BILL ANALYSIS �
SB 1094
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Date of Hearing: August 6, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1094 (Lara) - As Amended: August 4, 2014
Policy Committee: HealthVote:11-6
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill provides an additional 30 days for the Attorney
General (AG) to review proposed transactions involving
non-profit health facilities, and allows the AG to amend the
conditions of an agreement or transaction involving a non-profit
health facility if a party to the transaction or agreement made
material misrepresentations to the AG, or violated the
conditions set forth by the AG.
FISCAL EFFECT
Negligible state fiscal effect. Although this bill allows the
AG to use additional enforcement mechanisms, it should not
increase costs to the Department of Justice.
COMMENTS
1)Purpose . According to the author, this bill seeks to further
protect the interests and welfare of communities by
maintaining access to crucial hospital services and holding
health facilities accountable for agreements made when
transferring control or operation of the facility. The author
further states the process for reviewing proposed transactions
is complex and time intensive.
The author notes the AG is currently prevented from amending
conditions or imposing new conditions related to proposed
nonprofit hospital transaction agreements that would be in the
public's interest, even if the parties to the transaction
withheld material information from the AG during the review
process, or acted against the conditions set forth by the AG
when the transaction was approved. For instance, the AG cites
SB 1094
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a recent case involving sale of a non-profit hospital to a
for-profit corporation where conditions were violated, and
where the AG's office believed it lacked sufficient
enforcement authority to assure outcomes that were most
beneficial to the affected community.
This bill is sponsored by the AG.
2)Background . Current law requires the AG to review and approve
transactions involving non-profit health facilities. The AG
assesses the impact on access to health services on affected
communities, among other factors, and may impose conditions on
its approval of a transaction, such as requiring critical
medical services be maintained at the facility for a period of
time. Certain hospital services, such as emergency, trauma,
burn treatment, and psychiatric care may be at heightened risk
of elimination in a transaction because they are costly to
provide and may be less remunerative than other services.
Reproductive services have also been eliminated or limited in
some transactions.
3)Opposition . Hospitals oppose this bill, contending the AG
already has broad authority to review, approve, reject, and
impose conditions on transactions. They see this bill as
granting unilateral authority to the AG to unwind previously
approved transactions, and believe this exposes transactions
to unnecessary risk. They also believe this bill limits their
due-process rights, arguing that the right to a writ of
mandate offers some protection, but fails to guarantee full
due process protection. The Securities Industry and
Financial Markets Association, who represents securities
firms, banks, and asset managers, also opposes this bill,
indicating the uncertainty created by this bill would be
viewed unfavorably in capital markets and that it may be
costly to health care institutions, limit their capital
access, and potentially deter necessary transactions.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081