5914. (a) (1) Any nonprofit corporation that is defined in Section
5046 and operates or controls a health facility, as defined in
Section 1250 of the Health and Safety Code, or operates or controls a
facility that provides similar health care, shall be required to
provide written notice to, and to obtain the written consent of, the
Attorney General prior to entering into any agreement or transaction
to do either of the following:
(A) Sell, transfer, lease, exchange, option, convey, or otherwise
dispose of, its assets to a for-profit corporation or entity or to a
mutual benefit corporation or entity when a material amount of the
assets of the nonprofit corporation are involved in the agreement or
transaction.
(B) Transfer control, responsibility, or governance of a material
amount of the assets or operations of the nonprofit corporation to
any for-profit corporation or entity or to any mutual benefit
corporation or entity.
(2) The substitution of a new corporate member or members that
transfers the control of, responsibility for, or governance of the
nonprofit corporation shall be deemed a transfer for purposes of this
article. The substitution of one or more members of the governing
body, or any arrangement, written or oral, that would transfer voting
control of the members of the governing body, shall also be deemed a
transfer for purposes of this article.
(b) The notice to the Attorney General provided for in this
section shall include and contain the information the Attorney
General determines is required. The notice, including any other
information provided to the Attorney General under this article, and
that is in the public file, shall be made available by the Attorney
General to the public in written form, as soon as is practicable
after it is received by the Attorney General.
(c) This section shall not apply to a nonprofit corporation if the
agreement or transaction is in the usual and regular course of its
activities or if the Attorney General has given the corporation a
written waiver of this section as to the proposed agreement or
transaction.
(d) This section shall apply to any foreign nonprofit corporation
that operates or controls a health facility, as defined in Section
1250 of the Health and Safety Code, or a facility that provides
similar health care.
5915. Within 60 days of the receipt of the written notice required
by Section 5914, the Attorney General shall notify the public benefit
corporation in writing of the decision to consent to, give
conditional consent to, or not consent to the agreement or
transaction. The Attorney General may extend this period for one
additional 45-day period if any of the following conditions are
satisfied:
(a) The extension is necessary to obtain information pursuant to
subdivision (a) of Section 5919.
(b) The proposed agreement or transaction is substantially
modified after the first public meeting conducted by the Attorney
General in accordance with Section 5916.
(c) The proposed agreement or transaction involves a multifacility
health system serving multiple communities, rather than a single
facility.
5916. Prior to issuing any written decision referred to in Section
5915, the Attorney General shall conduct one or more public meetings,
one of which shall be in the county in which the facility is
located, to hear comments from interested parties. At least 14 days
before conducting the public meeting, the Attorney General shall
provide written notice of the time and place of the meeting through
publication in one or more newspapers of general circulation in the
affected community and to the board of supervisors of the county in
which the facility is located. If a substantive change in the
proposed agreement or transaction is submitted to the Attorney
General after the initial public meeting, the Attorney General may
conduct an additional public meeting to hear comments from interested
parties with respect to that change.
5917. The Attorney General shall have discretion to consent to,
give conditional consent to, or not consent to any agreement or
transaction described in subdivision (a) of Section 5914. In making
the determination, the Attorney General shall consider any factors
that the Attorney General deems relevant, including, but not limited
to, whether any of the following apply:
(a) The terms and conditions of the agreement or transaction are
fair and reasonable to the nonprofit corporation.
(b) The agreement or transaction will result in inurement to any
private person or entity.
(c) Any agreement or transaction that is subject to this article
is at fair market value. In this regard, "fair market value" means
the most likely price that the assets being sold would bring in a
competitive and open market under all conditions requisite to a fair
sale, the buyer and seller, each acting prudently, knowledgeably and
in their own best interest, and a reasonable time being allowed for
exposure in the open market.
(d) The market value has been manipulated by the actions of the
parties in a manner that causes the value of the assets to decrease.
(e) The proposed use of the proceeds from the agreement or
transaction is consistent with the charitable trust on which the
assets are held by the health facility or by the affiliated nonprofit
health system.
(f) The agreement or transaction involves or constitutes any
breach of trust.
(g) The Attorney General has been provided, pursuant to Section
5250, with sufficient information and data by the nonprofit
corporation to evaluate adequately the agreement or transaction or
the effects thereof on the public.
(h) The agreement or transaction may create a significant effect
on the availability or accessibility of health care services to the
affected community.
(i) The proposed agreement or transaction is in the public
interest.
5917.5. The Attorney General shall not consent to a health facility
agreement or transaction pursuant to Section 5914 or Section 5920 in
which the seller restricts the type or level of medical services
that may be provided at the health facility that is the subject of
the agreement or transaction.
5918. The Attorney General may adopt regulations implementing this
article.
5919. (a) Within the time periods designated in Section 5915 and
relating to those factors specified in Section 5917, the Attorney
General may do the following:
(1) Contract with, consult, and receive advice from any state
agency on those terms and conditions that the Attorney General deems
appropriate.
(2) In his or her sole discretion, contract with experts or
consultants to assist in reviewing the proposed agreement or
transaction.
(b) Contract costs shall not exceed an amount that is reasonable
and necessary to conduct the review and evaluation. Any contract
entered into under this section shall be on a noncompetitive bid
basis and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code. The
nonprofit corporation, upon request, shall pay the Attorney General
promptly for all contract costs.
