Bill Text: NY A07018 | 2009-2010 | General Assembly | Introduced
Bill Title: Establishes requirements for conversion of medical or dental expense indemnity corporations or health or hospital service corporations from not-for-profit to corporations organized for pecuniary profit; provides for procedures for review of the conversion application before presenting a petition for conversion to the court and standards for approval of such applications; makes related provisions.
Spectrum: Partisan Bill (Democrat 7-0)
Status: (Introduced - Dead) 2010-01-06 - referred to insurance [A07018 Detail]
Download: New_York-2009-A07018-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
7018
2009-2010 Regular Sessions
I N A S S E M B L Y
March 18, 2009
___________
Introduced by M. of A. GOTTFRIED, PAULIN, COOK -- Multi-Sponsored by --
M. of A. DINOWITZ, GALEF, LAVINE, MAISEL -- read once and referred to
the Committee on Insurance
AN ACT to amend the insurance law, in relation to conversion of medical
or dental expense indemnity corporations or health or hospital service
corporations into a corporation organized for pecuniary profit
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. The insurance law is amended by adding a new section 7318
2 to read as follows:
3 S 7318. CONVERSION OF CERTAIN ARTICLE FORTY-THREE CORPORATIONS AND
4 HEALTH MAINTENANCE ORGANIZATIONS. (A) (1) THIS SECTION SHALL APPLY TO
5 ARTICLE FORTY-THREE CORPORATIONS NOT SUBJECT TO SECTION SEVEN THOUSAND
6 THREE HUNDRED SEVENTEEN OF THIS ARTICLE AND HEALTH MAINTENANCE ORGANIZA-
7 TIONS DOING BUSINESS AS NOT-FOR-PROFIT ORGANIZATIONS.
8 (2) FOR THE PURPOSES OF THIS SECTION:
