0001| HOUSE BILL 1325 | 0002| 43rd legislature - STATE OF NEW MEXICO - first session, 1997 | 0003| INTRODUCED BY | 0004| MAX COLL | 0005| | 0006| | 0007| | 0008| | 0009| | 0010| AN ACT | 0011| RELATING TO HEALTH CARE; ENACTING THE NONPROFIT HOSPITAL SALE | 0012| ACT; ESTABLISHING PROCEDURES AND CRITERIA FOR REVIEW AND | 0013| APPROVAL OF CERTAIN ACQUISITIONS; DECLARING AN EMERGENCY. | 0014| | 0015| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0016| Section 1. SHORT TITLE.--This act may be cited as the | 0017| "Nonprofit Hospital Sale Act". | 0018| Section 2. DEFINITIONS.--As used in the Nonprofit | 0019| Hospital Sale Act: | 0020| A. "acquire" or "acquisition" means the acquiring | 0021| by a person of an interest in a hospital, whether by purchase, | 0022| merger, lease, gift or otherwise, that results in a change of | 0023| ownership or control of twenty percent or greater or that | 0024| results in the acquiring person holding a fifty percent or | 0025| greater interest in the ownership or control of a hospital, but | 0001| "acquisition" does not include the acquiring of an interest in | 0002| a hospital owned by a nonprofit corporation if the transferee: | 0003| (1) is a nonprofit corporation having a | 0004| substantially similar charitable health care purpose as the | 0005| transferor; and | 0006| (2) will continue representation from the | 0007| affected community on the local board; | 0008| B. "department" means the department of health; | 0009| C. "hospital" means a general or acute care or | 0010| specialty hospital licensed by the department; | 0011| D. "nonprofit corporation" means a person exempt | 0012| from federal income tax pursuant to Section 501(c)(3) of the | 0013| Internal Revenue Code or a government; and | 0014| E. "person" means an individual or other legal | 0015| entity, including the state or a department, agency, | 0016| institution or political subdivision of the state. | 0017| Section 3. ACQUISITIONS--APPLICATIONS--APPROVALS.-- | 0018| A. No person shall acquire a hospital owned by a | 0019| nonprofit corporation without first applying for and receiving | 0020| the approval of the department and without first notifying the | 0021| attorney general and, if applicable, receiving approval from | 0022| the attorney general pursuant to the Nonprofit Hospital Sale | 0023| Act. | 0024| B. Except as provided in Subsection C of this | 0025| section, no person shall acquire a hospital owned by a person | 0001| other than a nonprofit corporation without first applying for | 0002| and receiving the approval of the department pursuant to the | 0003| Nonprofit Hospital Sale Act unless the acquiring person is a | 0004| nonprofit corporation. | 0005| C. Approval of the department and the attorney | 0006| general is not required for the acquisition of a hospital if | 0007| the acquisition is a result of: | 0008| (1) the lease of a county hospital; | 0009| (2) the dissolution of a hospital district; or | 0010| (3) the merger of hospital districts or | 0011| governmental hospitals. | 0012| D. The acquisition application shall be submitted | 0013| to the department and the attorney general on forms provided by | 0014| the department and shall include the name of the seller, the | 0015| name of the purchaser or other parties to the acquisition, the | 0016| terms of the proposed agreement, the sale price, a copy of the | 0017| acquisition agreement, a financial and economic analysis and | 0018| report from an independent expert or consultant of the effect | 0019| of the acquisition based on the criteria set forth in Sections | 0020| 7 and 8 of the Nonprofit Hospital Sale Act and all other | 0021| related documents. A copy of the application and copies of all | 0022| additional related materials shall be submitted to the | 0023| department and to the attorney general at the same time. | 0024| Applications and all related documents are public records. | 0025| E. A person not required to obtain approval for an | 0001| acquisition shall notify the department and the attorney | 0002| general at least thirty days before the acquisition. The | 0003| notice shall briefly describe the impending acquisition, | 0004| including any change in ownership of tangible and intangible | 0005| assets. | 0006| Section 4. APPLICATION--CONTENTS--TIME PERIODS--APPROVALS | 0007| OR DISAPPROVALS.