BILL NUMBER: AB 2546 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 10, 2014
AMENDED IN ASSEMBLY MAY 15, 2014
AMENDED IN ASSEMBLY APRIL 29, 2014
AMENDED IN ASSEMBLY MARCH 28, 2014
INTRODUCED BY Assembly Member Salas
FEBRUARY 21, 2014
An act to add Chapter 5.5 (commencing with Section 101852) to Part
4 of Division 101 of the Health and Safety Code, relating to public
health.
LEGISLATIVE COUNSEL'S DIGEST
AB 2546, as amended, Salas. Kern County Hospital Authority.
Existing law authorizes the board of supervisors of certain
counties to establish a hospital authority for the management,
administration, and control of certain medical facilities.
This bill would authorize the board of supervisors of the County
of Kern to establish, by ordinance, the Kern County Hospital
Authority to manage, administer, and control the Kern Medical Center
and other health care facilities, as defined. The bill would prohibit
establishing the hospital authority until the medical center
affiliates or consolidates with at least one other health care
facility, as specified. The bill would grant to the authority the
duties, privileges, immunities, rights, liabilities, and limitations
of a local unit of government within the state. The bill would
specify that the transfer to the authority of the management,
administration, and control of the medical center and another health
facility does not affect the eligibility of the county or the
governing board of another health care facility for, but authorizes
the authority to participate in and receive, various sources of
funding, as specified, including various Medi-Cal programs.
This bill would provide various protections for the benefits of
the permanent employees of the medical center, subject to certain
conditions, and would authorize the authority to contract with the
Public Employees' Retirement System, as specified.
This bill would authorize the board of supervisors of the County
of Kern to establish, by ordinance, the Kern County Health System
Authority to manage, administer, and control the Kern Medical Center
and for the operation of additional programs, facilities, care
organizations, physical practice plans, and delivery systems that may
be affiliated or consolidated with the medical center. The bill
would also authorize the establishment of the authority to manage,
administer, and control the managed care plan established by Kern
Health Systems in order to ensure the substantial participation of
the disproportionate share hospital in the county and the safety net
providers with which it is affiliated and to negotiate and enter into
contracts to provide or arrange, or provide directly, health care
services to specified individuals.
The bill would require the board of supervisors, in the enabling
ordinance, to establish the terms and conditions of the transfers to
the authority from the county and Kern Health Systems, which
includes, among other things, any transfer of real and personal
property. The bill would require the authority to be governed by a
board of trustees, and would require the board of supervisors, in the
enabling ordinance, to specify, among other things, the membership
of the board trustees and the qualifications of members.
The bill would grant to the authority, among other powers, the
duties, privileges, immunities, rights, liabilities, and limitations
of a local unit of government within the state. The bill would
specify that the transfer to the authority of the management,
administration, and control of the medical center does not affect the
eligibility of the county for, but authorizes the authority to
participate in and receive, various sources of funding, as specified,
including various Medi-Cal programs. The bill would require the
board of supervisors to adopt, and the authority to implement, a
personnel transition plan that requires specified actions, including
ongoing communication to employees and recognized employee
organizations regarding the impact of the transition on certain
existing employees and employee classifications.
The bill would authorize the board of supervisors to find and
declare that the authority ceases to exist, and in that event, the
bill would require the board of supervisors to provide for the
disposition of the authority's assets, obligations, and liabilities.
Existing constitutional provisions require that a statute that
limits the right of access to the meetings of public bodies or the
writings of public officials and agencies be adopted with findings
demonstrating the interest protected by the limitation and the need
for protecting that interest.
This bill would make legislative findings to that effect.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Chapter 5.5 (commencing with Section
101852) is added to Part 4 of Division 101 of the Health
and Safety Code , to read:
CHAPTER 5.5. KERN COUNTY HEALTH SYSTEM AUTHORITY ACT
Article 1. General Provisions
101852. (a) This chapter shall be known and may be cited as the
Kern County Health System Authority Act.
(b) The Legislature finds and declares all of the following:
(1) Kern Medical Center, an acute care hospital currently operated
as a constituent department of the County of Kern, is a designated
public hospital, as defined in subdivision (d) of Section 14166.1 of
the Welfare and Institutions Code, and a critical component of the
state's health care safety net.
(2) Kern Health Systems, a separate public entity from the County
of Kern, is a special county health authority formed pursuant to
Section 14087.38 of the Welfare and Institutions Code to address
problems of delivery of publicly assisted medical care in the County
of Kern, and currently operates the local initiative, as defined in
subdivision (w) of Section 53810 of Title 22 of the California Code
of Regulations, in the county.
(3) The ongoing evolution of the healthcare environment is a
catalyst for public health care service entities to pursue innovative
health care delivery models that proactively improve the quality of
patient care services and patient experience, efficiently and
effectively increase access to needed health care services across the
care continuum, provide services in a patient-centered manner, and
moderate the rate of growth of health care expenditures.
(4) In order for the County of Kern and Kern Health Systems to
further their common mission of improving the health status of the
people of the County of Kern through providing access to affordable,
high quality health care services, and to help ensure the viability
of the health care safety net in the county, it is necessary that
they be permitted to combine resources and consolidate efforts
towards an integrated delivery system to achieve health plan and
provider alignment by enabling the operation of both Kern Medical
Center and the local initiative operated by Kern Health Systems under
a new special health system authority.
(5) Because there is no general law under which this public health
system authority could be formed for these purposes, the adoption of
this act authorizing formation of a special authority by the
Legislature is required.
