By Wolens H.B. No. 1884
Substitute the following for H.B. No. 1884:
By Delisi C.S.H.B. No. 1884
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to cooperative agreements among hospitals.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Title 4, Health and Safety Code, is amended by
1-5 adding Chapter 313 to read as follows:
1-6 CHAPTER 313. COOPERATIVE AGREEMENTS AMONG HOSPITALS
1-7 Sec. 313.001. DEFINITIONS. In this chapter:
1-8 (1) "Attorney General" means the Attorney General of
1-9 Texas or any assistant attorney general acting under the direction
1-10 of the Attorney General of Texas.
1-11 (2) "Cooperative agreement" means an agreement among
1-12 two or more hospitals for the allocation or sharing of health care
1-13 equipment, facilities, personnel or services.
1-14 (3) "Department" means the Texas Department of Health.
1-15 (4) "Hospital" means a general or special hospital
1-16 licensed under Chapter 241 or a private mental hospital licensed
1-17 under Chapter 577.
1-18 Sec. 313.002. REVIEW AND CERTIFICATION OF COOPERATIVE
1-19 AGREEMENTS.
1-20 (a) A hospital may negotiate and enter into cooperative
1-21 agreements with other hospitals in the state if the likely benefits
1-22 resulting from the agreement outweigh any disadvantages
1-23 attributable to a reduction in competition that may result from the
2-1 agreements. Acting through their boards of directors, a group of
2-2 hospitals may conduct discussions or negotiations concerning
2-3 cooperative agreements, provided that the discussions or
2-4 negotiations do not involve price-fixing or predatory pricing.
2-5 (b) Parties to a cooperative agreement may apply to the
2-6 department for a certification of public advantage governing the
2-7 cooperative agreement. The application must include a written copy
2-8 of the cooperative agreement and describe the nature and scope of
2-9 the cooperation in the agreement and any consideration passing to
2-10 any party under the agreement. A copy of the application and
2-11 copies of all additional related materials must be submitted to the
2-12 attorney general and to the department at the same time. The
2-13 department shall charge an application fee in an amount not to
2-14 exceed $10,000 per application.
2-15 (c) The department shall review the application in
2-16 accordance with the standards set forth in subsection (e) and (f)
2-17 and shall, if requested, hold a public hearing in accordance with
2-18 rules adopted by the department. The department shall grant or
2-19 deny the application within 120 days of the date of filing of the
2-20 application and that decision must be in writing and set forth the
2-21 basis for the decision. The department shall furnish a copy of
2-22 the decision to the applicants, the attorney general and any
2-23 intervenor within 10 days of its issuance.
2-24 (d) The department shall issue a certificate of public
2-25 advantage for a cooperative agreement if it determines that the
3-1 applicants have demonstrated by clear and convincing evidence that
3-2 the likely benefits resulting from the agreement outweigh any
3-3 disadvantages attributable to a reduction in competition that may
3-4 result from the agreement.
3-5 (e) In evaluating the potential benefits of a cooperative
3-6 agreement, the department shall consider whether one or more of the
3-7 following benefits may result from the cooperative agreement:
3-8 (1) Enhancement of the quality of hospital and
3-9 hospital-related care provided to Texas citizens;
3-10 (2) Preservation of hospital facilities in
3-11 geographical proximity to the communities traditionally served by
3-12 those facilities.
3-13 (3) Gains in the cost efficiency of services provided
3-14 by the hospitals involved;
3-15 (4) Improvements in the utilization of hospital
3-16 resources and equipment; and
3-17 (5) Avoidance of duplication of hospital resources.
3-18 (f) The department's evaluation of any disadvantages
3-19 attributable to any reduction in competition likely to result from
3-20 the agreement may include, but need not be limited to, the
3-21 following factors:
3-22 (1) The extent of any likely adverse impact on the
3-23 ability of health maintenance organizations, preferred provider
3-24 organizations or other health care payors to negotiate optimal
3-25 payment and service arrangements with hospitals, physicians, allied
4-1 health care professionals or other health care providers;
4-2 (2) The extent of any reduction in competition among
4-3 physicians, allied health professionals, other health care
4-4 providers or other persons furnishing goods or services to, or in
4-5 competition with, hospitals;
4-6 (3) The extent of any adverse impact on patients in
4-7 the quality, availability, and price of health care services; and
4-8 (4) The availability of arrangements that are less
4-9 restrictive to competition and achieve the similar benefits.
