BILL ANALYSIS �
SB 1094
Page 1
SENATE THIRD READING
SB 1094 (Lara)
As Amended August 22, 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. Allows the AG to enforce the
conditions of an approved agreement, and 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. Requires the AG, prior
to imposing an amended condition, to provide the parties to the
agreement written notice of the proposed condition and allows
the parties 30 days to respond. 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 material to the enforcement of the conditions
made during the application process, including those regarding
the availability or accessibility of health care services to
the affected community.
SB 1094
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3)Allows the AG to amend the conditions of an agreement after
the AG's decision has been issued if an entity required to
comply with the conditions contained in the transaction or
agreement made material misrepresentations to the AG.
Requires an amended condition to be made within five years of
the completion of an agreement or transaction.
4)Specifies that amended conditions imposed by the AG pursuant
to 3) 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.
5)Specifies that, before imposing an amended condition pursuant
to 3) above, the AG will provide the parties to the agreement
written notice of the proposed condition, and that the parties
to the agreement or transaction have 30 days from the date of
the AG's notice to provide a written response.
6)Specifies that, within 30 days of receiving the parties'
response the AG may:
a) Withdraw the written notice without prejudice;
b) Meet and confer in good faith with the parties to the
transaction or agreement; or,
c) Impose an amended condition pursuant to 3) above.
7)Provides that an amended condition is subject to judicial
review.
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
SB 1094
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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
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
stating that the most recent amendment does not change the
primary issue of the hospitals and noting that no change was
made to the provision in the bill that allows the AG to
retroactively amend a contract. CHA further argues that the
amendment simply requires the AG to give the parties 30 days'
notice before unilaterally imposing amended contract terms.
Finally, CHA argues that this bill still creates uncertainty for
hospital purchasing and financing.
Analysis Prepared by : Lara Flynn / HEALTH / (916) 319-2097
FN: 0005255