Bill Text: MI SB1114 | 2017-2018 | 99th Legislature | Introduced

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Bill Title: Health facilities; county medical care facilities; sales of municipal health facilities to for-profit corporations; authorize under certain circumstances. Amends title & secs. 103, 304 & 307 of 1987 PA 230 (MCL 331.1103 et seq.) & adds sec. 306a.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2018-09-05 - Referred To Committee On Michigan Competitiveness [SB1114 Detail]

Download: Michigan-2017-SB1114-Introduced.html

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SENATE BILL No. 1114

 

 

September 5, 2018, Introduced by Senator CASPERSON and referred to the Committee on Michigan Competitiveness.

 

 

 

     A bill to amend 1987 PA 230, entitled

 

"Municipal health facilities corporations act,"

 

by amending the title and sections 103, 304, and 307 (MCL 331.1103,

 

331.1304, and 331.1307), the title and sections 304 and 307 as

 

amended by 1988 PA 502 and section 103 as amended by 2010 PA 331,

 

and by adding section 306a.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

TITLE

 

     An act to authorize certain local governmental units to

 

incorporate municipal health facilities corporations and subsidiary

 

municipal health facilities corporations for establishing,

 

modifying, operating, and managing health services and acquiring,

constructing, adding to, repairing, remodeling, renovating,

 

equipping, and re-equipping hospitals and other health care

 

facilities and related purposes; to provide for the application of

 

this act to existing municipal hospitals and for the transfer of

 

ownership of hospital funds and personal property; to validate and

 

ratify the existence, organization, actions, proceedings, and board

 

membership of existing organizations acting as county public

 

hospitals; to provide for the appointment of trustees; to grant

 

certain powers of a public body corporate to health facilities

 

corporations and subsidiary health facilities corporations; to

 

empower certain local governmental units to encumber property for

 

the benefit of, transfer or make property available to, issue bonds

 

to construct facilities to be used by, appropriate funds for, and

 

levy a tax for, municipal health facilities corporations and

 

subsidiary municipal health facilities corporations; to empower

 

certain local governmental units to guarantee obligations of

 

municipal health facilities corporations and subsidiary municipal

 

health facilities corporations and to permit certain local

 

governmental units to pledge their full faith and credit to pay

 

such those guaranties; to provide for transfer of ownership or

 

operation of health care facilities and health services to

 

nonprofit health care organizations and business organizations; to

 

authorize municipal health facilities corporations and subsidiary

 

municipal health facilities corporations to borrow money and issue

 

notes for the purposes of meeting expenses of operation and to

 

issue corporation obligations for the purpose of acquisition,

 

construction, repair, remodeling, equipping or re-equipping of

health care facilities and for the refinancing, refunding, or

 

refunding in advance of indebtedness of the municipal health

 

facilities corporations or the subsidiary municipal health

 

facilities corporations or of indebtedness of certain local

 

governmental units undertaken on their behalf; to authorize

 

municipal health facilities corporations and subsidiary municipal

 

health facilities corporations to enter into mortgages, deeds of

 

trust, and other agreements for security which may include

 

provisions for the appointment of receivers; to exempt obligations

 

and property of municipal health facilities corporations and

 

subsidiary municipal health facilities corporations from taxation;

 

and to provide other rights, powers, and duties of municipal health

 

facilities corporations and subsidiary municipal health facilities

 

corporations.

 

     Sec. 103. As used in this act:

 

     (a) "Board of trustees" means the board of trustees of a

 

corporation created under or governed by this act.

 

     (b) "Business organization" means any of the following:

 

     (i) A domestic business corporation, as defined in section 105

 

of the nonprofit corporation act, 1982 PA 162, MCL 450.2105.

 

     (ii) A foreign business corporation, as defined in section 107

 

of the nonprofit corporation act, 1982 PA 162, MCL 450.2107.

 

     (iii) A domestic limited liability company.

 

     (iv) A foreign limited liability company.

 

     (v) _______________________.