101852.1. For purposes of this chapter, the following definitions
shall apply:
(a) "Authority" means the Kern County Health System Authority
established pursuant to this chapter.
(b) "Board of supervisors" means the board of supervisors of the
County of Kern.
(c) "Board of trustees" means the governing body of the authority.
(d) "County" means the County of Kern.
(e) "Enabling ordinance" means the county ordinance enacted
pursuant to this chapter to establish the authority, as may be
amended from time to time.
(f) "Kern Health Systems" means the public entity that operates
the managed care plan organized by the county pursuant to Section
14087.38 of the Welfare and Institutions Code in the County of Kern.
(g) "Managed care plan" means the health plan licensed pursuant to
the Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2), which was established
by Kern Health Systems and serves as the local initiative, as defined
in subdivision (w) of Section 53810 of Title 22 of the California
Code of Regulations, in the County of Kern, and includes all plan
assets and operations that exist or are later established.
(h) "Medical center" means the assets and liabilities comprising
the Kern Medical Center and related public health care programs,
facilities, care organizations, physician practice plans and delivery
systems, which may be hospital-based or nonhospital-based, that now
exist or are established in the future.
Article 2. Establishment of the Kern County Health System
Authority
101853. (a) Pursuant to this chapter, the board of supervisors
may establish by ordinance the Kern County Health System Authority,
which shall be a public agency that is a local unit of government
separate and apart from the county and any other public entity for
all purposes. The authority established pursuant to this chapter
shall file the statement required by Section 53051 of the Government
Code, and is a public entity for purposes of Division 3.6 (commencing
with Section 810) of Title 1 of the Government Code.
(b) The purpose of the authority shall be to do all of the
following:
(1) Provide management, administration, and other controls
consistent with this chapter for the medical center to continue to
operate as a designated public hospital, as defined in subdivision
(d) of Section 14166.1 of the Welfare and Institutions Code, and for
the operation of additional programs, facilities, care organizations,
physician practice plans, and delivery systems that may be
affiliated or consolidated with the medical center, to ensure the
viability of the health care safety net in the county in a manner
consistent with the county's requirements under Section 17000 of the
Welfare and Institutions Code.
(2) Provide management, administration, and other controls
consistent with this chapter for the managed care plan to continue to
operate as a local initiative, as defined in subdivision (w) of
Section 53810 of Title 22 of the California Code of Regulations, to
ensure the substantial participation of the disproportionate share
hospital in the county and the safety net providers with which it is
affiliated, and to negotiate and enter into contracts to provide or
arrange, or provide directly, health care services to individuals
including, but not limited to, those covered under Subchapters XVIII
(commencing with Section 1395), XIX (commencing with Section 1396),
and XXI (commencing with Section 1397aa) of Chapter 7 of Title 42 of
the United States Code, those entitled to coverage under private
group coverage, private individual coverage, including without
limitation, coverage through Covered California, other publicly
supported programs, those employed by public agencies or private
businesses, and uninsured or indigent individuals.
(c) Subject to the requirements of this chapter, the authority
shall be charged with the management, administration, and control of
the medical center and the managed care plan. The State Department of
Health Care Services and Department of Managed Health Care shall
take all necessary steps to ensure all of the following:
(1) The authority is permitted to operate the medical center and
the managed care plan.
(2) The medical center continues its status as a designated public
hospital.
(3) The managed care plan continues to operate as a local
initiative.
(4) The authority may participate as a contributing public agency
for the purposes of Section 433.51 of Title 42 of the Code of Federal
Regulations.
(d) The board of supervisors, in the enabling ordinance, shall
establish the terms and conditions of the transfers to the authority
from the county and Kern Health Systems, including, but not limited
to, all of the following:
(1) Any transfer of real and personal property, assets and
liabilities, including, but not limited to, liabilities of the
medical center determined and assigned by the county for county funds
previously advanced to fund the operations of the medical center.
(2) Transfer of employees, including any necessary personnel
transition plan, as specified in Section 101853.1.
(3) Maintenance operation and management or ownership of the
medical center and managed care plan.
(4) Transfer of licenses.
(5) Any other matters as the board of supervisors deems necessary,
appropriate or convenient for the conduct of the authority's
activities
(e) (1) Upon establishment of the authority, all assets and
liabilities comprising the managed care plan, and all operations and
governance of the managed care plan, shall be transferred to the
authority pursuant to the terms and conditions specified in the
enabling ordinance. The effective date of the transfer shall be as
prescribed in the enabling ordinance. The managed care plan shall
provide at least 30 days advance notice for change of ownership to
the Department of Managed Health Care in the form of a notice of
material modification.
(2) The notice of material modification shall describe any changes
in the governing body or higher management of the managed care plan,
and, notwithstanding any other law, shall be deemed approved upon
receipt. Any other changes to plan operations, governance, or
financial status shall be made after the change of ownership, and
shall be subject to the requirements of the Knox-Keene Health Care
Service Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340)
of Division 3).
(3) Upon the transfer of the maintenance, operation, and
management or ownership of the managed care plan to the authority,
the board of supervisors shall terminate Kern Health Systems by
ordinance. The board of supervisors shall notify the State Department
of Health Care Services 30 days prior to the effective date of the
termination.
(4) The provisions set forth in paragraph (5) of subdivision (t)
of, and subdivisions (v) and (x) of, Section 14087.38 of the Welfare
and Institutions Code shall not apply to the termination of Kern
Health Systems made pursuant to this chapter.
(5) Any liabilities of Kern Health Systems shall not become
obligations of the county upon termination of Kern Health Systems.
