Bill Text: CA AB412 | 2023-2024 | Regular Session | Amended
Bill Title: Distressed Hospital Loan Program.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Engrossed) 2023-06-14 - Referred to Com. on HEALTH. [AB412 Detail]
Download: California-2023-AB412-Amended.html
Amended
IN
Assembly
April 12, 2023 |
Amended
IN
Assembly
March 13, 2023 |
Introduced by Assembly (Principal coauthor: Senator Caballero) |
February 02, 2023 |
LEGISLATIVE COUNSEL'S DIGEST
This bill would create the Hospital Emergency Loan Program, until January 1, 2029, for the purpose of providing loans to prevent the closure of a hospital, as defined, or facilitate the reopening of a closed hospital, as defined. The bill would permit the authority to provide secured loans to certain hospitals at risk of closure, or governmental entities trying to facilitate the reopening of a hospital that meets specified criteria. The bill would require a hospital or a closed hospital to provide the authority with financial information, in a format determined by the authority, demonstrating the hospital’s need for assistance due to financial hardship. The bill would
specify that, in administering this loan program, the authority is exempt from rulemaking provisions of the Administrative Procedure Act. The bill would also exempt the authority from the rulemaking provisions of the Administrative Procedure Act for guidelines made pursuant to its general authority to make loans from the California Health Facilities Financing Authority Fund.
This bill would create the Hospital Emergency Loan Program Fund, a continuously appropriated fund, for use by the authority to administer the loan program. The bill would authorize the Treasurer to invest moneys in the fund that are not required for its current needs in eligible securities, and to transfer moneys in the fund to the Surplus Money Investment Fund for investment, as specified. By creating a continuously appropriated fund, the bill would make an
appropriation.
Digest Key
Vote: 2/3 Appropriation: YES Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Chapter 4 (commencing with Section 129380) is added to Part 6 of Division 107 of the Health and Safety Code, to read:CHAPTER 4. Distressed Hospital Loan Program
129380.
(a) This chapter shall be known and may be cited as the Distressed Hospital Loan Program.129381.
For the purposes of this chapter, the following definitions apply:129382.
(a) The department shall administer the program, subject to an appropriation for the purposes of this chapter.129383.
(a) In collaboration with the State Department of Health Care Services, the Department of Managed Health Care, and the State Department of Public Health, the department shall develop a methodology to evaluate an at-risk hospital’s potential eligibility for state assistance from the program.129384.
(a) Notwithstanding Sections 15432 and 15451.5 of the Government Code, unless subdivision (c) applies, a hospital shall be required to begin making monthly repayments of the loan after the first 18 months and shall discharge the loan within 72 months of the date of the loan.129385.
(a) The Distressed Hospital Loan Program Fund is hereby established in the Treasury. The fund shall be administered by the department consistent with this chapter.129386.
(a) Notwithstanding the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the authority and the department may implement, interpret, or make specific this chapter, in whole or in part, by means of information notices or other similar instructions, without taking any further regulatory action.129387.
This chapter shall remain in effect only until January 1, 2032, and as of that date is repealed.SEC. 2.
Section 128740 of the Health and Safety Code is amended to read:128740.
(a) The following summary financial and utilization data shall be reported to the department by a hospital within 45 days of the end of a calendar quarter. Adjusted reports reflecting changes as a result of audited financial statements may be filed within four months of the close of the hospital’s fiscal or calendar year. The quarterly summary financial and utilization data shall conform to the uniform description of accounts as contained in the Accounting and Reporting Manual for California Hospitals and shall include all of the following:(b)The department shall make available at cost, to any person, a hard copy of any hospital report made pursuant to this section and in addition to hard copies, shall make available at cost, a computer tape of all reports made pursuant to this section within 105 days of the end of every calendar quarter.
(c)The department shall adopt by regulation guidelines for the identification, assessment, and reporting of charity care services. In establishing the guidelines, the department shall consider the
principles and practices recommended by professional health care industry accounting associations for differentiating between charity services and bad debts. The department shall further conduct the onsite validations of health facility accounting and reporting procedures and records as are necessary to assure that reported data are consistent with regulatory guidelines.
The authority may do any of the following:
(a)Adopt bylaws for the regulation of its affairs and the conduct of its business.
(b)Adopt an official seal.
(c)Sue and be sued in its own name.