 

     (c) (b) "City" means a city establishing a corporation

 

incorporated under, or governed by, this act.

     (d) (c) "City public hospital" means a health care facility

 

that is owned or operated by a city.

 

     (e) (d) "Corporation" means a municipal health facilities

 

corporation incorporated under this act or created under 1913 PA

 

350, MCL 331.151 to 331.169, or under 1945 PA 109, MCL 331.201 to

 

331.213, and governed by this act. The term includes a restructured

 

corporation.

 

     (f) (e) "Corporation obligation" means a bond, note, or any

 

other legal instrument issued by a corporation or subsidiary

 

corporation under chapter 4 that evidences indebtedness of a

 

corporation or a subsidiary corporation, including principal,

 

interest, and premiums, if any, on that indebtedness. Notes issued

 

under section 401 are not considered corporation obligations.

 

     (g) (f) "County" means a county establishing a corporation

 

incorporated under, or governed by, this act.

 

     (h) (g) "County public hospital" means a public corporation

 

organized and existing or purportedly organized and existing under

 

1913 PA 350, MCL 331.151 to 331.169, or under 1945 PA 109, MCL

 

331.201 to 331.213, on the effective date of this act.February 27,

 

1988.

 

     (i) (h) "Direct provider of health care" means a person or

 

organization whose primary current activity is providing health

 

services to individuals. The term includes a person or organization

 

licensed, certified, or registered under article 6 or 15 of the

 

public health code, 1978 PA 368, MCL 333.6101 to 333.6523 333.6230

 

to 333.6251 and 333.16101 to 333.18838, or a professional

 

corporation or other public or private organization composed of or

employing direct providers of health care.

 

     (j) (i) "Health care facilities" means buildings, structures,

 

or equipment suitable and intended for, or incidental or ancillary

 

to, use in providing health services, including, but not limited

 

to, hospitals; hospital long-term care units; infirmaries;

 

sanatoria; nursing homes; medical care facilities; outpatient

 

clinics; ambulatory care facilities; surgical and diagnostic

 

facilities; hospices; clinical laboratories; shared service

 

facilities; laundries; meeting rooms; classrooms and other

 

educational facilities; students', nurses', interns', or

 

physicians' residences; administration buildings; facilities for

 

use as or by health maintenance organizations; facilities for

 

ambulance operations, advanced mobile emergency care services, and

 

limited advanced mobile emergency care services; research

 

facilities; facilities for the care of dependent children;

 

maintenance, storage, and utility facilities; parking lots and

 

structures; garages; office facilities not less than 80% of the net

 

leasable space of which is intended for lease to or other use by

 

direct providers of health care; facilities for the temporary

 

lodging of outpatients or families of patients; residential

 

facilities for use by the aged or disabled; and all necessary,

 

useful, or related equipment, furnishings, and appurtenances and

 

all lands necessary or convenient as sites for the health care

 

facilities described in this subdivision.

 

     (k) (j) "Health services" means 1 or more of the following:

 

     (i) Diagnosis and medical and surgical treatment by direct

 

providers of health care of persons suffering from illness, injury,

and disability, including persons suffering from tuberculosis and

 

other contagious and infectious diseases, and persons requiring

 

maternity care, rehabilitation, psychiatric care, or substance

 

abuse services; dentistry and related services; podiatric medicine

 

and surgery; optometric services; psychological services; skilled,

 

basic, and visiting nursing services and home health services;

 

ambulance operations; advanced mobile emergency care services and

 

limited advanced emergency services; physical, respiratory, and

 

occupational therapy; health maintenance services; services for the

 

prevention of illness, injury, and disability and for the

 

promotion, maintenance, and improvement of public health and

 

welfare; food services and care for dependent children, the

 

disabled, and the elderly; and social work and chaplaincy services

 

provided in conjunction with other health services described in

 

this subparagraph.

 

     (ii) Conduct of or participation in programs for the education

 

and training of health services personnel, including undergraduate,

 

internship, residency, postgraduate, and continuing education

 

programs for physicians; schools and other training programs for

 

nurses, technicians, therapists, pharmacists, and other health

 

services personnel; and in-service education of employees of health

 

care facilities.