(c) The Attorney General shall be entitled to reimbursement from
the nonprofit corporation for all actual, reasonable, direct costs
incurred in reviewing, evaluating, and making the determination
referred to in this article, including administrative costs. The
nonprofit corporation shall promptly pay the Attorney General, upon
request, for all of those costs.
(d) (1) In order to monitor effectively ongoing compliance with
the terms and conditions of any sale or transfer of assets subject to
Section 5914, including, but not limited to, the ongoing use of the
charitable assets in a manner consistent with the trust pursuant to
which they are held, the Attorney General may, in his or her sole
discretion, contract with experts and consultants to assist in this
regard.
(2) Contract costs shall not exceed an amount that is reasonable
and necessary to conduct the review and evaluation. Any contract
entered into under this section shall be on a noncompetitive bid
basis and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code. The
nonprofit corporation shall pay the Attorney General promptly for all
contract costs.
(3) The Attorney General shall be entitled to reimbursement from
either the selling or the acquiring corporation, depending upon which
one the burden of compliance falls, for all actual, reasonable, and
direct costs incurred in monitoring ongoing compliance with the terms
and conditions of the sale or transfer of assets, including contract
and administrative costs. The Attorney General may bill either the
selling or the acquiring corporation and the corporation billed by
the Attorney General shall promptly pay for all of those costs.
5920. (a) (1) Any nonprofit corporation that is defined in Section
5046 and operates or controls a health care facility, as defined in
Section 1250 of the Health and Safety Code, or operates or controls a
facility that provides similar health care, shall be required to
provide written notice to, and to obtain the written consent of, the
Attorney General prior to entering into any agreement or transaction
to do either of the following:
(A) Sell, transfer, lease, exchange, option, convey, or otherwise
dispose of, its assets to another nonprofit corporation or entity
when a material amount of the assets of the nonprofit corporation are
involved in the agreement or transaction.
(B) Transfer control, responsibility, or governance of a material
amount of the assets or operations of the nonprofit corporation to
another nonprofit corporation or entity.
(2) The substitution of a new corporate member or members that
transfers the control of, responsibility for, or governance of the
nonprofit corporation, the substitution of one or more members of the
governing body that would transfer voting control of the members of
the governing body, or any arrangement, written or oral, that would
transfer voting control of the entity shall be deemed a transfer for
purposes of this article.
(b) The notice to the Attorney General provided for in this
section shall contain the information the Attorney General determines
is required. The notice, including any other information provided to
the Attorney General under this article, and that is the public
file, shall be made available by the Attorney General to the public
in written form, as soon as is practicable after it is received by
the Attorney General.
(c) This section shall not apply to a nonprofit corporation if the
agreement or transaction is in the usual and regular course of its
activities or if the Attorney General has given the corporation a
written waiver of this section as to the proposed agreement or
transaction.
(d) This section shall apply to any foreign nonprofit corporation
that operates or controls a health facility, as defined in Section
1250 of the Health and Safety Code, or a facility that provides
similar health care.
(e) This section shall not apply to an agreement or transaction if
the other party to the agreement or transaction is an affiliate, as
defined in Section 5031, of the transferring nonprofit corporation or
entity, and the corporation or entity has given the Attorney General
20 days advance notice of the agreement or transaction.
5921. Within 60 days of the receipt of the written notice required
by Section 5920, the Attorney General shall notify the nonprofit
corporation in writing of the decision to consent to, give
conditional consent to, or not consent to the agreement or
transaction. The Attorney General may extend this period for one
additional 45-day period if any of the following conditions are
satisfied:
(a) The extension is necessary to obtain relevant information from
any state agency, experts, or consultants.
(b) The proposed agreement or transaction is substantially
modified after the first public meeting conducted by the Attorney
General in accordance with Section 5922.
(c) The proposed agreement or transaction involves a multifacility
health system serving multiple communities, rather than a single
facility.
5922. Prior to issuing any written decision referred to in Section
5921, the Attorney General shall conduct one or more public meetings,
one of which shall be in the county in which the facility is
located, to hear comments from interested parties. At least 14 days
before conducting the public meeting, the Attorney General shall
provide written notice of the time and place of the meeting through
publication in one or more newspapers of general circulation in the
affected community and to the board of supervisors of the county in
which the facility is located. If a substantive change in the
proposed agreement or transaction is submitted to the Attorney
General after the initial public meeting, the Attorney General may
conduct an additional public meeting to hear comments from interested
parties with respect to that change.
5923. The Attorney General shall have discretion to consent to,
give conditional consent to, or not consent to any agreement or
transaction described in subdivision (a) of Section 5920. In making
the determination, the Attorney General shall consider any factors
that the Attorney General deems relevant, including, but not limited
to, whether any of the following apply:
(a) The terms and conditions of the agreement or transaction are
fair and reasonable to the nonprofit corporation.
(b) The agreement or transaction will result in inurement to any
private person or entity.
(c) Fair market value of the agreement or transaction, meaning the
most likely price that the assets being sold would bring in a
competitive and open market under all conditions requisite to a fair
sale, the buyer and seller, each acting prudently, knowledgeably, and
in their own best interest, and a reasonable time being allowed for
exposure in the open market.
(d) The market value has been manipulated by the actions of the
parties in a manner that causes the value of the assets to decrease.
(e) The proposed use of the proceeds from the agreement or
transaction is consistent with the charitable trust on which the
assets are held by the health facility or by the affiliated nonprofit
health system.
(f) The agreement or transaction involves or constitutes any
breach of trust.
(g) The Attorney General has been provided, pursuant to Section
5250, with sufficient information and data by the nonprofit public
benefit corporation to evaluate adequately the agreement or
transaction or the effects thereof on the public.
