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H0547aa.........................................................by BUSINESS
HOSPITALS - Adds to existing law to clarify the charitable trust
supervisory powers of the Idaho Attorney General in the area of nonprofit
hospital transactions and conversions.
02/10 House intro - 1st rdg - to printing
02/11 Rpt prt - to Bus
03/24 Rpt out - to Gen Ord
03/27 Rpt out amen - to engros
03/28 Rpt engros - rules susp - PASSED - 70-0-0
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Black, Boe,
Bruneel, Callister, Campbell, Chase, Clark, Crow, Cuddy, Deal,
Denney, Ellsworth, Field(13), Field(20), Gagner, Geddes, Gould,
Hadley, Hammond, Hansen(23), Hansen(29), Henbest, Hornbeck, Jaquet,
Jones, Judd, Kellogg, Kempton, Kendell, Kunz, Lake, Linford,
Loertscher, Mader, Marley, McKague, Meyer, Montgomery, Mortensen,
Moyle, Pearce, Pischner, Pomeroy, Reynolds, Ridinger, Ringo, Robison,
Sali, Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson,
Stoicheff, Stone, Taylor, Tilman, Tippets, Trail, Wheeler, Wood,
Zimmermann, Mr. Speaker
NAYS -- None
Absent and excused -- None
Floor Sponsors - Callister, Henbest, Kunz
Title apvd - to Senate
03/29 Senate intro - 1st rdg as amen - to St Aff
03/30 Rpt out - rec d/p - to 2nd rdg as amen
2nd rdg - to 3rd rdg as amen
04/04 3rd rdg as amen - PASSED - 35-0-0
AYES -- Andreason, Boatright, Bunderson, Burtenshaw, Cameron, Crow,
Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Geddes,
Hawkins, Ingram, Ipsen, Keough, King-Barrutia, Lee, McLaughlin, Noh,
Parry, Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner,
Stennett, Thorne, Walton, Wheeler, Whitworth, Williams
NAYS -- None
Absent and excused -- None
Floor Sponsor - Sorensen
Title apvd - to House
04/05 To enrol - rpt enrol - Sp signed - Pres signed
04/06 To Governor
04/14 Governor signed
Session Law Chapter 314
Effective: 07/01/00
H0547
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 547, As Amended
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO NONPROFIT HOSPITAL SALES AND CONVERSIONS; AMENDING TITLE 48, IDAHO
3 CODE, BY THE ADDITION OF A NEW CHAPTER 15, TITLE 48, IDAHO CODE, TO PRO-
4 VIDE A STATEMENT OF LEGISLATIVE FINDINGS AND INTENT, TO PROVIDE DEFINI-
5 TIONS, TO PROVIDE NOTICE TO THE ATTORNEY GENERAL, TO PROVIDE FOR ATTORNEY
6 GENERAL REVIEW AND TIME PERIODS, TO PROVIDE FOR PUBLIC MEETINGS, NOTICE
7 AND TIME, TO PROVIDE NONPROFIT HOSPITAL CONVERSION TRANSACTION REVIEW ELE-
8 MENTS, TO PROVIDE FOR RULEMAKING AND CONSEQUENCES OF REFUSAL TO PROVIDE
9 INFORMATION, TO PROVIDE FOR CONTRACTS WITH AGENCIES AND CONSULTANTS, REIM-
10 BURSEMENTS FOR COSTS AND EXPENSES OF REVIEW, TO PROVIDE FOR PUBLIC
11 RECORDS, TO PROVIDE FOR PENALTIES AND REMEDIES, TO PROVIDE FOR THE PROHI-
12 BITION OF ANY PRIVATE BENEFIT FROM THE ACQUISITION OF A NONPROFIT HOSPITAL
13 AND TO PROVIDE FOR THE APPLICATION OF THE ACT.
14 Be It Enacted by the Legislature of the State of Idaho:
15 SECTION 1. That Title 48, Idaho Code, be, and the same is hereby amended
16 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
17 ter 15, Title 48, Idaho Code, and to read as follows:
18 CHAPTER 15
19 IDAHO NONPROFIT HOSPITAL SALE OR CONVERSION ACT
20 48-1501. LEGISLATIVE FINDINGS AND INTENT. (1) Nonprofit hospitals hold
21 assets in charitable trust, and are dedicated to the specific charitable pur-
22 poses set forth in the articles of incorporation of the nonprofit corporations
23 or governing papers of the nonprofit entities operating such hospitals. Non-
24 profit hospitals have a substantial and beneficial effect on the provision of
25 health care to the people of Idaho, providing as part of their charitable mis-
26 sion free or low-cost health care.
