Section 32.31. Establishment or incorporation of facilities for chemical dependence services

(a) No provider of services or facility providing chemical  dependence
  services  shall  be  established except with the written approval of the
  commissioner. No certificate of incorporation of a business,  membership
  or  not-for-profit  corporation or articles of organization of a limited
  liability company shall hereafter be  filed  which  includes  among  its
  corporate  purposes  or  powers  the  establishment  or  operation  of a
  facility providing chemical dependence services or the  solicitation  of
  contributions  for  any  such  purpose, or two or more of such purposes,
  except with the written approval of the commissioner and, when otherwise
  required by law, the approval of a justice of the supreme court endorsed
  on or annexed to the certificate of incorporation.  Notwithstanding  any
  other provision of law, the commissioner shall not require a corporation
  to amend its certificate of incorporation or a limited liability company
  to  amend its articles of organization which includes among the purposes
  of the corporation or limited liability  company  the  establishment  or
  operation  of a substance abuse program or alcoholism facility. Any such
  corporate or limited liability company purposes, powers,  or  provisions
  previously  approved by the office shall be deemed consent by the office
  for such corporation or limited liability company  to  provide  chemical
  dependence   services.   Nothing  herein  obviates  the  need  for  such
  corporation or limited liability company to possess  a  valid  operating
  certificate.
    (b)  With  respect to the incorporation or establishment of a provider
  or facility providing chemical  dependence  services,  the  commissioner
  shall give written approval after all of the following requirements have
  been met:
    1.  An  application  for  approval  of  the  proposed  certificate  of
  incorporation or articles  of  organization  shall  be  filed  with  the
  commissioner  together with such other forms and information as shall be
  prescribed  by,  or  acceptable  to,  him  or   her.   Thereafter,   the
  commissioner  shall  forward  a  copy  of  the  proposed  certificate or
  articles  or  organization  and  application   for   establishment   and
  accompanying  documents,  to  the local governmental unit of the area in
  which such facility is to be located. The  commissioner  shall  not  act
  upon  such  application  until  the  local  governmental  unit has had a
  reasonable time to submit their recommendations.
    2. Upon receipt of the recommendations of the local governmental unit,
  or the lapse of a reasonable time for comment,  the  commissioner  shall
  submit  the  application  along  with  the  recommendations of the local
  governmental unit to the advisory council on  alcoholism  and  substance
  abuse services for its review and recommendation. The commissioner shall
  not  act  upon  an  application  for establishment of a facility without
  having first given such advisory council  a  reasonable  opportunity  to
  make its recommendation on the application.
    3.  The  commissioner  shall  not  take  any  action  contrary  to the
  recommendation of the council unless he or she first appears before  the
  council and explains his or her reasons therefor. The commissioner shall
  not  take  any  action  contrary to the advice of the local governmental
  unit until he or she affords, to such entity, an opportunity to  request
  a  public hearing and if so requested, a public hearing shall be held in
  accordance with subdivision (e) of section 32.29 of this article. If the
  commissioner proposes to disapprove the  application  he  or  she  shall
  afford  the  applicant  an  opportunity  to  request a public hearing in
  accordance with subdivision (e) of section 32.29 of  this  article.  The
  commissioner may hold such a public hearing on the application on his or
  her own motion. Any public hearing held pursuant to this subdivision may

