1.1                          A bill for an act
  1.2             relating to trusts; defining a nonprofit health care 
  1.3             trust; establishing requirements for certain 
  1.4             agreements or transactions between nonprofit health 
  1.5             care trusts and for-profit corporations or entities; 
  1.6             proposing coding for new law in Minnesota Statutes, 
  1.7             chapter 501B. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  [501B.90] [DEFINITIONS.] 
  1.10     Subdivision 1.  [APPLICABILITY.] The following definitions 
  1.11  apply to sections 501B.90 to 501B.94. 
  1.12     Subd. 2.  [AFFECTED COMMUNITY.] "Affected community" means 
  1.13  the geographic area or areas served by a nonprofit health care 
  1.14  trust that has provided the attorney general with written notice 
  1.15  of a proposed agreement or transaction under section 501B.91. 
  1.16     Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
  1.17  commissioner of health. 
  1.18     Subd. 4.  [FAIR MARKET VALUE.] "Fair market value" means 
  1.19  the most likely price that an asset would bring in a competitive 
  1.20  and open market under all conditions requisite to a fair sale, 
  1.21  with the buyer and seller each acting prudently, knowledgeably, 
  1.22  and in their own best interest, and a reasonable time being 
  1.23  allowed for exposure in the open market. 
  1.24     Subd. 5.  [NONPROFIT HEALTH CARE TRUST.] "Nonprofit health 
  1.25  care trust" means a nonprofit or publicly owned hospital 
  1.26  licensed under sections 144.50 to 144.56. 
  2.1      Sec. 2.  [501B.91] [NOTIFICATION OF ATTORNEY GENERAL.] 
  2.2      Subdivision 1.  [WRITTEN NOTICE REQUIRED.] (a) A nonprofit 
  2.3   health care trust shall provide the attorney general with 
  2.4   written notice and shall obtain the written consent of the 
  2.5   attorney general prior to entering into an agreement or 
  2.6   transaction, or a series of related agreements or transactions, 
  2.7   to: 
  2.8      (1) sell, transfer, lease, exchange, option, convey, or 
  2.9   otherwise dispose of a material amount of trust assets to a 
  2.10  for-profit corporation or entity; or 
  2.11     (2) transfer control, responsibility, or governance of a 
  2.12  material amount of trust assets or operations to a for-profit 
  2.13  corporation or entity. 
  2.14     (b) For purposes of this subdivision, "material amount" 
  2.15  means: 
  2.16     (1) 20 percent or more; or 
  2.17     (2) an amount that results in a for-profit corporation or 
  2.18  entity holding an ownership or control interest in 50 percent or 
  2.19  more of trust assets or operations.  
  2.20     Subd. 2.  [CONTENTS OF WRITTEN NOTICE.] The written notice 
  2.21  required under subdivision 1 must include: 
  2.22     (1) the name of the nonprofit health care trust; 
  2.23     (2) the name of the purchaser or other parties to the 
  2.24  agreement or transaction; 
  2.25     (3) the terms of the proposed agreement or transaction; 
  2.26     (4) the sale price; 
  2.27     (5) a copy of the acquisition agreement; 
  2.28     (6) a financial and economic analysis and report from an 
  2.29  independent expert or consultant on the degree to which the 
  2.30  agreement or transaction satisfies the public interest criteria 
  2.31  in section 501B.93; and 
  2.32     (7) any other information required by the attorney general. 
  2.33     The written notice and all related documents are public 
  2.34  data under section 13.02. 
  2.35     Subd. 3.  [EXEMPTION.] This section does not apply to a 
  2.36  nonprofit health care trust if the agreement or transaction is 
  3.1   in the usual and regular course of its activities or if the 
  3.2   attorney general has given the nonprofit health care trust a 
  3.3   written waiver of this section for the proposed agreement or 
  3.4   transaction. 
  3.5      Subd. 4.  [ADDITIONAL REQUIREMENTS; CHARITABLE TRUSTS.] The 
  3.6   requirements of section 501B.90 to 501B.94 are in addition to 
  3.7   any other requirements that apply to a nonprofit health care 
  3.8   trust under sections 501B.33 to 501B.45. 
  3.9      Sec. 3.  [501B.92] [REVIEW AND DECISION BY ATTORNEY 
  3.10  GENERAL.] 
  3.11     Subdivision 1.  [PUBLIC INTEREST REVIEW.] Upon receipt of a 
  3.12  written notice required under section 501B.91, the attorney 
  3.13  general, in consultation with the commissioner, shall review the 
  3.14  proposed agreement or transaction and shall approve the 
  3.15  agreement or transaction if the attorney general determines that 
  3.16  the agreement or transaction is in the public interest.  An 
  3.17  agreement or transaction is in the public interest if the 
  3.18  attorney general determines, using the criteria in section 
  3.19  501B.93 and after considering public testimony, that appropriate 
  3.20  steps have been taken to safeguard the value of charitable 
  3.21  assets and ensure that any proceeds of the agreement or 
  3.22  transaction are used for appropriate charitable health care 
  3.23  purposes in the affected community. 
  3.24     Subd. 2.  [PUBLIC HEARINGS.] Prior to issuing a written 
  3.25  decision, the attorney general shall hold one or more public 
  3.26  meetings, at least one of which shall be in the affected 
  3.27  community, to hear comments from interested parties on the 
  3.28  proposed agreement or transaction and the criteria specified in 
  3.29  section 501B.93.  The attorney general shall provide at least 14 
  3.30  days' notice of the meeting in one or more newspapers of general 
  3.31  circulation in the affected community and in the State Register. 