(6) With respect to the maintenance, operation, and management or
ownership of the managed care plan, the authority shall comply with
the applicable requirements of the Knox-Keene Health Care Service
Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340) of
Division 3).
(7) The board of supervisors may contract with the authority to
provide indigent care services on behalf of the county. The contract
shall specify that county policies, as may be modified from time to
time and consistent with the county's obligations under Section 17000
of the Welfare and Institutions Code, shall be applicable.
Notwithstanding any other provision of this chapter, the authority
shall not undertake any of the county's obligations under Section
17000 of the Welfare and Institutions Code, nor shall the authority
have an entitlement to receive any revenue for the discharge of the
county's obligations, without a written agreement with the county.
Any contract executed by and between the county and the authority
shall provide for the indemnification of the county by the authority
for liabilities as specifically set forth in the contract, except
that the contract shall include a provision that the county shall
remain liable for its own negligent acts. Indemnification by the
authority shall not be construed as divesting the county from its
ultimate responsibility for compliance with Section 17000 of the
Welfare and Institutions Code.
(f) (1) A transfer of maintenance, operation, and management or
ownership or lease of the medical center to the authority may be made
with or without the payment of a purchase price by the authority and
otherwise upon the terms and conditions as found necessary by the
board of supervisors and specified in the enabling ordinance to
ensure that the transfer will constitute an ongoing material benefit
to the county and its residents.
(2) A transfer of the maintenance, operation, and management of
the medical center to the authority shall not be construed as
empowering the authority to transfer any ownership interest of the
county in the medical center except as otherwise approved by the
board of supervisors.
(3) The authority shall not transfer the maintenance, operation,
and management or ownership or lease of the medical center to any
other entity without the prior written approval of the board of
supervisors.
(4) With respect to the maintenance, operation, and management or
ownership of the medical center, the authority shall conform to both
of the following requirements:
(A) Comply with Section 14000.2 of the Welfare and Institutions
Code.
(B) Comply with any applicable requirements of Section 1442.5.
(5) The board of supervisors may retain control of the medical
center physical plant and facilities except as otherwise specifically
provided for in the enabling ordinance or other lawful agreements
entered into by the board of supervisors. Any lease agreement or
other agreement between the county and the authority may provide that
county premises shall not be sublet without the approval of the
board of supervisors.
(6) Notwithstanding any other provision of this chapter, and
whether or not accompanied by a change in licensing, the authority's
responsibility for the maintenance, operation, and management or
ownership of the medical center does not relieve the county of the
ultimate responsibility for indigent care pursuant to Section 17000
of the Welfare and Institutions Code.
(g) Unless otherwise agreed to by the authority and the board of
supervisors, an obligation of the authority, statutory, contractual,
or otherwise, shall be the obligation solely of the authority and
shall not be the obligation of the county or any other entity, and
any contract executed by and between the county and the authority, or
any other entity and the authority, shall contain a provision that
liabilities or obligations of the authority with respect to its
activities pursuant to the contract shall be the liabilities or
obligations of the authority and shall not be or become the
liabilities or obligations of the county or the other entity,
respectively. An obligation of the authority, statutory, contractual,
or otherwise, shall not be the obligation of the state.
(h) The authority shall not be a "person" subject to suit under
the Cartwright Act (Chapter 2 (commencing with Section 16700) of Part
2 of Division 7 of the Business and Professions Code).
(i) The authority is not subject to the jurisdiction of a local
agency formation commission pursuant to the Cortese-Knox-Hertzberg
Local Government Reorganization Act of 2000 (Division 3 (commencing
with Section 56000) of Title 5 of the Government Code), or any
successor statute.
101853.1. (a) In exercising its powers to employ personnel, the
authority shall implement, and the board of supervisors shall adopt,
a personnel transition plan. The personnel transition plan shall
require all of the following:
(1) Ongoing communication to employees and recognized employee
organizations regarding the impact of the transition on existing
managed care plan, medical center, county, and other health care
facility employees and employee classifications.
(2) Meeting and conferring with representatives of affected
bargaining unit employees on both of the following issues:
(A) A timeframe for which the transfer of personnel shall occur.
(B) Specified periods of time during which county or medical
center employees affected by the establishment of the authority may
elect to be considered for appointment to funded, equivalent, vacant
county positions, and exercise reinstatement rights, for which they
are qualified and eligible. An employee who first elects to remain
with the county, but who subsequently seeks employment with the
authority within 30 days of this election, shall be subject to the
requirements of this article.
(3) Acknowledgment that the authority, to the extent permitted by
federal law, shall be bound by the terms of the memoranda of
understanding executed between the county and its exclusive employee
representatives that are or will be in effect as of the date the
county adopts the enabling ordinance pursuant to this article.
Subsequent memoranda of understanding shall be subject to approval
only by the board of trustees, and not the county.
(b) The implementation of this chapter shall not be a cause for
the modification of the level of medical center, county, or Kern
Health Systems employment benefits. Upon the execution of the
enabling ordinance, employees who serve or work for the medical
center, county, or Kern Health Systems immediately prior to the
implementation of this chapter, and who become authority employees,
shall retain their existing or equivalent classifications and job
descriptions upon transfer to the authority, comparable pension
benefits, and at least their existing salaries and other benefits
that include, but are not limited to, accrued and unused vacation,
sick leave, personal leave, health care, retiree health benefits, and
deferred compensation plans.
(c) The authority shall recognize as the exclusive representatives
of those authority employees who perform functions transferred from
the county or medical center to the authority, pursuant to this
chapter, the employee organizations that represented the employees at
the county or medical center performing those functions at the time
of transfer.
