State of Illinois
90th General Assembly
Legislation

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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,
                            -2-                LRB9010213PTsb
 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
                            -3-                LRB9010213PTsb
 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
                            -4-                LRB9010213PTsb
 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
                            -5-                LRB9010213PTsb
 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.
                            -6-                LRB9010213PTsb

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