75R12759 DLF-F
By Maxey, Delisi, Berlanga, Naishtat, H.B. No. 1331
Hirschi, et al.
Substitute the following for H.B. No. 1331:
By Berlanga C.S.H.B. No. 1331
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to certain nonprofit entities that provide health or
1-3 long-term care or health benefit plans.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. PURPOSE AND FINDINGS. Nonprofit health care
1-6 providers have historically served the needs of their community,
1-7 including the needs of uninsured individuals in the community.
1-8 Access to high quality, affordable health care is a continuing need
1-9 in a state with over four million uninsured individuals and
1-10 millions more individuals who do not have adequate insurance.
1-11 Changes in the health care market have caused a substantial number
1-12 of nonprofit health care providers and nonprofit health benefit
1-13 plan providers to establish for-profit ventures, affecting hundreds
1-14 of millions of charitable dollars. As these changes in the health
1-15 care system occur, it is in the best interest of this state to
1-16 ensure that the state and the public have adequate information to
1-17 evaluate the impact of the changes on the public and the unmet
1-18 health care needs in this state.
1-19 SECTION 2. SHORT TITLE. This Act may be cited as the
1-20 Charitable Health Care Trust Act.
1-21 SECTION 3. DEFINITIONS. In this Act:
1-22 (1) "For-profit entity" means a business entity that
1-23 is not a mutual plan provider or a nonprofit provider.
1-24 (2) "Health benefit plan provider" means an insurer,
2-1 group hospital service corporation, health maintenance
2-2 organization, or other entity that issues:
2-3 (A) an individual, group, blanket, or franchise
2-4 insurance policy, insurance agreement, or group hospital service
2-5 contract that provides benefits for medical or surgical expenses
2-6 incurred as a result of an accident or sickness;
2-7 (B) an evidence of coverage or group subscriber
2-8 contract issued by a health maintenance organization; or
2-9 (C) a long-term care insurance policy.
2-10 (3) "Health care provider" means any entity licensed
2-11 to provide health or long-term care. The term includes any
2-12 facility licensed under Subtitle B, Title 4, Health and Safety
2-13 Code.
2-14 (4) "Mutual plan provider" means any mutual or mutual
2-15 assessment association subject to Chapter 11, 12, 13, or 14,
2-16 Insurance Code, that provides health and accident insurance,
2-17 including any entity exempt under Article 14.17, Insurance Code.
2-18 (5) "Nonprofit provider" means a health benefit plan
2-19 provider or a health care provider that is:
2-20 (A) exempt from federal income tax under Section
2-21 501(a) of the Internal Revenue Code of 1986 by being listed as an
2-22 exempt organization in Section 501(c)(3) or 501(c)(4) of the code;
2-23 (B) incorporated under the Texas Non-Profit
2-24 Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
2-25 Statutes) or a similar law of another state;
2-26 (C) exempt from state franchise, property, and
2-27 sales taxes; or
3-1 (D) organized and operated exclusively for the
3-2 promotion of social welfare and that normally receives more than
3-3 one-third of its support in any year from private or public gifts,
3-4 grants, contributions, or membership fees.
3-5 SECTION 4. DUTIES OF NONPROFIT PROVIDER. (a) A nonprofit
3-6 provider shall comply with this Act, in accordance with the periods
3-7 established by this Act, with respect to any agreement or
3-8 transaction under which the nonprofit provider directly or
3-9 indirectly:
3-10 (1) sells, transfers, leases, exchanges, provides an
3-11 option with respect to, or otherwise disposes of assets of the
3-12 nonprofit provider in favor of a for-profit entity or a mutual plan
3-13 provider;
3-14 (2) restructures as or converts to a for-profit entity
3-15 or a mutual plan provider;
3-16 (3) transfers control, responsibility, or governance
3-17 of the assets, operations, or business of the nonprofit provider in
3-18 favor of a for-profit entity or a mutual plan provider; or
3-19 (4) closes a facility operated by the nonprofit
3-20 provider or dissolves.
3-21 (b) Subsection (a)(1) or (2) of this section applies only
3-22 if:
3-23 (1) the fair market value of the assets of the
3-24 nonprofit provider involved in the proposed agreement or
3-25 transaction is at least 30 percent of the value of the total assets
3-26 of the nonprofit provider; or
3-27 (2) the fair market value of the assets of the
4-1 nonprofit provider involved in the proposed agreement or
4-2 transaction, when added to the fair market value of all assets of
4-3 the nonprofit provider that have been subject to a previous
4-4 agreement or transaction described by Subsection (a)(1), (2), or
4-5 (3) of this section that has been made during the two-year period
4-6 before the date on which the proposed agreement or transaction
4-7 becomes effective, is at least 35 percent of the value of the total
4-8 assets of the nonprofit provider.