4-10 (g) The department shall consult with the attorney general
4-11 regarding any potential reduction in competition that may result
4-12 from a cooperative agreement. The attorney general shall review
4-13 the application and all supporting documents provided by the
4-14 applicants, any documents or other information provided by any
4-15 intervenors, any documents or testimony provided at a public
4-16 hearing, if any, on the application and shall advise the department
4-17 whether the proposed cooperative agreement would have inappropriate
4-18 impact on competition. If the attorney general advises the
4-19 department to deny an application, the attorney general shall state
4-20 the basis and reasons for the recommended denial.
4-21 SEC. 313.003. ATTORNEY GENERAL AUTHORITY. (a) The attorney
4-22 general, at any time after an application is filed under Section
4-23 313.002(b), may require by civil investigative demand the
4-24 attendance and testimony of witnesses and the production of
4-25 documents in Travis County or the county in which the applicants
5-1 are located for the purpose of investigating whether the
5-2 cooperative agreement satisfies the standards set forth in Section
5-3 313.002. All nonpublic documents produced and testimony given to
5-4 the attorney general are subject to the prohibitions on disclosure
5-5 and use of Section 15.10(i) of the Business and Commerce Code. The
5-6 attorney general may seek an order from the district court
5-7 compelling compliance with a civil investigative demand issued
5-8 under this Section.
5-9 (b) The attorney general may seek to enjoin the operation of
5-10 a cooperative agreement for which an application for certificate of
5-11 public advantage has been filed by filing suit against the parties
5-12 to the cooperative agreement in district court. The attorney
5-13 general may file an action before or after the department acts on
5-14 the application for a certificate but, except as provided in
5-15 Subsection (e), the action must be brought no later than 20 days
5-16 following the attorney general's receipt of a copy of the final and
5-17 appealable decision of the department.
5-18 (c) Upon the filing of the complaint in an action under
5-19 Subsection (b), the department's certification, if previously
5-20 issued, must be stayed and the cooperative agreement is of no
5-21 further force unless the court orders otherwise or until the action
5-22 is concluded. The attorney general may apply to the court for any
5-23 ancillary temporary or preliminary relief necessary to stay the
5-24 cooperative agreement pending final disposition of the case.
5-25 (d) In any action brought under Subsection (b), the
6-1 applicants for a certificate bear the burden of establishing by
6-2 clear and convincing evidence that in accordance with Section
6-3 313.002(e) and (f), the likely benefits resulting from the
6-4 cooperative agreement outweigh any disadvantages attributable to a
6-5 reduction in competition that may result from the agreement. In
6-6 assessing disadvantages attributable to a reduction in competition
6-7 likely to result from the agreement, the court may draw upon the
6-8 determinations of federal and Texas courts concerning unreasonable
6-9 restraint of trade under 15 United States Code, Sections 1 and 2
6-10 and Chapter 15 of the Business and Commerce Code.
6-11 (e) If at any time following the 20-day period specified in
6-12 Subsection (b), the attorney general determines that as a result of
6-13 changed circumstances the benefits resulting from a certified
6-14 agreement no longer outweigh any disadvantages attributable to a
6-15 reduction in competition resulting from the agreement, the attorney
6-16 general may file suit in the district court seeking to cancel the
6-17 certificate of public advantage. The standard for adjudication for
6-18 an action brought under this subsection is as follows:
6-19 (1) Except as provided in subparagraph (2), in any
6-20 action brought under this subsection the attorney general has the
6-21 burden of establishing by a preponderance of the evidence that as a
6-22 result of changed circumstances, the benefits resulting from the
6-23 agreement and the unavoidable costs of canceling the agreement are
6-24 outweighed by disadvantages attributable to a reduction in
6-25 competition resulting from the agreement;
7-1 (2) In any action under this subsection, if the
7-2 attorney general first establishes by a preponderance of evidence
7-3 that the department's certification was obtained as a result of
7-4 material misrepresentation to the department or the attorney
7-5 general or as the result of coercion, threats or intimidation
7-6 toward any party to the cooperative agreement then, the parties to
7-7 the agreement bear the burden of establishing by clear and
7-8 convincing evidence that the benefits resulting from the agreement
7-9 and the unavoidable costs of canceling the agreement are outweighed
7-10 by disadvantages attributable to any reduction in competition
7-11 resulting from the agreement.
