To amend chapter 197, RSMo, by adding thereto eleven new sections relating to transfers of assets by nonprofit hospitals.

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

     Section A. Chapter 197, RSMo, is amended by adding thereto eleven new sections, to be known as sections 197.150, 197.153, 197.156, 197.159, 197.162, 197.165, 197.168, 197.171, 197.174, 197.177 and 197.180, to read as follows:

     197.150. 1. Sections 197.150 to 197.180 shall be known and may be cited as the Nonprofit Hospital Sale Act.

     2. For the purposes of sections 197.150 to 197.180, the following terms shall have the following meanings:

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

     (2) "Hospital", the definition found in section 197.020;

     (3) "Acquisition", any acquisition by a person or persons of an ownership or controlling interest in a hospital, whether by purchase, merger, lease, gift, or otherwise, which results in a change of ownership or control of twenty percent or greater or which results in the acquiring person or persons holding a fifty percent or greater interest in the ownership or control of a hospital, but acquisition does not include the acquisition of an ownership or controlling interest in a hospital owned by a nonprofit corporation if the transferee:

     (a) Is a nonprofit corporation having a substantially similar charitable health care purpose as the transferor or is a governmental entity;

     (b) Is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code or as a governmental entity; and

     (c) Will maintain representation from the affected community on the local board;

     (4) "Person", any individual, corporation, partnership, limited partnership, limited liability company, trust, association or any other entity.

     197.153. 1. No person shall engage in the acquisition of a hospital owned by a nonprofit corporation without first having applied for and received the approval of the department and without first having notified the attorney general and, if applicable, received approval from the attorney general pursuant to sections 197.150 to 197.180.

     2. No person shall engage in the acquisition of a hospital owned by a nonprofit corporation without first having applied for and received the approval of the department pursuant to sections 197.150 to 197.180 unless such acquiring person is a nonprofit corporation exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code or is a governmental entity. For purposes of section 197.150 to 197.180, approval of the department and the attorney general shall not be required for the acquisition of a hospital not owned by a nonprofit corporation in the following situations:

     (1) The dissolution of a hospital district approved under chapter 206, RSMo; or

     (2) The merger of hospital districts approved under chapter 206, RSMo;

Any person not required to obtain the approval of the department under the provisions of this section shall give the attorney general at least sixty days' notice of an impending acquisition, during which time the attorney general may take any necessary and appropriate action consistent with his or her general duties of oversight with regard to the conduct of charities. The notice shall briefly describe the impending acquisition, including any change in ownership of tangible or intangible assets.

     3. The application shall be submitted to the department and the attorney general on forms provided by the department and shall include the name of the seller, the name of the purchaser or other parties to an acquisition, the terms of the proposed agreement, the sale price, a copy of the acquisition agreement, a financial and economic analysis and report from an independent expert or consultation of the effect of the acquisition under the criteria set forth in section 197.165, and all other related documents. A copy of the application and copies of all additional related materials shall be submitted to the department and to the attorney general at the same time. The applications and all related documents shall be considered public records for purposes of chapter 610, RSMo.

     197.156. 1. Within five working days after receipt of an application under section 197.153, the department shall publish notice of the application in a newspaper of general circulation in the county or counties where the hospital is located and shall notify by first-class United States mail any person who has requested notice of the filing of such applications. The notice shall state that an application has been received, state the names of the parties to the agreement, describe the contents of the application, and state the date by which a person may submit written comments about the application to the department.

     2. Within sixty days after receiving an application, the department shall review the application in accordance with the standards set forth in sections 197.150 to 197.180 and approve or disapprove the acquisition.

     3. Within twenty days after receiving an application, the attorney general shall determine whether to review the application in accordance with section 197.165 and shall so notify the applicant. If the attorney general determines to review the application, the attorney general shall, within sixty days after receiving the application, review the application in accordance with the standards set forth in section 197.165 and approve and disapprove the acquisition. If the attorney general determines not to review the application, then none of the other provisions applicable to review by the attorney general shall apply.

