§ 461-b. Provisions related to establishment of adult care facilities.
1. (a) Only a natural person or partnership composed only of natural
persons, a not-for-profit corporation, a public corporation, a business
corporation other than a corporation whose shares are traded on a
national securities exchange or are regularly quoted on a national
over-the-counter market or a subsidiary of such corporation or a
corporation any of the stock of which is owned by another corporation, a
limited liability company provided that if a limited liability company
has a member that is a corporation, a limited liability company or a
partnership, the shareholders of the member corporation, the members of
the member limited liability company, or the partners of the member
partnership must be natural persons, a social services district or other
governmental agency may be issued an operating certificate by the
department for the purpose of operating an adult care facility, except
family type homes for adults, which may be issued operating certificates
by the department or social services district only if such facilities
are operated by a natural person or persons. The holder of an operating
certificate for the purposes of operating an adult home shall not be
issued an operating certificate for the purposes of operating an
enriched housing program if such adult home operator has not met
compliance standards during the most recent inspection cycle. Provided
however, the department may deem an operator eligible to receive an
operating certificate for the purposes of operating an enriched housing
program upon the consideration of the results of previous inspections
and whether the operator is meeting the needs of the residents and is
providing quality care.

(b) A natural person may seek certification as an operator of a
family-type home for adults to provide long-term residential care and
personal care and/or supervision to persons related to the operator,
provided that the relationship between the operator and resident is not
that of spouse, in-law, child or step-child.

(c) An appropriation made available for the purposes of funding the
operating assistance sub-program for enriched housing up to the amount
appropriated for such purpose in the nineteen hundred
ninety-six--ninety-seven state fiscal year shall be limited to any
enriched housing program operated by a public agency, public corporation
or a not-for-profit corporation, which may be issued an operating
certificate by the department to operate an enriched housing program.

2. (a) No adult care facility shall be operated unless and until the
operator obtains the written approval of the department. Such approval
may be granted only to an operator who satisfactorily demonstrates: that
the operator is of good moral character; that the operator is
financially responsible; that there is a public need for the facility;
that the buildings, equipment, staff, standards of care and records to
be employed in the operation comply with applicable law and regulations
of the department and that any license or permit required by law for the
operation of such facility has been issued to such operation. In
determining whether there is a public need for the facility, the
department shall give consideration to the relative concentration of
such facilities in the area proposed to be serviced. Such approval for
family type home for adults shall not be granted unless the appropriate
social services official has made the required visitation and inspection
and has submitted a report thereof to the department in accordance with
this article.

(b) For existing licensed operators in good standing and their
affiliates, the department shall develop a streamlined application
review and approval process, in collaboration with representatives of
associations of operators, to be available for use in relation to
approval of an additional facility of the same type. Notwithstanding any
provision of law or regulation to the contrary, the streamlined
application review and approval process shall include, but not be
limited to, the following:

(i) a certification process and form for the operator or its affiliate
to attest that it will have sufficient financial resources, revenue and
financing to meet facility expenses and resident needs, which shall
satisfy the statutory and regulatory financial component of the
application review and approval process;

(ii) a certification process and form for the operator or its
affiliate to attest that its legal, corporate and organizational
documents comply in substance with department requirements, which shall
satisfy the statutory and regulatory legal component of the application
review and approval process;

(iii) a certification process and form for the operator or its
affiliate to attest that it is in substantial compliance with all
applicable codes, rules and regulations in any other state in which it
operates, and to disclose any enforcement or administrative action taken
against it in any other state;

(iv) issuance by the department of a conditional approval to operate
the facility for a specified period of time upon substantial completion
of the character and competence, legal, financial and architectural
components of the application, so long as the operator or its affiliate
agrees in writing to satisfy all pending conditions prior to the
expiration of the conditional approval period or a time frame
established by the department;

(v) issuance by the department of a conditional approval to construct
a facility, at the operator's or its affiliate's own risk, upon
substantial completion of the architectural component of the
application;

(vi) elimination of duplicative submission and review of any
application information which has been previously reviewed and approved
by the department or any of its regional offices within the past two
years through a certification process and form whereby the operator or
its affiliate will attest that such application information is
duplicative;

(vii) with respect to any programmatic application information to be
reviewed by the regional office, such review shall be conducted on-site
by the regional office during the pre-opening inspection or first full
annual inspection, if the department has previously approved the
operator or its affiliate to operate the same type of program at another
facility within the past two years;

(viii) electronic submission of applications; and

(ix) a combined application for licensure as an adult care facility,
assisted living residence and/or assisted living program, to the extent
the department determines such a combined application is feasible.