27 (2) The attorney general is entrusted by law to bring actions on behalf
28 of the public in the event of a breach of the charitable trust, pursuant to
29 section 67-1401, Idaho Code.
30 (3) This act shall be cited as the "Nonprofit Hospital Sale or Conversion
31 Act."
32 48-1502. DEFINITIONS. As used in this act:
33 (1) "Hospital" means a place devoted primarily to the maintenance and
34 operation of facilities for the diagnosis, treatment or care for not less than
35 twenty-four (24) hours in any week of two (2) or more nonrelated individuals
36 suffering from illness, disease, injury, deformity, or requiring care because
37 of old age, or a place devoted primarily to providing, for not less than
38 twenty-four (24) hours in any week, of obstetrical or other medical or nursing
39 care for two (2) or more nonrelated individuals.
40 (2) "Nonprofit hospital" means any hospital, including hospitals owned by
41 corporations, that is organized as a nonprofit concern, however structured or
2
1 created. The term also includes entities owned, governed or controlled by a
2 nonprofit hospital. The term does not include hospitals which are operated by
3 a governmental unit.
4 (3) "Nonprofit hospital conversion transaction" means:
5 (a) The sale, transfer, lease, exchange, optioning, or conveyance of the
6 lesser of thirty million dollars ($30,000,000) or forty percent (40%) of
7 the assets of a nonprofit hospital to an entity or person other than a
8 nonprofit entity or an entity controlled by the nonprofit hospital; or
9 (b) The transfer of control or governance of the lesser of thirty million
10 dollars ($30,000,000) or forty percent (40%) of the assets of a nonprofit
11 hospital to an entity or person other than a nonprofit entity or an entity
12 controlled by the nonprofit hospital.
13 (c) "Nonprofit hospital conversion transaction" does not include con-
14 tracts, in the usual course of business, between the nonprofit hospital
15 and another entity:
16 (i) For the provision of services to the nonprofit hospital;
17 (ii) For the sale of equipment; or
18 (iii) For the leasing of space.
19 (d) Beginning on July 1, 2001, and each July 1 thereafter, the sums of
20 thirty million dollars ($30,000,000) referenced in subsections (3)(a) and
21 (3)(b) of this section, shall increase or decrease in accordance with the
22 percentage amount change in the hospital services component of the con-
23 sumer price index as published by the bureau of labor statistics of the
24 United States department of labor.
25 (4) "Person" means any individual, partnership, trust, estate, corpora-
26 tion, association, joint venture, joint stock company, insurance company or
27 other organization.
28 (5) "Charitable trust interest" shall mean those factors specifically
29 listed in section 48-1506, Idaho Code.
30 48-1503. NOTICE TO THE ATTORNEY GENERAL. (1) Any nonprofit hospital
31 shall be required to provide written notice to the attorney general prior to
32 entering into any nonprofit hospital conversion transaction.
33 (2) In addition to identifying the parties to the nonprofit hospital con-
34 version transaction and the general terms of the transaction, the notice to
35 the attorney general provided for in this section shall include and contain
36 relevant information related to the review factors set forth in section
37 48-1506, Idaho Code.
38 (3) This chapter shall not apply to a nonprofit hospital if the attorney
39 general has given the nonprofit hospital a written waiver of this chapter as
40 to the nonprofit hospital conversion transaction.
41 48-1504. ATTORNEY GENERAL REVIEW AND WRITTEN OPINION -- TIME PERIODS --
42 EXTENSION -- DISTRICT COURT REVIEW. (1) No nonprofit hospital conversion
43 transaction may close or be consummated until the time periods, as provided in
44 this section, have expired.