(h) The agreement or transaction may create a significant effect
on the availability or accessibility of health care services to the
affected community.
(i) The proposed agreement or transaction is in the public
interest.
5924. (a) Within the time periods designated in Section 5921 and
relating to those factors specified in Section 5923, the Attorney
General may do the following:
(1) Contract with, consult, and receive advice from any state
agency on those terms and conditions that the Attorney General deems
appropriate.
(2) In his or her sole discretion, contract with experts or
consultants to assist in reviewing the proposed agreement or
transaction.
(b) Contract costs shall not exceed an amount that is reasonable
and necessary to conduct the review and evaluation. Any contract
entered into under this section shall be on a noncompetitive bid
basis and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code. The
selling nonprofit corporation, upon request, shall pay the Attorney
General promptly for all contract costs.
(c) The Attorney General shall be entitled to reimbursement from
the selling nonprofit corporation for all actual, reasonable, direct
costs incurred in reviewing, evaluating, and making the determination
referred to in Section 5921, including administrative costs. The
selling nonprofit corporation shall promptly pay the Attorney
General, upon request, for all of those costs.
(d) (1) In order to effectively monitor ongoing compliance with
the terms and conditions of any sale or transfer of assets subject to
Section 5920, including, but not limited to, the ongoing use of the
charitable assets in a manner consistent with the trust pursuant to
which they are held, the Attorney General may, in his or her sole
discretion, contract with experts and consultants to assist in this
regard.
(2) Contract costs shall not exceed an amount that is reasonable
and necessary to conduct the review and evaluation. Any contract
entered into under this section shall be on a noncompetitive bid
basis and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code. The
selling nonprofit corporation shall pay the Attorney General promptly
for all contract costs.
(3) The Attorney General shall be entitled to reimbursement from
either the selling or the acquiring nonprofit corporation, depending
upon which one the burden of compliance falls, for all actual,
reasonable, and direct costs incurred in monitoring ongoing
compliance with the terms and conditions of the sale or transfer of
assets, including contract and administrative costs. The Attorney
General shall be entitled to this reimbursement for a period of time
not to exceed two years after any time period specified in the terms
or conditions of sale or transfer of assets. The Attorney General may
bill either the selling or the acquiring corporation and the
corporation billed by the Attorney General shall promptly pay for all
of those costs.
5925. The Attorney General may adopt regulations implementing
Sections 5920 to 5924, inclusive.
5930. (a) The Attorney General shall prepare a plan for an
evaluation of whether additional standards for charitable care and
community benefits should be established for private, not-for-profit
corporations that operate or control a general acute care hospital as
defined in Section 1250 of the Health and Safety Code.
(b) In preparing the plan, the Attorney General shall consult with
representatives of interested parties, including, but not limited
to, all of the following:
(1) Health facility associations.
(2) Physician organizations.
(3) Consumer groups.
(4) Health care employee organizations.
(5) Community groups.
(6) The Office of Statewide Health Planning and Development.
(c) The plan shall provide for the evaluation of all of the
following:
(1) The degree to which private, not-for-profit hospitals provide
charitable care and community benefits, including the nature of the
benefits, the definition of the community, and a comparison of the
cost of providing the benefit with the value of the benefits given to
the community.
(2) The implications of the relationships among private
not-for-profit hospitals and affiliated entities, as defined in
Section 5031 of the Corporations Code, for purposes of determining
community benefits.
(3) The role of the board of directors of private, not-for-profit
hospitals in ensuring benefit to the community.
(d) The plan shall be submitted to the appropriate policy and
fiscal committees of the Legislature by March 1, 2001.
5914. (a) (1) Any nonprofit corporation that is defined in Section
5046 and operates or controls a health facility, as defined in
Section 1250 of the Health and Safety Code, or operates or controls a
facility that provides similar health care, shall be required to
provide written notice to, and to obtain the written consent of, the
Attorney General prior to entering into any agreement or transaction
to do either of the following:
(A) Sell, transfer, lease, exchange, option, convey, or otherwise
dispose of, its assets to a for-profit corporation or entity or to a
mutual benefit corporation or entity when a material amount of the
assets of the nonprofit corporation are involved in the agreement or
transaction.
(B) Transfer control, responsibility, or governance of a material
amount of the assets or operations of the nonprofit corporation to
any for-profit corporation or entity or to any mutual benefit
corporation or entity.
(2) The substitution of a new corporate member or members that
transfers the control of, responsibility for, or governance of the
nonprofit corporation shall be deemed a transfer for purposes of this
article. The substitution of one or more members of the governing
body, or any arrangement, written or oral, that would transfer voting
control of the members of the governing body, shall also be deemed a
transfer for purposes of this article.
(b) The notice to the Attorney General provided for in this
section shall include and contain the information the Attorney
General determines is required. The notice, including any other
information provided to the Attorney General under this article, and
that is in the public file, shall be made available by the Attorney
General to the public in written form, as soon as is practicable
after it is received by the Attorney General.
(c) This section shall not apply to a nonprofit corporation if the
agreement or transaction is in the usual and regular course of its
activities or if the Attorney General has given the corporation a
written waiver of this section as to the proposed agreement or
transaction.
(d) This section shall apply to any foreign nonprofit corporation
that operates or controls a health facility, as defined in Section
1250 of the Health and Safety Code, or a facility that provides
similar health care.
