Bill Text: MI HB4078 | 2019-2020 | 100th Legislature | Introduced

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Bill Title: Businesses: nonprofit corporations; municipal health facilities operated by certain cities under home rule cities act; provide for incorporation by operation of law. Amends secs. 251, 253, 254, 255, 256 & 258 of 1987 PA 230 (MCL 331.1251 et seq.) & adds sec. 252a.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2019-01-23 - Bill Electronically Reproduced 01/23/2019 [HB4078 Detail]

Download: Michigan-2019-HB4078-Introduced.html

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HOUSE BILL No. 4078

 

 

January 23, 2019, Introduced by Rep. Neeley and referred to the Committee on Health Policy.

 

     A bill to amend 1987 PA 230, entitled

 

"Municipal health facilities corporations act,"

 

by amending sections 251, 253, 254, 255, 256, and 258 (MCL

 

331.1251, 331.1253, 331.1254, 331.1255, 331.1256, and 331.1258),

 

sections 251, 253, 254, and 255 as added by 1988 PA 502, section

 

256 as amended by 2010 PA 331, and section 258 as amended by 2011

 

PA 195, and by adding section 252a.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 251. (1) The city council of a city or the village

 

council of a village that owns or operates a public hospital may

 

incorporate 1 or more corporations under this act. The city council

 

of a city or the village council of a village that does not own or

 

operate a public hospital may also establish such a public hospital

 

or other health care facility, or both, by incorporating 1 or more

 

corporations under this act.

 

     (2) The Except as provided in section 252a, the question of

 

establishing 1 or more corporations under this act shall be

 

presented to the city or village electors at a special or regular

 

city or village election before incorporation. An election under

 

this section shall be conducted pursuant to under the Michigan

 

election law, Act No. 116 of the Public Acts of 1954, being

 

sections 168.1 to 168.992 of the Michigan Compiled Laws.1954 PA

 

116, MCL 168.1 to 168.992.

 

     Sec. 252a. (1) A city hospital that was established under the

 

home rule cities act, 1909 PA 279, MCL 117.1 to 117.38, is in a

 

city that has a population of fewer than 103,000 as of the most

 

recent federal decennial census, and is not incorporated as of the

 

effective date of this section, is considered a corporation

 

incorporated and existing under this act, without the adoption or

 

filing of articles of incorporation, without a vote of the

 

electors, and without diminishing the terms of office of

 

individuals serving on the board of the city hospital on the

 

effective date of this section.

 

     (2) The city council of a city that operates a hospital that

 

is considered incorporated by operation of subsection (1) may at

 

any time after the effective date of this section adopt articles of

 

incorporation for the corporation under sections 255(2) and 256.

 

Until the effective date of articles of incorporation adopted under

 

this subsection, the provisions of this act are considered to

 

constitute the articles of incorporation of the corporation.

 

     Sec. 253. (1) If the city or village electors approve the

incorporation of a corporation under this act, the or if a city

 

hospital is incorporated by operation of section 252a(1), all of

 

the following apply:

 

     (a) The corporation shall be is considered to be the successor

 

to the city public hospital for the city or the village public

 

hospital for the village, and the terms of office of the trustees

 

of the city public hospital or village public hospital shall

 

continue.

 

     (b) The corporation shall have has all of the rights,

 

privileges, immunities, and franchises of its predecessor city

 

public hospital or village public hospital, all personal property,

 

all debts due on whatever account, and all choses in action.

 

     (c) All interests and licenses of or belonging to the city

 

public hospital or village public hospital shall be are considered

 

to be transferred to, and vested in, the corporation without

 

further act or deed, . Such and those interests and licenses shall

 

not be considered to have undergone any change of ownership for the

 

purpose of any law or regulation. , nor shall the

 

     (d) The fiscal year of any city public hospital or village

 

public hospital shall not be considered to have ended solely

 

because the city or village incorporates a corporation under this

 

act.

 

     (e) The title to any real estate, or any interest in real

 

estate, vested in any city or city public hospital or village or

 

village public hospital, shall does not revert or in any way be and

 

is not impaired because a corporation succeeds a city public

 

hospital or village public hospital pursuant to under this act.