-- | 0008| A. Within ten days after receipt of an application, | 0009| the department shall publish notice of the application in a | 0010| newspaper of general circulation in the county where the | 0011| hospital is located and shall notify by mail any person who has | 0012| requested notice of the filing of applications. The notice | 0013| shall state that an application has been received, state the | 0014| names of the parties to the agreement, describe the contents of | 0015| the application and state the date by which a person may submit | 0016| written comments about the application to the department. | 0017| B. Within twenty days after receiving an | 0018| application, the attorney general shall determine whether to | 0019| review the application in accordance with Section 7 of the | 0020| Nonprofit Hospital Sale Act and shall notify the applicant of | 0021| his decision. If the attorney general reviews the application, | 0022| he shall approve or disapprove the acquisition within sixty | 0023| days. | 0024| C. Within sixty days after receiving an | 0025| application, the department shall review the application in | 0001| accordance with the standards set forth in the Nonprofit | 0002| Hospital Sale Act and shall: | 0003| (1) approve the acquisition, with or without | 0004| any specific modifications; or | 0005| (2) disapprove the acquisition. | 0006| D. If during its review the department determines | 0007| that the application is incomplete, it may return the | 0008| application to the applicant or may request additions or | 0009| changes to the application. All deadlines are suspended during | 0010| the time an application is incomplete. | 0011| E. The department shall not make its decision | 0012| subject to any condition not directly related to criteria | 0013| enumerated in Section 8 of the Nonprofit Hospital Sale Act, and | 0014| any condition or modification shall bear a direct and rational | 0015| relationship to the application under review. | 0016| F. An affected person may appeal a final decision | 0017| by the department pursuant to the Nonprofit Hospital Sale Act | 0018| in the same manner as appeals related to the department's | 0019| denial, suspension or revocation of a hospital license pursuant | 0020| to Section 24-1-5 NMSA 1978. | 0021| Section 5. PUBLIC HEARING.--The department and the | 0022| attorney general shall hold a public hearing in which any | 0023| person may file written comments and exhibits or appear and | 0024| make a statement. The department and the attorney general may | 0025| subpoena additional information or witnesses, require and | 0001| administer oaths, require sworn statements, take depositions | 0002| and use related discovery procedures for purposes of the | 0003| hearing and at any time prior to making a decision on the | 0004| application. The hearing shall be held not later than forty | 0005| days after receipt of an application. The hearing shall be | 0006| held upon ten working days' notice, not including days the | 0007| application is deemed incomplete. | 0008| Section 6. DECLARATORY JUDGMENT.--After the attorney | 0009| general approves or disapproves the acquisition, the applicant | 0010| or any person who has submitted comments pursuant to Section 5 | 0011| of the Nonprofit Hospital Sale Act, if the person has an | 0012| interest in the hospital being acquired or in another hospital | 0013| that has contracted with the acquirable hospital for the | 0014| provision of essential health services, may bring an action for | 0015| declaratory judgment for a determination that the acquisition | 0016| is or is not in the public interest as provided in Section 7 of | 0017| that act. | 0018| Section 7. ATTORNEY GENERAL--CRITERIA.