To amend chapter 355, RSMo, by adding thereto twelve new sections relating to transfers of assets by nonprofit hospitals, with an emergency clause.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF MISSOURI, AS FOLLOWS:

     Section A. Chapter 355, RSMo, is amended by adding thereto twelve new sections, to be known as sections 355.900, 355.903, 355.906, 355.914, 355.915, 355.917, 355.918, 355.921, 355.924, 355.927, 355.929 and 355.930, to read as follows:

     355.900. 1. Sections 355.900 to 355.930 shall be known and may be cited as the "Nonprofit Hospital Sales Act".

     2. For the purposes of sections 355.900 to 355.930, the following terms mean:

     (1) "Covered transaction", any transaction in which a nonprofit corporation sells, transfers, relinquishes or in any way conveys all, or any substantial part, of the assets constituting a hospital or control over the same. A covered transaction shall also include the closing of, or substantial cut of services at, a hospital owned by a nonprofit corporation owning or controlling more than one hospital where the hospital is being closed, or at which services are being cut, is more than sixty miles from the corporation's principal place of business;

     (2) "Department", the Missouri department of health;

     (3) "Hospital", the definition found in section 197.020, RSMo.

     355.903. 1. No entity shall engage in a covered transaction without having submitted an application to the attorney general and the department and, if applicable, received approval from the attorney general pursuant to sections 355.900 to 355.930.

     2. The application to be filed by the nonprofit corporation divesting the hospital shall include the name of the nonprofit corporation divesting the hospital, the name of the purchaser or other parties, the terms of the covered transaction including but not limited to price, a copy of all agreements comprising or relating to the covered transaction, a financial and economic analysis and report from an independent expert or consultant on the effect of the covered transaction under the criteria set forth in section 355.915, and all other documents or information requested by the attorney general. An application shall not be considered complete until all of the required information, including such additional information relating to the criteria set forth in sections 355.915 and 355.918 as may be required by the attorney general, is received by the department and the attorney general. The application and all related documents shall be considered public records for purposes of chapter 610, RSMo.

     355.906. 1. Within five working days after receipt of a completed application pursuant to section 355.903, the department shall cause to be published a notice of the application in a newspaper of general circulation in the city or county where the hospital is located. The notice shall state that an application has been received, state the names of the parties to the covered transaction, describe the contents of the application, and state the date by which written comments about the application should be submitted to the attorney general.

     2. Within fifteen days after receiving a completed application, the attorney general shall determine whether to review the application under the criteria set forth in section 355.915 and shall so notify the department and the applicant of that determination.

     3. If the attorney general determines to review an application, the department shall, within thirty days of that determination, review the application under the criteria set forth in section 355.918 and forward its review, together with a recommendation as to whether the application should be approved, to the attorney general.

     4. If the attorney general determines to review an application, the attorney general shall, within seventy-five days after that determination, review the covered transaction under the criteria set forth in section 355.915 and shall approve, conditionally approve or disapprove the transaction.

     5. If the attorney general determines to review an application but fails to approve, conditionally approve or disapprove the transaction within the time allotted, the transaction shall be deemed approved.

     355.914. 1. If the attorney general determines to review an application, the attorney general shall, during the course of review, hold at least one public hearing at which any person may file written comments and exhibits or appear and make a statement. Such hearing shall be held not later than thirty days after the attorney general receives the department's report and recommendation and shall be held on not less than ten working days' notice.

     2. The attorney general may subpoena additional information or witnesses, require and administer oaths, require sworn statements, take depositions, and use related discovery procedures for the purpose of this hearing or, for purposes of the attorney general's review pursuant to section 355.915, at any time prior to making a decision on the application.

     355.915. 1. If the attorney general determines to review the application, he or she shall not approve the application unless he or she finds that the acquisition is in the public interest.

     2. An acquisition is in the public interest if appropriate steps have been taken to safeguard the value of charitable assets and ensure that any proceeds of the transaction are used for appropriate health care purposes as provided in this section.

     3. In determining whether a covered transaction would be in the public interest for purposes of this section, the attorney general shall consider, among other factors:

     (1) Whether the acquisition is permitted pursuant to chapter 355 and other laws of Missouri governing nonprofit entities, trusts or charities;

     (2) Whether the nonprofit corporation exercised due diligence in deciding to sell, selecting the purchaser and negotiating the terms and conditions of the covered transaction;

     (3) The procedures used by the seller in making its decision, including whether appropriate expert assistance was used;

     (4) Whether the conflict of interest prohibitions of section 355.924 have been followed;

     (5) Whether the seller will receive fair value for its assets. The attorney general may employ, at the seller's expense, reasonably necessary expert assistance in making this determination;

     (6) Whether charitable funds are placed at unreasonable risk, if the acquisition is financed in part by the seller;

     (7) Whether any management contract entered into as part of, or provided for in, the covered transaction is for reasonable fair value;

     (8) Whether the sale proceeds will be used for appropriate charitable health care purposes consistent with the seller's original purpose or for the support and promotion of health care in the affected community and whether the proceeds will be controlled as charitable funds independently of the purchaser or parties to the acquisition; and

     (9) Whether a right of first refusal to repurchase the assets has been retained by the seller, by a successor nonprofit corporation or by a charitable foundation if the hospital is subsequently sold to, or merged with, another entity.

