S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2993
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 28, 2019
                                ___________
 
 Introduced  by  M.  of A. GOTTFRIED, PAULIN -- read once and referred to
   the Committee on Higher Education
 
 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD04006-01-9

 A. 2993                             2
 
 ACCREDITED MEDICAL SCHOOL, DENTAL SCHOOL, CHIROPRACTIC COLLEGE,  COLLEGE
 OR  UNIVERSITY  WITH AN ACCREDITED DOCTOR OF PHYSICAL THERAPY PROGRAM OR
 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

 A. 2993                             3
 
 which  such corporation is authorized to practice and is a member of the
 faculty OR MEDICAL STAFF of the medical school, dental  school,  chirop-
 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-

 A. 2993                             4
 
 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
 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.