 

     (iii) Research relating to the cause, prevention, and

 

treatment of illness, injury, and disability, and the protection,

 

promotion, or improvement of public health and welfare.

 

     (l) (k) "Local governmental unit" means a county, city, or

 

village.

     (m) (l) "Nonprofit health care organization" means a public

 

body organized and existing under the laws of this state and

 

authorized to provide health services, a nonprofit corporation

 

incorporated under the nonprofit corporation act, 1982 PA 162, MCL

 

450.2101 to 450.3192, or a not-for-profit corporation incorporated

 

under the laws of another state and qualified to do business in

 

this state, that is organized and operated exclusively for

 

charitable, scientific, educational, or religious purposes and

 

authorized to provide health services, no part of the net earnings

 

of which inures to the benefit of any private shareholder or

 

individual.

 

     (n) "Person" means an individual, a partnership, a domestic or

 

foreign corporation, a limited liability company, or any other

 

association, corporation, trust, or legal entity.

 

     (o) (m) "Project costs" means the total of the reasonable or

 

necessary costs incurred for carrying out the acquisition,

 

construction, repair, remodeling, equipping, or re-equipping of

 

health care facilities. The term includes, but is not limited to,

 

any of the following costs: studies, surveys, plans, and

 

specifications; architectural and engineering services; fees,

 

charges, and expenses incurred in obtaining permits, approvals, and

 

licenses for the acquisition, and initial operation of the health

 

care construction, financing, facilities; legal, organizational,

 

marketing, and other special services; acquisition, demolition,

 

construction, equipment, and site development of new and

 

rehabilitated buildings; rehabilitation, construction, repair, or

 

remodeling of existing buildings; interest and carrying charges

during construction and before full earnings are achieved but for a

 

period not to exceed 3 years after the date of the corporation

 

obligations; operating expenses before full earnings are achieved,

 

but for a period not to exceed 1 year following completion of

 

construction; and reasonable reserves for payment of principal and

 

interest on corporation obligations, not exceeding 15% of the

 

principal amount of the corporation obligations. Project costs

 

shall also include reimbursement of a corporation or a subsidiary

 

corporation for any of the project costs described in this section

 

expended before the issuance and delivery of the corporation

 

obligations.

 

     (p) (n) "Restructured corporation" means a corporation that

 

has completed the process described in section 305a.

 

     (q) (o) "Restructured subsidiary corporation" means a

 

subsidiary corporation that has completed the process described in

 

section 305a.

 

     (r) (p) "Subsidiary board" means the board of trustees of a

 

subsidiary corporation.

 

     (s) (q) "Subsidiary corporation" means a subsidiary municipal

 

health facilities corporation incorporated under this act. The term

 

includes a restructured subsidiary corporation.

 

     (t) (r) "Trustee" means a person an individual serving on a

 

board of trustees or a subsidiary board.

 

     (u) (s) "Village" means a village establishing a corporation

 

incorporated under, or governed by, this act.

 

     (v) (t) "Village public hospital" means a health care facility

 

that is owned or operated by a village.

     Sec. 304. Without limiting the powers described in section 301

 

and elsewhere in this act, each board of trustees and subsidiary

 

board, in furtherance of its purposes and consistent with its

 

articles of incorporation, but subject to applicable licensing and

 

other regulatory requirements, may do any or all of the following:

 

     (a) Establish sites for its health care facilities inside or

 

outside the local governmental unit and relocate its health care

 

facilities in the same municipality or elsewhere.

 

     (b) Acquire by purchase, gift, devise, lease, sublease,

 

installment purchase agreement, land contract, option, or by any

 

other means, hold, and own in its own name health care facilities

 

and interests therein and other real and personal property,

 

including, but not limited to, interests in condominiums, and

 

property subject to mortgages, security interests, or other liens,

 

necessary or convenient to fulfill its purposes; and, for the

 

purpose of condemnation, proceed under the uniform condemnation

 

procedures act, Act No. 87 of the Public Acts of 1980, being

 

sections 213.51 to 213.77 of the Michigan Compiled Laws, 1980 PA

 

87, MCL 213.51 to 213.75, or other applicable statute.