  3.32     Subd. 3.  [DECISION.] Within 60 days of receipt of a 
  3.33  written notice required under section 501B.91, the attorney 
  3.34  general shall provide a written decision to the nonprofit health 
  3.35  care trust to approve, approve conditionally, or not approve an 
  3.36  agreement or transaction.  The attorney general may extend the 
  4.1   decision period for up to 45 additional days, if the extension 
  4.2   is necessary to obtain the information required under section 
  4.3   501B.93. 
  4.4      Subd. 4.  [HEALTH CARE ACCESS MONITOR.] The attorney 
  4.5   general may require a for-profit corporation or entity entering 
  4.6   into an agreement or transaction with a nonprofit health care 
  4.7   trust to provide full funding for an independent health care 
  4.8   access monitor, for a period of up to three years following the 
  4.9   effective date of the agreement or transaction.  The monitor 
  4.10  shall be selected by the commissioner and shall report quarterly 
  4.11  to the attorney general and the commissioner regarding health 
  4.12  care access in the affected community.  The for-profit entity 
  4.13  receiving assets or control shall provide the monitor with 
  4.14  appropriate access to the entity's records to enable the monitor 
  4.15  to carry out the reporting duty.  
  4.16     Subd. 5.  [CONTRACTING.] The attorney general may contract 
  4.17  with experts, consultants, or state agencies to provide 
  4.18  assistance in conducting the review required by this section. 
  4.19     Subd. 6.  [PAYMENT OF COSTS.] A nonprofit health care trust 
  4.20  proposing to enter into an agreement or transaction shall 
  4.21  reimburse the attorney general for all actual, reasonable, 
  4.22  direct costs incurred in reviewing, evaluating, and making the 
  4.23  determination required by this section, including administrative 
  4.24  costs, contract costs, and public hearing costs. 
  4.25     Subd. 7.  [APPEAL OF ATTORNEY GENERAL'S DECISION.] A party 
  4.26  to a proposed agreement or transaction that is reviewed by the 
  4.27  attorney general may appeal the decision of the attorney general 
  4.28  to the Minnesota court of appeals.  The appeal must be filed 
  4.29  within 90 days of the date on which the attorney general's 
  4.30  decision is issued. 
  4.31     Sec. 4.  [501B.93] [CRITERIA FOR PUBLIC INTEREST REVIEW.] 
  4.32     In determining whether an agreement or transaction is in 
  4.33  the public interest, the attorney general, in consultation with 
  4.34  the commissioner, shall consider: 
  4.35     (1) whether the terms and conditions of the agreement or 
  4.36  transaction are fair and reasonable to the nonprofit health care 
  5.1   trust, including whether the nonprofit health care trust will 
  5.2   receive reasonably fair market value for its assets; 
  5.3      (2) whether the terms and conditions of the agreement or 
  5.4   transaction are fair and reasonable to the state and affected 
  5.5   community, including whether the state and affected community 
  5.6   will receive compensation commensurate with the financial value 
  5.7   of any tax preferences provided to the nonprofit health care 
  5.8   trust; 
  5.9      (3) whether the nonprofit health care trust exercised due 
  5.10  diligence in deciding to sell, selecting the purchaser, and 
  5.11  negotiating the terms and conditions of the sale; 
  5.12     (4) whether any conflict of interest was disclosed, 
  5.13  including any conflict of interest related to the board members 
  5.14  of, executives of, or experts retained by the parties to the 
  5.15  agreement or transaction; 
  5.16     (5) whether the agreement or transaction will result in 
  5.17  inurement to any private persons or entity; 
  5.18     (6) if the transaction is financed in part by the nonprofit 
  5.19  health care trust, whether charitable funds are placed at 
  5.20  unreasonable risk; 
  5.21     (7) whether any management contract under or related to the 
  5.22  agreement or transaction is for reasonably fair market value; 
  5.23     (8) whether proceeds from the agreement or transaction will 
  5.24  be used for appropriate charitable health care purposes 
  5.25  consistent with the seller's original purpose or for the support 
  5.26  and promotion of health care in the affected community, and 
  5.27  whether the proceeds will be controlled as charitable funds 
  5.28  independently of the purchaser or parties to the agreement or 
  5.29  transaction; 
  5.30     (9) whether sufficient safeguards are included to ensure 
  5.31  the affected community continued access to affordable care, and 
  5.32  whether parties to the agreement or transaction have made a 
  5.33  commitment to provide health care to the disadvantaged, the 
  5.34  uninsured, and the underinsured, and to provide benefits to the 
  5.35  affected community to promote improved health care; 
  5.36     (10) if health care providers will be offered the 
  6.1   opportunity to invest or own an interest in the purchaser, 
  6.2   whether procedures or safeguards are in place to avoid conflict 
  6.3   of interest in patient referral, and the nature of the 
  6.4   procedures or safeguards; and 
  6.5      (11) any other factors the attorney general considers 
  6.6   relevant. 
  6.7      Sec. 5.  [501B.94] [PROHIBITIONS ON INVESTMENT.] 
  6.8      If the attorney general approves an agreement or 
  6.9   transaction under section 501B.92, the trustees and senior 
  6.10  managers of the nonprofit health care trust are prohibited, for 
  6.11  a period of three years from the date of the agreement or 
  6.12  transaction, from investing in a for-profit corporation or 
  6.13  entity that was a party to the transaction or in a new 
  6.14  for-profit corporation or entity that was established as a 
  6.15  result of the agreement or transaction. 
  6.16     Sec. 6.  [EFFECTIVE DATE.] 
  6.17     Sections 1 to 5 are effective the day following final 
  6.18  enactment and apply to agreements or transactions proposed on or 
  6.19  after that date and to agreements and transactions proposed 
  6.20  prior to that date that have not been finalized as of that date.