(d) In order to stabilize labor and employment relations and
provide continuity of care and services to the people of the county,
and notwithstanding any other law, the authority shall do all of the
following for a period of 24 months after the effective date of the
transfer of the medical center to the authority:
(1) Continue to recognize each exclusive representative of each
bargaining unit.
(2) Continue to provide at least the same level of employee
benefits to authority employees, who were medical center, county, or
managed care plan employees, that had been provided to these
employees, whether those benefits arise out of a memorandum of
understanding, or other agreements or law.
(3) Roll over and continue to be bound by any existing medical
center or county memoranda of understanding covering the terms and
condition, including the level of wages and benefits, of transferred
employees for 24 months after the term end date of any memoranda of
agreement, unless modified by mutual agreement with each of the
employees' exclusive representatives, and only to the extent that
continuing to provide those pension benefits specified in any
memoranda of agreement does not conflict with any Kern County
Employees' Retirement Association regulation or federal law. Any
conflicts in the existing agreements as to wages and other terms and
conditions of employment shall be resolved only by mutual agreement
between the authority and each of the exclusive employee
representatives.
(e) Permanent employees of the medical center, county, or Kern
Health Systems on the effective date of the transfer of the medical
center and the managed care plan, as applicable, to the authority,
shall be deemed qualified for employment or retention in equivalent
positions at the authority, and no other qualifications shall be
required except as otherwise required by state or federal law.
Probationary employees on the effective date of , as set forth in
this paragraph, shall retain their probationary status and rights and
shall not be deemed to have transferred so as to require serving a
new probationary period. To the extent possible, employees who
transfer to equivalent positions at the authority shall retain their
existing classifications and job descriptions, but to the extent
there is a dispute on this issue, the authority agrees to meet and
confer with the transferred employees exclusive authorized
representative.
(f) Employees who transfer from the medical center, county, or
Kern Health Systems to the authority shall retain the seniority they
earned from their previous employers. The authority shall continue to
provide for the maintenance of any benefits that accompany
seniority, if they existed, prior to the transfer. All time served in
the same, equivalent, or higher classification shall be counted
toward classification seniority.
(g) Notwithstanding anything to the contrary contained in this
chapter, this chapter does not prohibit the authority from
determining the number of employees, the number of full-time
equivalent positions, job descriptions, the nature and extent of
classified employment positions, and salaries of employees.
Article 3. Board of Trustees
101854. (a) The authority established pursuant to this chapter
shall be governed by a board of trustees that is appointed, both
initially and continually, by the board of supervisors. The board of
supervisors, in the enabling ordinance, shall specify the membership
of the board of trustees, the qualifications for individual members,
the manner of appointment, selection, or removal of board of trustees
members, their terms of office, and all other matters that the board
of supervisors deems necessary or convenient for the conduct of the
board of trustees. Notwithstanding any other law, at the board of
supervisors' discretion and as specified in the enabling ordinance,
the board of trustees may consist entirely of members of the board of
supervisors or may include any number of the members of the board of
supervisors.
(b) The board of supervisors, either during or after the formation
of the authority, may modify the number, length of terms, and
appointing authority for the board of trustees, and provisions for
all other matters pertaining to the board of trustees by subsequent
ordinance.
(c) The board of supervisors shall adopt bylaws for the authority
that, among other things, shall specify the officers of the board of
trustees, the time, place, and conduct of meetings, and other matters
that the board of supervisors deems necessary or appropriate to
conduct the authority's activities. The bylaws shall be operative
upon approval by a majority vote of the board of supervisors, but may
be amended, from time to time, by a majority vote of the board of
supervisors.
(d) Notwithstanding any other law, a member of the board of
trustees shall not be deemed to be interested in a contract entered
into by the authority within the meaning of Article 4 (commencing
with Section 1090) of Chapter 1 of Division 4 of Title 1 of the
Government Code if either of the following apply:
(1) The member is also a member of the board of supervisors, or is
a county employee appointed to represent the interests of the board
of supervisors.
(2) All the following applies to the member:
(A) The member was appointed to represent the interests of
physicians, health care practitioners, hospitals, pharmacies, or
other health care organizations, or beneficiaries.
(B) The contract authorizes the member or the organization the
member represents to provide services to beneficiaries under the
authority's programs.
(C) The contract contains substantially the same terms and
conditions as contracts entered into with other individuals or
organizations that the member was appointed to represent.
(D) The member does not influence or attempt to influence the
health authority or another member of the authority to enter into the
contract in which the member is interested.
(E) The member discloses the interest to the authority and
abstains from voting on the contract.
(F) The board of trustees notes the member's disclosure and
abstention in its official records and authorizes the contract in
good faith by a vote of its membership sufficient for the purpose
without counting the vote of the interested member.
(e) Members of the board of trustees shall not be vicariously
liable for injuries caused by the act or omission of the authority to
the extent that protection applies to members of governing boards of
local public entities generally under Section 820.9 of the
Government Code.
(f) The board of trustees created and appointed pursuant to this
chapter is a duly constituted governing body as the term is used in
Section 1250 and defined in Section 70035 of Title 22 of the
California Code of Regulations.
(g) In the event of a change of license ownership, the board of
trustees shall comply with the obligations of governing bodies of
general acute care hospitals generally as set forth in Section 70701
of Title 22 of the California Code of Regulations, as currently
written or subsequently amended, as well as the terms and conditions
of the license. The authority shall be the responsible party with
respect to compliance with these obligations, terms, and conditions.
