SB 220 - Hospital Authorities - sale, lease of health care facilities

First Reader Summary

A bill to amend Article 4 of Chapter 7 of Title 31 of the Official Code of Georgia Annotated, the "Hospital Authorities Law," so as to require a public hearing prior to the sale or lease of any health care facility owned by a hospital authority; to specify certain terms and conditions for the lease of a health care facility owned by a hospital authority.

Page Numbers - 1/ 2/ 3/ 4/ 5/ 6/ 7

Code Sections - 31-7-74/ 31-7-74.1

SB 220                                            LC 11 9349S 
 
 
 
 
 
 
                        A BILL TO BE ENTITLED 
                               AN ACT 
 
 
  1- 1  To amend Article 4 of Chapter 7 of Title 31 of the Official 
  1- 2  Code of Georgia Annotated, the "Hospital Authorities Law," 
  1- 3  so as to require a public hearing prior to the sale or lease 
  1- 4  of any hospital owned by a hospital authority; to specify 
  1- 5  certain terms and conditions for the lease of a hospital 
  1- 6  owned by a hospital authority; to provide for certain 
  1- 7  disclosures of interests and relationships and prohibit 
  1- 8  certain business transactions; to provide for approval of 
  1- 9  certain transactions and for authorizations and 
  1-10  ratifications; to provide for immunity for actions taken in 
  1-11  compliance with certain requirements; to provide for 
  1-12  sanctions; to provide for stricter rules and for preemption; 
  1-13  to provide for applicability; to provide an effective date; 
  1-14  to repeal conflicting laws; and for other purposes. 
 
  1-15       BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA: 
 
  1-16                           SECTION 1. 
 
  1-17  Article 4 of Chapter 7 of Title 31 of the Official Code of 
  1-18  Georgia Annotated, the "Hospital Authorities Law," is 
  1-19  amended by striking Code Section 31-7-74, relating to 
  1-20  residency qualifications of authority members, and inserting 
  1-21  in its place the following: 
 
  1-22    "31-7-74. 
 
  1-23    (a) The members of a hospital authority shall be residents 
  1-24    of the participating units comprising the authority.  The 
  1-25    requirement of residence shall not apply to authorities 
  1-26    activated under subsection (d) of Code Section 31-7-72, 
  1-27    provided they are selected from within the area of service 
  1-28    and within 12 miles of the hospital location or within 12 
  1-29    miles of the sponsoring county or municipality, whichever 
  1-30    is farther.  The members shall elect one of their number 
  1-31    as chairman chair and another as vice-chairman vice chair 
  1-32    and shall also elect a secretary-treasurer, who need not 
  1-33    be a member.  The members shall receive no compensation 
  1-34    for their services, either as members or as employees of 
 
 
 
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  2- 1    the authority but may be reimbursed for their actual 
  2- 2    expenses incurred in the performance of their duties or, 
  2- 3    in the alternative, the members may elect to be reimbursed 
  2- 4    for such expenses on a per diem basis in an amount not to 
  2- 5    exceed $100.00 per meeting and the total amount not to 
  2- 6    exceed $100.00 per month.  The authority shall make rules 
  2- 7    and regulations for its governance and may delegate to one 
  2- 8    or more of its members, officers, agents, or employees 
  2- 9    such powers and duties as may be deemed necessary and 
  2-10    proper.  
 
  2-11    (b) The provisions of Code Section 45-10-23 and any other 
  2-12    Code section shall be deemed to have been complied with 
  2-13    and an authority may purchase from, sell to, borrow from, 
  2-14    loan to, contract with, or otherwise deal with any member 
  2-15    or any organization or person with which any member of an 
  2-16    authority is in any way interested or involved, provided 
  2-17    that:  
 
  2-18      (1) Any interest or involvement by such member is 
  2-19      disclosed in advance to the authority and is recorded in 
  2-20      the minutes of the authority;  
 
  2-21      (2) No member having a substantial interest or 
  2-22      involvement may be present at that portion of an 
  2-23      authority meeting during which discussion of any matter 
  2-24      is conducted involving any such organization or person; 
  2-25      and  
 
  2-26      (3) No member having a substantial interest or 
  2-27      involvement may participate in any decision of the 
  2-28      authority relating to any matter involving such 
  2-29      organization or person.  
 
  2-30    As used in this Code section, a 'substantial interest' 
  2-31    shall mean any interest which reasonably may be expected 
  2-32    to result in a direct financial benefit to such member as 
  2-33    determined by the authority, which determination shall be 
  2-34    final and not subject to review. 
 