(d)Receive and accept from any agency of the United States, any agency of the state, or any municipality, county, or other political subdivision thereof, or from any individual, association, or corporation gifts, grants, or donations of moneys for achieving any of the purposes of this chapter.
(e)Engage the services of private consultants
to render professional and technical assistance and advice in carrying out the purposes of this part.
(f)Determine the location and character of any project to be financed under this part, and to acquire, construct, enlarge, remodel, renovate, alter, improve, furnish, equip, fund, finance, own, maintain, manage, repair, operate, lease as lessee or lessor, and regulate the same, to enter into contracts for any or all of those purposes, to enter into contracts for the management and operation of a project or other health facilities owned by the authority, and to designate a participating health institution as its agent to determine the location and character of a project undertaken by that participating health institution under this chapter and as the agent of the authority, to acquire, construct, enlarge, remodel, renovate, alter, improve, furnish, equip, own, maintain, manage, repair, operate, lease as lessee or lessor, and regulate the same,
and as the agent of the authority, to enter into contracts for any or all of those purposes, including contracts for the management and operation of that project or other health facilities owned by the authority.
(g)Acquire, directly or by and through a participating health institution as its agent, by purchase solely from funds provided under the authority of this part, or by gift or devise, and to sell, by installment sale or otherwise, any lands, structures, real or personal property, rights, rights-of-way, franchises, easements, and other interests in lands, including lands lying under water and riparian rights, that are located within the state that the authority determines necessary or convenient for the acquisition, construction, or financing of a health facility or the acquisition, construction, financing, or operation of a project, upon the terms and at the prices considered by the authority to be reasonable and that can be agreed
upon between the authority and the owner thereof, and to take title thereto in the name of the authority or in the name of a participating health institution as its agent.
(h)Receive and accept from any source loans, contributions, or grants for, or in aid of, the construction, financing, or refinancing of a project or any portion of a project in money, property, labor, or other things of value.
(i)Make secured or unsecured loans to, or purchase secured or unsecured loans of, any participating health institution in connection with the financing of a project or working capital in accordance with an agreement between the authority and the participating health institution. However, no loan to finance a project shall exceed the total cost of the project, as determined by the participating health institution and approved by the authority. Funds for secured loans may be provided from
the California Health Facilities Financing Authority Fund pursuant to subdivision (b) of Section 15439 to small or rural health facilities pursuant to authority guidelines. The authority may adopt guidelines to implement the loan programs authorized by this subdivision. Any such guidelines shall not be subject to the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2).
(j)(1)Make secured or unsecured loans to, or purchase secured or unsecured loans of, any participating health institution in accordance with an agreement between the authority and the participating health institution to refinance indebtedness incurred by that participating health institution or a participating health institution that controls or manages, is
controlled or managed by, is under common control or management with, or is affiliated with that participating health institution, in connection with projects undertaken or for health facilities acquired or for working capital.
(2)Make secured or unsecured loans to, or purchase secured or unsecured loans of, any participating health institution in accordance with an agreement between the authority and the participating health institution to refinance indebtedness incurred by that participating health institution or a participating health institution that controls or manages, is controlled or managed by, is under common control or management with, or is affiliated with that participating health institution, payable to the authority or assigned or pledged to authority issued bonds.
(3)Funds for secured loans may be provided from the California Health Facilities Financing Authority
Fund pursuant to subdivision (b) of Section 15439 to small or rural health facilities pursuant to authority guidelines.
(4)The authority may adopt guidelines to implement the loan programs authorized by this subdivision. Any such guidelines shall not be subject to the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2).
(k)Mortgage all or any portion of interest of the authority in a project or other health facilities and the property on which that project or other health facilities are located, whether owned or thereafter acquired, including the granting of a security interest in any property, tangible or intangible, and to assign or pledge all or any portion of the interests of the
authority in mortgages, deeds of trust, indentures of mortgage or trust, or similar instruments, notes, and security interests in property, tangible or intangible, of participating health institutions to which the authority has made loans, and the revenues therefrom, including payments or income from any thereof owned or held by the authority, for the benefit of the holders of bonds issued to finance the project or health facilities or issued to refund or refinance outstanding indebtedness of participating health institutions as permitted by this part.