(b-1) For purposes of paragraph (b) of this subdivision, "affiliate"
shall mean an entity, for which a majority of the ownership or
controlling interest is the same as the ownership or controlling
interest in an existing licensed operator under this section (provided
that an affiliate may have different percentages of ownership or control
or fewer natural persons with ownership or control than an existing
operator) and, further:

(i) for any entity owned, directly or indirectly, by natural persons:

(A) at all times, more than half of the ownership interest of the
entity shall be owned, directly or indirectly, by natural persons who
have previously been determined to have undergone a satisfactory
determination of character, competence and standing in the community;

(B) at all times, any owner with a direct or indirect ownership
interest who has not undergone a satisfactory determination of
character, competence and standing in the community review must possess
a less than ten percent direct or indirect interest in the entity, until
a satisfactory determination has been made; and

(C) for any natural person proposed to be an owner, directly or
indirectly, of the entity who is a controlling person, member, director,
or officer of an existing licensed operator under this section, such
existing licensed operator must be in good standing with the department;
and

(ii) for any not-for-profit corporation or other entity not under
subparagraph (i) of this paragraph:

(A) more than half of the entity's total board members, directors,
officers and controlling persons shall have previously undergone a
satisfactory determination of character, competence and standing in the
community; and

(B) if any natural person proposed to be a board member, director, or
officer of the entity has an ownership interest, directly or indirectly,
or is a board member, director, officer, or controlling person, in an
existing licensed operator under this section, such existing licensed
operator must also be in good standing with the department.

(b-2) For purposes of paragraph (b) of this subdivision, "good
standing" shall mean the operator and its affiliates have not (A)
received any official written notice from the department of a proposed
revocation, suspension, denial or limitation on the operating
certificate of the facility or residence; (B) within the previous three
years, been assessed a civil penalty after a hearing conducted pursuant
to subparagraph one of paragraph (b) of subdivision seven of section
four hundred sixty-d of this article for a violation that has not been
rectified; (C) within the previous year, received any official written
notice from the department of a proposed assessment of a civil penalty
for a violation described in subparagraph two of paragraph (b) of
subdivision seven of section four hundred sixty-d of this article; (D)
within the previous three years, been issued an order pursuant to
subdivision two, five, six or eight of section four hundred sixty-d of
this article; (E) within the previous three years, been placed on, and
if placed on, removed from the department's "do not refer list" pursuant
to subdivision fifteen of section four hundred sixty-d of this article.
Provided, however, that in the case of an operator or affiliate that is
not in good standing as provided in this paragraph, the department may
permit the operator or affiliate to use the streamlined application
process, in its discretion, if it determines that the disqualifying
violation was an isolated occurrence that was promptly corrected by the
operator or affiliate.

(c) After an operator obtains approval of the department for the
operation of an adult care facility he may operate such facility only so
long as he continues to do so in compliance with the requirements of
such approval, applicable law, and the regulations of the department.

(d) The knowing operation of an adult care facility without the prior
written approval of the department shall be a class A misdemeanor.

3. (a) The department shall not approve an application for
establishment of an adult care facility unless it is satisfied insofar
as applicable, as to (i) the character, competence and standing in the
community, of the applicant; provided, however, with respect to any such
applicant who is already or within the past ten years has been an
incorporator, director, sponsor, stockholder, operator, administrator,
member or owner of any adult care facility which has been issued an
operating certificate by the board or the department, or of a halfway
house, hostel or other residential facility or of a program or facility
licensed or operated by a health, mental hygiene, social services or
education agency or department of this or any state, or a program
serving persons with mental disabilities, or other persons with
disabilities as defined in subdivision twenty-one of section two hundred
ninety-two of the executive law, the aged, children or other persons
receiving health, mental hygiene, residential, social or educational
services, no approval of such application shall be granted unless the
department shall affirmatively find by substantial evidence as to each
such applicant that a substantially consistent high level of care is
being or was being rendered in each such facility or institution with
which such person is or was affiliated; for the purposes of this
paragraph, there may be a finding that a substantially consistent high
level of care has been rendered where there have been violations of
applicable rules and regulations, that (1) did not threaten to directly
affect the health, safety or welfare of any patient or resident, and (2)
were promptly corrected and not recurrent; (ii) the financial resources
of the proposed facility and its sources of future revenue; and (iii)
such other matters as it shall deem pertinent.

