Current Status Bill Number:406 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19970220 Primary Sponsor:Fair All Sponsors:Fair and Thomas Drafted Document Number:psd\7087ac.97 Companion Bill Number:3956 Residing Body:Senate Current Committee:Medical Affairs Committee 13 SMA Subject:Public Hospital Accountability Act, Medical
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
Senate 19970220 Introduced, read first time, 13 SMA
referred to Committee
View additional legislative information at the LPITS web site.
TO AMEND TITLE 44, CHAPTER 7, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO HOSPITALS, TUBERCULOSIS CAMPS, AND HEALTH SERVICE DISTRICTS, BY ADDING ARTICLE 22 SO AS TO ENACT THE SOUTH CAROLINA PUBLIC HOSPITAL ACCOUNTABILITY ACT AND TO PROHIBIT A TRANSACTION WHICH RESULTS IN THE TRANSFER OF ASSETS OF A PUBLIC HOSPITAL OR THE SHARING, DELEGATION, OR TRANSFER OF CONTROL OF ANY HOSPITAL OWNED BY OR FUNCTIONS PROVIDED BY A PUBLIC HOSPITAL OR THE ACQUISITION OF AN ACUTE CARE HOSPITAL UNLESS CERTAIN DISCLOSURE REQUIREMENTS ARE MET AND THE TRANSACTION, TRANSFER, OR ACQUISITION IS APPROVED BY A MAJORITY OF THE ELECTORS IN THE HOME COUNTY OF THE PUBLIC HOSPITAL; TO PROHIBIT ANTITRUST IMMUNITY BASED ON ANY VOTE CONDUCTED UNDER THIS ARTICLE OR ON ANY COUNTY COUNCIL PUBLIC HOSPITAL BOARD APPROVAL ACTION; AND TO PROVIDE REMEDIES FOR VIOLATIONS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 44, Chapter 7 of the 1976 Code is amended by adding:
Section 44-7-2700. This article may be cited as the South Carolina Public Hospital Accountability Act.
Section 44-7-2705. The trend toward mergers and other consolidations of public hospitals in South Carolina has resulted in the need for greater accountability from public hospitals regarding these transactions. This article seeks to ensure that public hospitals which have reached a certain size and have attained a certain degree of control over an area will be accountable. It is anticipated that more and more hospitals will reach these thresholds as mergers in the healthcare industry continue in this State.
Section 44-7-2710. As used in this article:
(1) 'County council' means the county council of a county or, in the case of a county without a county council, the governing body of that county.
(2) 'Home county' with respect to a public hospital means the county in which the regional medical center of the public hospital is located.
(3) 'Public hospital' means an entity that is a political subdivision of this State that owns or controls directly or indirectly a regional medical center within a county and also owns or controls directly or indirectly at least two other hospitals within that county. For the purposes of this article regional health service districts and health service districts provided for in Articles 15 and 16 and any other similar entities are considered political subdivisions of the State.
(4) 'Regional medical center' means a general acute care hospital, other than a state medical university hospital or a hospital owned by the federal government, with legal authorization, whether by license, certificate of need, or otherwise, for at least three hundred general hospital beds.
(5) 'Restricted transaction' means a transaction (sale, lease, merger, joint venture, management arrangement, managed care agreement, or otherwise) which results directly or indirectly in (a) the transfer of assets of a public hospital or any of the hospitals that it owns or controls that produce a gross annual income or have a fair market value or book value of five million dollars or more or (b) the sharing, delegation, or transfer of control or governance of any of the hospitals owned or controlled by a public hospital or (c) the sharing, delegation, or transfer of control or governance of any of the functions of a public hospital or any of the hospitals that it owns or controls involving a gross annual revenue of five million dollars or more. The acquisition, whether by purchase, lease, merger, joint venture, management arrangement, managed care agreement, acquisition of assets, acquisition of control, or otherwise, by a public hospital of an acute care hospital is also a restricted transaction. However, a transaction which is solely designed and intended in good faith to do no more than provide security for debt incurred by a public hospital in good faith solely to finance its own operations and which is unrelated to the acquisition of an acute care hospital, through any means including those listed in the preceding sentence and, is not a restricted transaction.
Section 44-7-2720. Until a restricted transaction is fully disclosed as provided in Section 44-7-2730 and has been approved by the majority of the qualified electors of the home county of the public hospital voting in that referendum held in accordance with the requirements of Section 44-7-2740, no public hospital may permit, enter, consummate, or engage in that restricted transaction. However, the referendum requirement provided for in Section 44-7-2740 does not apply to a public hospital with more than one home county.
Section 44-7-2730. (A) At least thirty days before the governing body of a public hospital authorizes a restricted transaction and one hundred twenty days before consummation of the restricted transaction, the public hospital must disclose the following information to the public regarding the restricted transaction:
(1) the full text and all supporting schedules of all drafts and final agreements, contracts, and other documents that contain any of the actual or proposed terms of the restricted transaction;
(2) a detailed itemized statement specifying the amounts of any savings and any other benefits that are expected to be obtained as a result of the restricted transaction and describing in detail how and when these savings and benefits are to be obtained.