45 (2) Within ninety (90) days of receipt of a written notice as required by
46 section 48-1503, Idaho Code, the attorney general shall review the proposed
47 nonprofit hospital conversion transaction and notify the nonprofit hospital in
48 writing of his opinion. The attorney general shall review the nonprofit hospi-
49 tal conversion transaction to determine if it is in the charitable trust
50 interest. In making his determination, the attorney general shall be guided by
51 the factors set forth in section 48-1506, Idaho Code. Upon application by the
52 attorney general, the district court may extend this period for an additional
53 sixty (60) day period, provided the extension is necessary to obtain necessary
3
1 and relevant information pursuant to section 48-1507(2) or 48-1508(1), Idaho
2 Code.
3 (3) If the attorney general, in his written opinion, opposes the proposed
4 nonprofit hospital conversion transaction, the parties to the transaction may
5 not close or consummate the transaction for fourteen (14) days after the
6 attorney general's opinion has been issued to allow the attorney general, in
7 his discretion, to file suit seeking to block the transaction.
8 (4) If the attorney general files a lawsuit seeking to block the non-
9 profit hospital conversion transaction, the district court shall review, de
10 novo, the transaction to determine if it is in the charitable trust interest.
11 In making this determination, the district court shall use the factors set
12 forth in section 48-1506, Idaho Code. Neither a positive nor a negative find-
13 ing with regard to one (1) or more of the factors listed in section 48-1506,
14 Idaho Code, shall necessarily mean that the nonprofit hospital conversion
15 transaction is or is not in the charitable trust interest.
16 48-1505. PUBLIC MEETINGS -- NOTICE OF TIME AND PLACE. (1) Prior to issu-
17 ing any written opinion pursuant to section 48-1504, Idaho Code, the attorney
18 general may conduct one (1) or more public meetings, one (1) of which, if
19 held, shall be held in the county where the nonprofit hospital's assets to be
20 transferred are located.
21 (2) If a party to the intended nonprofit hospital conversion transaction
22 requests the hearing be conducted by a hearing officer outside the attorney
23 general's office, a hearing officer, mutually agreed upon by the parties to
24 the conversion transaction and the attorney general, shall be selected.
25 (3) At the public meeting, the attorney general or hearing officer shall
26 hear comments from interested persons desiring to make statements regarding
27 the proposed nonprofit hospital conversion transaction.
28 (4) The attorney general shall cause timely written notice to be provided
29 regarding the time and place of the meeting through publication in one (1) or
30 more newspapers of general circulation in the affected community, to the
31 county board of supervisors, and if applicable, to the city council of the
32 city where the nonprofit hospital's assets to be transferred are located.
33 (5) If a hearing officer is used, the parties to the nonprofit hospital
34 conversion transaction shall pay the costs of the hearing officer.
35 48-1506. NONPROFIT HOSPITAL CONVERSION TRANSACTION REVIEW ELEMENTS. In
36 reviewing a proposed nonprofit hospital conversion transaction, the attorney
37 general (and the district court as necessary and applicable), shall consider:
38 (1) Whether the nonprofit hospital will receive fair market value for its
39 charitable trust assets;
40 (2) Whether the fair market value of the nonprofit hospital's assets to
41 be transferred has been affected by the actions of the parties in a manner
42 that improperly causes the fair market value of the assets to decrease;
43 (3) Whether the proceeds of the proposed nonprofit hospital conversion
44 transaction will be used consistent with the trust under which the assets are
45 held by the nonprofit hospital and whether the proceeds will be controlled as
46 funds independently of the acquiring or related entities;
47 (4) Whether the governing body of the nonprofit hospital exercised due
48 diligence in deciding to dispose of the nonprofit hospital's assets, selecting
49 the acquiring entity, and negotiating the terms and conditions of the disposi-
50 tion;
51 (5) Whether the nonprofit hospital conversion transaction will result in
52 improper private inurement to any person as set forth in section 48-1511,
53 Idaho Code; and
4
1 (6) Whether the terms of any management or services contract negotiated
2 in conjunction with the proposed nonprofit hospital conversion transaction are
3 reasonable.
4 48-1507. RULES -- AUTHORITY TO ADOPT -- INFORMATION REQUESTS -- CONSE-
5 QUENCES OF REFUSAL TO PROVIDE INFORMATION. (1) The attorney general may adopt
6 such rules, pursuant to chapter 52, title 67, Idaho Code, as the attorney gen-
7 eral deems appropriate or necessary to implement this chapter.
8 (2) The attorney general may request that the nonprofit hospital giving
9 notice under section 48-1503, Idaho Code, in addition to providing information
10 related to the review factors set forth in section 48-1506, Idaho Code, pro-
11 vide other information which the attorney general reasonably deems necessary
12 and relevant to review the nonprofit hospital conversion transaction.