  2-35    (b) No hospital which is owned by a hospital authority may 
  2-36    be sold or leased to a for profit entity, a not for profit 
  2-37    entity, or another hospital authority unless a public 
  2-38    hearing regarding such action is held in the county where 
  2-39    such hospital is located at least 60 days prior to such 
  2-40    sale or lease becoming effective.  In the event there is 
  2-41    more than one participating unit for an authority, a 
  2-42    hearing shall be held in each participating unit's county 
  2-43    at least 60 days prior to the sale or lease becoming 
 
 
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  3- 1    effective.  The hospital authority must publish notice of 
  3- 2    the hearing at least three times, with the first such 
  3- 3    notice appearing at least 60 days prior to the hearing in 
  3- 4    the legal organ of each participating unit.  At each such 
  3- 5    public hearing, the hospital authority shall describe, 
  3- 6    discuss, or otherwise disclose: 
 
  3- 7      (1) The reasonably foreseeable adverse and beneficial 
  3- 8      effects of such lease or sale upon health care in the 
  3- 9      service area of the hospitals to be leased or sold, and, 
  3-10      for purposes of this paragraph, the service area shall 
  3-11      include the county in which the hospital is located and 
  3-12      each adjoining county; 
 
  3-13      (2) A financial statement indicating the estimated value 
  3-14      of the total assets and liabilities to be transferred or 
  3-15      received in the transaction; however, if the value of 
  3-16      any individual asset exceeds $100,000.00, a description 
  3-17      and the value of such assets shall be indicated on the 
  3-18      financial statement; and 
 
  3-19      (3) The resumes of the top five executive officers who 
  3-20      will manage the facility after it is sold or leased.  
 
  3-21    (c) Nothing contained in this article shall be deemed to 
  3-22    prohibit any member who is present at any meeting or who 
  3-23    participates in any decision of the authority from 
  3-24    providing legal services in connection with any of the 
  3-25    undertakings of the authority or from being paid for such 
  3-26    services. 
 
  3-27    (c) No hospital which is owned by a hospital authority may 
  3-28    be leased to another person, corporation, or business 
  3-29    entity, other than as provided in paragraphs (23) and (24) 
  3-30    of Code Section 31-7-75, unless such lease requires that: 
 
  3-31      (1) At least one member of the hospital authority will 
  3-32      serve as a full voting member upon the governing body or 
  3-33      local board of the business entity exercising control 
  3-34      and management powers over the leased hospital; and 
 
  3-35      (2) The governing body or local board of the business 
  3-36      entity exercising control and management powers over the 
  3-37      leased hospital submits to the governing authority of 
  3-38      each county in which the hospital is located, within 90 
  3-39      days after the close of the calendar year or that 
  3-40      entity's fiscal year, a complete and detailed financial 
  3-41      statement for that entity. 
 
 
 
 
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  4- 1    (d) Provisions of a lease required by subsection (c) of 
  4- 2    this Code section may not be renegotiated or otherwise 
  4- 3    altered or amended for the duration of such lease." 
 
  4- 4                           SECTION 2. 
 
  4- 5  Said article is further amended by adding following Code 
  4- 6  Section 31-7-74 a new Code section to read as follows: 
 
  4- 7    "31-7-74.1. 
 
  4- 8    (a) As used in this Code section, the term: 
 
  4- 9      (1) 'Family' means spouse, child, or sibling. 
 
  4-10      (2) 'Financial interest' means the direct or indirect 
  4-11      ownership of any assets or stock of any business. 
 
  4-12      (3) 'Substantial interest' means the direct or indirect 
  4-13      ownership of more than 25 percent of the assets or stock 
  4-14      of any business. 
 
  4-15      (4) 'Transact business' or 'transact any business' or 
  4-16      'transaction' means any sale or lease of any personal 
  4-17      property, real property, or services on behalf of 
  4-18      oneself or on behalf of any third party as an agent, 
  4-19      broker, dealer, or representative. 
 
  4-20    (b) Each member of a hospital authority or member of the 
  4-21    governing authority of an entity leasing a public hospital 
  4-22    shall disclose upon his or her selection as a member, and 
  4-23    at least annually thereafter, the following described 
  4-24    interests and relationships: 
 
  4-25      (1) Any financial interest held by the member or the 
  4-26      member's family, or held by an entity in which the 
  4-27      member or the member's family owns a financial interest, 
  4-28      in any health care provider, any managed care provider 
  4-29      or network, or any entity which sells products or 
  4-30      services to the authority; 
 
  4-31      (2) Any position held by the member or the member's 
  4-32      family as an officer, director, or employee of a 
  4-33      hospital, hospital holding company, other health care 
  4-34      provider, or managed care network; and 
 
  4-35      (3) Any contract which exists between the member or the 
  4-36      member's family, or any entity in which the member or 
  4-37      the member's family owns a financial interest, and the 
  4-38      authority, including, but not limited to, supply 
  4-39      contracts, service contracts, and leases. 
 
