SB 1094, as amended, Lara. Health facilities: sale of assets: approval.
Existing law requires any nonprofit corporation that is subject to the Nonprofit Public Benefit Corporation Law and is a health facility, as defined, or is a facility that provides similar health care, operates or controls a health facility or operates or controls a facility that provides similar health care, to provide written notice to, and obtain the written consent of, the Attorney General prior to selling or otherwise disposing of a material amount of its assets to a for-profit corporation or entity or to a mutual benefit corporation or entity. Existing law requires the Attorney General to conduct one or more public meetings prior to issuing its decision whether to consent to the proposed agreement or transaction, and, in any case, to issue its decision within 60 days of the receipt of the written notice from the public benefit corporation, subject to one additional 45-day extension under specified circumstances.
This bill would instead require the Attorney General to issue its decision within 90 days of the receipt of the written notice from the public benefit corporation. The bill would additionally authorize the Attorney General to enforce conditions imposed on the approval of an agreement or transaction, and to require the transferee to fulfill all representations made during the application process, as specified. The bill would authorize the Attorney General to amend the conditions after the decision is issued under specified circumstances. The bill would additionally provide that once the agreement or transaction is closed, the parties to the transaction are deemed to have explicitly and implicitly consented to the applicability and compliance with each condition, except for an amended condition, set forth by the Attorney General, as specified.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 5915 of the Corporations Code is
2amended to read:
Within 90 days of the receipt of the written notice
4required by Section 5914, the Attorney General shall notify the
5public benefit corporation in writing of the decision to consent to,
6give conditional consent to, or not consent to the agreement or
7transaction. The Attorney General may extend this period for one
8additional 45-day period if any of the following conditions are
9satisfied:
10(a) The extension is necessary to obtain information pursuant
11to subdivision (a) of Section 5919.
12(b) The proposed agreement or transaction is substantially
13modified after the first public meeting conducted by the Attorney
14General
in accordance with Section 5916.
15(c) The proposed agreement or transaction involves a
16multifacility health system serving multiple communities, rather
17than a single facility.
Section 5921 of the Corporations Code is amended to
19read:
Within 90 days of the receipt of the written notice
21required by Section 5920, the Attorney General shall notify the
22nonprofit corporation in writing of the decision to consent to, give
23conditional consent to, or not consent to the agreement or
24transaction. The Attorney General may extend this period for one
25additional 45-day period if any of the following conditions are
26satisfied:
27(a) The extension is necessary to obtain relevant information
28from any state agency, experts, or consultants.
P3 1(b) The proposed agreement or transaction is substantially
2modified after the first public meeting conducted by the
Attorney
3General in accordance with Section 5922.
4(c) The proposed agreement or transaction involves a
5multifacility health system serving multiple communities, rather
6than a single facility.
Section 5926 is added to the Corporations Code, to
8read:
(a) The Attorney General may enforce conditions
10imposed on the Attorney General’s approval of an agreement or
11transaction pursuant to Section 5914 or 5920. The Attorney General
12may require the transferee to fulfill all representations made during
13the application process, including those regarding levels of care.
14(b) The Attorney General may amend the conditions after the
15decision is issued, if either of the following occur:
16(1) begin deleteA party to end deletebegin insertAn entity required to
comply with the conditions
17contained in end insertthe transaction or agreement made material
18misrepresentations to the Attorney General. An amended condition
19imposed by the Attorney General pursuant to this paragraph shall
20be substantially related to the material misrepresentation made by
21thebegin delete party to the transactionend deletebegin insert entity and shall be made within three
22years of the discovery of the misrepresentation by the Attorney
23Generalend insert.
24(2) begin deleteA party to end deletebegin insertAn entity required to comply with the conditions
25contained in end insertthe
transaction or agreement violated the conditions
26set forth in the Attorney General’s decision. An amended condition
27imposed by the Attorney General pursuant to this paragraph shall
28be substantially related to the violation made by thebegin delete party to the begin insert entityend insert and shall be necessary to mitigate, and to provide
29transactionend delete
30appropriate restitution for, the effects of the violation.
31(c) An amended condition pursuant to this section is subject to
32judicial review pursuant to Section 1085 of the Code of Civil
33Procedure.
34(c)
end delete
35begin insert(d)end insert Nothing in this provision precludes the Attorney General
36from pursuing any other available legal remedies.
Section 5927 is added to the Corporations Code, to
38read:
Once the agreement or transaction pursuant to Section
405914 or 5920 is closed, the parties to the transaction are deemed
P4 1to have explicitly and implicitly consented to the applicability and
2compliance with each condition set forth in the Attorney General’s
3consent, and to have waived any right to seek judicial relief with
4respect to each condition set forth in the Attorney General’s
5consent. This section shall not apply to an amended condition
6imposed by the Attorney General pursuant to subdivision (b) of
7Section 5926.
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