9 (A) "APPLICANT" SHALL MEAN A CORPORATION OR OTHER ENTITY ORGANIZED
10 PURSUANT TO THIS ARTICLE OR A NOT-FOR-PROFIT ORGANIZATION CERTIFIED
11 PURSUANT TO ARTICLE FORTY-FOUR OF THE PUBLIC HEALTH LAW AND WHICH SEEKS
12 TO CONVERT INTO A CORPORATION OR OTHER ENTITY ORGANIZED FOR PECUNIARY
13 PROFIT OR INTO A FOR-PROFIT ORGANIZATION OF ANY KIND.
14 (B) "CONVERT" OR "CONVERSION" SHALL MEAN ANY TRANSACTION THE EFFECT OF
15 WHICH IS TO CHANGE THE STATUS, ORIENTATION OR OPERATION OF THE APPLICANT
16 FROM A NOT-FOR-PROFIT ORGANIZATION TO A FOR-PROFIT ORGANIZATION, INCLUD-
17 ING WITHOUT LIMITATION:
18 (I) ANY SALE, LEASE, TRANSFER, EXCHANGE, OPTION, CONVEYANCE, GIFT,
19 JOINT VENTURE, MERGER, CONSOLIDATION OR DISPOSITION OR SERIES OF DISPO-
20 SITIONS OVER A PERIOD UP TO FIVE YEARS; OR
21 (II) ANY TRANSFER OF CONTROL, RESPONSIBILITY OR GOVERNANCE OR SERIES
22 OF SUCH TRANSFERS OVER A PERIOD OF UP TO FIVE YEARS.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06377-01-9
A. 7018 2
1 (C) "CHARITABLE ASSET" SHALL MEAN THE FAIR MARKET VALUE OF THE APPLI-
2 CANT OR PORTION THEREOF INVOLVED IN THE CONVERSION.
3 (3) ANY APPLICANT SHALL, NO LESS THAN ONE HUNDRED FIFTY DAYS BEFORE
4 PRESENTING A PETITION FOR CONVERSION TO THE SUPREME COURT, SUBMIT AN
5 APPLICATION TO THE ATTORNEY GENERAL. THE APPLICANT SHALL PRESENT SUCH A
6 PETITION TO THE SUPREME COURT IN ACCORDANCE WITH THE PROCEDURES IN PARA-
7 GRAPHS (A), (B) AND (C) OF SECTION FIVE HUNDRED ELEVEN OF THE
8 NOT-FOR-PROFIT CORPORATION LAW. IF THE CONVERSION INVOLVES A TRANSFER OR
9 DISPOSITION SUBJECT TO SECTIONS FIVE HUNDRED TEN AND FIVE HUNDRED ELEVEN
10 OF THE NOT-FOR-PROFIT CORPORATION LAW, A MERGER OR CONSOLIDATION PURSU-
11 ANT TO ARTICLE NINE OF THE NOT-FOR-PROFIT CORPORATION LAW, AN AMENDMENT
12 PURSUANT TO ARTICLE EIGHT OF THE NOT-FOR-PROFIT CORPORATION LAW OR A
13 DISSOLUTION PURSUANT TO ARTICLE TEN OF THE NOT-FOR-PROFIT CORPORATION
14 LAW, THE APPLICANT SHALL ALSO COMPLY WITH ALL APPLICABLE REQUIREMENTS OF
15 SUCH LAW. SUCH APPLICATION SHALL INCLUDE, BUT NOT BE LIMITED TO:
16 (A) THE BOARD OF DIRECTORS RESOLUTION REQUIRED BY SECTION FIVE HUNDRED
17 TEN, EIGHT HUNDRED TWO, NINE HUNDRED TWO, NINE HUNDRED THREE, ONE THOU-
18 SAND ONE OR ONE THOUSAND TWO OF THE NOT-FOR-PROFIT CORPORATION LAW OR
19 COMPARABLE ACTION BY THE APPLICANT'S GOVERNING BODY;
20 (B) THE INFORMATION REQUIRED TO BE INCLUDED IN THE APPLICANT'S PETI-
21 TION TO THE SUPREME COURT;
22 (C) A STATEMENT OF THE BENEFITS THE APPLICANT PROVIDES TO THE PUBLIC
23 AND ITS SUBSCRIBERS, ENROLLEES AND BENEFICIARIES;
24 (D) AN ASSESSMENT OF THE IMPACT THAT THE PROPOSED CONVERSION MAY HAVE
25 ON HEALTH CARE ACCESS, SERVICES AND COVERAGE IN THE AREA SERVED BY THE
26 APPLICANT; AND
27 (E) ALL OTHER SUCH INFORMATION WHICH THE ATTORNEY GENERAL DEEMS NECES-
28 SARY.
29 THE ATTORNEY GENERAL, AFTER CONSULTING WITH THE COMMISSIONER OF HEALTH
30 AND THE SUPERINTENDENT, MAY ADOPT SUCH REGULATIONS OR ESTABLISH SUCH
31 PROCEDURES NOT INCONSISTENT WITH THIS SUBSECTION AS THE ATTORNEY GENERAL