13 (3) If the nonprofit hospital declines to provide the information
14 requested by the attorney general in subsection (2) of this section, the
15 attorney general may apply to the court for an order requiring the disclosure
16 of the information, which shall be granted if found to be necessary and rele-
17 vant.
18 48-1508. CONTRACTS WITH AGENCIES AND CONSULTANTS -- REIMBURSEMENT FOR
19 COSTS AND EXPENSES OF REVIEW -- FAILURE TO PAY. (1) Within the time periods
20 designated in section 48-1504, Idaho Code, the attorney general may do any of
21 the following to assist in the review of the proposed nonprofit hospital con-
22 version transaction described in section 48-1503, Idaho Code:
23 (a) Contract with, consult, and receive advice from any agency of the
24 state or the United States on such terms and conditions the attorney gen-
25 eral deems appropriate; or
26 (b) In the attorney general's sole discretion, contract with such experts
27 or consultants the attorney general deems appropriate to assist the attor-
28 ney general in reviewing the proposed nonprofit hospital conversion trans-
29 action.
30 (2) Any costs incurred by the attorney general pursuant to this section
31 shall not exceed an amount that is reasonable and necessary to conduct the
32 review of the proposed nonprofit hospital conversion transaction. The attor-
33 ney general shall be exempt from the provisions of any applicable state laws
34 regarding public bidding procedures for purposes of entering into contracts
35 pursuant to this section.
36 (3) The attorney general, after reviewing the nonprofit hospital conver-
37 sion transaction, may submit a claim to the board of examiners for reimburse-
38 ment of his reasonable costs and expenses incurred in reviewing the transac-
39 tion. Upon submission of a claim from the attorney general, the board of
40 examiners may authorize the issuance of deficiency warrants for the purpose of
41 reimbursing the attorney general reasonable and actual costs, but not
42 attorney's fees, associated with actions taken pursuant to this chapter.
43 Deficiency warrants authorized by the board of examiners under this section
44 shall not exceed one hundred thousand dollars ($100,000) for reimbursement of
45 all claims as a result of the attorney general's review of a transaction under
46 this chapter. Upon authorization of deficiency warrants by the board of exam-
47 iners in accordance with the provisions of this section, the state controller
48 shall, after notice to the state treasurer, draw deficiency warrants in the
49 authorized amounts against the general account.
50 48-1509. PUBLIC RECORDS. All documents submitted to the attorney general
51 by any person, including nonprofit hospital entities giving notice under sec-
52 tion 48-1503, Idaho Code, in connection with the attorney general's review of
5
1 the proposed nonprofit hospital conversion transaction pursuant to this chap-
2 ter shall be deemed records contained in court files of judicial proceedings,
3 as provided for in section 9-340A(2), Idaho Code, and shall only be subject to
4 public disclosure, pursuant to a public document request, in the same manner
5 as set forth in that section.
6 48-1510. PENALTIES -- REMEDIES. (1) In his discretion, the attorney gen-
7 eral may apply to the district court for an order voiding any nonprofit hospi-
8 tal conversion transaction entered into in violation of the notice and disclo-
9 sure requirements of section 48-1503(1), Idaho Code. Each member of the gov-
10 erning boards and the chief executive officers of the parties to the nonprofit
11 hospital conversion transaction may be subject to a civil penalty of up to ten
12 thousand dollars ($10,000) for knowingly failing to notify the attorney gen-
13 eral of the nonprofit hospital conversion transaction, or for violating the
14 provisions of section 48-1511, Idaho Code, as applicable. The amount of any
15 civil penalty shall be determined by the district court in the county in which
16 the nonprofit hospital's assets to be transferred are located. No such pen-
17 alty may be imposed under this section merely because the attorney general
18 files suit under section 48-1504, Idaho Code, or because the district court
19 enters an order that the nonprofit hospital conversion transaction at issue is
20 not in the charitable trust interest. The attorney general shall institute
21 proceedings to impose such a penalty.
