412(g) to specifically
permit all "university faculty practice corporations" to operate under
the name (or portion thereof) or initials of the affiliated school,
education entity, hospital or hospitals or under the name (or portion
thereof) or initials of the system with which the affiliated school,
education entity, hospital or hospitals is/are publicly identified.

Section two provides that the act shall take effect immediately.

 
JUSTIFICATION:

Section 1412 of the State's Not-for-Profit Corporation Law currently
permits individuals who are authorized by law to practice the same
professional service and who are members of the faculty of the same
accredited medical school or other medical education entity to form
practice corporations known as "university faculty practice corpo-
rations." Such corporations are organized for the purpose of supporting
the mission of the related medical school or medical education entity
and must be operated in compliance with Section 501(c)(3) of the Inter-
nal Revenue Code and the practice plan associated with the affiliate
medical school or medical education entity.


In contrast, individuals who are similarly authorized by law to practice
the same professional service and who are members of the medical staff
of a general hospital are not currently permitted to organize a practice
corporation under Not-For-Profit Law Section 1412. Instead, they must
organize under Section 1503 of New York State's Business Corporation
Law. However, most such practice organizations have assumed (or desire
to assume) the same roles and attributes of practice organizations
organized under Section 1412 of the Not-for-Profit Law: they support the
mission of their related not-for-profit hospital; they operate in
compliance with Section 501(c)(3) of the Internal Revenue Code (and in
many cases actually obtain 501(c)(3) status). Thus these practices have
arranged what are commonly referred to as captive PC arrangements with a
general hospital or facility authorized under Article 16 of the Mental
Hygiene Law.

In reviewing new applicants and renewals, the New York State Education
Department (SED) has recently raised questions about the ability of such
medical staff practice organizations to assume these not-for-profit
attributes, namely, supporting their related hospital and operating in
compliance with Section 501(c)(3), given the fact that they are organ-
ized under Section 1503 of the Business Corporation Law. In addition,
SED has raised questions about the use of all or some portion of the
name of the related hospital or system in the name of the medical staff
practice organization. In taking these positions, SED indicates it is
constrained by State law, and has begun denying renewals for applica-
tions that had previously been approved.

To address this situation, this legislation ensures that general hospi-
tals and Article 16 facilities that have a long standing practice of the
state approving, and in many cases encouraging, these arrangements, can
continue. These proposed amendment will help serve the goals of health
reform by eliminating barriers to system development, encouraging clin-
ical integration among affiliated providers, and advancing care coordi-
nation and collaboration among providers. The amendment will also
provide a vehicle for practice organizations that most closely reflect
the actual relationships among members of the medical staff and their
affiliated hospitals and facilities, their actual form and not-for-pro-
fit status.

 
LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
Immediately

2017-S8612 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8612
 
                             I N  S E N A T E
 
                               May 10, 2018
                                ___________
 
 Introduced  by  Sen.  HANNON -- read twice and ordered printed, and when
   printed to be committed to the Committee on Corporations,  Authorities
   and Commissions
 