(l)Lease to a participating health institution the project being financed or other health facilities conveyed to the authority in connection with that financing, upon the terms and conditions the authority determines proper, charge and collect rents therefor, terminate the lease upon the failure of the lessee to comply with any of the obligations of the lease, and include in that lease, if
desired, provisions granting the lessee options to renew the term of the lease for the period or periods and at the rent, as determined by the authority, purchase any or all of the health facilities or that upon payment of all of the indebtedness incurred by the authority for the financing of that project or health facilities or for refunding outstanding indebtedness of a participating health institution, then the authority may convey any or all of the project or the other health facilities to the lessee or lessees thereof with or without consideration.
(m)Charge and equitably apportion among participating health institutions, the administrative costs and expenses incurred by the authority in the exercise of the powers and duties conferred by this part.
(n)Obtain, or aid in obtaining, from any department or agency of the United States or of the state, any private company, or any
insurance or guarantee as to, of, or for the payment or repayment of, interest or principal, or both, or any part thereof, on any loan, lease, or obligation, or any instrument evidencing or securing the loan, lease, or obligation, made or entered into pursuant to this part; and notwithstanding any other provisions of this part, to enter into any agreement, contract, or any other instrument whatsoever with respect to that insurance or guarantee, to accept payment in the manner and form as provided therein in the event of default by a participating health institution, and to assign that insurance or guarantee as security for the authority’s bonds.
(o)Enter into any and all agreements or contracts, including agreements for liquidity or credit enhancement, bond exchange agreements, interest rate swaps or hedges, execute any and all instruments, and do and perform any and all acts or things necessary, convenient, or desirable for the purposes of
the authority or to carry out any power expressly granted by this part.
(p)Invest any moneys held in reserve or sinking funds or any moneys not required for immediate use or disbursement, at the discretion of the authority, in any obligations authorized by the resolution authorizing the issuance of the bonds secured thereof or authorized by law for the investment of trust funds in the custody of the Treasurer.
(q)Award grants to any eligible clinic pursuant to Section 15438.6.
(r)Award grants to any eligible health facility pursuant to Section 15438.7.
(s)Award grants pursuant to Section 15438.10.
(a)The authority shall establish the Hospital Emergency Loan Program for the purpose of providing loans to prevent the closure of a hospital, as defined in subdivision (b), or facilitating the reopening of a closed hospital, as defined in subdivision (c).
(b)For purposes of this subdivision, “hospital” means a general acute care hospital, as defined in paragraph (1) of subdivision (d) of Section 15432, that meets all of the following criteria, as of January 1, 2023:
(1)It has fewer than 85 general acute care beds.
(2)It has a distinct part skilled nursing facility with fewer than 130 beds.
(3)It has been determined by the authority to be at risk of closure.
(c)For purposes of this subdivision, a closed hospital eligible to be reopened includes both of the following:
(A)A general acute care hospital, as defined in paragraph (1) of subdivision (d) of Section 15432 that has closed between January 1, 2023, and March 1, 2023.
(B)A hospital, as defined in subdivision (b) that has closed between January 1, 2023, and December 31, 2023.
(d)The Hospital Emergency Loan Program Fund is hereby created in the State Treasury. Notwithstanding Section 13340 of the Government Code, all moneys in the fund are continuously appropriated to the authority, without regard to fiscal year, for the
purposes of this section. All moneys accruing to the authority pursuant to this section from any source shall be deposited into the fund. The Treasurer may invest moneys in the fund that are not required for its current needs in eligible securities specified in Section 16430 of the Government Code, and may transfer moneys in the fund to the Surplus Money Investment Fund for investment pursuant to Article 4 (commencing with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government Code. Notwithstanding Section 16305.7 of the Government Code, all interest or other increment resulting from the investment or deposit of moneys from the fund shall be deposited in the fund. Moneys in the fund shall not be subject to transfer to any other funds pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of Title 2 of the Government Code, except to the Surplus Money Investment Fund.
(e)The authority shall
only make secured loans from the Hospital Emergency Loan Program Fund to a hospital, or to a governmental entity representing a closed hospital, for purposes of preventing the closure of, or facilitating the reopening of, those hospitals.
(f)A hospital or a closed hospital shall provide the authority with financial information, in a format determined by the authority, demonstrating the hospital’s need for assistance due to financial hardship.
(g)The authority may make deductions from the Hospital Emergency Loan Program Fund to cover its own administrative expenses. Administrative expenditures shall be limited to 5 percent of the initial appropriation, plus 5 percent of all moneys recaptured.
(h)In administering the loan program pursuant to this section, the authority shall not be subject to the rulemaking
provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2).
(i)This section shall remain in effect only until January 1, 2029, and as of that date is repealed.