 

     (c) Construct, add to, repair, remodel, renovate, equip, and

 

re-equip health care facilities and establish rules, regulations,

 

or policies conforming with applicable law with respect to

 

requirements for competitive bidding, advertising, advertising for

 

bids and letting contracts. However, in all cases, the right to

 

reject any and all bids shall be is reserved.

 

     (d) Dispose Subject to sections 306 and 306a, dispose of its

 

real and personal property by sale, lease, sublease, installment

sale agreement, land contract, or other lawful means.

 

     (e) Purchase, contract for, or acquire administrative,

 

management, and other services necessary or convenient to the

 

fulfillment of its purposes from the local governmental unit and

 

from other sources and sell these services to the local

 

governmental unit and to other public and private persons.

 

     (f) Apply for, negotiate, receive, and accept gifts or grants

 

of money, property, or services, or other aid offered or made

 

available to it, and comply, subject to the provisions of this act

 

and other applicable law, with the terms of such gifts, grants, a

 

gift, grant, or other aid.

 

     (g) Provide insurance , or reinsurance, obtain indemnification

 

or establish programs or trusts for self-insurance against loss in

 

connection with its assets or any liability in connection with its

 

activities, . The insurance, reinsurance, indemnification, or self-

 

insurance shall be in such forms and amounts, and from such

 

sources, as in any form and amount and from any source it considers

 

appropriate.

 

     (h) Invest funds not immediately required for its purposes,

 

funds accumulated to provide retirement or pension benefits,

 

endowment funds created for charitable or educational purposes, and

 

other funds in any manner in which a local governmental unit may

 

then lawfully invest such property those funds and loan its funds

 

in furtherance of its purposes.

 

     (i) Borrow money from the local governmental unit in

 

accordance with under section 305(e) and enter into agreements for

 

the repayment of the loans.

     (j) Grant mortgages, security interests, and other liens in

 

its real and personal property, sell and lease back its real and

 

personal property, and pledge its property or revenues in

 

furtherance of its purposes.

 

     (k) Guarantee, in whole or in part, bonds, notes, and other

 

obligations of the local governmental unit undertaken for its

 

benefit and grant mortgages, security interests, and other liens in

 

its real and personal property and pledge its property or revenues

 

to secure obligations of the local governmental unit undertaken for

 

its benefit, with or without guaranteeing such those obligations.

 

     (l) Transfer real or personal property to subsidiary

 

corporations or parent corporations in furtherance of its purposes

 

or the purposes of the subsidiary or parent corporations, with or

 

without monetary consideration, and transfer money and other real

 

and personal property not required to carry out its purposes to the

 

local governmental unit.

 

     (m) Guarantee, in whole or in part, corporation obligations,

 

bonds, notes, and other obligations of a subsidiary corporation or

 

a parent corporation.

 

     (n) Grant mortgages, security interests, or other liens in its

 

real and personal property and pledge its property or revenues to

 

secure corporation obligations, bonds, notes, or other obligations

 

of 1 or more of its subsidiary corporations or its parent

 

corporation, with or without guaranteeing such those obligations.

 

     Sec. 306a. (1) Subject to applicable licensing and other

 

regulatory requirements, and subject to the requirements of this

 

section, a board of trustees or a subsidiary board may enter into

and carry out agreements for the sale or transfer of the ownership

 

of a corporation or subsidiary corporation, or the sale or transfer

 

of ownership or operation of some or all of the health care

 

facilities and related assets or health services of the corporation

 

or subsidiary corporation, to a business organization by sale,

 

installment sales agreement, land contract, lease, lease with an

 

option to purchase, sublease, contract, option, or by any other

 

means.