5915. Within 60 days of the receipt of the written notice required
by Section 5914, the Attorney General shall notify the public benefit
corporation in writing of the decision to consent to, give
conditional consent to, or not consent to the agreement or
transaction. The Attorney General may extend this period for one
additional 45-day period if any of the following conditions are
satisfied:
(a) The extension is necessary to obtain information pursuant to
subdivision (a) of Section 5919.
(b) The proposed agreement or transaction is substantially
modified after the first public meeting conducted by the Attorney
General in accordance with Section 5916.
(c) The proposed agreement or transaction involves a multifacility
health system serving multiple communities, rather than a single
facility.
5916. Prior to issuing any written decision referred to in Section
5915, the Attorney General shall conduct one or more public meetings,
one of which shall be in the county in which the facility is
located, to hear comments from interested parties. At least 14 days
before conducting the public meeting, the Attorney General shall
provide written notice of the time and place of the meeting through
publication in one or more newspapers of general circulation in the
affected community and to the board of supervisors of the county in
which the facility is located. If a substantive change in the
proposed agreement or transaction is submitted to the Attorney
General after the initial public meeting, the Attorney General may
conduct an additional public meeting to hear comments from interested
parties with respect to that change.
5917. The Attorney General shall have discretion to consent to,
give conditional consent to, or not consent to any agreement or
transaction described in subdivision (a) of Section 5914. In making
the determination, the Attorney General shall consider any factors
that the Attorney General deems relevant, including, but not limited
to, whether any of the following apply:
(a) The terms and conditions of the agreement or transaction are
fair and reasonable to the nonprofit corporation.
(b) The agreement or transaction will result in inurement to any
private person or entity.
(c) Any agreement or transaction that is subject to this article
is at fair market value. In this regard, "fair market value" means
the most likely price that the assets being sold would bring in a
competitive and open market under all conditions requisite to a fair
sale, the buyer and seller, each acting prudently, knowledgeably and
in their own best interest, and a reasonable time being allowed for
exposure in the open market.
(d) The market value has been manipulated by the actions of the
parties in a manner that causes the value of the assets to decrease.
(e) The proposed use of the proceeds from the agreement or
transaction is consistent with the charitable trust on which the
assets are held by the health facility or by the affiliated nonprofit
health system.
(f) The agreement or transaction involves or constitutes any
breach of trust.
(g) The Attorney General has been provided, pursuant to Section
5250, with sufficient information and data by the nonprofit
corporation to evaluate adequately the agreement or transaction or
the effects thereof on the public.
(h) The agreement or transaction may create a significant effect
on the availability or accessibility of health care services to the
affected community.
(i) The proposed agreement or transaction is in the public
interest.
5917.5. The Attorney General shall not consent to a health facility
agreement or transaction pursuant to Section 5914 or Section 5920 in
which the seller restricts the type or level of medical services
that may be provided at the health facility that is the subject of
the agreement or transaction.
5918. The Attorney General may adopt regulations implementing this
article.
5919. (a) Within the time periods designated in Section 5915 and
relating to those factors specified in Section 5917, the Attorney
General may do the following:
(1) Contract with, consult, and receive advice from any state
agency on those terms and conditions that the Attorney General deems
appropriate.
(2) In his or her sole discretion, contract with experts or
consultants to assist in reviewing the proposed agreement or
transaction.
(b) Contract costs shall not exceed an amount that is reasonable
and necessary to conduct the review and evaluation. Any contract
entered into under this section shall be on a noncompetitive bid
basis and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code. The
nonprofit corporation, upon request, shall pay the Attorney General
promptly for all contract costs.
(c) The Attorney General shall be entitled to reimbursement from
the nonprofit corporation for all actual, reasonable, direct costs
incurred in reviewing, evaluating, and making the determination
referred to in this article, including administrative costs. The
nonprofit corporation shall promptly pay the Attorney General, upon
request, for all of those costs.
(d) (1) In order to monitor effectively ongoing compliance with
the terms and conditions of any sale or transfer of assets subject to
Section 5914, including, but not limited to, the ongoing use of the
charitable assets in a manner consistent with the trust pursuant to
which they are held, the Attorney General may, in his or her sole
discretion, contract with experts and consultants to assist in this
regard.
(2) Contract costs shall not exceed an amount that is reasonable
and necessary to conduct the review and evaluation. Any contract
entered into under this section shall be on a noncompetitive bid
basis and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code. The
nonprofit corporation shall pay the Attorney General promptly for all
contract costs.
(3) The Attorney General shall be entitled to reimbursement from
either the selling or the acquiring corporation, depending upon which
one the burden of compliance falls, for all actual, reasonable, and
direct costs incurred in monitoring ongoing compliance with the terms
and conditions of the sale or transfer of assets, including contract
and administrative costs. The Attorney General may bill either the
selling or the acquiring corporation and the corporation billed by
the Attorney General shall promptly pay for all of those costs.
5920. (a) (1) Any nonprofit corporation that is defined in Section
5046 and operates or controls a health care facility, as defined in
Section 1250 of the Health and Safety Code, or operates or controls a
facility that provides similar health care, shall be required to
provide written notice to, and to obtain the written consent of, the
Attorney General prior to entering into any agreement or transaction
to do either of the following:
(A) Sell, transfer, lease, exchange, option, convey, or otherwise
dispose of, its assets to another nonprofit corporation or entity
when a material amount of the assets of the nonprofit corporation are
involved in the agreement or transaction.
(B) Transfer control, responsibility, or governance of a material
amount of the assets or operations of the nonprofit corporation to
another nonprofit corporation or entity.