-- | 0019| A. The attorney general shall approve the | 0020| application unless he finds that the acquisition is not in the | 0021| public interest. An acquisition is not in the public interest | 0022| unless appropriate steps have been taken to safeguard the value | 0023| of charitable assets and ensure that any proceeds of the | 0024| transaction are used for appropriate charitable health care | 0025| purposes as provided in Paragraph (8) of Subsection B of this | 0001| section. | 0002| B. In determining whether the acquisition meets the | 0003| requirements of the Nonprofit Hospital Sale Act, the attorney | 0004| general shall consider: | 0005| (1) whether the acquisition is permitted by | 0006| the Nonprofit Corporation Act and other laws of New Mexico | 0007| governing public procurement or nonprofit entities; | 0008| (2) whether the nonprofit hospital exercised | 0009| due diligence in deciding to sell, selecting the purchaser and | 0010| negotiating the terms and conditions of the sale; | 0011| (3) the procedures used by the seller in | 0012| making its decision, including whether appropriate expert | 0013| assistance was used; | 0014| (4) whether conflict of interest was | 0015| disclosed, including conflicts of interest related to board | 0016| members of, executives of and experts retained by the seller, | 0017| purchaser or other parties to the acquisition; | 0018| (5) whether the seller will receive reasonable | 0019| consideration and fair value for its assets. The attorney | 0020| general may employ, at the seller's expense, reasonably | 0021| necessary expert assistance in making this determination; | 0022| (6) whether public and charitable funds are | 0023| placed at unreasonable risk, if the acquisition is financed in | 0024| part by the seller; | 0025| (7) whether any management contract under the | 0001| acquisition is for reasonable consideration and fair value; | 0002| (8) whether the sale proceeds will be used for | 0003| appropriate public and charitable health care purposes | 0004| consistent with the seller's original purpose or for the | 0005| support and promotion of health care in the affected community | 0006| and whether the proceeds will be controlled as public or | 0007| charitable funds independent of the purchaser or parties to the | 0008| acquisition; and | 0009| (9) whether a right of first refusal has been | 0010| retained to repurchase the assets by a successor nonprofit | 0011| corporation or foundation if the hospital is subsequently sold | 0012| to, acquired by or merged with another entity. | 0013| Section 8. DEPARTMENT CRITERIA.-- | 0014| A. In determining whether the acquisition meets the | 0015| requirements of the Nonprofit Hospital Sale Act, the department | 0016| shall consider: | 0017| (1) whether sufficient safeguards are included | 0018| to assure the affected community continued access to affordable | 0019| and appropriate health care; | 0020| (2) whether the purchaser and parties to the | 0021| acquisition have made a commitment to provide health care to | 0022| the disadvantaged, the uninsured and the underinsured and to | 0023| provide benefits to the affected community to promote health | 0024| care. Activities and funding provided by the seller to provide | 0025| such health care may be considered in evaluating compliance | 0001| with this paragraph; and | 0002| (3) if health care providers will be offered | 0003| the opportunity to invest or own an interest in the purchaser | 0004| or an entity related to the purchaser, whether procedures or | 0005| safeguards are in place to avoid conflict of interest in | 0006| patient referral and the nature of the procedures or | 0007| safeguards. | 0008| B. This section does not apply higher standards to | 0009| hospitals covered by the provisions of the Nonprofit Hospital | 0010| Sale Act than those applicable to hospitals not covered by the | 0011| provisions of that act. | 0012| Section 9. ACQUISITION--FAILURE TO FULFILL OBLIGATIONS-- | 0013| REVOCATION OF LICENSE.--If the department receives information | 0014| indicating that the acquiring person is not fulfilling the | 0015| commitment to the affected community pursuant to Section 7 of | 0016| the Nonprofit Hospital Sale Act, the department shall hold a | 0017| hearing on ten working days' notice to the affected parties. | 0018| If after the hearing the department determines that the | 0019| information is true, it may institute proceedings to revoke the | 0020| license issued to the purchaser. | 0021| Section 10. LICENSURE--DENIAL, SUSPENSION OR REVOCATION.