 AN  ACT  to  amend  the  not-for-profit  corporation law, in relation to
   university faculty practice corporations
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  Section  1412  of  the not-for-profit corporation law, as
 added by and paragraph (f) as amended by chapter  555  of  the  laws  of
 1993,  paragraphs (a), (c) and (e) as amended by chapter 323 of the laws
 of 2012, paragraph (d) as amended by chapter 549 of the  laws  of  2013,
 and  subparagraph  2  of  paragraph (f) as amended by chapter 172 of the
 laws of 1999, is amended to read as follows:
 § 1412. University faculty practice corporations.
   (a) Organization. Notwithstanding any other provision of law,  one  or
 more  individuals  who  are  duly  authorized  by law to render the same
 professional service, which shall be the practice of medicine, the prac-
 tice of dentistry, the practice of chiropractics, the practice of  phys-
 ical  therapy  or  the practice of optometry, and who are members of the
 faculty OR MEDICAL STAFF of the same accredited medical  school,  dental
 school,  chiropractic  college, college or university with an accredited
 doctor of physical therapy program  or  optometry  college,  A  "GENERAL
 HOSPITAL",  AS DEFINED IN SECTION TWENTY-EIGHT HUNDRED ONE OF THE PUBLIC
 HEALTH LAW, (PROVIDED, HOWEVER, THAT INDIVIDUALS ON THE STAFF OF ONE  OR
 MORE GENERAL HOSPITALS CAN FORM A SINGLE ENTITY HEREUNDER IF SUCH HOSPI-
 TALS  ARE  COMMONLY  CONTROLLED  OR  ONE  OF  THE HOSPITALS CONTROLS THE
 OTHER), OR A FACILITY AUTHORIZED TO OPERATE PURSUANT TO SECTION 16.03 OF
 THE MENTAL HYGIENE LAW, as applicable, in the  state  of  New  York  may
 organize,  or  cause  to  be  organized, a [university faculty] practice
 corporation under this article (1) for the  purpose  of  supporting  the
 [educational  mission  of  such  school  by  providing]  MISSION OF SUCH
 SCHOOL, HOSPITAL OR HOSPITALS, OR FACILITY, BY, (A) IN THE  CASE  OF  AN
 ACCREDITED  MEDICAL SCHOOL, DENTAL SCHOOL, CHIROPRACTIC COLLEGE, COLLEGE
 OR UNIVERSITY WITH AN ACCREDITED DOCTOR OF PHYSICAL THERAPY  PROGRAM  OR
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                       [ ] is old law to be omitted.
                                                            LBD15325-05-8

 S. 8612                             2
 
 OPTOMETRY COLLEGE, PROVIDING HOSPITAL OR MEDICAL STAFF clinical instruc-
 tion  and  supervision of students of such school, interns and residents
 and, incident thereto, rendering professional services; (B) IN THE  CASE
 OF A GENERAL HOSPITAL OR HOSPITALS, OR FACILITY, PROVIDING CARE TO INDI-
 VIDUALS  THAT THE GENERAL HOSPITAL OR HOSPITALS, OR FACILITY ARE AUTHOR-
 IZED TO SERVE and (2) which shall be operated  in  compliance  with  (A)
 section 501(c)(3) of the United States internal revenue code and (B) the
 [faculty]  practice  plan  with  which members of the faculty OR MEDICAL
 STAFF of such school, GENERAL HOSPITAL OR  HOSPITALS,  OR  FACILITY  are
 required to comply, AS APPLICABLE, as amended from time to time.
   (b)  Definition.  "University  faculty practice corporation" means [a]
 ANY PRACTICE corporation organized or reincorporated under this section.
 SUCH CORPORATIONS SHALL BE REFERRED TO  HEREIN  AS  "UNIVERSITY  FACULTY
 PRACTICE CORPORATIONS".
   (c)  Certificate of incorporation. The certificate of incorporation of
 a university faculty practice corporation shall meet the requirements of
 this chapter and shall have attached thereto a  certificate  or  certif-
 icates  issued  by  the  licensing authority certifying that each of the
 proposed members, if any, directors and officers is authorized by law to
 practice the profession which the  corporation  is  being  organized  to
 practice.  The  certificate shall also state (1) the name of the medical
 school, dental school, chiropractic college, college or university  with
 an  accredited  doctor of physical therapy program or optometry college,
 OR THE NAME OF THE GENERAL HOSPITAL OR HOSPITALS OR FACILITY  AUTHORIZED
 TO  OPERATE  PURSUANT  TO  SECTION  16.03  OF THE MENTAL HYGIENE LAW, as
 applicable, in the state of New York of which the proposed  members,  if
 any,  directors and officers are faculty OR MEMBERS OF MEDICAL STAFF, AS
 APPLICABLE; and (2) that such corporation shall  operate  in  compliance
 with  (A)  section  501(c)(3) of the United States internal revenue code
 and (B) the [faculty] practice plan with which members of the faculty of
 such school OR MEMBERS OF THE MEDICAL STAFF OF SUCH GENERAL HOSPITAL  OR
 HOSPITALS,  OR  FACILITY are required to comply, as amended from time to
 time.
   (d) Type. A university faculty practice corporation  is  a  charitable
 corporation under this chapter.
   (e) Applicability of laws; members, directors and officers. This chap-
 ter  shall  be  applicable  to a university faculty practice corporation
 except to the extent that the  provisions  thereof  conflict  with  this
 section.  A  university  faculty practice corporation may consolidate or
 merge only with another university  faculty  practice  corporation.  The
 following  provisions of article fifteen of the business corporation law
 shall be applicable to a university faculty practice corporation  except
 that  each  reference  in  such  provisions  to a "shareholder" shall be
 deemed to be a reference to  a  "member"  and  each  reference  in  such
 provisions  to  "shareholders" shall be deemed a reference to "members":
 paragraphs (a), (b), (c) and (e) of section fifteen hundred  one;  para-
 graphs  (b),  (c)  and  (d) of section fifteen hundred three; paragraphs
 (a), (c) and (g)  of  section  fifteen  hundred  four;  section  fifteen
 hundred  five;  section  fifteen  hundred nine except to the extent such
 section refers to section fifteen hundred ten; paragraph (a) of  section
 fifteen  hundred  twelve;  section fifteen hundred fourteen; and section
 fifteen hundred fifteen.  No individual may be  a  member,  director  or
 officer  of  a university faculty practice corporation unless such indi-
 vidual is authorized by law to practice in  this  state  the  profession
 which  such corporation is authorized to practice and is a member of the
 faculty OR MEDICAL STAFF of the medical school, dental  school,  chirop-