(2) The substitution of a new corporate member or members that
transfers the control of, responsibility for, or governance of the
nonprofit corporation, the substitution of one or more members of the
governing body that would transfer voting control of the members of
the governing body, or any arrangement, written or oral, that would
transfer voting control of the entity shall be deemed a transfer for
purposes of this article.
(b) The notice to the Attorney General provided for in this
section shall contain the information the Attorney General determines
is required. The notice, including any other information provided to
the Attorney General under this article, and that is the public
file, shall be made available by the Attorney General to the public
in written form, as soon as is practicable after it is received by
the Attorney General.
(c) This section shall not apply to a nonprofit corporation if the
agreement or transaction is in the usual and regular course of its
activities or if the Attorney General has given the corporation a
written waiver of this section as to the proposed agreement or
transaction.
(d) This section shall apply to any foreign nonprofit corporation
that operates or controls a health facility, as defined in Section
1250 of the Health and Safety Code, or a facility that provides
similar health care.
(e) This section shall not apply to an agreement or transaction if
the other party to the agreement or transaction is an affiliate, as
defined in Section 5031, of the transferring nonprofit corporation or
entity, and the corporation or entity has given the Attorney General
20 days advance notice of the agreement or transaction.
5921. Within 60 days of the receipt of the written notice required
by Section 5920, the Attorney General shall notify the nonprofit
corporation in writing of the decision to consent to, give
conditional consent to, or not consent to the agreement or
transaction. The Attorney General may extend this period for one
additional 45-day period if any of the following conditions are
satisfied:
(a) The extension is necessary to obtain relevant information from
any state agency, experts, or consultants.
(b) The proposed agreement or transaction is substantially
modified after the first public meeting conducted by the Attorney
General in accordance with Section 5922.
(c) The proposed agreement or transaction involves a multifacility
health system serving multiple communities, rather than a single
facility.
5922. Prior to issuing any written decision referred to in Section
5921, the Attorney General shall conduct one or more public meetings,
one of which shall be in the county in which the facility is
located, to hear comments from interested parties. At least 14 days
before conducting the public meeting, the Attorney General shall
provide written notice of the time and place of the meeting through
publication in one or more newspapers of general circulation in the
affected community and to the board of supervisors of the county in
which the facility is located. If a substantive change in the
proposed agreement or transaction is submitted to the Attorney
General after the initial public meeting, the Attorney General may
conduct an additional public meeting to hear comments from interested
parties with respect to that change.
5923. The Attorney General shall have discretion to consent to,
give conditional consent to, or not consent to any agreement or
transaction described in subdivision (a) of Section 5920. In making
the determination, the Attorney General shall consider any factors
that the Attorney General deems relevant, including, but not limited
to, whether any of the following apply:
(a) The terms and conditions of the agreement or transaction are
fair and reasonable to the nonprofit corporation.
(b) The agreement or transaction will result in inurement to any
private person or entity.
(c) Fair market value of the agreement or transaction, meaning the
most likely price that the assets being sold would bring in a
competitive and open market under all conditions requisite to a fair
sale, the buyer and seller, each acting prudently, knowledgeably, and
in their own best interest, and a reasonable time being allowed for
exposure in the open market.
(d) The market value has been manipulated by the actions of the
parties in a manner that causes the value of the assets to decrease.
(e) The proposed use of the proceeds from the agreement or
transaction is consistent with the charitable trust on which the
assets are held by the health facility or by the affiliated nonprofit
health system.
(f) The agreement or transaction involves or constitutes any
breach of trust.
(g) The Attorney General has been provided, pursuant to Section
5250, with sufficient information and data by the nonprofit public
benefit corporation to evaluate adequately the agreement or
transaction or the effects thereof on the public.
(h) The agreement or transaction may create a significant effect
on the availability or accessibility of health care services to the
affected community.
(i) The proposed agreement or transaction is in the public
interest.
5924. (a) Within the time periods designated in Section 5921 and
relating to those factors specified in Section 5923, the Attorney
General may do the following:
(1) Contract with, consult, and receive advice from any state
agency on those terms and conditions that the Attorney General deems
appropriate.
(2) In his or her sole discretion, contract with experts or
consultants to assist in reviewing the proposed agreement or
transaction.
(b) Contract costs shall not exceed an amount that is reasonable
and necessary to conduct the review and evaluation. Any contract
entered into under this section shall be on a noncompetitive bid
basis and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code. The
selling nonprofit corporation, upon request, shall pay the Attorney
General promptly for all contract costs.
(c) The Attorney General shall be entitled to reimbursement from
the selling nonprofit corporation for all actual, reasonable, direct
costs incurred in reviewing, evaluating, and making the determination
referred to in Section 5921, including administrative costs. The
selling nonprofit corporation shall promptly pay the Attorney
General, upon request, for all of those costs.
(d) (1) In order to effectively monitor ongoing compliance with
the terms and conditions of any sale or transfer of assets subject to
Section 5920, including, but not limited to, the ongoing use of the
charitable assets in a manner consistent with the trust pursuant to
which they are held, the Attorney General may, in his or her sole
discretion, contract with experts and consultants to assist in this
regard.
(2) Contract costs shall not exceed an amount that is reasonable
and necessary to conduct the review and evaluation. Any contract
entered into under this section shall be on a noncompetitive bid
basis and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code. The
selling nonprofit corporation shall pay the Attorney General promptly
for all contract costs.