     (2) A corporation incorporated by a city or village under this

 

act shall be or incorporated by operation of section 252a(1) is

 

considered to be the owner of all money and other property then

 

deposited in the treasury of the city or village to the credit of

 

the hospital fund and shall be is entitled to all interest and

 

other earnings accruing on those funds on and after the effective

 

date of the incorporation. The corporation shall be is the owner of

 

all other personal property used exclusively by or for the city

 

public hospital or village public hospital. The treasurer of any

 

city or village having that has custody of money and other property

 

belonging that belongs to a corporation pursuant to under this

 

subsection shall arrange for the prompt transfer of such that money

 

and other property to the custody of the corporation.

 

     (3) A corporation incorporated by a city or village under this

 

act shall be or incorporated by operation of section 252a(1) is the

 

employer of all persons individuals who are employed by the city

 

public hospital or village public hospital and shall assume and be

 

bound by any labor agreement in existence on the effective date of

 

the incorporation and applicable to the city public hospital or

 

village public hospital, but shall not be subject to greater

 

obligations with respect to the terms, conditions, or duration of

 

employment than was the city public hospital or village public

 

hospital immediately preceding the effective date of the

 

incorporation. A representative of the employees or a group of

 

employees who is entitled to represent the employees or group of

 

employees under Act No. 336 of the Public Acts of 1947, being

 

sections 423.201 to 423.216 of the Michigan Compiled Laws, 1947 PA

336, MCL 423.201 to 423.217, shall continue to be the

 

representative of the employees or group of employees. This

 

subsection does not limit the rights of the hospital employees,

 

under applicable law, to assert that a bargaining representative

 

protected by this subsection is no longer the representative of the

 

employees.

 

     (4) A corporation incorporated by a city or village under this

 

act shall be or incorporated by operation of section 252a(1) is

 

responsible and liable for all liabilities and obligations of the

 

city public hospital or village public hospital it succeeds. A

 

claim existing or an action or proceeding pending by or against a

 

city public hospital or village public hospital may be prosecuted

 

by the corporation succeeding it in the name of the city public

 

hospital or village public hospital, or the corporation may be

 

substituted. The rights of creditors and any lien upon the property

 

of a city or a city public hospital or a village or village public

 

hospital existing on the effective date of the incorporation shall

 

not be impaired.

 

     Sec. 254. (1) If, in accordance with sections 251 and 252,

 

connection with the incorporation of a corporation for which a vote

 

of electors is required under section 251, a majority of all the

 

votes cast upon the question are in favor of establishing a

 

corporation, the city council or village council may incorporate a

 

corporation in order to implement or further the public purposes

 

stated in section 102 through the exercise of all or some of the

 

powers provided in under this act.

 

     (2) The board of trustees of a corporation may incorporate 1

or more subsidiary corporations in order to implement or further

 

the public purposes stated in section 102 through the exercise of

 

all or some of the powers provided in this act.

 

     (3) The city council or village council shall adopt a suitable

 

name for any corporation which that it incorporates or that is

 

incorporated by operation of section 252a(1). The board of trustees

 

of a corporation shall adopt a suitable name for any subsidiary

 

corporation which that it incorporates.

 

     Sec. 255. (1) The Except as provided in section 252a, the

 

incorporation of a corporation by a city or village shall be

 

accomplished by approval of articles of incorporation by resolution

 

of the city council or village council. The incorporation of a

 

subsidiary corporation shall be accomplished by approval of

 

articles of incorporation by resolution of the city council or

 

village council.

 

     (2) The articles of incorporation approved under subsection

 

(1) or section 252a(2) shall set forth the name of the corporation

 

or subsidiary corporation; the purposes for which it is created,

 

which may include all of the purposes for which a corporation or

 

subsidiary corporation may be organized under this act; the number,

 

terms, and manner of selection of the officers of its board of

 

trustees or subsidiary board, which shall include a chairperson and

 

a secretary, and a general description of their respective powers

 

and duties; the effective date upon which of the incorporation;

 

shall become effective; and the name of the newspaper in which the

 

articles of incorporation shall be published. The articles of

 

incorporation of a subsidiary corporation shall also contain the

name of the corporation acting as its parent, and shall specify the

 

size of the subsidiary board in accordance with section 258(2). The

 

articles of incorporation of a corporation may specify transactions

 

otherwise within the powers of its board of trustees which shall

 

that require approval by resolution of the city council or village

 

council, and may also contain other matters considered expedient to

 

be included in the articles of incorporation. The articles of

 

incorporation of a subsidiary corporation may specify transactions

 

otherwise within the powers of its subsidiary board which shall

 

that require approval by resolution of the board of trustees of its

 

designated parent corporation, and may also contain other matters

 

considered expedient to be included in the articles of

 

incorporation.