4-9 (c) Subsection (a)(3) of this section applies only if:
4-10 (1) the fair market value of the assets of the
4-11 nonprofit provider with respect to which control, responsibility,
4-12 or governance would be transferred under the proposed agreement or
4-13 transaction is at least 30 percent of the value of the total assets
4-14 of the nonprofit provider;
4-15 (2) the fair market value of the assets of the
4-16 nonprofit provider with respect to which control, responsibility,
4-17 or governance would be transferred under the proposed agreement or
4-18 transaction, when added to the fair market value of all assets of
4-19 the nonprofit provider that have been subject to a previous
4-20 agreement or transaction described by Subsection (a)(1), (2), or
4-21 (3) of this section that has been made during the two-year period
4-22 before the date on which the proposed agreement or transaction
4-23 becomes effective, is at least 35 percent of the value of the total
4-24 assets of the nonprofit provider;
4-25 (3) the gross revenues associated with business or
4-26 operations of the nonprofit provider with respect to which control,
4-27 responsibility, or governance would be transferred under the
5-1 proposed agreement or transaction is at least 30 percent of the
5-2 value of the gross revenues associated with all of the business or
5-3 operations of the nonprofit provider; or
5-4 (4) the gross revenues associated with business or
5-5 operations of the nonprofit provider with respect to which control,
5-6 responsibility, or governance would be transferred under the
5-7 proposed agreement or transaction, when added to the gross revenues
5-8 associated with the business or operations with respect to which
5-9 control, responsibility, or governance has been transferred under a
5-10 previous agreement or transaction described by Subsection (a)(3) of
5-11 this section that has been made during the two-year period before
5-12 the date on which the proposed agreement or transaction becomes
5-13 effective, is at least 35 percent of the value of the gross
5-14 revenues associated with all of the business or operations of the
5-15 nonprofit provider.
5-16 (d) For purposes of applying Subsection (b) or (c)(1) or (2)
5-17 of this section:
5-18 (1) the fair market value of assets of a nonprofit
5-19 provider involved in a previous agreement or transaction is
5-20 determined as of the time the previous agreement or transaction
5-21 became effective; and
5-22 (2) the fair market value of the total assets of the
5-23 nonprofit provider is determined as of the time the proposed
5-24 agreement or transaction would become effective.
5-25 (e) For purposes of applying Subsection (c)(3) or (4) of
5-26 this section:
5-27 (1) the gross revenues associated with the business or
6-1 operations of a nonprofit provider with respect to which control,
6-2 responsibility, or governance has been transferred under a previous
6-3 agreement or transaction are determined as of the time the previous
6-4 agreement or transaction became effective; and
6-5 (2) the value of the gross revenues associated with
6-6 all of the business or operations of the nonprofit provider is
6-7 determined as of the time the proposed agreement or transaction
6-8 would become effective.
6-9 (f) If a nonprofit provider is a health care system that
6-10 owns or operates more than one licensed hospital, each separately
6-11 licensed hospital is a nonprofit provider for purposes of applying
6-12 this section and, for purposes of applying Subsections (b), (c),
6-13 (d), and (e) of this section, only the assets and business or
6-14 operations of the separately licensed hospital shall be considered.
6-15 SECTION 5. NOTICE OF AGREEMENT OR TRANSACTION. (a) A
6-16 nonprofit provider that signs a letter of intent or any other
6-17 written agreement evidencing the intent to enter into an agreement
6-18 or transaction described by Section 4 of this Act shall notify the
6-19 attorney general and shall publish notice of that fact.
6-20 (b) The notice to the attorney general must:
6-21 (1) be made in writing not later than the earlier of:
6-22 (A) the fifth day after the date the letter of
6-23 intent or other written agreement evidencing intent is signed; or
6-24 (B) the 90th day before the date on which the
6-25 agreement or transaction is to become effective; and
6-26 (2) disclose the conditions under which the agreement
6-27 or transaction will be made according to the best information
7-1 available to the nonprofit provider.