(3) The Attorney General shall be entitled to reimbursement from
either the selling or the acquiring nonprofit corporation, depending
upon which one the burden of compliance falls, for all actual,
reasonable, and direct costs incurred in monitoring ongoing
compliance with the terms and conditions of the sale or transfer of
assets, including contract and administrative costs. The Attorney
General shall be entitled to this reimbursement for a period of time
not to exceed two years after any time period specified in the terms
or conditions of sale or transfer of assets. The Attorney General may
bill either the selling or the acquiring corporation and the
corporation billed by the Attorney General shall promptly pay for all
of those costs.
5925. The Attorney General may adopt regulations implementing
Sections 5920 to 5924, inclusive.
5930. (a) The Attorney General shall prepare a plan for an
evaluation of whether additional standards for charitable care and
community benefits should be established for private, not-for-profit
corporations that operate or control a general acute care hospital as
defined in Section 1250 of the Health and Safety Code.
(b) In preparing the plan, the Attorney General shall consult with
representatives of interested parties, including, but not limited
to, all of the following:
(1) Health facility associations.
(2) Physician organizations.
(3) Consumer groups.
(4) Health care employee organizations.
(5) Community groups.
(6) The Office of Statewide Health Planning and Development.
(c) The plan shall provide for the evaluation of all of the
following:
(1) The degree to which private, not-for-profit hospitals provide
charitable care and community benefits, including the nature of the
benefits, the definition of the community, and a comparison of the
cost of providing the benefit with the value of the benefits given to
the community.
(2) The implications of the relationships among private
not-for-profit hospitals and affiliated entities, as defined in
Section 5031 of the Corporations Code, for purposes of determining
community benefits.
(3) The role of the board of directors of private, not-for-profit
hospitals in ensuring benefit to the community.
(d) The plan shall be submitted to the appropriate policy and
fiscal committees of the Legislature by March 1, 2001.
5914. (a) (1) Any nonprofit corporation that is defined in Section
5046 and operates or controls a health facility, as defined in
Section 1250 of the Health and Safety Code, or operates or controls a
facility that provides similar health care, shall be required to
provide written notice to, and to obtain the written consent of, the
Attorney General prior to entering into any agreement or transaction
to do either of the following:
(A) Sell, transfer, lease, exchange, option, convey, or otherwise
dispose of, its assets to a for-profit corporation or entity or to a
mutual benefit corporation or entity when a material amount of the
assets of the nonprofit corporation are involved in the agreement or
transaction.
(B) Transfer control, responsibility, or governance of a material
amount of the assets or operations of the nonprofit corporation to
any for-profit corporation or entity or to any mutual benefit
corporation or entity.
(2) The substitution of a new corporate member or members that
transfers the control of, responsibility for, or governance of the
nonprofit corporation shall be deemed a transfer for purposes of this
article. The substitution of one or more members of the governing
body, or any arrangement, written or oral, that would transfer voting
control of the members of the governing body, shall also be deemed a
transfer for purposes of this article.
(b) The notice to the Attorney General provided for in this
section shall include and contain the information the Attorney
General determines is required. The notice, including any other
information provided to the Attorney General under this article, and
that is in the public file, shall be made available by the Attorney
General to the public in written form, as soon as is practicable
after it is received by the Attorney General.
(c) This section shall not apply to a nonprofit corporation if the
agreement or transaction is in the usual and regular course of its
activities or if the Attorney General has given the corporation a
written waiver of this section as to the proposed agreement or
transaction.
(d) This section shall apply to any foreign nonprofit corporation
that operates or controls a health facility, as defined in Section
1250 of the Health and Safety Code, or a facility that provides
similar health care.
5915. Within 60 days of the receipt of the written notice required
by Section 5914, the Attorney General shall notify the public benefit
corporation in writing of the decision to consent to, give
conditional consent to, or not consent to the agreement or
transaction. The Attorney General may extend this period for one
additional 45-day period if any of the following conditions are
satisfied:
(a) The extension is necessary to obtain information pursuant to
subdivision (a) of Section 5919.
(b) The proposed agreement or transaction is substantially
modified after the first public meeting conducted by the Attorney
General in accordance with Section 5916.
(c) The proposed agreement or transaction involves a multifacility
health system serving multiple communities, rather than a single
facility.
5916. Prior to issuing any written decision referred to in Section
5915, the Attorney General shall conduct one or more public meetings,
one of which shall be in the county in which the facility is
located, to hear comments from interested parties. At least 14 days
before conducting the public meeting, the Attorney General shall
provide written notice of the time and place of the meeting through
publication in one or more newspapers of general circulation in the
affected community and to the board of supervisors of the county in
which the facility is located. If a substantive change in the
proposed agreement or transaction is submitted to the Attorney
General after the initial public meeting, the Attorney General may
conduct an additional public meeting to hear comments from interested
parties with respect to that change.
5917. The Attorney General shall have discretion to consent to,
give conditional consent to, or not consent to any agreement or
transaction described in subdivision (a) of Section 5914. In making
the determination, the Attorney General shall consider any factors
that the Attorney General deems relevant, including, but not limited
to, whether any of the following apply:
(a) The terms and conditions of the agreement or transaction are
fair and reasonable to the nonprofit corporation.
(b) The agreement or transaction will result in inurement to any
private person or entity.
(c) Any agreement or transaction that is subject to this article
is at fair market value. In this regard, "fair market value" means
the most likely price that the assets being sold would bring in a
competitive and open market under all conditions requisite to a fair
sale, the buyer and seller, each acting prudently, knowledgeably and
in their own best interest, and a reasonable time being allowed for
exposure in the open market.