 

     Sec. 256. (1) The articles of incorporation of a corporation

 

incorporated by a city or village or adopted under section 252a(2)

 

shall be executed in duplicate by the chairperson of the city

 

council or the president of the village council or other member of

 

the city council or village council designated by the city council

 

or village council. The articles of incorporation of a subsidiary

 

corporation of a corporation incorporated by a city or village

 

shall be executed in duplicate by the chairperson of the board of

 

trustees of the parent corporation, or other trustee designated by

 

the board of trustees. The articles of incorporation shall then be

 

delivered to the city clerk or village clerk who shall file 1 copy

 

in his or her office and the other with the secretary of the

 

corporation or subsidiary corporation when a secretary is selected.

 

The city clerk or village clerk shall cause a copy of the articles

of incorporation to be published once in a newspaper designated in

 

the articles of incorporation and circulating within the city or

 

village, accompanied by a statement that the right exists to

 

question the validity of the incorporation in court as provided in

 

under this section, if applicable.

 

     (2) The city clerk or village clerk shall file 1 printed copy

 

of articles of incorporation delivered to him or her under

 

subsection (1) with the secretary of state and 1 printed copy in

 

his or her office. The city clerk or village clerk shall attach to

 

each of the printed copies his or her certificate setting forth

 

that the copy is a true and complete copy of the original articles

 

of incorporation on file in his or her office.

 

     (3) The Except as provided in section 252a(2), the

 

incorporation of a corporation or a subsidiary corporation

 

described in this section is effective at the time provided in the

 

articles of incorporation, but not before approval of the question

 

of incorporation by the city or village electors under section 251.

 

     (4) The validity of the incorporation of a corporation or a

 

subsidiary corporation described in this section is conclusively

 

presumed unless questioned in a court of competent jurisdiction

 

within 60 days after the certified copy of the articles of

 

incorporation of that corporation or subsidiary corporation is

 

filed with the secretary of state under subsection (2). This

 

subsection does not apply to a corporation incorporated by

 

operation of section 252a(1).

 

     (5) This section does not apply to articles of incorporation

 

of a restructured corporation or restructured subsidiary

corporation described in section 305a.

 

     Sec. 258. (1) All of the following apply to each board of

 

trustees and subsidiary board of a corporation incorporated by a

 

city or village, or to a corporation incorporated by operation of

 

section 252a(1) that has adopted articles of incorporation under

 

section 252a(2):

 

     (a) The board shall consist of at least 5 and not more than 15

 

trustees. The exact number of trustees and the length of their

 

terms of office shall be as specified in the articles of

 

incorporation.

 

     (b) Except for the initial appointments to a board of trustees

 

or subsidiary board of a newly incorporated corporation or

 

subsidiary corporation, or to the initial appointment to the board

 

of trustees of a corporation incorporated by operation of section

 

252a(1) that has adopted articles of incorporation under section

 

252a(2), the term of office of a trustee begins on January 1.

 

     (c) The terms of office of trustees shall be staggered so that

 

an approximately equal number of terms expire at the end of each

 

year or each 2 years, except that terms may be fixed so that the

 

shortest terms do not expire until the end of the second year

 

following the incorporation of a corporation or a subsidiary

 

corporation or the effective date of articles of incorporation

 

adopted under section 252a(2) by a corporation incorporated by

 

operation of section 252a(1). A trustee whose term of office has

 

expired expires shall continue to serve until his or her successor

 

is appointed.