 S. 8612                             3
 
 ractic college, college or university with an accredited doctor of phys-
 ical therapy program or optometry college, OR OF THE GENERAL HOSPITAL OR
 HOSPITALS,  OR  OF  A FACILITY AUTHORIZED TO OPERATE PURSUANT TO SECTION
 16.03  OF  THE MENTAL HYGIENE LAW which such corporation is organized to
 support.
   (f) Corporations heretofore incorporated. Any  corporation  heretofore
 incorporated  under  article fifteen of the business corporation law and
 operated in compliance with the requirements of section 501(c)(3) of the
 United States internal revenue code may amend its certificate of  incor-
 poration  and  be reincorporated as a university faculty practice corpo-
 ration organized under this section by making and filing in  the  office
 of  the  secretary of state a certificate entitled "Certificate of Rein-
 corporation of...(name of incorporation) under section 1412 of the  Not-
 for-Profit  Corporation Law." (1) Such reincorporation certificate shall
 contain the provisions required, and any other provisions permitted,  by
 section  [402] FOUR HUNDRED TWO of this chapter and shall also set forth
 (A) a statement that such corporation  is  filing  such  reincorporation
 certificate  under this section, (B) if the name of such corporation has
 been changed, the name  under  which  such  corporation  was  originally
 incorporated, (C) the date of incorporation of such corporation, (D) the
 names  and  post-office addresses of the holders of record of all of the
 outstanding shares of such corporation entitled to vote, (E) a statement
 that such corporation has elected to become and be a university  faculty
 practice  corporation  organized  and  operated  under by virtue of this
 section and (F)  the  statements  required  by  paragraph  (c)  of  this
 section.  (2)  Such  reincorporation  certificate  shall  be  either (A)
 subscribed in person or by proxy by all of the holders of record of  all
 of the outstanding shares of such corporation entitled to vote and shall
 have  annexed  an  affidavit  of the secretary or an assistant secretary
 that the persons who have executed the  certificate,  in  person  or  by
 proxy, constitute all of the holders of record of all of the outstanding
 shares  of  the  corporation  entitled  to vote or (B) subscribed by the
 president or a vice president and the secretary or an  assistant  secre-
 tary  and  shall have annexed an affidavit of such officers stating that
 they have been authorized  to  execute  and  file  such  reincorporation
 certificate  by  the  votes,  cast  in person or by proxy, of all of the
 holders of record of all of the outstanding shares of  such  corporation
 entitled  to vote at the meeting at which such votes were cast, and that
 such votes were cast at a meeting of shareholders held on a date  speci-
 fied,  upon  notice pursuant to section six hundred five of the business
 corporation law. (3) A reincorporation pursuant to this paragraph  shall
 not  effect  a  dissolution  of  such corporation, but shall be deemed a
 continuation of its corporate existence, without affecting its  then-ex-
 isting  property rights or liabilities, or the liabilities of its share-
 holders, directors or officers as such, but  thereafter  it  shall  have
 only  such  rights, powers and privileges, and it and such shareholders,
 directors and officers shall be subject only to such  other  duties  and
 liabilities,  as  a university faculty practice corporation and members,
 directors and officers thereof. (4) Upon the filing of a reincorporation
 certificate in the office of the secretary of state, (A) any issued  and
 outstanding shares of such corporation shall be purchased by such corpo-
 ration at a purchase price equal to the price for which such shares were
 originally  issued,  or such other price as such corporation shall agree
 to, such price to be paid out of the surplus of the corporation,  where-
 upon such shares shall be deemed cancelled as of the date of such filing
 and  (B) such reincorporation certificate shall be deemed to replace the