(b) Any natural person or partnership composed only of natural
persons, not-for-profit corporation, public corporation, business
corporation other than a corporation whose shares are traded on a
national securities exchange or are regularly quoted on a national
over-the-counter market or a subsidiary of such corporation or a
corporation any of the stock of which is owned by another corporation, a
limited liability company provided that if a limited liability company
has a member that is a corporation, a limited liability company or a
partnership, the shareholders of the member corporation, the members of
the member limited liability company, or the partners of the member
partnership must be natural persons, social services district or other
governmental agency filing an application for approval to operate a
residence for adults, adult home or enriched housing program, shall file
with the department such information on the ownership of the property
interest in such facility as shall be prescribed by regulation,
including the following:

(i) The name and address and a description of the interest held by
each of the following persons:

(1) any person, who directly or indirectly, beneficially owns any
interest in the land on which the facility is located;

(2) any person who, directly or indirectly, beneficially owns any
interest in the building in which the facility is located;

(3) 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

(4) 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.

(ii) If any person named in response to subparagraph (i) of this
paragraph is a partnership or limited liability company, then the name
and address of each partner or member.

(iii) If any person named in response to subparagraph (i) 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.

(iv) If any corporation named in response to subparagraph (i) 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.

(v) For the purpose of this section the term "controlling person"
shall mean 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 interests, to
direct or cause the direction of the management or policies of said
corporation, partnership or other entity. Neither the department nor any
employee of the department shall, by reason of his or her official
position, be deemed a controlling person of any corporation, partnership
or other entity, nor shall any person who serves as an officer,
administrator or other employee of any corporation, partnership 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 or other entity as a result of such position or his or her
official actions in such position. The term "principal stockholder"
shall mean 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) No articles of organization of a limited liability company
established pursuant to the New York limited liability law which
includes among its powers or purposes the establishment or operation of
any adult home, residence for adults or enriched housing program as
defined in section two of this chapter, shall be filed with the
department of state unless the written approval of the department is
annexed to the articles of organization.

3-a. (a) Every person who is a controlling person of any adult care
facility liable under any provision of this article to any person or
class of persons for damages or to the state for any civil fine,
penalty, assessment of damages, shall also be liable, jointly and
severally, with and to the same extent as such adult care facility, to
such person or class of persons for damages or to the state for any such
civil fine, penalty, assessment or damages.

(b) For the purposes of this section the term "controlling person"
shall mean 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 interests, to
direct or cause the direction of the management or policies of said
corporation, partnership or other entity. Neither the department nor any
employee of the department shall, by reason of his or her official
position, be deemed a controlling person of any corporation, partnership
or other entity, nor shall any person who serves as an officer,
administrator or other employee of any corporation, partnership 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 or other entity as a result of such position or his or her
official actions in such position. The term "principal stockholder"
shall mean 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.

4. No person, corporation, home, institution, hotel or other
residential facility or accommodation other than a facility or agency
which possesses a valid operating certificate, as required under the
provisions of this chapter, the mental hygiene law or public health law
shall hold itself out, advertise or otherwise in any form or manner
represent that it is a facility offering accommodations and services for
dependent, aged or disabled adults.

5. Any adult care facility subject to the provisions of this section
that possesses a valid operating certificate as of October first,
nineteen hundred seventy-seven shall be deemed to have department
approval to continue operation of such facility for the duration or the
period for which such certificate was issued, provided such facility
continues to be operated in accordance with applicable provisions of law
and department regulations.

6. (a) The department, prior to making a final determination with
respect to approving the establishment of, or the certificate of
incorporation of, or the articles of organization of, or an operating
certificate for a residence for adults, adult home, or enriched housing
program, shall in addition to any other requirements of law take into
consideration and be empowered to request information and advice as to
the availability of facilities or services such as ambulatory, home care
or other services which may serve as alternatives or substitutes for the
whole or any part of a proposed facility and the possible economies and
improvements in services to be anticipated from the operation of
centralized facilities and services reasonably available in the regional
services area.

(b) In determining whether there is a public need for a residence for
adults or an adult home, the department shall consider the advice of the
state health planning and development agency designated pursuant to the
provisions of the national health planning and resources development act
of nineteen hundred seventy-four and any amendments thereto.

(c) Notwithstanding any other provision of this article, the
department shall not consider public need in determining whether to
approve any proprietary adult home that was in existence and operating
on September first, nineteen hundred seventy-five as a family care home
under the mental hygiene law or an adult care facility operated by a
social services district.

7. (a) The department shall suspend, limit, modify or revoke an
operating certificate of a shelter for adults, residence for adults or
adult home upon determining that such action would be in the public
interest in order to conserve resources by restricting the number of
beds, or the level of services, or both, to those which are actually
needed, after taking into consideration the total number of beds
necessary to meet the public need, and the availability of facilities or
services such as ambulatory, home care or other services which may serve
as alternatives or substitutes for the whole or any part of a facility,
and in the case of modification, the level of care and the nature and
type of services provided by a facility or required by all or some of
the residents in or seeking admission to such facility, and whether such
level of care is consistent with the operating certificate of the
facility.