22 (2) Nothing in this chapter shall be construed to limit the common law
23 authority of the attorney general regarding charitable trusts and charitable
24 assets in this state. The provisions of this chapter are in addition to, and
25 not a replacement for, any other actions which the attorney general may take
26 under either the common law or statutory law, including rescinding the non-
27 profit hospital conversion transaction, granting injunctive relief or any com-
28 bination of these and other remedies available under common law or statutory
29 law.
30 48-1511. PRIVATE BENEFIT. No person who is an officer, director, board
31 member or other fiduciary of a nonprofit hospital shall receive anything of
32 value, beyond ordinary compensation, that relates to a nonprofit hospital con-
33 version transaction described in this act and is of such a character as to
34 have the appearance of an improper influence on the person with respect to the
35 person's duties; provided however, that an officer or employee of the non-
36 profit hospital may accept a job with, perform duties for, and receive ordi-
37 nary compensation from, the purchasing or converting entity. Any person who
38 violates the provisions of this section shall, in addition to being subject to
39 the provisions of section 48-1510, Idaho Code, forfeit the items of value
40 received in violation of this section.
41 48-1512. APPLICATION OF ACT. This act applies to all acquisitions, the
42 consummation of which occurs after the effective date of this act.
AH0547
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
Moved by Callister
Seconded by Henbest
IN THE HOUSE OF REPRESENTATIVES
HOUSE AMENDMENT TO H.B. NO. 547
1 AMENDMENT TO THE BILL
2 On page 1 of the printed bill, delete lines 22 through 41, delete pages 2,
3 3, 4, 5 and 6 and insert:
4 "48-1501. LEGISLATIVE FINDINGS AND INTENT. (1) Nonprofit hospitals hold
5 assets in charitable trust, and are dedicated to the specific charitable pur-
6 poses set forth in the articles of incorporation of the nonprofit corporations
7 or governing papers of the nonprofit entities operating such hospitals. Non-
8 profit hospitals have a substantial and beneficial effect on the provision of
9 health care to the people of Idaho, providing as part of their charitable mis-
10 sion free or low-cost health care.
11 (2) The attorney general is entrusted by law to bring actions on behalf
12 of the public in the event of a breach of the charitable trust, pursuant to
13 section 67-1401, Idaho Code.
14 (3) This act shall be cited as the "Nonprofit Hospital Sale or Conversion
15 Act."
16 48-1502. DEFINITIONS. As used in this act:
17 (1) "Hospital" means a place devoted primarily to the maintenance and
18 operation of facilities for the diagnosis, treatment or care for not less than
19 twenty-four (24) hours in any week of two (2) or more nonrelated individuals
20 suffering from illness, disease, injury, deformity, or requiring care because
21 of old age, or a place devoted primarily to providing, for not less than
22 twenty-four (24) hours in any week, of obstetrical or other medical or nursing
23 care for two (2) or more nonrelated individuals.
24 (2) "Nonprofit hospital" means any hospital, including hospitals owned by
25 corporations, that is organized as a nonprofit concern, however structured or
26 created. The term also includes entities owned, governed or controlled by a
27 nonprofit hospital. The term does not include hospitals which are operated by
28 a governmental unit.
29 (3) "Nonprofit hospital conversion transaction" means:
30 (a) The sale, transfer, lease, exchange, optioning, or conveyance of the
31 lesser of thirty million dollars ($30,000,000) or forty percent (40%) of
32 the assets of a nonprofit hospital to an entity or person other than a
33 nonprofit entity or an entity controlled by the nonprofit hospital; or
34 (b) The transfer of control or governance of the lesser of thirty million
35 dollars ($30,000,000) or forty percent (40%) of the assets of a nonprofit
36 hospital to an entity or person other than a nonprofit entity or an entity
37 controlled by the nonprofit hospital.
38 (c) "Nonprofit hospital conversion transaction" does not include con-
39 tracts, in the usual course of business, between the nonprofit hospital
40 and another entity:
41 (i) For the provision of services to the nonprofit hospital;
42 (ii) For the sale of equipment; or
43 (iii) For the leasing of space.
2
1 (d) Beginning on July 1, 2001, and each July 1 thereafter, the sums of
2 thirty million dollars ($30,000,000) referenced in subsections (3)(a) and
3 (3)(b) of this section, shall increase or decrease in accordance with the
4 percentage amount change in the hospital services component of the con-
5 sumer price index as published by the bureau of labor statistics of the
6 United States department of labor.
7 (4) "Person" means any individual, partnership, trust, estate, corpora-
8 tion, association, joint venture, joint stock company, insurance company or
9 other organization.