- | 0022| - | 0023| A. No license to operate a hospital shall be issued | 0024| or renewed by the department and a license that has been issued | 0025| shall be suspended or revoked if: | 0001| (1) there is an acquisition of a hospital | 0002| without first having received the approval, if applicable, of | 0003| the department pursuant to the Nonprofit Hospital Sale Act; | 0004| (2) there is an acquisition of a hospital | 0005| without the approval of the attorney general if the attorney | 0006| general determines to review the application pursuant to the | 0007| Nonprofit Hospital Sale Act; | 0008| (3) there is an acquisition of a hospital and | 0009| there is a judicial determination that the acquisition is not | 0010| in the public interest; or | 0011| (4) the hospital is not fulfilling its | 0012| commitment pursuant to Section 8 of the Nonprofit Hospital Sale | 0013| Act. | 0014| B. Hearings and appeals of department actions | 0015| pursuant to this section shall be taken in the same manner as | 0016| provided for other hospital license suspensions or revocations | 0017| in Section 24-1-5 NMSA 1978. | 0018| Section 11. EMERGENCY.--It is necessary for the public | 0019| peace, health and safety that this act take effect immediately. | 0020|  State of New Mexico | 0021| House of Representatives | 0022| | 0023| FORTY-THIRD LEGISLATURE | 0024| FIRST SESSION, 1997 | 0025| | 0001| | 0002| March 6, 1997 | 0003| | 0004| | 0005| Mr. Speaker: | 0006| | 0007| Your CONSUMER AND PUBLIC AFFAIRS COMMITTEE, to | 0008| whom has been referred | 0009| | 0010| HOUSE BILL 1325 | 0011| | 0012| has had it under consideration and reports same with | 0013| recommendation that it DO PASS, and thence referred to the | 0014| APPROPRIATIONS AND FINANCE COMMITTEE. | 0015| | 0016| Respectfully submitted, | 0017| | 0018| | 0019| | 0020| | 0021| | 0022| Gary King, Chairman | 0023| | 0024| | 0025| Adopted Not Adopted | 0001| | 0002| (Chief Clerk) (Chief Clerk) | 0003| | 0004| Date | 0005| | 0006| The roll call vote was 6 For 0 Against | 0007| Yes: 6 | 0008| Excused: Heaton, King, Rios, Vigil | 0009| Absent: None | 0010| | 0011| | 0012| G:\BILLTEXT\BILLW_97\H1325 State of New Mexico | 0013| House of Representatives | 0014| | 0015| FORTY-THIRD LEGISLATURE | 0016| FIRST SESSION, 1997 | 0017| | 0018| | 0019| March 8, 1997 | 0020| | 0021| | 0022| Mr. Speaker: | 0023| | 0024| Your APPROPRIATIONS AND FINANCE COMMITTEE, to | 0025| whom has been referred | 0001| | 0002| HOUSE BILL 1325 | 0003| | 0004| has had it under consideration and reports same with | 0005| recommendation that it DO PASS. | 0006| | 0007| Respectfully submitted, | 0008| | 0009| | 0010| | 0011| | 0012| | 0013| Max Coll, Chairman | 0014| | 0015| | 0016| Adopted Not Adopted | 0017| | 0018| (Chief Clerk) (Chief Clerk) | 0019| | 0020| Date | 0021| | 0022| The roll call vote was 10 For 4 Against | 0023| Yes: 10 | 0024| No: Bird, Knowles, Pearce, Wallace | 0025| Excused: Buffett, Marquardt, Watchman | 0001| Absent: None | 0002| | 0003| | 0004| G:\BILLTEXT\BILLW_97\H1325 FORTY-THIRD LEGISLATURE | 0005| FIRST SESSION, 1997 HB 1325/a | 0006| | 0007| | 0008| March 17, 1997 | 0009| Mr. President: | 0010| | 0011| Your PUBLIC AFFAIRS COMMITTEE, to whom has been | 0012| referred | 0013| | 0014| HOUSE BILL 1325 | 0015| | 0016| has had it under consideration and reports same with | 0017| recommendation that it DO PASS, amended as follows: | 0018| | 0019| 1. On page 2, line 13, strike "or a government" and insert | 0020| in lieu thereof "or the state or a department, agency, | 0021| institution or political subdivision of the state". | 0022| | 0023| 2. On page 2, line 15, before "including" insert "not". | 0024| | 0025| Respectfully submitted, | 0001| | 0002| | 0003| | 0004| | 0005| __________________________________ | 0006| Shannon Robinson, Chairman | 0007| | 0008| | 0009| Adopted_______________________ Not | 0010| Adopted_______________________ | 0011| (Chief Clerk) (Chief Clerk) | 0012| | 0013| | 0014| Date ________________________ | 0015| | 0016| | 0017| | 0018| The roll call vote was 3 For 2 Against | 0019| Yes: 3 | 0020| No: Adair, Boitano | 0021| Excused: Garcia, Vernon, Ingle, Rodarte | 0022| Absent: None | 0023| | 0024| | 0025| | 0001| | 0002| | 0003| H1325PA1 .118969.1 | 0004| | 0005| | 0006| |