 

     (2) In establishing the terms of a sale or transfer described

 

in subsection (1), the board of trustees or subsidiary board may

 

take into account, in addition to the monetary consideration for

 

the sale or transfer, if any, 1 or more of the following:

 

     (a) The ability and willingness of the business organization

 

to continue to provide health services to residents of the local

 

governmental unit.

 

     (b) The assumption by the business organization of

 

liabilities, obligations, and risks associated with ownership or

 

operation of the corporation, subsidiary corporation, or health

 

care facilities and health services sold or transferred, including

 

those associated with outstanding bonds, notes and obligations,

 

pension, retirement, and other benefits for employees and employees

 

and conditions attached to public or private grants.

 

     (c) The willingness and ability of the business organization

 

to provide services to those unable to pay fully for their care.

 

     (d) The elimination of or reduction in support required for

 

the corporation, subsidiary corporation, or health care facilities

 

or health services from tax revenues or other public sources.

     (e) The ability and willingness of the business corporation to

 

expand or improve the corporation, subsidiary corporation, or

 

health care facilities or health services being sold or

 

transferred.

 

     (f) Any other factors bearing on the health and welfare of the

 

residents of the local governmental unit that the board of trustees

 

or subsidiary board considers appropriate.

 

     (3) A board of trustees or subsidiary board may accept secured

 

or unsecured notes, bonds, or obligations given by or on behalf of

 

a business organization or any other forms of payment that it

 

considers appropriate in full or partial satisfaction of any

 

monetary consideration provided under an agreement for a sale or

 

transfer described in subsection (1).

 

     (4) Any board of trustees or subsidiary board that sells or

 

transfers a corporation, subsidiary corporation, or health

 

facilities under this section shall require, for a term of not less

 

than 30 years, that use of the health care facilities owned by the

 

sold or transferred corporation or subsidiary corporation or the

 

sold or transferred health care facilities shall be open to all

 

regardless of race, religion, color, national origin, sex, age,

 

disability, marital status, sexual preference, or source of

 

payment, and that the business organization acquiring those health

 

care facilities or that corporation or subsidiary corporation shall

 

provide an equal opportunity for employment, without discrimination

 

as to race, religion, color, national origin, sex, age, disability,

 

marital status, or sexual preference.

 

     (5) Any transfer made by a subsidiary board in reliance on

this section shall be made only with the prior approval of the

 

board of trustees of its parent corporation.

 

     (6) Any sale or transfer of ownership of a corporation or

 

subsidiary corporation under this section shall be made only with

 

the prior approval of the county board of commissioners, city

 

council, or village council. Any sale or transfer of ownership or

 

operation of health care facilities or health services by a

 

corporation or a subsidiary corporation under this section shall be

 

made only with the prior approval of the county board of

 

commissioners, city council, or village council, if either of the

 

following applies:

 

     (a) The health care facilities or health services to be

 

transferred provided more than 10% of the gross revenues of the

 

corporation or subsidiary corporation making the transfer,

 

determined in accordance with generally accepted accounting

 

principles, in either of the 2 full fiscal years of the corporation

 

or subsidiary corporation completed immediately preceding the date

 

of the transfer.

 

     (b) A majority of the governing body of the business

 

organization acquiring the health care facilities or health

 

services is composed of individuals who are also serving as

 

trustees of the corporation or the subsidiary corporation making

 

the transfer.

 

     (7) Notwithstanding any other provision of this section, no

 

sale or transfer under this section shall be made in such a way as

 

to impair the obligation of the corporation or the subsidiary

 

corporation with respect to any outstanding corporation obligation,

bond, note, or contract.

 

     Sec. 307. (1) As used in this section:

 

     (a) "Contractor" means an entity which a business organization

 

or other entity that enters into a contract or other agreement with

 

a local governmental unit, corporation, or subsidiary corporation

 

for the purpose of providing health services or for the management,

 

administration, or operation of a health care facility or

 

department of a health care facility, pursuant to under section

 

303(h), 304(d), 304(e), 304(l), 305(b), 305(i), or 306, or 306a.