     197.159. 1. The department, and the attorney general if he or she determines to review the acquisition, shall during the course of review under sections 197.150 to 197.180 hold a public hearing in which any person may file written comments and exhibits or appear and make a statement. The department or 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 purposes of the hearing and at any time prior to making a decision on the application.

     2. The hearing shall be held not later than thirty days after receipt of an application. The hearing shall be held upon ten working days' notice, not including days the application is deemed to be incomplete.

     197.162. 1. If the attorney general determines to review the application, he or she shall review the application in accordance with the standards enumerated in section 197.165. Within sixty days after receipt of an application, the attorney general shall approve or disapprove the acquisition.

     2. If the attorney general does not act within sixty days after receipt of an application, the application shall be deemed approved. If the attorney general approves or disapproves the acquisition, the applicant, or any person who has submitted comments under section 197.159, if the person has a legal interest in the hospital being acquired or in another hospital that has contracted with the acquired hospital for the provision of essential health services, may bring an action for declaratory judgment for a determination that the acquisition is or is not in the public interest as provided in section 197.165.

     3. The department shall review the completed application in accordance with the standards enumerated in section 197.168. Within sixty days after receipt of a completed application, the department shall:

     (1) Approve the acquisition, with or without any specific modifications; or

     (2) Disapprove the acquisition.

     4. The department shall not make its decisions subject to any condition not directly related to criteria enumerated in section 197.168, and any condition or modification shall bear a direct and rational relationship to the application under review.

     5. The department, the applicant, or any affected person who has intervened in the matter before the department may seek judicial review in circuit court.

     197.165. 1. If the attorney general determines to review the application, he or she shall approve the application unless he or she finds that the acquisition is not in the public interest. An acquisition is not in the public interest unless appropriate steps have been taken to safeguard the value of charitable assets and ensure that any proceeds of the transaction are used for appropriate charitable health care purposes as provided in this section. In determining whether the acquisition meets such criteria under sections 197.150 to 197.180, the attorney general shall consider the following:

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

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

     (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 197.174 have been followed;

     (5) Whether the seller will receive reasonably 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 under the acquisition 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 a successor nonprofit corporation or foundation if the hospital is subsequently sold to, acquired by, or merged with another entity.

     2. The attorney general shall have the authority to ensure compliance with commitments which inure to the public interest.

     197.168. 1. In making a decision whether to approve or disapprove an application, the department shall consider:

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

     (2) Whether the purchaser and parties to the acquisition 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 foundation to provide such health care may be considered in evaluating 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.

     2. This section does not apply higher standards for providing health care to hospitals covered by sections 197.150 to 197.180 than those applicable to hospitals not covered by such sections.

     197.171. If the department receives information indicating that the acquiring person is not fulfilling the commitment to the affected community under section 197.168, or that the conflict of interest limits under section 197.174 have been violated, the department shall hold a hearing upon ten days' notice to the affected parties. If after such hearing the department determines that the information is true, it may institute proceedings to revoke the license issued to the purchaser.

     197.174. 1. No person may acquire a hospital owned by a nonprofit corporation if the person or any director, officer or spouse thereof is also a director, officer, or spouse thereof, of the nonprofit hospital corporation. This restriction shall apply to all positions held within six months preceding the application for acquisition.

     2. No nonprofit organization receiving the assets or other proceeds of the nonprofit hospital corporation under an acquisition agreement may have a director, officer or spouse thereof who is also a director, officer, or spouse thereof of the person acquiring the nonprofit hospital corporation under section 197.150 to 197.180. This restriction shall apply to all positions held within six months preceding the application for acquisition and to any time after the acquisition.

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

     (1) There is an acquisition of a hospital without first having received the approval of the department under sections 197.150 to 197.180;

     (2) There is an acquisition of a hospital without the approval of the attorney general, if the attorney general determines to review the application under the act;

     (3) There is an acquisition of a hospital and the attorney general disapproves the acquisition and there is a judicial declaratory judgment or other judicial determination that the acquisition is not in the public interest; or

     (4) The hospital is not fulfilling its commitment under section 197.168 or is not following the conflict of interest safeguards required under section 197.168 or 197.174.

     197.180. No provision of sections 197.150 to 197.180 shall limit the common law or other statutory authority of the attorney general.