  be  conducted by the commissioner or by any individual designated by the
  commissioner.
    (c)  The commissioner shall not approve a certificate of incorporation
  or articles of organization or application for establishment unless  the
  provisions of subdivision (a) of section 32.09 of this article have been
  met  and  that  the commissioner is satisfied, insofar as applicable, as
  to:
    1. the public need for the existence of the facility at the  time  and
  place  and  under  the  circumstances proposed taking into consideration
  local, regional, and statewide need;
    2. the absence of  availability  and  feasibility  of  development  of
  facilities  or  services  which may serve as alternatives or substitutes
  for the whole or any part of the proposed facility;
    3. the character, competence and standing  in  the  community  of  the
  proposed   incorporators,   directors,   members,   partners,  sponsors,
  stockholders or operators; considering, with  respect  to  any  proposed
  incorporator,   director,   member,  partner,  sponsor,  stockholder  or
  operator who is already or  within  the  past  ten  years  has  been  an
  incorporator,   director,   member,  partner,  sponsor,  stockholder  or
  operator of any hospital, private proprietary home for adults, residence
  for adults, or not-for-profit home for the aged or blind which has  been
  issued  an  operating  certificate  by the office of children and family
  services or a halfway house, hostel or other facility or institution for
  the care, custody or treatment of the mentally disabled which is subject
  to approval by an office of the department, the level of care  being  or
  having  been  rendered  in  each such hospital, home, residence, halfway
  house, hostel, or other residential facility or institution  with  which
  such person is or was affiliated;
    4. the overall financial condition of the applicant, through review of
  audited  financial  statements,  taking into consideration the financial
  resources of  the  proposed  facility  and  of  its  sources  of  future
  revenues; and
    5.  the  sufficiency  of such other matters as he or she shall deem in
  the public interest.
    (d) 1. Any change in the  person  who  or  partnership  which  is  the
  provider of services shall be approved by the commissioner in accordance
  with the provisions of this subdivision and subdivisions (a) through (c)
  of this section.
    2.  Any  transfer,  assignment  or other disposition of ten percent or
  more of the stock, membership interest or voting rights thereunder of  a
  corporation  or  a  limited  liability  company which is the provider of
  services  providing  chemical  dependence  services  or  any   transfer,
  assignment or other disposition of the stock, ownership or voting rights
  thereunder  of  such  a corporation or a limited liability company which
  results in the ownership or control of more  than  ten  percent  of  the
  stock,  ownership  or  voting  rights  thereunder of such corporation or
  limited liability company by any person shall be subject to approval  by
  the  commissioner  in accordance with the provisions of this subdivision
  and  subdivisions  (a)  through  (c)  of  this  section  and  rules  and
  regulations  promulgated  pursuant  thereto.  In  the  absence  of  such
  approval, the operating certificate of such facility shall be subject to
  revocation or suspension.
    3. No facility shall be approved  for  establishment  which  would  be
  operated  by  a  partnership  or  limited  liability  company any of the
  members of which are not natural persons.
    4. No facility shall be approved  for  establishment  which  would  be
  operated  by a corporation any of the stock of which is owned by another
  corporation.

    5. No corporation having power to solicit contributions for charitable
  purposes shall be deemed to have authority to solicit contributions  for
  any  purposes  for  which  the  approval of the commissioner is required
  pursuant to subdivision (a) of this section, unless the  certificate  of
  incorporation  or articles of organization specifically makes provisions
  therefor, and the written approval of the commissioner is endorsed on or
  annexed to such certificate or  articles  of  organization.  Where  such
  approval  has  not  been  obtained  the  commissioner  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 or articles of organization of any such corporation  or
  limited liability company.
    6.  Only  a  natural  person  or  a  partnership  existing  under  the
  partnership law may hereafter undertake to engage  in  the  business  of
  operating   or  conducting  a  facility  providing  chemical  dependence
  services  for  profit,  except  that:  (i)  a  person,  partnership   or
  corporation which owned and was operating such a facility on July first,
  nineteen  hundred  eighty-three  may  continue  to  own and operate such
  facility; (ii) a business corporation organized pursuant to the business
  corporation law or a limited liability company organized pursuant to the
  limited liability company law may, with the approval of the commissioner
  and in accordance with the provisions  of  this  section,  undertake  to
  engage  in  the  business  of  operating  or  conducting such a facility
  provided that such corporation or limited liability  company  shall  not
  discriminate  because  of race, color, creed, national origin or sponsor
  in admission or retention of  patients;  (iii)  any  person  who,  or  a
  partnership  which,  is  operating  a  private  proprietary  facility in
  accordance with applicable provisions of law may, with the  approval  of
  the  commissioner, and in accordance with the provisions of this section
  and any rules and regulations thereunder, form a business corporation to
  engage in  the  business  of  operating  or  conducting  such  facility,
  provided,  however, that such corporation shall not discriminate because
  of race, color, creed,  national  origin  or  sponsor  in  admission  or
  retention of patients.
    (e)  The  commissioner  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  or  formation   of   limited   liability   companies   or
  incorporation of corporations.
    (f) Where the approval required by subdivision (a) of this section has
  not been obtained, the commissioner may institute and maintain an action
  in  the supreme court through the attorney general to procure a judgment
  dissolving and vacating or annulling:
    1. the  certificate  of  incorporation  of  any  such  corporation  or
  articles of organization of any such limited liability company, or
    2.  the  certificate  of  incorporation of any such corporation or the
  articles of organization of any such limited liability company hereafter
  incorporated or formed, the name, purposes, objectives, or activities of
  which in  any  manner  may  reasonably  lead  to  the  belief  that  the
  corporation  or  limited liability company possesses or may exercise any
  of such purposes.