 

     (2) If a city or village incorporates a corporation under this

act, the city council or village council shall appoint the initial

 

board of trustees. After If an unincorporated city hospital that is

 

already in existence as of the effective date of the amendatory act

 

that added section 252a is automatically incorporated under section

 

252a(1), appointments to the board of trustees shall be made in the

 

manner previously specified in the city charter, until the

 

effective date of articles of incorporation adopted under section

 

252a(2) that specify otherwise. For a city hospital that is already

 

in existence as of the effective date of the amendatory act that

 

added section 252a, after the initial board of trustees, when a

 

trustee's term of office expires or if a trustee's office is

 

otherwise vacant, the remaining members of the board of trustees

 

shall fill the vacancy with the advice and consent of the city

 

council or village council. This subsection does not apply to an ex

 

officio member of a board of trustees who is appointed by a chief

 

executive officer.

 

     (3) The terms of office of trustees serving on the board of a

 

city public hospital or village public hospital before

 

incorporation that is subsequently incorporated under this act or

 

before the effective date of articles of incorporation adopted

 

under section 252a(2) by a corporation incorporated by operation of

 

section 252a(1) shall not be diminished, except that the articles

 

of incorporation for that successor corporation may prospectively

 

establish new lengths of terms of office for the board of trustees,

 

and may prospectively alter the board size.

 

     (4) If a city or village incorporates a subsidiary

 

corporation, the board of trustees of the parent corporation shall

appoint the initial subsidiary board with the advice and consent of

 

the city council or village council. After the initial subsidiary

 

board, when a trustee's term of office expires or if a trustee's

 

office is otherwise vacant, the board of trustees of the parent

 

corporation shall fill the vacancy with the advice and consent of

 

the city council or village council. This subsection does not apply

 

to an ex officio member of a subsidiary board who is appointed by a

 

chief executive officer.

 

     (5) A trustee of a corporation or subsidiary corporation

 

established by a city or village, or a trustee of a corporation

 

incorporated by operation of section 252a(1) that adopts articles

 

of incorporation under section 252a(2), shall be chosen based on

 

his or her qualifications for that office, but not more than 1/3 of

 

the trustees serving at any time shall be direct providers of

 

health care. The articles of incorporation of the corporation or

 

subsidiary corporation may require that a trustee be a resident of

 

the city or village. A trustee of the parent corporation, including

 

its chief executive officer, and the chief executive officer of a

 

subsidiary corporation are eligible for appointment to a subsidiary

 

board, and those offices are not incompatible. A trustee is

 

eligible for reappointment.

 

     (6) Within 9 days after commencing his or her term of office,

 

a trustee shall take the oath of office as provided in section 1 of

 

article XI of the state constitution of 1963.

 

     (7) A trustee of a corporation incorporated by a city or

 

village, or a trustee of a corporation incorporated by operation of

 

section 252a(1) that adopts articles of incorporation under section

252a(2), may be removed from office for cause either by vote of a

 

majority of the members then serving on the city council or village

 

council or by vote of a majority of the members then serving on the

 

board of trustees of the corporation. A trustee of a subsidiary

 

corporation may be removed from office for cause either by vote of

 

a majority of the members then serving on the city council or

 

village council or by vote of a majority of the members then

 

serving on the board of trustees of the parent corporation. As used

 

in this subsection, "cause" includes, but is not limited to,

 

incompetency to properly exercise duties; official misconduct; or

 

habitual or willful neglect of duty, including, but not limited to,

 

failure to attend meetings, including committee meetings, in

 

accordance with standards determined by the board of trustees of

 

the corporation or subsidiary board.

 

     (8) A trustee of a corporation incorporated by a city or

 

village, or a trustee of a corporation incorporated by operation of

 

section 252a(1) that adopts articles of incorporation under section

 

252a(2), shall not be removed from office on grounds of misconduct

 

or neglect unless the trustee is served with a notice of hearing

 

and a copy of the asserted ground for removal, and is given full

 

opportunity to be heard, either in person or by counsel, before a

 

vote is taken on the question of removal from office.

 

     (9) Subsections (1) to (8) do not apply to a city hospital

 

that exists on the effective date of the amendatory act that added

 

this subsection, that is incorporated by operation of section

 

252a(1), and that has not adopted articles of incorporation under

 

section 252a(2). Until a city hospital incorporated by operation of

section 252a(1) adopts articles of incorporation under 252a(2), the

 

city charter of the city that established the hospital shall govern

 

the number, term of office, appointment, qualification, and removal

 

of trustees serving on the board of that corporation.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.