SB 1094, as amended, Lara. Nonprofit health facilities: sale of assets: Attorney General approval.
Existing law requires any nonprofit corporation that is subject to the Nonprofit Public Benefit Corporation Law that operates or controls a health facility, as defined, 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, to a mutual benefit corporation or entity, or to another nonprofit 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
P3 1additional 45-day period if any of the following conditions are
2satisfied:
3(a) The extension is necessary to obtain relevant information
4from any state agency, experts, or consultants.
5(b) The proposed agreement or transaction is substantially
6modified after the first public meeting conducted by the
Attorney
7General in accordance with Section 5922.
8(c) The proposed agreement or transaction involves a
9multifacility health system serving multiple communities, rather
10than a single facility.
Section 5926 is added to the Corporations Code, to
12read:
(a) The Attorney General may enforce conditions
14imposed on the Attorney General’s approval of an agreement or
15transaction pursuant to Section 5914 or 5920. The Attorney General
16may require a transferee to fulfill all representations material to
17the enforcement of the conditions made during the Attorney
18General’s review process, including those regarding
the availability
19or accessibility of health care services to the affected community.
20(b) The Attorney General may amend the conditions after the
21decision is issued, if either of the following occur:
22(1) An entity required to comply with the conditions
imposed
23on the Attorney General’s approval of the transaction or agreement
24makes material misrepresentations to the Attorney General. An
25amended condition imposed by the Attorney General pursuant to
26this paragraph shall meet the following requirements:
27(A) The condition shall be substantially related to the material
28misrepresentation made by the entity.
29(B) The condition shall be made within begin delete 10end deletebegin insert 5end insert years of the
30completion of an agreement or transaction pursuant to Section
315914 or 5920.
32(2) An entity required to comply
with the conditions imposed
33on the Attorney General’s approval of the transaction or agreement
34violates the conditions set forth in the Attorney General’s decision.
35An amended condition imposed by the Attorney General pursuant
36to this paragraph shall meet the following requirements:
37(A) The condition shall be substantially related to the violation
38made by the entity.
39(B) The condition shall be necessary to mitigate, and to provide
40appropriate restitution for, the effects of the violation.
P4 1(c) The Attorney General may impose an amended condition
2pursuant to subdivision (b) by providing the parties to the
3agreement or transaction written notice of the proposed
condition
4pursuant to paragraph (1) or (2) of subdivision (b). The parties
5to the agreement or transaction shall have 30 days from the date
6of the Attorney General’s notice to provide a written response to
7the Attorney General. Within 30 days of receiving the parties’
8response, the Attorney General may:
9(1) Withdraw the written notice without prejudice.
end insertbegin insert
10(2) Meet and confer in good faith with the parties to the
11transaction or agreement.
12(3) Impose an amended condition pursuant to subdivision (b).
end insert13(c)
end delete
14begin insert(end insertbegin insertd)end insert An amended condition pursuant to this section is subject to
15judicial review pursuant to Section 1085 of the Code of Civil
16Procedure.
17(d)
end delete
18begin insert(end insertbegin inserte)end insert Nothing in this provision precludes the Attorney General
19from pursuing any other available legal
remedies.
Section 5927 is added to the Corporations Code, to
21read:
Once the agreement or transaction pursuant to Section
235914 or 5920 is closed, the parties to the transaction are deemed
24to have explicitly and implicitly consented to the applicability and
25compliance with each condition set forth in the Attorney General’s
26consent, and to have waived any right to seek judicial relief with
27respect to each condition set forth in the Attorney General’s
28consent. This section shall not apply to an amended condition
29imposed by the Attorney General pursuant to subdivision (b) of
30Section 5926.
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