(d) The market value has been manipulated by the actions of the
parties in a manner that causes the value of the assets to decrease.
(e) The proposed use of the proceeds from the agreement or
transaction is consistent with the charitable trust on which the
assets are held by the health facility or by the affiliated nonprofit
health system.
(f) The agreement or transaction involves or constitutes any
breach of trust.
(g) The Attorney General has been provided, pursuant to Section
5250, with sufficient information and data by the nonprofit
corporation to evaluate adequately the agreement or transaction or
the effects thereof on the public.
(h) The agreement or transaction may create a significant effect
on the availability or accessibility of health care services to the
affected community.
(i) The proposed agreement or transaction is in the public
interest.
5917.5. The Attorney General shall not consent to a health facility
agreement or transaction pursuant to Section 5914 or Section 5920 in
which the seller restricts the type or level of medical services
that may be provided at the health facility that is the subject of
the agreement or transaction.
5918. The Attorney General may adopt regulations implementing this
article.
5919. (a) Within the time periods designated in Section 5915 and
relating to those factors specified in Section 5917, the Attorney
General may do the following:
(1) Contract with, consult, and receive advice from any state
agency on those terms and conditions that the Attorney General deems
appropriate.
(2) In his or her sole discretion, contract with experts or
consultants to assist in reviewing the proposed agreement or
transaction.
(b) Contract costs shall not exceed an amount that is reasonable
and necessary to conduct the review and evaluation. Any contract
entered into under this section shall be on a noncompetitive bid
basis and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code. The
nonprofit corporation, upon request, shall pay the Attorney General
promptly for all contract costs.
(c) The Attorney General shall be entitled to reimbursement from
the nonprofit corporation for all actual, reasonable, direct costs
incurred in reviewing, evaluating, and making the determination
referred to in this article, including administrative costs. The
nonprofit corporation shall promptly pay the Attorney General, upon
request, for all of those costs.
(d) (1) In order to monitor effectively ongoing compliance with
the terms and conditions of any sale or transfer of assets subject to
Section 5914, including, but not limited to, the ongoing use of the
charitable assets in a manner consistent with the trust pursuant to
which they are held, the Attorney General may, in his or her sole
discretion, contract with experts and consultants to assist in this
regard.
(2) Contract costs shall not exceed an amount that is reasonable
and necessary to conduct the review and evaluation. Any contract
entered into under this section shall be on a noncompetitive bid
basis and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code. The
nonprofit corporation shall pay the Attorney General promptly for all
contract costs.
(3) The Attorney General shall be entitled to reimbursement from
either the selling or the acquiring corporation, depending upon which
one the burden of compliance falls, for all actual, reasonable, and
direct costs incurred in monitoring ongoing compliance with the terms
and conditions of the sale or transfer of assets, including contract
and administrative costs. The Attorney General may bill either the
selling or the acquiring corporation and the corporation billed by
the Attorney General shall promptly pay for all of those costs.
5920. (a) (1) Any nonprofit corporation that is defined in Section
5046 and operates or controls a health care facility, as defined in
Section 1250 of the Health and Safety Code, or operates or controls a
facility that provides similar health care, shall be required to
provide written notice to, and to obtain the written consent of, the
Attorney General prior to entering into any agreement or transaction
to do either of the following:
(A) Sell, transfer, lease, exchange, option, convey, or otherwise
dispose of, its assets to another nonprofit corporation or entity
when a material amount of the assets of the nonprofit corporation are
involved in the agreement or transaction.
(B) Transfer control, responsibility, or governance of a material
amount of the assets or operations of the nonprofit corporation to
another nonprofit corporation or entity.
(2) The substitution of a new corporate member or members that
transfers the control of, responsibility for, or governance of the
nonprofit corporation, the substitution of one or more members of the
governing body that would transfer voting control of the members of
the governing body, or any arrangement, written or oral, that would
transfer voting control of the entity shall be deemed a transfer for
purposes of this article.
(b) The notice to the Attorney General provided for in this
section shall contain the information the Attorney General determines
is required. The notice, including any other information provided to
the Attorney General under this article, and that is the public
file, shall be made available by the Attorney General to the public
in written form, as soon as is practicable after it is received by
the Attorney General.
(c) This section shall not apply to a nonprofit corporation if the
agreement or transaction is in the usual and regular course of its
activities or if the Attorney General has given the corporation a
written waiver of this section as to the proposed agreement or
transaction.
(d) This section shall apply to any foreign nonprofit corporation
that operates or controls a health facility, as defined in Section
1250 of the Health and Safety Code, or a facility that provides
similar health care.
(e) This section shall not apply to an agreement or transaction if
the other party to the agreement or transaction is an affiliate, as
defined in Section 5031, of the transferring nonprofit corporation or
entity, and the corporation or entity has given the Attorney General
20 days advance notice of the agreement or transaction.
5921. Within 60 days of the receipt of the written notice required
by Section 5920, the Attorney General shall notify the nonprofit
corporation in writing of the decision to consent to, give
conditional consent to, or not consent to the agreement or
transaction. The Attorney General may extend this period for one
additional 45-day period if any of the following conditions are
satisfied:
(a) The extension is necessary to obtain relevant information from
any state agency, experts, or consultants.
(b) The proposed agreement or transaction is substantially
modified after the first public meeting conducted by the Attorney
General in accordance with Section 5922.