Article 4. Powers and Duties of the Authority
101855. (a) The authority, in addition to any other powers
granted pursuant to this chapter, shall have the following powers:
(1) To have the duties, privileges, immunities, rights,
liabilities, and limitations of a local unit of government within the
state.
(2) To have perpetual existence.
(3) To adopt, have, and use a seal, and to alter it at its
pleasure.
(4) To sue and be sued in the name of the authority in all actions
and proceedings in all courts and tribunals of competent
jurisdiction.
(5) To purchase, lease, trade, exchange, or otherwise acquire,
maintain, hold, improve, mortgage, lease, sell, and dispose of real
and personal property of any kind necessary or convenient to perform
its functions and fully exercise its powers.
(6) To appoint and employ a chief executive officer and other
officers and employees that may be necessary or appropriate,
including legal counsel, to establish their compensation, provide for
their health, retirement, and other employment benefits, and to
define the power and duties of officers and employees.
(7) (A) To incur indebtedness and to borrow money and issue bonds
evidencing the same, including the authority to issue, from time to
time, notes and revenue bonds in principal amounts that the authority
determines to be necessary to provide sufficient funds for achieving
any of its purposes, including, but not limited to, assumption or
refinancing of debt service for capital projects eligible for
Medi-Cal supplemental payments pursuant to Section 14085.5 of the
Welfare and Institutions Code, the payment of interest on notes and
bonds of the authority, the establishment of reserves to secure these
notes and bonds, and all other expenditures of the authority
incident to and necessary or convenient to carry out its purposes and
powers.
(B) Any notes, bonds, or other securities issued, and the income
from them, including any profit from the sale thereof, shall at all
times be free from taxation by the state or any agency, political
subdivision, or instrumentality of the state.
(C) Notwithstanding the provisions of subparagraph (A), for any
indebtedness, notes, bonds, or other securities that require voter
approval pursuant to state law, the prior approval of the board of
supervisors shall be required. Notwithstanding the required prior
approval of the board of supervisors, any indebtedness incurred, or
notes, bonds, or other securities issued pursuant to this
subparagraph shall be the indebtedness, notes, bonds, or securities
of the authority and not of the county, and the credit of the county
shall not be pledged or relied upon in any manner in order to incur
the indebtedness, or issue the notes, bonds, or other securities,
unless the board of supervisors explicitly authorizes the use of the
county's credit. The authority shall reimburse the county for all
costs associated with the county's consideration of the indebtedness,
notes, bonds, or securities, and the authority shall defend,
indemnify, and hold harmless the county from any and all liability,
costs, or expenses arising from or related to the indebtedness,
notes, bonds, or securities.
(D) Nothing herein shall preclude the authority from repayment of
its debts or other liabilities, using funds that are not otherwise
encumbered and do not cause the managed care plan's tangible net
equity to drop below its required level.
(8) To pursue its own credit rating.
(9) To enter into a contract or agreement consistent with this
chapter or the laws of this state, and to authorize the chief
executive officer to enter into contracts, execute all instruments,
and do all things necessary or convenient in the exercise of the
powers granted in this chapter.
(10) To purchase supplies, equipment, materials, property, and
services.
(11) To establish policies relating to its purposes.
(12) To acquire or contract to acquire, rights-of-way, easements,
privileges, and property, and to construct, equip, maintain, and
operate any and all works or improvements wherever located that are
necessary, convenient, or proper to carry out any of the provisions,
objects, or purposes of this chapter, and to complete, extend, add
to, repair, or otherwise improve any works or improvements acquired
by it.
(13) To participate in, contract for, and to accept, gifts,
grants, and loans of funds, property, or other aid or finance
opportunity in any form from the federal government, the state, a
state agency, or other source, or combination thereof, as otherwise
would be available to a public, government, or private entity, and to
comply, subject to this chapter, with the terms and conditions
thereof.
(14) To invest surplus money in its own treasury, manage
investments, and engage third-party investment managers, in
accordance with state law.
(15) To arrange for guarantees or insurance of its bonds, notes,
or other obligations by the federal or state government or by a
private insurer, and to pay the premiums thereof.
(16) To engage in managed care contracting, joint ventures,
affiliations with other health care facilities, other health care
providers and payers, management agreements, or to participate in
alliances, purchasing consortia, health insurance pools, accountable
care organizations, alternative delivery systems, or other
cooperative arrangements, with any public or private entity.
(17) To enter into joint powers agreements pursuant to Chapter 5
(commencing with Section 6500) of Division 7 of Title 1 of the
Government Code. Notwithstanding any other provision of law, the
authority may enter into a joint powers agreement as described in
Section 6523.5 of the Government Code as though that section applied
to hospitals and other health care facilities in the County of Kern.
(18) To establish nonprofit, for profit, or other entities
necessary to carry out the duties of the authority.
(19) To elect to transfer funds to the state and incur certified
public expenditures in support of the Medi-Cal program and other
programs for which federal financial participation is available.
(20) To use a computerized management information system,
including an electronic health records system, in connection with the
administration of its facilities and Medi-Cal managed care plans.
(21) To request that the board of supervisors levy a tax on behalf
of the authority. If the board of supervisors approves the proposal
to levy the tax, it shall call the election to seek voter approval
and place the appropriate measure on the ballot for that election.
The proceeds of these taxes shall be tax proceeds of the authority
and not of the county. The authority shall reimburse the county for
all costs associated with the county's consideration of these taxes,
and shall defend, indemnify, and hold harmless the county from any
liability, costs, or expenses arising from or related to the
imposition of these taxes.