(b) Wherever any finding as described in this subdivision is under
consideration with respect to any particular facility, the department
shall cause to be published in a newspaper of general circulation in the
geographic area of the facility at least thirty days prior to making
such a finding an announcement that such a finding is under
consideration and an address to which interested persons can write to
make their views known. The department shall take all public comments
into consideration in making such a finding.

(c) The department shall, upon such finding described in this
subdivision with respect to any facility or project, cause such facility
to be notified of the finding at least thirty days in advance of taking
the proposed action to revoke, suspend, limit, or modify the facility's
operating certificate. Upon receipt of any such notification and before
the expiration of the thirty days or such longer period as may be
specified in the notice, the facility may request a public hearing to be
held in the county in which the facility is located. In no event shall
the revocation, suspension, limitation, or modification take effect
prior to the thirtieth day after the date of the notice or prior to the
effective date specified in the notice or prior to the date of the
hearing decision, whichever is later.

(d) Except as otherwise provided by law, all appeals from a finding of
the department made pursuant to this subdivision shall be directly to
the appellate division of the supreme court in the third department.
Except as otherwise expressly provided by law, such appeals shall have
preference over all issues in all courts.

8. No adult care facility certified by the department which is
operating in compliance with this chapter and regulations shall be
required to be certified by the office of mental health as a residential
care center for adults.

9. (a) The prior written approval of the department is required for:
(i) any transfer, assignment or other disposition of ten percent or more
of an interest or voting rights in a partnership, business corporation
or limited liability company which is the operator of an adult care
facility to a new partner, shareholder or member; or (ii) any transfer,
assignment or other disposition of interest or voting rights in a
partnership, business corporation or limited liability company which is
the operator of an adult care facility which results in the ownership or
control of more than ten percent of the interest or voting rights
thereunder by any person who has not been previously approved by the
department for that operator.

(b) With respect to a transfer, assignment or disposition involving
less than ten percent of an interest or voting rights in such
partnership, business corporation or limited liability company to a new
partner, shareholder or member, no prior approval of the department
shall be required except where required by paragraph (a) of this
subdivision. However, no such transaction shall be effective unless at
least ninety days prior to the intended effective date thereof, the
partnership, business corporation or limited liability company fully
completes and files with the department notice on a form, to be
developed by the department, which shall disclose such information as
may reasonably be necessary for the department to determine whether it
should prohibit the transaction. Within ninety days from the date of
receipt of such notice, the department may prohibit any such transaction
under this subparagraph if it finds: (i) there are reasonable grounds to
believe the proposed transaction does not satisfy the character and
competence review, as may be appropriate; or (ii) if the transaction,
together with all other such transactions during any five year period,
would in the aggregate, involve twenty-five percent or more of the
interest in the entity that constitutes the operator. The department
shall state the specific reasons for prohibiting any transaction under
this subparagraph and shall so notify each party to the proposed
transaction.

(c) With respect to a transfer, assignment or disposition of an
interest or voting rights in a partnership, business corporation or
limited liability company to any existing partner, shareholder or
member, no prior approval of the department shall be required. However,
if the transaction involves the withdrawal of the transferor from the
partnership, business corporation or limited liability company, no such
transaction shall be effective unless at least ninety days prior to the
intended effective date thereof, the partnership, business corporation
or limited liability company fully completes and files with the
department notice of such transaction. Within ninety days from the date
of receipt of such notice, the department may prohibit any such
transaction under this paragraph if the equity position of the
partnership, business corporation 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 department shall state the specific reason for prohibiting any
transaction under this paragraph and shall so notify each party to the
proposed transaction.

10. Notwithstanding any provision of law to the contrary, the
department is authorized to approve a certificate of incorporation or
articles of organization for establishment of an adult care facility on
an expedited basis where: (a) 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 department to operate an adult care facility; (b) every
incorporator, stockholder, member and director of the new entity shall
have been an owner, partner, incorporator, stockholder, member or
director of the existing entity; (c) the distribution of ownership
interests and voting rights in the new entity shall be the same as in
the existing entity; and (d) there shall be no change in the operator of
the adult care facility other than the form of its business
organization, as a result of the approval of such certificate of
incorporation or articles of organization. Upon submission, if the
department does not object to the proposal within ninety days of the
receipt of a complete application, the proposal will be deemed
acceptable to the department and an amended operating certificate shall
be issued.