10 (5) "Charitable trust interest" shall mean those factors specifically
11 listed in section 48-1506, Idaho Code.
12 48-1503. NOTICE TO THE ATTORNEY GENERAL. (1) Any nonprofit hospital
13 shall be required to provide written notice to the attorney general prior to
14 entering into any nonprofit hospital conversion transaction.
15 (2) In addition to identifying the parties to the nonprofit hospital con-
16 version transaction and the general terms of the transaction, the notice to
17 the attorney general provided for in this section shall include and contain
18 relevant information related to the review factors set forth in section
19 48-1506, Idaho Code.
20 (3) This chapter shall not apply to a nonprofit hospital if the attorney
21 general has given the nonprofit hospital a written waiver of this chapter as
22 to the nonprofit hospital conversion transaction.
23 48-1504. ATTORNEY GENERAL REVIEW AND WRITTEN OPINION -- TIME PERIODS --
24 EXTENSION -- DISTRICT COURT REVIEW. (1) No nonprofit hospital conversion
25 transaction may close or be consummated until the time periods, as provided in
26 this section, have expired.
27 (2) Within ninety (90) days of receipt of a written notice as required by
28 section 48-1503, Idaho Code, the attorney general shall review the proposed
29 nonprofit hospital conversion transaction and notify the nonprofit hospital in
30 writing of his opinion. The attorney general shall review the nonprofit hospi-
31 tal conversion transaction to determine if it is in the charitable trust
32 interest. In making his determination, the attorney general shall be guided by
33 the factors set forth in section 48-1506, Idaho Code. Upon application by the
34 attorney general, the district court may extend this period for an additional
35 sixty (60) day period, provided the extension is necessary to obtain necessary
36 and relevant information pursuant to section 48-1507(2) or 48-1508(1), Idaho
37 Code.
38 (3) If the attorney general, in his written opinion, opposes the proposed
39 nonprofit hospital conversion transaction, the parties to the transaction may
40 not close or consummate the transaction for fourteen (14) days after the
41 attorney general's opinion has been issued to allow the attorney general, in
42 his discretion, to file suit seeking to block the transaction.
43 (4) If the attorney general files a lawsuit seeking to block the non-
44 profit hospital conversion transaction, the district court shall review, de
45 novo, the transaction to determine if it is in the charitable trust interest.
46 In making this determination, the district court shall use the factors set
47 forth in section 48-1506, Idaho Code. Neither a positive nor a negative find-
48 ing with regard to one (1) or more of the factors listed in section 48-1506,
49 Idaho Code, shall necessarily mean that the nonprofit hospital conversion
50 transaction is or is not in the charitable trust interest.
51 48-1505. PUBLIC MEETINGS -- NOTICE OF TIME AND PLACE. (1) Prior to issu-
52 ing any written opinion pursuant to section 48-1504, Idaho Code, the attorney
3
1 general may conduct one (1) or more public meetings, one (1) of which, if
2 held, shall be held in the county where the nonprofit hospital's assets to be
3 transferred are located.
4 (2) If a party to the intended nonprofit hospital conversion transaction
5 requests the hearing be conducted by a hearing officer outside the attorney
6 general's office, a hearing officer, mutually agreed upon by the parties to
7 the conversion transaction and the attorney general, shall be selected.
8 (3) At the public meeting, the attorney general or hearing officer shall
9 hear comments from interested persons desiring to make statements regarding
10 the proposed nonprofit hospital conversion transaction.
11 (4) The attorney general shall cause timely written notice to be provided
12 regarding the time and place of the meeting through publication in one (1) or
13 more newspapers of general circulation in the affected community, to the
14 county board of supervisors, and if applicable, to the city council of the
15 city where the nonprofit hospital's assets to be transferred are located.
16 (5) If a hearing officer is used, the parties to the nonprofit hospital
17 conversion transaction shall pay the costs of the hearing officer.
