BILL NUMBER: SB 1240	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 28, 2010
	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
 , with certain exceptions,  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   financial  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 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     financial
 audit and the resulting report shall be made public by the
district.
   (3)  (A)    In the case of a subsequent sale of
the hospital facility or any other assets of the district to the
operating entity, any 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) This paragraph does not apply to a sale of a hospital facility
that is otherwise in compliance with paragraph (1) of subdivision
(p) of Section 32121. 
   (b) Subdivision (a) shall apply to 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. 
   (c) Subdivisions (a) and (b) do not apply to a contract by a local
health care district that meets all of the following criteria: 

   (1) The contract is between the district and a tax-exempt
nonprofit corporation, qualified under Section 501(c)(3) of the
Internal Revenue Code.  
   (2) The nonprofit corporation operates one or more general acute
care hospitals, as defined in subdivision (a) of Section 1250, that
are the subject of the contract.  
   (3) The general acute care hospital or hospitals that are operated
by the nonprofit corporation are owned by the district.  
   (4) The district is the nonprofit corporation's sole corporate
member. 
  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.