 S. 8612                             4
 
 certificate of incorporation of  such  corporation.  The  department  of
 state  shall  not  file  such  certificate of reincorporation unless the
 consent of the commissioner of taxation and finance is attached thereto.
 Such  certificate  of consent shall only be given if the commissioner of
 taxation and finance ascertains that all  taxes  imposed  under  article
 nine-A of the tax law, as well as penalties and interest charges related
 thereto, accrued against the corporation have been paid.
   (g) Effect of section. University faculty practice corporations incor-
 porated  or  reincorporated  under  this  section shall be organized and
 operated exclusively for the purposes set forth in paragraph (a) of this
 section and shall be subject to the restrictions and limitations imposed
 by or pursuant to paragraphs (a) and (e) of this section.  ALL UNIVERSI-
 TY FACULTY PRACTICE CORPORATIONS INCORPORATED  OR  REINCORPORATED  UNDER
 THIS SECTION MAY OPERATE UNDER THE NAME (OR PORTION THEREOF) OR INITIALS
 OF  THE  AFFILIATED SCHOOL, HOSPITAL OR HOSPITALS, OR FACILITY, OR UNDER
 THE NAME (OR PORTION THEREOF) OR INITIALS OF THE SYSTEM WITH WHICH  SUCH
 AFFILIATED SCHOOL, HOSPITAL OR HOSPITALS, OR FACILITY ARE PUBLICLY IDEN-
 TIFIED. Notwithstanding anything to the contrary in article twenty-eight
 of the public health law or the regulations adopted pursuant thereto, no
 corporation  organized  under  this section shall be deemed to be estab-
 lishing or operating a  hospital,  diagnostic  center  and/or  treatment
 center requiring establishment or construction approval solely by reason
 of  being  organized  as  a  not-for-profit  corporation. Insofar as the
 provisions of this section are inconsistent with the provisions  of  any
 other  law,  general or special, the provisions of this section shall be
 controlling as to the corporations incorporated or reincorporated  here-
 under.
   § 2. This act shall take effect immediately.

Comments

Open Legislation is a forum for New York State legislation. All comments are subject to review and community moderation is encouraged.

Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity, hate or toxic speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Attempts to intimidate and silence contributors or deliberately deceive the public, including excessive or extraneous posting/posts, or coordinated activity, are prohibited and may result in the temporary or permanent banning of the user. Comment moderation is generally performed Monday through Friday. By contributing or voting you agree to the Terms of Participation and verify you are over 13.

Create an account. An account allows you to sign petitions with a single click, officially support or oppose key legislation, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Senate Bill S8612

Sponsored By

Archive: Last Bill Status - In Assembly Committee

2017-S8612 (ACTIVE) - Details

2017-S8612 (ACTIVE) - Summary

2017-S8612 (ACTIVE) - Sponsor Memo

2017-S8612 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S8612

Share this bill

Sponsored By

Kemp Hannon

Archive: Last Bill Status - In Assembly Committee

2017-S8612 (ACTIVE) - Details

2017-S8612 (ACTIVE) - Summary

2017-S8612 (ACTIVE) - Sponsor Memo

2017-S8612 (ACTIVE) - Bill Text download pdf

Comments