7-2 (c) The notice provided to the attorney general under
7-3 Subsection (b) of this section must state:
7-4 (1) the identity of the nonprofit provider and any
7-5 nonprofit entity that owns or controls the nonprofit provider;
7-6 (2) the identity of the for-profit entity or mutual
7-7 plan provider with which the proposed agreement or transaction is
7-8 to be made;
7-9 (3) the identity of any other party to the proposed
7-10 agreement or transaction;
7-11 (4) the terms of the proposed agreement or
7-12 transaction;
7-13 (5) the value of consideration to be provided in
7-14 connection with the proposed agreement or transaction and the basis
7-15 on which this valuation is made;
7-16 (6) the identity of any individual or entity who is an
7-17 officer, director, or affiliate of the nonprofit provider and a
7-18 statement as to whether each named individual or entity:
7-19 (A) has been promised future employment as a
7-20 result of the proposed agreement or transaction;
7-21 (B) has been a party to discussions relating to
7-22 future employment as a result of the proposed agreement or
7-23 transaction; or
7-24 (C) has any other direct or indirect economic
7-25 interest in the proposed agreement or transaction; and
7-26 (7) the date on which the proposed agreement or
7-27 transaction is to become effective.
8-1 (d) In addition to the notice required under Subsection (b)
8-2 of this section, the nonprofit provider shall notify the attorney
8-3 general of any material change in the agreement or transaction or
8-4 any of the information required by Subsection (c) of this section
8-5 not later than the 30th day before the date the agreement or
8-6 transaction becomes effective. The attorney general may waive the
8-7 requirement that the notice be provided within the time required by
8-8 this subsection if the attorney general finds the waiver is
8-9 appropriate.
8-10 (e) The notice submitted to the attorney general under this
8-11 section and any materials submitted with the notice are public
8-12 information. On the request of any person, the nonprofit provider
8-13 shall make the information available at the business office of the
8-14 nonprofit provider in the affected service area.
8-15 (f) The publication of notice under this section must be
8-16 made not later than the 90th day before the date the agreement or
8-17 transaction would become effective and must state the address of
8-18 the business office of the nonprofit provider in the affected
8-19 service area and state that more detailed information concerning
8-20 the proposed agreement or transaction is available at the business
8-21 office.
8-22 SECTION 6. PUBLICATION OF NOTICE. (a) A nonprofit provider
8-23 that is required to publish notice under this Act must publish
8-24 notice in:
8-25 (1) the Texas Register; and
8-26 (2) one or more newspapers in accordance with
8-27 Subsection (b) of this section.
9-1 (b) Notice published under Subsection (a)(2) of this section
9-2 must be published at least once in a newspaper of general
9-3 circulation in the publication area described by Subsection (d) of
9-4 this section. If the publication area includes more than one
9-5 county, the nonprofit provider must send a news release to a
9-6 newspaper of general circulation in each county included in the
9-7 publication area.
9-8 (c) If a newspaper of general circulation does not exist in
9-9 a county in the publication area, the nonprofit provider shall send
9-10 the notice to the county commissioners court in the county. The
9-11 county commissioners court may post the notice as it finds
9-12 appropriate.
9-13 (d) For purposes of this section, the publication area of a
9-14 nonprofit provider is:
9-15 (1) the county in this state in which the provider
9-16 maintains its registered agent;
9-17 (2) if different from the county described in
9-18 Subdivision (1) of this subsection, the county in this state in
9-19 which the principal executive office of the provider is located;
9-20 (3) any county that is contiguous to a county
9-21 described by Subdivisions (1) and (2) of this subsection; and
9-22 (4) any county not described by Subdivision (1), (2),
9-23 or (3) of this subsection in which the provider maintains an
9-24 office.
9-25 SECTION 7. EFFECTIVE DATE. This Act takes effect September
9-26 1, 1997.
9-27 SECTION 8. TRANSITION. (a) This Act applies only to:
10-1 (1) an agreement described by Section 4 of this Act
10-2 that is entered into on or after September 1, 1997; or
10-3 (2) a transaction described by Section 4 of this Act
10-4 that is made pursuant to an agreement entered into on or after
10-5 September 1, 1997.
10-6 (b) An agreement described by Section 4 of this Act that is
10-7 entered into before September 1, 1997, and a transaction described
10-8 by Section 4 of this Act that is made pursuant to an agreement
10-9 entered into before September 1, 1997, are governed by the law as
10-10 it existed immediately before the effective date of this Act, and
10-11 that law is continued in effect for that purpose.
10-12 SECTION 9. EMERGENCY. The importance of this legislation and
10-13 the crowded condition of the calendars in both houses create an
10-14 emergency and an imperative public necessity that the
10-15 constitutional rule requiring bills to be read on three several
10-16 days in each house be suspended, and this rule is hereby suspended.