(22) Notwithstanding the provisions of this chapter relating to
the obligations and liabilities of the authority, or any other law, a
transfer of control or ownership of the medical center and the
managed care plan shall confer onto the authority all the rights and
duties set forth in state law with respect to hospitals, clinics and
other health facilities, health programs, care organizations,
physician practice plans, delivery systems, and health care service
plans owned or operated by a county.
(23) To engage in other activities that may be in the best
interests of the authority and the persons served by the authority,
as determined by the board of trustees, in order to respond to
changes in the health care industry.
(b) The authority shall conform to the following requirements:
(1) (A) Be a government agency that is a local unit of government
separate and apart for all purposes from the county and any other
public entity, and shall not be considered to be an agency, division,
or department of the county or any other public entity. The
authority shall not be governed by or subject to the civil service
requirements of the county. Except as otherwise provided for in the
enabling ordinance consistent with this chapter, and as set forth in
Section 101853.1, the authority shall not be governed by, or subject
to, other policies or operational rules of the county, medical
center, or any other public entity, including, but not limited to,
those relating to personnel and procurement.
(B) The board of trustees shall adopt written rules, regulations,
and procedures with regard to basic human resource functions not
inconsistent with employees' memoranda of understanding or the
provisions of this chapter. Until the time that the board of trustees
adopts its own rules, regulations, or procedures with regard to
these functions, the existing rules, regulations, and procedures set
forth in any memoranda of understanding described in Section 101853.1
and the enabling ordinance shall apply.
(2) Be subject to state and federal taxation laws that are
applicable to public entities generally.
(3) Except as otherwise specifically provided in this chapter,
comply with the Meyers-Milias-Brown Act (Chapter 10 (commencing with
Section 3500) of Division 4 of Title 1 of the Government Code), the
Public Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code), and the Ralph M. Brown
Act (Chapter 10 (commencing with Section 3500) of Division 4 of
Title 1 of the Government Code).
(4) Be subject to the jurisdiction of the Public Employment
Relations Board. Until the authority adopts local rules pursuant to
subdivision (a) of Section 3507 of the Government Code, the Public
Employment Relations Board's regulations apply.
(5) Carry professional and general liability insurance or programs
to the extent sufficient to cover its activities.
(6) Comply with the requirements of Sections 53260 and 53261 of
the Government Code.
(7) Meet all local, state, and federal data reporting
requirements.
(c) The authority may borrow from the county, repay debt and
otherwise provide and arrange for medical services. The county may
lend the authority funds or issue revenue anticipation notes to
obtain those funds necessary to operate the medical center and
managed care plan.
(d) Open sessions of the authority shall constitute official
proceedings authorized by law within the meaning of Section 47 of the
Civil Code. The privileges set forth in that section with respect to
official proceedings shall apply to open sessions of the authority.
(e) (1) Notwithstanding any other law, the board of trustees may
order that a meeting held solely for the purpose of discussion or
taking action on authority trade secrets, as defined in subdivision
(d) of Section 3426.1 of the Civil Code, shall be held in closed
session. Trade secrets for purposes of this chapter shall also
include information for which the secrecy of the information is
necessary for the authority to initiate a new service, program,
marketing strategy, business plan, or technology, or to add a benefit
or product, and premature disclosure of the trade secret would
create a substantial probability of depriving the authority of a
substantial economic benefit or opportunity.
(2) The requirements of making a public report of actions taken in
closed session and the vote or abstention of every member present
may be limited to a brief general description devoid of the
information constituting the trade secret.
(3) Those records of the authority that reveal the authority's
trade secrets are exempt from disclosure pursuant to the California
Public Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code), or any similar local
law requiring the disclosure of public records. This exemption shall
apply for a period of two years after the service, program, marketing
strategy, business plan, technology, benefit, or product that is the
subject of the trade secret is formally adopted by the governing
body of the health authority, provided that the service, program,
marketing strategy, business plan, technology, benefit, or product
continues to be a trade secret. The board of trustees may delete the
portion or portions containing trade secrets from any documents that
were finally approved in the closed session that are provided to
persons who have made the timely or standing request.
(4) This section shall not prevent the board of trustees from
meeting in closed session as otherwise provided by law.
(f) Notwithstanding any other law, those records of the authority
and of the county that reveal the authority's rates of payment for
health care services for the managed care plan, the rates of payment
for health care services provided by the medical center, or the
authority's deliberative processes, discussions, communications, or
any other portion of the negotiations with providers of health care
services or Medi-Cal, health care plans or other payors for rates of
payment, shall not be required to be disclosed pursuant to the
California Public Records Act (Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code), or any
similar local law requiring the disclosure of public records.
However, three years after a contract or amendment to a contract is
fully executed, the portion of the contract or amendment containing
the rates of payment shall be open to inspection.
(g) The authority shall be a public agency that is a local unit of
government for purposes of eligibility with respect to grants and
other funding and loan guarantee programs. Contributions to the
authority shall be tax deductible to the extent permitted by state
and federal law. Nonproprietary income of the authority shall be
exempt from state income taxation.
(h) Unless otherwise provided by the board of supervisors by way
of resolution, the authority is empowered, or the board of
supervisors is empowered on behalf of the authority, to apply as a
public agency for one or more licenses for the provision of health
care or the operation of a health care services plan pursuant to
statutes and regulations governing licensing as currently written or
subsequently amended.
(i) The statutory authority of a board of supervisors to prescribe
rules that authorize a county hospital to integrate its services
with those of other providers into a system of community service that
offers free choice of hospitals to those requiring hospital care, as
set forth in Section 14000.2 of the Welfare and Institutions Code,
shall apply to the authority and the board of trustees.