     355.917. 1. After determining to review an application pursuant to section 355.906, and after conducting the review pursuant to section 355.915, the attorney general may approve the transaction as described in the application, may disapprove the transaction as described in the application, or may approve the transaction upon one or more conditions altering or supplementing the transaction.

     2. The attorney general may, as a condition of approval, require such additional commitments, promises or undertakings by any of the parties to the transaction as the attorney general believes are reasonably necessary to meet the criteria set forth in section 355.915.

     3. The attorney general shall not make his or her decision subject to any condition or commitment not reasonably related to the criteria set forth in section 355.915.

     355.918. In performing its review and in making its recommendation to the attorney general regarding a covered transaction, the department shall consider:

     (1) Whether sufficient safeguards are included in the transaction to assure the affected community continued access to health care;

     (2) Whether the parties to the transaction have made a commitment to provide health care to the disadvantaged, the uninsured, and the underinsured and to provide benefits to the affected community to promote improved health care. Activities and funding provided by the seller or its successor nonprofit corporation or charitable foundation to provide such health care may be considered in evaluating the compliance with this commitment; and

     (3) If health care providers will be offered the opportunity to invest or own an interest in the purchaser or an entity related to the purchaser, whether procedures or safeguards are in place to avoid conflict of interest in patient referral and the nature of such procedures or safeguards.

     355.921. 1. Upon completion of the acquisition, if the attorney general receives information from the department or any other source that any party to the transaction, or entity related to such a party, is not fulfilling a commitment to the affected community pursuant to section 355.918 or is not fulfilling a commitment made or condition required by the attorney general pursuant to section 355.917, or that an application filed pursuant to section 355.903 contained a material misrepresentation of fact, or that any party to the transaction was in violation of the conflict of interest limits pursuant to section 355.924, the attorney general may:

     (1) Initiate proceedings to revoke the license issued to the purchaser; or

     (2) File an action in the circuit court of the county containing the seat of state government seeking any relief that may be available at law or equity, including but not limited to damages or specific enforcement of the commitment or condition that has not been fulfilled.

     2. The attorney general shall have authority to enforce any commitment, promise or undertaking made as part of the covered transaction which inures to the public interest.

     355.924. 1. No entity may be a party to a covered transaction if it, or any of its directors or officers or their spouses, is a director or officer, or spouse thereof, of the nonprofit corporation divesting the hospital. This restriction shall apply to all positions held within the six months preceding the covered transaction.

     2. No nonprofit organization may receive the assets or other proceeds of a nonprofit corporation divesting a hospital under a covered transaction if the receiving corporation, or any of its officers or directors or their spouses, is an officer or director or spouse thereof of the entity acquiring the hospital. This restriction shall apply to all positions held within the six months preceding the covered transaction.

     3. There is no restriction on the relationship between the officers of a nonprofit hospital corporation and the officers of any nonprofit foundation or other nonprofit organization receiving the assets of the nonprofit hospital corporation.

     355.927. No license to operate a hospital may be issued or renewed by the department pursuant to any state statute, and a license which has been issued shall be subject to revocation or suspension, if:

     (1) The hospital was acquired in a covered transaction without an application having been submitted as provided in section 355.903 and, if applicable, without having received the approval of the attorney general;

     (2) The entity acquiring the hospital is not fulfilling its commitment to the affected community pursuant to section 355.918 or is not fulfilling a commitment made or condition required by the attorney general pursuant to section 355.917;

     (3) The application submitted pursuant to section 355.903 contained a material misrepresentation of fact; or

     (4) The buyer in the covered transaction was in violation of the conflict of interest limits pursuant to section 355.924.

     355.929. 1. If the attorney general approves or conditionally approves an application pursuant to section 355.917, any person with a legal interest in the hospital being divested or in another hospital that has contracted with the hospital being divested for the provision of essential health services may bring an action for judicial review of that decision.

     2. If the attorney general disapproves or conditionally approves an application pursuant to section 355.917, the applicant may bring an action for judicial review of the decision.

     3. The sole proper venue for any action brought pursuant to this section shall be the circuit court of the county containing the seat of state government.

     4. In any action brought pursuant to this section, the court shall affirm the decision of the attorney general unless the petitioner shows that the decision was an abuse of discretion.

     5. There shall be no action to review a decision of the attorney general not to review an application pursuant to section 355.906.

     355.930. The provisions of sections 355.900 to 355.930 supplant any other provision of chapter 355, RSMo, that might apply to a covered transaction. No provision of sections 355.900 to 355.930 shall limit the common law or other statutory authority of the attorney general.

     Section B. Because of the possible loss of nonprofit hospital services in this state, section A of this act is deemed necessary for the immediate preservation of the public health, welfare, peace and safety, and is hereby declared to be an emergency act within the meaning of the constitution, and section A of this act shall be in full force and effect upon its passage and approval.