18 48-1506. NONPROFIT HOSPITAL CONVERSION TRANSACTION REVIEW ELEMENTS. In
19 reviewing a proposed nonprofit hospital conversion transaction, the attorney
20 general (and the district court as necessary and applicable), shall consider:
21 (1) Whether the nonprofit hospital will receive fair market value for its
22 charitable trust assets;
23 (2) Whether the fair market value of the nonprofit hospital's assets to
24 be transferred has been affected by the actions of the parties in a manner
25 that improperly causes the fair market value of the assets to decrease;
26 (3) Whether the proceeds of the proposed nonprofit hospital conversion
27 transaction will be used consistent with the trust under which the assets are
28 held by the nonprofit hospital and whether the proceeds will be controlled as
29 funds independently of the acquiring or related entities;
30 (4) Whether the governing body of the nonprofit hospital exercised due
31 diligence in deciding to dispose of the nonprofit hospital's assets, selecting
32 the acquiring entity, and negotiating the terms and conditions of the disposi-
33 tion;
34 (5) Whether the nonprofit hospital conversion transaction will result in
35 improper private inurement to any person as set forth in section 48-1511,
36 Idaho Code; and
37 (6) Whether the terms of any management or services contract negotiated
38 in conjunction with the proposed nonprofit hospital conversion transaction are
39 reasonable.
40 48-1507. RULES -- AUTHORITY TO ADOPT -- INFORMATION REQUESTS -- CONSE-
41 QUENCES OF REFUSAL TO PROVIDE INFORMATION. (1) The attorney general may adopt
42 such rules, pursuant to chapter 52, title 67, Idaho Code, as the attorney gen-
43 eral deems appropriate or necessary to implement this chapter.
44 (2) The attorney general may request that the nonprofit hospital giving
45 notice under section 48-1503, Idaho Code, in addition to providing information
46 related to the review factors set forth in section 48-1506, Idaho Code, pro-
47 vide other information which the attorney general reasonably deems necessary
48 and relevant to review the nonprofit hospital conversion transaction.
49 (3) If the nonprofit hospital declines to provide the information
50 requested by the attorney general in subsection (2) of this section, the
51 attorney general may apply to the court for an order requiring the disclosure
52 of the information, which shall be granted if found to be necessary and rele-
53 vant.
4
1 48-1508. CONTRACTS WITH AGENCIES AND CONSULTANTS -- REIMBURSEMENT FOR
2 COSTS AND EXPENSES OF REVIEW -- FAILURE TO PAY. (1) Within the time periods
3 designated in section 48-1504, Idaho Code, the attorney general may do any of
4 the following to assist in the review of the proposed nonprofit hospital con-
5 version transaction described in section 48-1503, Idaho Code:
6 (a) Contract with, consult, and receive advice from any agency of the
7 state or the United States on such terms and conditions the attorney gen-
8 eral deems appropriate; or
9 (b) In the attorney general's sole discretion, contract with such experts
10 or consultants the attorney general deems appropriate to assist the attor-
11 ney general in reviewing the proposed nonprofit hospital conversion trans-
12 action.
13 (2) Any costs incurred by the attorney general pursuant to this section
14 shall not exceed an amount that is reasonable and necessary to conduct the
15 review of the proposed nonprofit hospital conversion transaction. The attor-
16 ney general shall be exempt from the provisions of any applicable state laws
17 regarding public bidding procedures for purposes of entering into contracts
18 pursuant to this section.
19 (3) The attorney general, after reviewing the nonprofit hospital conver-
20 sion transaction, may submit a claim to the board of examiners for reimburse-
21 ment of his reasonable costs and expenses incurred in reviewing the transac-
22 tion. Upon submission of a claim from the attorney general, the board of
23 examiners may authorize the issuance of deficiency warrants for the purpose of
24 reimbursing the attorney general reasonable and actual costs, but not
25 attorney's fees, associated with actions taken pursuant to this chapter.
26 Deficiency warrants authorized by the board of examiners under this section
27 shall not exceed one hundred thousand dollars ($100,000) for reimbursement of
28 all claims as a result of the attorney general's review of a transaction under
29 this chapter. Upon authorization of deficiency warrants by the board of exam-
30 iners in accordance with the provisions of this section, the state controller
31 shall, after notice to the state treasurer, draw deficiency warrants in the
32 authorized amounts against the general account.