(j) (1) Except as otherwise provided in this chapter, provisions
of the Evidence Code, the Government Code, including the Public
Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7
of Title 1 of the Government Code), the Civil Code, the Business and
Professions Code, and other applicable law pertaining to the
confidentiality of peer review activities of peer review bodies shall
apply to the peer review activities of the authority, or any peer
review body, as defined in paragraph (1) of subdivision (a) of
Section 805 of the Business and Professions Code, formed pursuant to
the powers granted to the authority. The laws pertaining to the
confidentiality of peer review activities shall be together construed
as extending, to the extent permitted by law, the maximum degree of
protection of confidentiality.
(2) Notwithstanding Article 9 (commencing with Section 11120) of
Chapter 1 of Part 1 of Division 3 of Title 2 of, and Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title 5
of, the Government Code, or any other provision of law, any peer
review body formed pursuant to the powers granted to the authority,
may, at its discretion and without notice to the public, meet in
closed session, so long as the purpose of the meeting is the peer
review body's discharge of its responsibility to evaluate and improve
the quality of care rendered by health facilities and health
practitioners. The peer review body and its members shall receive, to
the fullest extent, all immunities, privileges, and protections
available to those peer review bodies, their individual members, and
persons or entities assisting in the peer review process, including
those afforded by Section 1157 of the Evidence Code and Section 1370.
Peer review proceedings shall constitute an official proceeding
authorized by law within the meaning of Section 47 of the Civil Code
and those privileges set forth in that section with respect to
official proceedings shall apply to peer review proceedings of the
authority.
(3) Notwithstanding the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code), or Article 9 (commencing with Section 11120) of
Chapter 1 of Part 1 of Division 3 of Title 2 of, and Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title 5
of, the Government Code, or any other provision of state or local law
requiring disclosure of public records, those records of a peer
review body formed pursuant to the powers granted to the authority,
shall not be required to be disclosed. The records and proceedings of
the peer review body and its individual members shall receive, to
the fullest extent, all immunities, privileges, and protections
available to those records and proceedings, including those afforded
by Section 1157 of the Evidence Code and Section 1370 of the Health
and Safety Code.
(4) If the authority is required by law or contractual obligation
to submit to the state or federal government peer review information
or information relevant to the credentialing of a participating
provider, that submission shall not constitute a waiver of
confidentiality.
(5) Notwithstanding any other law, Section 1461 shall apply to
hearings on reports of hospital medical audit or quality assurance
committees.
(k) Except as expressly provided by other provisions of this
section, all exemptions and exclusions from disclosure as public
records pursuant to this chapter and the California Public Records
Act, including, but not limited to, those pertaining to trade secrets
and information withheld in the public interest, shall be fully
applicable for the board of supervisors, and all state and local
agencies with respect to all writings that the authority is required
to prepare, produce, or submit, and which shall not constitute a
waiver of exemption from disclosure.
(l) The authority and the county, or any combination thereof may
engage in marketing, advertising, and promotion of the medical and
health care services made available to the community by the
authority.
(m) The board of trustees shall have authority over procurement
and contracts for the authority. The board of trustees shall adopt
written rules, regulations, and procedures with regard to these
functions. Contracts by and between the authority and a public
agency, and contracts by and between the authority and providers of
health care, goods, or services, may be let on a nonbid basis and
shall be exempt from Chapter 2 (commencing with Section 10290) of
Part 2 of Division 2 of the Public Contract Code.
(n) The authority may contract with the county for services and
personnel upon mutually agreeable terms.
(o) Notwithstanding Article 4.7 (commencing with Section 1125) of
Chapter 1 of Division 4 of Title 1 of the Government Code, related to
incompatible activities, a member of the authority's administrative
staff shall not be considered to be engaged in activities
inconsistent and incompatible with his or her duties as a result of
prior employment or affiliation with the county or Kern Health
Systems.
(p) The board of trustees and the officers and employees of the
authority are public employees for purposes of Division 3.6
(commencing with Section 810) of Title 1 of the Government Code,
relating to claims and actions against public entities and public
employees, and shall be protected by the immunities applicable to
public entities and public employees governed by Part 2 (commencing
with Section 814) of Division 3.6 of Title 1 of the Government Code,
except as provided by other statutes or regulations that apply
expressly to the authority.
101855.1. (a) Transfer by the county to the authority of the
maintenance, operation, and management or ownership of the medical
center, whether or not the transfer includes the surrendering by the
county of the existing general acute care hospital license and
corresponding application for a change of ownership of the license,
shall not affect the eligibility of the county to undertake, and
shall authorize the authority, subject to applicable requirements, to
do any of the following:
(1) With the written consent of the county, participate in and
receive allocations pursuant to the California Health Care for
Indigents Program pursuant to Chapter 5 (commencing with Section
16940) of Part 4.7 of Division 9 of the Welfare and Institutions
Code, or similar programs, as may be identified or earmarked by the
county for indigent health care services of the type provided by the
medical center.
(2) With the written consent of the county, participate in and
receive allocations of local revenue fund amounts provided pursuant
to Chapter 6 (commencing with Section 17600) of Part 5 of Division 9
of the Welfare and Institutions Code as may be identified or
earmarked by the county for indigent health care services of the type
provided by the medical center.
(3) Participate in the financing of and receive, Medicaid
disproportionate share hospital payments available to a county
hospital or designated public hospital, or any other successor or
modified payment or funding that is intended to assist hospitals that
serve a disproportionate share of low-income patients with special
needs. The allocation of
Medicaid disproportionate share hospital payments shall be made in
consultation with the State Department of Health Care Services and
other designated safety net hospitals.