(3) All reports and information including, but not limited to, reports or comments of consultants or financial advisors, related to the proposed restricted transaction. If the public hospital claims that disclosure of any of the material covered in this item would involve disclosure of information that would significantly impair its ability to compete, the public hospital may withhold the material, but it must provide a full description of any document withheld, specifying the author, the recipients, the general substance of the document, and the basis for the decision to withhold it, and the public hospital must make the information available to any person or entity who requests it to the extent possible under arrangements that reasonably protect the competitive position of the public hospital while permitting that person or entity to have access to the information. A person or entity desiring to review information that is withheld on this basis is entitled to bring an action in the circuit court of the home county of the public hospital to gain access to the information or to challenge the basis on which the public hospital has agreed to make the information available or any refusal to make information available. The circuit court shall grant a person or entity the maximum access possible without significantly damaging the competitive position of the public hospital. All time periods provided in this article must be stayed pending a final determination of any request for access to materials that are withheld or any challenge to the terms on which the public hospital makes the information available. In addition, the circuit court shall award attorney's fees and costs to any person or entity seeking information when the public hospital has failed to agree to any proposed reasonable disclosure arrangement that would make the information requested available to that person or entity in the manner required by this subsection.
(4) The full text of any employment contracts or arrangements that are proposed with an executive of an entity that will participate in the restricted transaction and a detailed description of all benefits and compensation arrangements that an executive of an entity participating in the restricted transaction will or may receive as a result of or in connection with the restricted transaction. No executive of an entity that will participate in a restricted transaction may receive from an entity related in any way to the restricted transaction or any of the participants in that restricted transaction any benefits or compensation in any form for five years after the consummation of the restricted transaction that has not been fully disclosed as required in this item.
(5) Copies of all written communications by or on behalf of the public hospital with any public official regarding the restricted transaction and a description of any oral communications with any public official regarding the transaction, including the names of the people involved in the communication, the dates, and the substance of the discussion.
(6) The identity of all consultants, public relations firms, lobbyists, fund raisers, attorneys, and other persons and entities who have rendered or are rendering services in connection with the proposed restricted transaction or any public vote regarding it, and the amounts paid, budgeted for payment, or expected to be paid to each of these persons and entities for their services.
(7) The amounts spent or committed regarding any advertising or public relation efforts regarding the proposed restricted transaction.
(B) At the time of the disclosure, the public hospital must publish and provide to the media covering each of its home counties a public notice of the proposed restricted transaction, describing the transaction and the availability of information about it as required under subsection (A).
(C) Once the disclosure is made initially, the public hospital must continue to make the information disclosed available to the public for inspection and copying during normal business hours daily until sixty days after the earlier of (1) the date on which the governing body of the public hospital withdraws its approval of the restricted transaction, or (2) the consummation of the restricted transaction and during that time shall update the information at least weekly to ensure its continued completeness and accuracy.
(D) If the governing body of a public hospital approves a restricted transaction and then later withdraws its approval, another disclosure is required in connection with any subsequent authorization of that restricted transaction and the time periods and permissible time under this article for any action regarding that restricted transaction must be determined in respect to the time of the subsequent disclosure. Any material change in a restricted transaction which has been already subject to a disclosure requires a new disclosure. After any new disclosure the timing and permissible times for action in regard to the restricted transaction as modified must be determined in respect to the new disclosure.
Section 44-7-2740. (A) The question of whether a restricted transaction involving a public hospital is to be approved must not be placed on the ballot in the home county of that public hospital except by a resolution adopted by the affirmative vote of the majority of the county council of that home county after the transaction has been approved by the governing body of the public hospital. The actual election referendum on any particular restricted transaction may not occur until at least ninety days have passed since the authorization of the restricted transaction by the governing body of the public hospital.
(B) The resolution of the county council referred to in subsection (A) shall specify whether the matter will be submitted to the qualified electors of the county during the next general election or, if applicable, a special election. The county council may, if no general election is scheduled to be held within six months of the resolution submitting the matter to a vote, provide for a special election.
Section 44-7-2750. Nothing in this article and no vote in any election pursuant to Section 44-7-2740 or any action of any county council pursuant to any provision or law that permits a county council or any other public body to appoint or have the right to approve members of a governing board of a public hospital is intended to confer or confers any antitrust immunity regarding any restricted transaction or any other matter. No such immunity exists unless it is expressly and specifically stated in the statutory law of this State.
Section 44-7-2760. (A) A resident of the home county of a public hospital, whether a corporate entity or an individual, may bring an action for injunctive relief to enforce the provisions of this article in connection with a restricted transaction involving that public hospital. Whenever injunctive relief is obtained in an action, the trial judge shall award the person or entity obtaining injunctive relief reasonable attorney's fees and costs incurred in connection with bringing the claim for injunctive relief. In addition, the Attorney General and any solicitor with jurisdiction over the home county of a public hospital in connection with a restricted transaction involving that public hospital may bring actions to enforce the provisions of this article.
(B) The courts are authorized to issue orders and injunctions to restrain and prevent violations of this article and these orders and injunctions shall be issued without bond.
(C) If it is determined in an action brought under this section that there has been a violation of this article in connection with a restricted transaction and the public hospital cannot show by clear and convincing evidence that the violation had no effect on the result of the vote in any election regarding whether the transaction should be permitted, any approval of that restricted transaction in any election is rendered void.
(D) An action under this section must be brought within one year of the time that the violation of the article was or should have been discovered by the plaintiff."
SECTION 2. This act takes effect upon approval by the Governor.