33 48-1509. PUBLIC RECORDS. All documents submitted to the attorney general
34 by any person, including nonprofit hospital entities giving notice under sec-
35 tion 48-1503, Idaho Code, in connection with the attorney general's review of
36 the proposed nonprofit hospital conversion transaction pursuant to this chap-
37 ter shall be deemed records contained in court files of judicial proceedings,
38 as provided for in section 9-340A(2), Idaho Code, and shall only be subject to
39 public disclosure, pursuant to a public document request, in the same manner
40 as set forth in that section.
41 48-1510. PENALTIES -- REMEDIES. (1) In his discretion, the attorney gen-
42 eral may apply to the district court for an order voiding any nonprofit hospi-
43 tal conversion transaction entered into in violation of the notice and disclo-
44 sure requirements of section 48-1503(1), Idaho Code. Each member of the gov-
45 erning boards and the chief executive officers of the parties to the nonprofit
46 hospital conversion transaction may be subject to a civil penalty of up to ten
47 thousand dollars ($10,000) for knowingly failing to notify the attorney gen-
48 eral of the nonprofit hospital conversion transaction, or for violating the
49 provisions of section 48-1511, Idaho Code, as applicable. The amount of any
50 civil penalty shall be determined by the district court in the county in which
51 the nonprofit hospital's assets to be transferred are located. No such pen-
52 alty may be imposed under this section merely because the attorney general
53 files suit under section 48-1504, Idaho Code, or because the district court
5
1 enters an order that the nonprofit hospital conversion transaction at issue is
2 not in the charitable trust interest. The attorney general shall institute
3 proceedings to impose such a penalty.
4 (2) Nothing in this chapter shall be construed to limit the common law
5 authority of the attorney general regarding charitable trusts and charitable
6 assets in this state. The provisions of this chapter are in addition to, and
7 not a replacement for, any other actions which the attorney general may take
8 under either the common law or statutory law, including rescinding the non-
9 profit hospital conversion transaction, granting injunctive relief or any com-
10 bination of these and other remedies available under common law or statutory
11 law.
12 48-1511. PRIVATE BENEFIT. No person who is an officer, director, board
13 member or other fiduciary of a nonprofit hospital shall receive anything of
14 value, beyond ordinary compensation, that relates to a nonprofit hospital con-
15 version transaction described in this act and is of such a character as to
16 have the appearance of an improper influence on the person with respect to the
17 person's duties; provided however, that an officer or employee of the non-
18 profit hospital may accept a job with, perform duties for, and receive ordi-
19 nary compensation from, the purchasing or converting entity. Any person who
20 violates the provisions of this section shall, in addition to being subject to
21 the provisions of section 48-1510, Idaho Code, forfeit the items of value
22 received in violation of this section.
23 48-1512. APPLICATION OF ACT. This act applies to all acquisitions, the
24 consummation of which occurs after the effective date of this act.".
25 CORRECTION TO TITLE
26 On page 1, delete lines 11 through 15 and insert: "RECORDS, TO PROVIDE FOR
27 PENALTIES AND REMEDIES, TO PROVIDE FOR THE PROHIBITION OF ANY PRIVATE BENEFIT
28 FROM THE ACQUISITION OF A NONPROFIT HOSPITAL AND TO PROVIDE FOR THE APPLICA-
29 TION OF THE ACT.".
STATEMENT OF PURPOSE
RS 09482
This proposed legislation adds a new chapter to Title 48 of the Idaho
Code, clarifying the existing charitable trust supervisory powers of the Attorney
General in the area of nonprofit hospital transactions and conversions. Since
nonprofit hospitals are historically created by community sacrifice and donation,
the proposed conversion of such a hospital deserves review and consideration.
The legislation establishes procedures by which these transactions are to be
reviewed and evaluated, ensuring that a community's interest in its hospital is
protected and considered. The legislation provides for notice of such
transactions to the Attorney General and items that should be considered in
reviewing any such transaction. The legislation also allows the Attorney General
to hold a public hearing and appear in court. Finally, the legislation also prohibits
current board members of a nonprofit hospital from receiving anything of value
that relates to a hospital conversion if it is of such a character to have the
appearance of an improper influence on the person with respect to that person's
duties.
FISCAL NOTE
This legislation should ensure that charitable trust property will not be
lost. Other than potential workloads for the Office of the Attorney' General, there
should be no fiscal impact upon the general funds of the State.
Contact: Brett DeLange, Office of Attorney General
Phone: 334-4114
STATEMENT OF PURPOSE/FISCAL IMPACT H 547