HBA-NRS, CCH H.B. 393 77(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 393 By: Maxey Public Health 8/28/2001 Enrolled BACKGROUND AND PURPOSE Many nonprofit hospitals, health maintenance organizations, and health insurers are converting to for-profit or mutual corporations or transferring to another nonprofit. Under state law, a nonprofit health care organization is obligated to dedicate its assets to a nonprofit organization that is dedicated to similar purposes. However, without careful monitoring, such newly converted organizations may seek to hold on to the nonprofit's public assets and devote them to serving the corporation's stockholders. The attorney general is responsible for protecting charitable trusts, gifts, and entities and for ensuring that nonprofits are used for their dedicated purpose and not for individual gain. Prior to the 77th Legislature, nonprofit organizations were not required to inform the attorney general when considering whether to sell or change their nonprofit status. House Bill 393 establishes provisions so that charitable assets continue to serve the public's health care needs, especially the needs of uninsured or underinsured individuals. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 393 sets forth the Charitable Health Care Trust Act (Act) to guide transfers, leases, exchanges, conversions, restructurings, or sales of a nonprofit health care provider (nonprofit) to another nonprofit, a for-profit entity, or a mutual plan provider and the closing or the dissolving of a licensed facility operated by the nonprofit. The Act sets forth applicability standards based on the type of proposed agreement or transaction, whether previous agreements or transactions are involved, and the fair market value of the assets or gross revenues of the nonprofit (SECTION 4). The fair market value is determined by an independent assessor paid for by the nonprofit at the time the agreement or transaction takes effect (SECTION 5). The bill requires a nonprofit that enters into an agreement or transaction to establish the fair market value of the assets of the nonprofit and to request an appraisal from the chief appraiser or appraisers of the appraisal district or districts in which the nonprofit's property is located. The bill provides that a nonprofit provider that enters into an agreement or transaction with another nonprofit provider is not required to request an appraisal from the chief appraiser or appraiser of the appraisal district or districts in which the nonprofit's property is located (SECTION 5). The bill requires the nonprofit to: _notify the attorney general with a written disclosure of the agreement (SECTION 6); _publish a public notice of the transaction; _publish the time and place of at least one public meeting for the public to make written comments; and _notify the commissioners court in each county in the publication area of the nonprofit of the request for written comment (SECTION 8). The bill provides that the notice is public information (SECTION 6). The bill sets forth the contents the notification must include (SECTION 7). The bill sets forth the attorney general's powers of enforcement, including the imposition of a civil penalty not to exceed $10,000 for each day of a continuing violation for organizations that fail to comply with the Act (SECTION 9). EFFECTIVE DATE Vetoed.