(c) The proposed agreement or transaction involves a multifacility
health system serving multiple communities, rather than a single
facility.
5922. Prior to issuing any written decision referred to in Section
5921, the Attorney General shall conduct one or more public meetings,
one of which shall be in the county in which the facility is
located, to hear comments from interested parties. At least 14 days
before conducting the public meeting, the Attorney General shall
provide written notice of the time and place of the meeting through
publication in one or more newspapers of general circulation in the
affected community and to the board of supervisors of the county in
which the facility is located. If a substantive change in the
proposed agreement or transaction is submitted to the Attorney
General after the initial public meeting, the Attorney General may
conduct an additional public meeting to hear comments from interested
parties with respect to that change.
5923. The Attorney General shall have discretion to consent to,
give conditional consent to, or not consent to any agreement or
transaction described in subdivision (a) of Section 5920. In making
the determination, the Attorney General shall consider any factors
that the Attorney General deems relevant, including, but not limited
to, whether any of the following apply:
(a) The terms and conditions of the agreement or transaction are
fair and reasonable to the nonprofit corporation.
(b) The agreement or transaction will result in inurement to any
private person or entity.
(c) Fair market value of the agreement or transaction, meaning the
most likely price that the assets being sold would bring in a
competitive and open market under all conditions requisite to a fair
sale, the buyer and seller, each acting prudently, knowledgeably, and
in their own best interest, and a reasonable time being allowed for
exposure in the open market.
(d) The market value has been manipulated by the actions of the
parties in a manner that causes the value of the assets to decrease.
(e) The proposed use of the proceeds from the agreement or
transaction is consistent with the charitable trust on which the
assets are held by the health facility or by the affiliated nonprofit
health system.
(f) The agreement or transaction involves or constitutes any
breach of trust.
(g) The Attorney General has been provided, pursuant to Section
5250, with sufficient information and data by the nonprofit public
benefit corporation to evaluate adequately the agreement or
transaction or the effects thereof on the public.
(h) The agreement or transaction may create a significant effect
on the availability or accessibility of health care services to the
affected community.
(i) The proposed agreement or transaction is in the public
interest.
5924. (a) Within the time periods designated in Section 5921 and
relating to those factors specified in Section 5923, the Attorney
General may do the following:
(1) Contract with, consult, and receive advice from any state
agency on those terms and conditions that the Attorney General deems
appropriate.
(2) In his or her sole discretion, contract with experts or
consultants to assist in reviewing the proposed agreement or
transaction.
(b) Contract costs shall not exceed an amount that is reasonable
and necessary to conduct the review and evaluation. Any contract
entered into under this section shall be on a noncompetitive bid
basis and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code. The
selling nonprofit corporation, upon request, shall pay the Attorney
General promptly for all contract costs.
(c) The Attorney General shall be entitled to reimbursement from
the selling nonprofit corporation for all actual, reasonable, direct
costs incurred in reviewing, evaluating, and making the determination
referred to in Section 5921, including administrative costs. The
selling nonprofit corporation shall promptly pay the Attorney
General, upon request, for all of those costs.
(d) (1) In order to effectively monitor ongoing compliance with
the terms and conditions of any sale or transfer of assets subject to
Section 5920, including, but not limited to, the ongoing use of the
charitable assets in a manner consistent with the trust pursuant to
which they are held, the Attorney General may, in his or her sole
discretion, contract with experts and consultants to assist in this
regard.
(2) Contract costs shall not exceed an amount that is reasonable
and necessary to conduct the review and evaluation. Any contract
entered into under this section shall be on a noncompetitive bid
basis and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code. The
selling nonprofit corporation shall pay the Attorney General promptly
for all contract costs.
(3) The Attorney General shall be entitled to reimbursement from
either the selling or the acquiring nonprofit corporation, depending
upon which one the burden of compliance falls, for all actual,
reasonable, and direct costs incurred in monitoring ongoing
compliance with the terms and conditions of the sale or transfer of
assets, including contract and administrative costs. The Attorney
General shall be entitled to this reimbursement for a period of time
not to exceed two years after any time period specified in the terms
or conditions of sale or transfer of assets. The Attorney General may
bill either the selling or the acquiring corporation and the
corporation billed by the Attorney General shall promptly pay for all
of those costs.
5925. The Attorney General may adopt regulations implementing
Sections 5920 to 5924, inclusive.
5930. (a) The Attorney General shall prepare a plan for an
evaluation of whether additional standards for charitable care and
community benefits should be established for private, not-for-profit
corporations that operate or control a general acute care hospital as
defined in Section 1250 of the Health and Safety Code.
(b) In preparing the plan, the Attorney General shall consult with
representatives of interested parties, including, but not limited
to, all of the following:
(1) Health facility associations.
(2) Physician organizations.
(3) Consumer groups.
(4) Health care employee organizations.
(5) Community groups.
(6) The Office of Statewide Health Planning and Development.
(c) The plan shall provide for the evaluation of all of the
following:
(1) The degree to which private, not-for-profit hospitals provide
charitable care and community benefits, including the nature of the
benefits, the definition of the community, and a comparison of the
cost of providing the benefit with the value of the benefits given to
the community.
(2) The implications of the relationships among private
not-for-profit hospitals and affiliated entities, as defined in
Section 5031 of the Corporations Code, for purposes of determining
community benefits.
(3) The role of the board of directors of private, not-for-profit
hospitals in ensuring benefit to the community.
(d) The plan shall be submitted to the appropriate policy and
fiscal committees of the Legislature by March 1, 2001.