 
 
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  5- 1    (c) Except as otherwise provided in this Code section, no 
  5- 2    authority member, no hospital chief executive, and no 
  5- 3    hospital system chief executive officer shall, for such 
  5- 4    person or for any entity in which such person or such 
  5- 5    person's family has a substantial interest, transact any 
  5- 6    business with such authority. 
 
  5- 7    (d) The prohibition of subsection (c) of this Code section 
  5- 8    shall not apply to: 
 
  5- 9      (1) Any relationship whereunder a person licensed under 
  5-10      Title 43 provides to such authority or its medical 
  5-11      facilities any professional services authorized to be 
  5-12      provided within the scope of practice of such person's 
  5-13      license; or 
 
  5-14      (2) Any officer or employee of a trust company or bank 
  5-15      which has been selected to be the depository of the 
  5-16      funds of such nonprofit corporation. 
 
  5-17    (e) A transaction in which any member of an authority has 
  5-18    a financial interest or relationship described in 
  5-19    subsection (b) of this Code section which does not 
  5-20    constitute a substantial interest may be approved if, at 
  5-21    the time of such approval: 
 
  5-22      (1) The material facts of the transaction and the 
  5-23      member's financial interest are disclosed or known to 
  5-24      the authority's board; 
 
  5-25      (2) The interested member is absent from any portion of 
  5-26      a meeting which discusses or votes upon said 
  5-27      transaction; and 
 
  5-28      (3) The members approving the transaction in good faith 
  5-29      reasonably believe that the transaction is fair to the 
  5-30      authority. 
 
  5-31    (f) Notwithstanding the provisions of subsection (c) of 
  5-32    this Code section, a transaction in which any member of an 
  5-33    authority has a substantial interest may be approved if: 
 
  5-34      (1) The transaction was submitted to a competitive 
  5-35      process for requests for proposals, which includes but 
  5-36      is not limited to consideration of all submitted 
  5-37      proposals for price, quality, and appropriateness; and 
 
  5-38      (2) Notice of the transaction was published in the 
  5-39      official county organ not less than two weeks prior to 
  5-40      the approval of the board; 
 
 
 
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  6- 1      (3) Opportunity for public comment concerning the 
  6- 2      proposed transaction was provided at a meeting of the 
  6- 3      board; 
 
  6- 4      (4) At the time of approval, the members approving the 
  6- 5      transaction in good faith reasonably believe that the 
  6- 6      transaction is fair and is in the best interests of the 
  6- 7      authority; and 
 
  6- 8      (5) The interested member is absent from any portion of 
  6- 9      a meeting which discusses or votes upon said 
  6-10      transaction. 
 
  6-11    (g) For purposes of this Code section, a transaction is 
  6-12    authorized, approved, or ratified if it receives the 
  6-13    affirmative vote of a majority of the members on the board 
  6-14    present and voting who have no financial interest in the 
  6-15    transaction. A majority, but not less than two, of all the 
  6-16    noninterested members on the board present and voting 
  6-17    constitutes a quorum for purposes of action that complies 
  6-18    with this Code section. 
 
  6-19    (h) Any action by an authority which is taken in 
  6-20    compliance with the applicable requirements of this Code 
  6-21    section may not be enjoined, set aside, or give rise to an 
  6-22    award of damages or other sanctions against the authority 
  6-23    or any member or officer on the ground of a member's or 
  6-24    officer's interest in such transaction.  For any action by 
  6-25    an authority not in compliance with such requirements, any 
  6-26    member knowingly violating such requirements shall be 
  6-27    immediately sanctioned, which may include, but not be 
  6-28    limited to, reprimand, temporary suspension, or permanent 
  6-29    removal from the authority after appropriate notice and 
  6-30    hearing.  The entity having appointed such member shall 
  6-31    have the authority to impose any sanction. 
 
  6-32    (i) Nothing in this Code section shall prevent an 
  6-33    authority from having stricter rules relating to interests 
  6-34    or relationships than what is provided in this Code 
  6-35    section. 
 
  6-36    (j) To the extent the provisions of this Code section 
  6-37    conflict with the provisions of any other law, the 
  6-38    provisions of this Code section shall govern." 
 
  6-39                           SECTION 3. 
 
  6-40  This Act shall become effective July 1, 1997. 
 
 
 
 
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  7- 1                           SECTION 4. 
 
  7- 2  All laws and parts of laws in conflict with this Act are 
  7- 3  repealed. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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