7-12 Sec. 313.004. MONITORING OF APPROVED COOPERATIVE AGREEMENTS.
7-13 (a) If, at any time following the approval of a cooperative
7-14 agreement by the department, the department determines that as a
7-15 result of changed circumstances the benefits resulting from an
7-16 approved agreement no longer outweigh any disadvantages
7-17 attributable to a reduction in competition resulting from the
7-18 agreement, the department may initiate proceedings to terminate the
7-19 certificate of public advantage.
7-20 (b) The department may request documents from the parties to
7-21 the cooperative agreement regarding the current status of the
7-22 agreement, including information relative to the continued benefits
7-23 and any disadvantages of the agreement and shall, if requested,
7-24 hold a public hearing to solicit additional information concerning
7-25 the effects of the cooperative agreement.
8-1 (c) If the department determines that the likely benefits
8-2 resulting from an approved cooperative agreement no longer outweigh
8-3 any disadvantages attributable to any potential reduction in
8-4 competition resulting from the agreement, the department may
8-5 terminate the certificate of public advantage.
8-6 Sec. 313.005. JUDICIAL REVIEW OF DEPARTMENT ACTION (a) Any
8-7 party aggrieved by a decision of the department in granting or
8-8 denying an application, refusing to act on an application or
8-9 terminating a certificate is entitled to judicial review of the
8-10 decision in accordance with the Administrative Procedure and Texas
8-11 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes).
8-12 Sec. 313.006. VALIDITY OF CERTIFIED COOPERATIVE AGREEMENTS.
8-13 (a) Notwithstanding Section 15.05(a) of the Business and Commerce
8-14 Code or any other provision of law, a cooperative agreement for
8-15 which a certificate of public advantage has been issued is a lawful
8-16 agreement. Notwithstanding Section 15.05(a) or any other provision
8-17 of law, if the parties to a cooperative agreement file an
8-18 application for a certificate of public advantage governing the
8-19 agreement with the department, the conduct of the parties in
8-20 negotiating and entering into a cooperative agreement is lawful
8-21 conduct.
8-22 (b) If the department, or in any action by the attorney
8-23 general, the district court determines that the applicants have not
8-24 established by clear and convincing evidence that the likely
8-25 benefits resulting from a cooperative agreement outweigh any
9-1 disadvantages attributable to any potential reduction in
9-2 competition resulting from the agreement, the agreement is invalid
9-3 and has no further force or effect.
9-4 (c) Nothing in this chapter exempts hospitals from
9-5 compliance with the requirements of Chapters 241 or 577 of this
9-6 Code.
9-7 Sec. 313.007. MERGERS AND CONSOLIDATIONS INVOLVING
9-8 HOSPITALS.
9-9 The provisions of this chapter do not apply to any agreement
9-10 among hospitals by which ownership or control over substantially
9-11 all of the stock, assets of activities of one or more previously
9-12 licensed and operating hospitals is placed under the control of
9-13 another licensed hospital or hospitals.
9-14 Sec. 313.008. AUTHORITY TO ADOPT RULES, EFFECTIVE DATE.
9-15 The department shall have the authority to adopt rules to
9-16 implement the requirements of this chapter. Such rules shall be
9-17 adopted by March 1, 1994, at which time hospitals may file an
9-18 application with the department for a certification of public
9-19 advantage.
9-20 SECTION 2. This Act takes effect September 1, 1993.
9-21 SECTION 3. The importance of this legislation and the
9-22 crowded condition of the calendars in both houses create an
9-23 emergency and an imperative public necessity that the
9-24 constitutional rule requiring bills to be read on three several
9-25 days in each house be suspended, and this rule is hereby suspended.