BILL ANALYSIS �
SB 1094
Page 1
SENATE THIRD READING
SB 1094 (Lara)
As Amended August 13, 2014
Majority vote
SENATE VOTE :21-15
HEALTH 11-6 APPROPRIATIONS 11-6
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|Ayes:|Pan, Bonilla, Bonta, |Ayes:|Gatto, Bocanegra, |
| |Chesbro, Gomez, Gonzalez, | |Bradford, |
| |Roger Hern�ndez, | |Ian Calderon, Campos, |
| |Lowenthal, Ridley-Thomas, | |Eggman, Gomez, Holden, |
| |Rodriguez, Wieckowski | |Pan, Quirk, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Maienschein, Ch�vez, |Nays:|Bigelow, Donnelly, Jones, |
| |Mansoor, Waldron, | |Linder, Ridley-Thomas, |
| |Patterson, Wagner | |Wagner |
| | | | |
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SUMMARY : 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. Requires the amended conditions
to be substantially related to the material misrepresentation.
Specifically, this bill :
1)Extends the time in which the AG must notify a non-profit
corporation in writing of the decision to consent or not
consent to a proposed transaction from 60 days to 90 days.
2)Permits the AG to enforce conditions imposed on the AG's
approval of an agreement or transaction involving a nonprofit
health facility and to require the transferee to fulfill all
representations made during the application process, including
those regarding levels of care.
3)Allows the AG to amend the conditions of an agreement after
the AG's decision has been issued if an entity required to
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comply with the conditions contained in the transaction or
agreement made material misrepresentations to the AG; or, an
entity required to comply with the conditions contained in the
transaction or agreement violated the conditions set forth in
the AG's decision.
4)Requires an amended condition to be made within 10 years of
the completion of an agreement or transaction.
5)Specifies that amended conditions imposed by the AG pursuant
to 4) above, must be substantially related to the material
misrepresentation or the violation made by the entity to the
transaction, and shall be necessary to mitigate and provide
restitution for the effects of the violation.
6)Provides that an amended condition is subject to judicial
review.
7)Further clarifies that the parties' waiver of their rights to
judicial relief pertaining to the original agreement does not
apply to an amended condition imposed by the AG.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, 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 : 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
that the process for reviewing proposed transactions is complex
and time intensive. Finally, the author notes that 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.
This bill is sponsored by the AG, which states that since the
AG's role in overseeing non-profit health facility transactions
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was first conceptualized, the proposed transactions have become
more complex and numerous, including a notable spike observed in
recent years. This has resulted in an increased amount of time
needed for review by the AG. In addition, the AG states that
recent cases have revealed scenarios in which the AG's inability
to revisit approved transactions following significant new
developments seriously hinders its ability to preserve the level
of access to care for patients in accordance with the public
trust. The AG states that this bill is designed to provide
modest but crucial updates to the AG's oversight authority to
account for these developments.
The California Hospital Association (CHA) opposes this bill
because it eliminates certainty in transactions involving the
sale or transfer of nonprofit hospitals by allowing the AG to
unilaterally impose post-transaction conditions. CHA contends
that any allegation by a third-party, justified or otherwise,
that certain representations were made that contradict the
actual terms of the agreement, even if it was made by an
unauthorized representative or outside of the formal proceedings
and record, would allow the AG to unilaterally change the terms
of a deal. Finally, CHA concludes that this bill would have a
chilling effect on these transactions because it eliminates any
certainty at the end of this negotiation and approval process
and hospitals will be unable to obtain financing because of the
lack of finality.
Analysis Prepared by : Lara Flynn / HEALTH / (916) 319-2097
FN: 0004591