(4) Participate in the financing of and receive, Medi-Cal
supplemental reimbursements, including, but not limited to, payments
made pursuant to Sections 14105.96, 14105.965, 14166.4, and 14182.15
of the Welfare and Institutions Code, payments described in paragraph
(4) of subdivision (b) of Section 14301.4 of, and Section 14301.5
of, the Welfare and Institutions Code, and payments made available to
a county provider or designated public hospital, or governmental
entity with which it is affiliated, under any other successor or
modified Medicaid payment system.
(5) Participate in the financing of, and receive, safety net care
pool funding, stabilization funding, delivery system reform incentive
pool payments, and any other funding available to a county provider
or designated public hospital, or governmental entities with which it
is affiliated under the Medicaid demonstration project authorized
pursuant to Article 5.2 (commencing with Section 14166) and Article
5.4 (commencing with Section 14180) of Chapter 7 of Part 3 of
Division 9 of the Welfare and Institutions Code, or under any other
successor or modified Medicaid demonstration project or Medicaid
payment system. The allocation of safety net care pool funds shall be
made in consultation with the State Department of Health Care
Services and other designated safety net hospitals.
(6) Participate in the financing, administration, and provision of
services under the Low Income Health Program authorized pursuant to
Part 3.6 (commencing with Section 15909) of Division 9 of the Welfare
and Institutions Code, or under any other successor or modified
Medicaid demonstration project or Medicaid payment system if the
authority enters into an agreement with the county concerning the
provision of services by, and payment for these services to, the
county.
(7) Participate in and receive direct grant and payment
allocations pursuant to Article 5.230 (commencing with Section
14169.50) of Chapter 7 of Part 3 of Division 9 of the Welfare and
Institutions Code, or under any other successor or modified direct
grant and payment systems funded by hospital or other provider fee
assessments.
(8) Receive Medi-Cal capital supplements pursuant to Section
14085.5 of the Welfare and Institutions Code. Notwithstanding any
other law, supplemental payments shall be made to the medical center
under Section 14085.5 of the Welfare and Institutions Code for the
debt service costs incurred by the county, and, if applicable, by the
authority to the extent that debt service responsibility is
refinanced, transferred to, or otherwise assumed by, directly or
indirectly, the authority.
(9) Receive any other funds that would otherwise be available to a
county provider or designated public hospital, or governmental
entity with which it is affiliated.
(b) A transfer described in subdivision (a) shall not otherwise
disqualify the county or the board of trustees, or in the case of a
change in license ownership, the authority, from participating in any
of the following:
(1) Local, state, and federal funding sources either specific to
county or other publicly owned or operated health care service plans,
hospitals, or other health care providers including, but not limited
to, ambulatory care clinics, health systems, practices, designated
public hospitals, or government entities with which they are
affiliated, for which there are special provisions specific to those
hospitals, ambulatory care clinics, health systems, practices, other
health care providers or government entities with which they are
affiliated.
(2) Funding programs in which the county, by itself or on behalf
of the medical center, or in which Kern Health Systems had
participated prior to the creation of the authority, or would
otherwise be qualified to participate in had the authority not been
created, and the maintenance, operation, and management or ownership
of the medical center or managed care plan not been transferred to
the authority pursuant to this chapter.
Article 5. Termination of the Authority
101856. The board of supervisors may find and declare that the
authority shall cease to exist. In that event, the board of
supervisors shall provide for the disposition of the authority's
assets, obligations, and liabilities. Absent written agreement, the
county shall not be obligated under any law to assume the authority's
obligations or liabilities, or take title to, or custody or control
of the authority's assets. Upon notification by the authority of the
disposition of the authority's assets and liabilities, the board of
supervisors shall rescind the ordinance that established the
authority, and the authority shall cease to exist on the date set
forth in the rescinding ordinance. The board of supervisors shall
notify the State Department of Health Care Services 30 days prior to
the effective date of the termination. The notice may also include a
statement of the board of supervisors' intent to have the medical
center and the managed care plan transferred to the county upon the
effective date of termination of the authority.
101856.1. In the event that the authority votes to file a
petition of bankruptcy, or the board of supervisors notifies the
State Department of Health Care Services of its intent to terminate
the authority, the provisions set forth in paragraphs (5) and (6) of
subdivision (t) of Section 14087.38 of the Welfare and Institutions
Code shall apply unless the board of supervisors has notified the
State Department of Health Care Services of its intent to have the
medical center and the managed care plan transferred to the county.
SEC. 2. The Legislature finds and declares that
Section 1 of this act, which adds Chapter 5.5 (commencing with
Section 101852) to Part 4 of Division 101 of the Health and Safety
Code, imposes a limitation on the public's right of access to the
meetings of public bodies or the writings of public officials and
agencies within the meaning of Section 3 of Article I of the
California Constitution. Pursuant to that constitutional provision,
the Legislature makes the following findings to demonstrate the
interest protected by this limitation and the need for protecting
that interest:
In order to enable the Kern County Health System Authority to
successfully operate both the Kern Medical Center and managed care
plan as an integrated delivery system that increases access to health
care in the community and proactively improves the quality of
patient care services and patient experience, it is imperative that
the authority's discussions, deliberative processes, writings, and
other communications pertaining to trade secrets or other strategic
planning actions, its rates of payments for providing or arranging
for health care services, and its peer review functions by which it
discharges its responsibility to evaluate and improve the quality of
care be protected as confidential information. All matter
omitted in this version of the bill appears in the bill as amended in
the Assembly May 15, 2014. (JR11)