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90_HB3385
New Act
Creates the Not-for-Profit Health Care Facility Sale Act.
Provides that a not-for-profit health care facility shall
notify and seek consent from the Attorney General before
transferring its assets or control to a for-profit entity.
Provides that the Attorney General shall hold a public
hearing, evaluate the transaction, and determine the effect
on charitable health care in the area. Provides that if
consent is granted, the Department of Public Health shall
monitor the for-profit entity's operation of the facility to
assess its continued service to the community and submit a
report to the Attorney General. Effective January 1, 1999.
LRB9010213PTsb
LRB9010213PTsb
1 AN ACT concerning not-for-profit health care facilities.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Not-for-Profit Health Care Facility Sale Act.
6 Section 5. Policy. The General Assembly makes the
7 following determinations:
8 (a) Charitable, not-for-profit health care facilities,
9 including not-for-profit hospitals, hold all of their assets
10 in trust for the specific charitable purposes set forth in
11 their articles of incorporation.
12 (b) The public is the beneficiary of the trust in which
13 charitable, not-for-profit health care facilities hold their
14 assets.
15 (c) Charitable, not-for-profit health care facilities
16 have a substantial and beneficial effect on the provision of
17 health care to the people of Illinois, providing care to the
18 poor, elderly, and disabled.
19 (d) Transfers of the assets of charitable, not-for-profit
20 health care facilities to the for-profit sector by sale,
21 joint venture, or other sharing of assets directly affect the
22 charitable use of those assets and may affect the
23 availability of community health care services.
24 (e) The Attorney General is entrusted by law to bring
25 actions on behalf of the public, and the public should be
26 protected in the event of a breach of the charitable trust of
27 a not-for-profit entity and represented in the event of a
28 sale or other transfer of the assets of a not-for-profit
29 entity.
30 Section 10. Definition. For the purposes of this Act,
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1 "health care facilities" has the meaning found in Section 3
2 of the Illinois Health Facilities Planning Act.
3 Section 15. Notice.
4 (a) A not-for-profit corporation that is subject to the
5 General Not For Profit Corporation Act of 1986 and is a
6 health care facility or a facility that provides health care
7 services shall be required to provide written notice to and
8 obtain the written consent of the Attorney General before
9 entering into any agreement to do the following:
10 (1) Sell, transfer, lease, exchange, option, convey,
11 or otherwise dispose of its assets to a for-profit
12 corporation or entity when a material amount of the
13 assets of the not-for-profit corporation are involved in
14 the agreement or transaction.
15 (2) Transfer control, responsibility, or governance
16 of a material amount of the assets or operations of the
17 not-for-profit corporation to a for-profit corporation or
18 entity.
19 (b) The notice to the Attorney General provided for in
20 this Section shall include all documents of the proposed
21 transaction and contain other information the Attorney
22 General determines is required.
23 (c) This Act shall not apply to a not-for-profit
24 corporation if the Attorney General has given the corporation
25 a written waiver of this Act as to the proposed agreement or
26 transaction.
27 Section 20. Consent. Within 60 days after the receipt
28 of the written notice required by Section 15, the Attorney
29 General shall notify the not-for-profit corporation in
30 writing of the decision to consent to, give conditional
31 consent to, or not consent to the agreement or transaction.
32 The Attorney General may extend this period for one
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1 additional 45-day period, provided the extension is necessary
2 to obtain information under Section 15. If consent is
3 granted, the Attorney General shall require the for-profit
4 entity to notify and seek further consent from the Attorney
5 General before closing the health care facility.
6 Section 25. Public meeting. Before issuing any written
7 decision referred to in Section 20, the Attorney General
8 shall conduct one or more public meetings, one of which
9 shall be in the county in which the facility is located, to
10 hear comments from interested parties. At least 14 days
11 before conducting the public meeting, the Attorney General
12 shall provide written notice of the time and place of the
13 meeting through publication in one or more newspapers of
14 general circulation in the affected community and to the
15 board of supervisors of the county in which the facility is
16 located.
17 Section 30. Determination. The Attorney General shall
18 have discretion to consent to, give conditional consent to,
19 or not consent to any agreement or transaction described in
20 subsection (a) of Section 15. In making the determination,
21 the Attorney General shall consider any factors that the
22 Attorney General deems relevant including, but not limited
23 to, the following:
24 (1) The terms and conditions of the agreement or
25 transaction are fair and reasonable to the not-for-profit
26 corporation.
27 (2) The agreement or transaction will not monetarily
28 benefit any private person or entity, conflicts of
29 interest have been disclosed, and the effects of those
30 conflicts on the transaction have been disclosed.
31 (3) An agreement or a transaction that is subject to
32 this Act is at fair market value. For purposes of this
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1 paragraph, "fair market value" means the most likely
2 price that the assets being sold would bring in a
3 competitive and open market under all conditions
4 requisite to a fair sale, including the buyer and seller
5 acting prudently, knowledgeably, and in their own best
6 interest and a reasonable time being allowed for exposure
7 in the open market.
8 (4) The market value has not been manipulated by the
9 actions of the parties in a manner that causes the value
10 of the assets to decrease.
11 (5) The proposed use of the proceeds from the
12 agreement or transaction is consistent with the
13 charitable trust in which the assets are held by the
14 health care facility or by the affiliated not-for-profit
15 health system.
16 (6) The agreement or transaction does not involve or
17 constitute a breach of trust.
18 (7) The Attorney General has been provided under
19 Section 15 sufficient information by the not-for-profit
20 corporation to evaluate adequately the agreement or
21 transaction and its effects on the public.
22 (8) The agreement or transaction does not create a
23 significant effect on the continued availability or
24 accessibility of charitable health care services to the
25 affected community.
26 (9) The proposed agreement or transaction is in the
27 public interest.
28 Section 35. Rules. The Attorney General may adopt rules
29 to implement this Act.
30 Section 40. Evaluation.
31 (a) Within the time periods designated in Section 20 and
32 relating to those factors specified in Section 30, the
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1 Attorney General may do the following:
2 (1) Consult and receive advice from the Department
3 of Public Health on those terms and conditions that the
4 Attorney General deems appropriate.
5 (2) In his or her sole discretion, contract with
6 experts or consultants to assist in reviewing the
7 proposed agreement or transaction.
8 (b) Contract costs shall not exceed an amount that is
9 reasonable and necessary to conduct the review and
10 evaluation. A contract entered into under this Section with a
11 professional may be on a noncompetitive bid basis. The
12 not-for-profit corporation and the for-profit entity, upon
13 request, shall pay the Attorney General promptly all contract
14 costs.
15 (c) The Attorney General shall be entitled to
16 reimbursement from the not-for-profit corporation and the
17 for-profit entity for all actual, reasonable, and direct
18 costs incurred in reviewing, evaluating, and making the
19 determination referred to in this Act including
20 administrative costs. The not-for-profit corporation and the
21 for-profit entity shall promptly pay the Attorney General,
22 upon request, all these costs.
23 Section 45. Review. If consent is granted, the
24 Department of Public Health shall monitor the for-profit
25 entity to assess the continued availability of essential
26 health care services to the local community. The Department
27 shall submit an assessment report to the Attorney General on
28 January 1 of each even numbered year. The for-profit entity
29 shall pay the Department, upon request, the monitoring and
30 reporting costs.
31 Section 99. Effective date. This Act takes effect on
32 January 1, 1999.
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