BILL NUMBER: SB 1240	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 13, 2010

INTRODUCED BY   Senator Corbett

                        FEBRUARY 19, 2010

   An act to add Section 32121.6 to the Health and Safety Code,
relating to local health care districts.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1240, as amended, Corbett. Local health care districts:
operation of facility by another entity.
   Existing law, the Local Health Care District Law, provides for the
formation of local health care districts and, until January 1, 2011,
authorizes each local district to transfer, at fair market value,
any part of its assets to one or more corporations to operate and
maintain the assets. After January 1, 2011, existing law changes that
provision to restrict these transfers only to nonprofit
corporations.
   This bill would, notwithstanding any provision of law, require a
contract for operation of a district facility by another entity to
(1) preclude assets, including, but not limited to, all revenue
generated by the district facility, from being used for the benefit
of any person or entity other than a hospital within the jurisdiction
of the district, (2) require the hospital and the operating entity
to annually undergo an independent fiscal audit and that the
resulting report be made public, and (3) preclude, in the case of a
subsequent sale of the facility or any assets of the district to the
operating entity, any  loses   losses 
incurred by the entity in the operation of the facility from being
used as a credit against the purchase price of the facility or other
district assets. By requiring that districts comply with these
requirements, this bill would impose a state-mandated local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 32121.6 is added to the Health and Safety Code,
to read:
   32121.6.  (a) Notwithstanding any provision of law, when a
district contracts with another public or private entity to operate
one or more of its health facilities, the contract shall comply with
all of the following requirements:
   (1) No assets of the district, including, but not limited to, all
revenue generated by the district facility or facilities being
operated by the other entity shall be used for the benefit of any
person or entity other than a hospital within the jurisdiction of the
district.
   (2) The hospital and the operating entity shall annually undergo
an independent fiscal audit and the resulting report shall be made
public by the district.
   (3) In the case of a subsequent sale of the hospital facility or
any other assets of the district to the operating entity, any
 loses   losses  incurred by the entity in
the operation of the facility shall not be used as a credit against
the purchase price of the facility or other district assets.
   (b) Subdivision (a) shall  have retroactive effect, and
shall  apply to  contracts entered into prior to
January 1, 2011,   all existing and future  
contracts,  unless there has been full performance by both
parties prior to January 1, 2011.  For purposes of this section,
"full performance" means the complete execution by all parties of all
terms and conditions of a contract. 
  SEC. 2.  If the Commission on State Mandates determines that this
act contains costs mandated by the state, reimbursement to local
agencies and school districts for those costs shall be made pursuant
to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of
the Government Code.