 

Contractor includes a local governmental unit, corporation, or

 

subsidiary corporation.

 

     (b) "Transferee" means an entity which a business organization

 

or other entity that receives, accepts, or comes into possession or

 

an ownership or leasehold interest in a health care facility,

 

department of a health care facility, or other real or personal

 

assets of a health care facility pursuant to under section 303(h),

 

304(d), 304(e), 304(l), 305(b), 305(i), or 306, or 306a. Transferee

 

includes a corporation, county, or subsidiary corporation.

 

     (c) "Affected health care facility" means a health care

 

facility or part or department of a health care facility regularly

 

employing 5 or more persons individuals on a full-time basis or the

 

equivalent which that is the subject of any transaction made

 

pursuant to under section 303(h), 304(d), 304(e), 304(l), 305(b),

 

305(i), or 306, or 306a.

 

     (2) A local governmental unit, corporation, or subsidiary

 

corporation shall not enter into a contract, lease, agreement,

 

transfer, or other arrangement authorized in section 303(h),

304(d), 304(e), 304(l), 305(b), 305(i), or 306, or 306a with a

 

contractor or transferee under which the contractor or transferee

 

agrees or can reasonably be expected to continue the operation of

 

the affected health care facility for the purpose of providing

 

health services unless the local governmental unit, corporation, or

 

subsidiary corporation agrees to retain the employees of the

 

affected health care facility and continue all collective

 

bargaining agreements covering such those employees or unless the

 

contractor or transferee agrees to all of the following:

 

     (a) That all collective bargaining agreements in effect and

 

covering employees of the affected health care facility shall be

 

continued in full force and effect by the contractor or transferee.

 

     (b) That employees of the affected health care facility shall

 

be employed by the contractor or transferee and shall not be

 

replaced with new employees, except in accordance with applicable

 

collective bargaining agreements and with policies applicable to

 

the affected health care facility existing on the date of such the

 

contract, lease, agreement, transfer, or other arrangement.

 

     (c) That the contractor or transferee shall continue the terms

 

and conditions of employment of employees of the affected health

 

care facility.

 

     (d) That the contractor or transferee shall grant recognition

 

to each collective bargaining agent of employees of the affected

 

health care facility which that had representation rights on the

 

date of the contract, agreement, or other arrangement. However, a

 

contract, lease, agreement, transfer, or other arrangement may

 

permit such any modifications of the obligations of the contractor

or transferee as that may be required to conform to an order of the

 

national labor relations board National Labor Relations Board in

 

appropriate proceedings.

 

     (3) This section does not limit employees' rights, under

 

applicable law, to assert that their bargaining representative is

 

no longer representative of the employee.

 

     (4) If a local governmental unit, corporation, or subsidiary

 

corporation enters into an agreement providing for a transaction

 

that is subject to subsection (2), an employee of the affected

 

health care facility or the collective bargaining agent of such an

 

employee shall have standing to commence an action in the circuit

 

court for the county to determine if the transaction is in

 

compliance with subsection (2), if the action is commenced within

 

90 days after written notice by the local governmental unit,

 

corporation, or subsidiary corporation to the employees and

 

collective bargaining agent of the affected health care facility of

 

the execution of such the agreement. If the court determines that

 

the agreement is not in compliance with subsection (2), and if the

 

local governmental unit, corporation, or the subsidiary corporation

 

and the contractor or transferee do not agree to amendments making

 

the agreement in compliance with subsection (2), the court shall

 

declare the agreement void and of no effect and provide for

 

rescission of the transactions provided for under the agreement.

 

     (5) An employee of a county public hospital, city public

 

hospital, village public hospital, or other health care facility

 

who, on the effective date of this act, February 27, 1988,

 

participates in the federal old age, survivors, and disability

insurance benefits program through a voluntary agreement made

 

pursuant to under section 218 of title II of the social security

 

act, 42 U.S.C. USC 418, shall continue to participate in the

 

program if the individual is employed by a corporation or

 

subsidiary corporation pursuant to under this act.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.