32 DEEMS NECESSARY OR PROPER TO IMPLEMENT THIS SUBSECTION. NO APPLICATION
33 SHALL BE DEEMED TO BE COMPLETE UNTIL THE ATTORNEY GENERAL HAS ACKNOWL-
34 EDGED, IN WRITING, THE RECEIPT OF A COMPLETE APPLICATION.
35 (4) UPON RECEIPT OF A COMPLETE APPLICATION, THE ATTORNEY GENERAL SHALL
36 PROVIDE NOTICE TO THE PUBLIC, THE COMMISSIONER OF HEALTH AND THE SUPER-
37 INTENDENT OF THE FILING OF THE APPLICATION, AND SHALL HAVE NO LESS THAN
38 ONE HUNDRED TWENTY DAYS TO APPROVE, DISAPPROVE OR CONDITIONALLY APPROVE
39 THE APPLICATION, PROVIDED, HOWEVER, THAT THE ATTORNEY GENERAL MAY EXTEND
40 SUCH TIME LIMIT FOR AN ADDITIONAL SIXTY DAYS UPON A SUBSTANTIAL AMEND-
41 MENT TO THE APPLICATION OR FOR OTHER GOOD CAUSE. IN UNDERTAKING A REVIEW
42 OF AN APPLICATION, THE ATTORNEY GENERAL SHALL BE AUTHORIZED TO HIRE
43 INDEPENDENT FINANCIAL, HEALTH, LEGAL AND OTHER EXPERTS AND CONSULTANTS,
44 THE REASONABLE AND NECESSARY COSTS OF WHICH SHALL BE THE RESPONSIBILITY
45 OF THE APPLICANT. PROMPTLY FOLLOWING CONSUMMATION OF THE CONVERSION, THE
46 SURVIVING FOR-PROFIT ORGANIZATION SHALL REIMBURSE THE CHARITABLE ENTITY
47 RECEIVING THE CHARITABLE ASSET FOR THE COSTS OF SUCH EXPERTS AND
48 CONSULTANTS, SUCH REIMBURSEMENTS TO BE MADE NOT LATER THAN THREE YEARS
49 AFTER THE SUPREME COURT'S ORDER AUTHORIZING THE APPLICANT'S PETITION TO
50 CONVERT BECOMES FINAL AND UNAPPEALABLE.
51 (5) WITHIN FORTY-FIVE DAYS AFTER THE ATTORNEY GENERAL DEEMS AN APPLI-
52 CATION COMPLETE, THE ATTORNEY GENERAL SHALL HOLD ONE OR MORE PUBLIC
53 HEARINGS ON THE APPLICATION WITHIN THE AREA SERVED BY THE APPLICANT. THE
54 NUMBER AND LOCATIONS OF THE HEARINGS SHALL BE SUFFICIENT TO ENSURE
55 ADEQUATE PUBLIC INVOLVEMENT AND COMMENT. IMMEDIATELY AFTER THE ATTORNEY
56 GENERAL DEEMS THE APPLICATION COMPLETE, THE APPLICANT SHALL PROVIDE
A. 7018 3
1 NOTICE OF THE PUBLIC HEARINGS THROUGHOUT THE AREA AFFECTED BY THE APPLI-
2 CATION, BY DISTRIBUTING A FORM OR NOTICE APPROVED BY THE ATTORNEY GENER-
3 AL AND INCLUDING SUCH NOTICES IN THE STATE REGISTER, IN ACCORDANCE WITH
4 THE STATE ADMINISTRATIVE PROCEDURE ACT, IN NEWSPAPERS OF GENERAL CIRCU-
5 LATION AND ELECTRONIC NOTICES POSTED ON THE INTERNET. THE APPLICANT
6 SHALL NOTIFY POLICYHOLDERS, SUBSCRIBERS, ENROLLEES AND PROVIDERS OF
7 HEALTH CARE SERVICES UNDER CONTRACT WITH THE APPLICANT, IN WRITING, OF
8 THE APPLICATION AND HEARINGS. IN THE EVENT THAT THERE IS A MATERIAL
9 AMENDMENT TO THE APPLICATION, ADDITIONAL HEARINGS SHALL BE HELD WITH DUE
10 NOTICE PROVIDED. WITHIN FIVE DAYS OF RECEIPT OF A COMPLETE APPLICATION,
11 THE APPLICATION AND ANY SUPPORTING MATERIAL SUBMITTED TO THE ATTORNEY
12 GENERAL IN CONJUNCTION WITH THE APPLICATION SHALL BE DEEMED TO BE PUBLIC
13 RECORDS AND SHALL BE MADE AVAILABLE TO THE PUBLIC FOR INSPECTION DURING
14 NORMAL BUSINESS HOURS, AT NO COST, AT THE APPLICANT'S MAIN OFFICE WITHIN
15 THE STATE OF NEW YORK, AND AT THE OFFICE OF THE ATTORNEY GENERAL. ALSO
16 WITHIN FIVE DAYS OF THE APPLICANT'S RECEIPT OF THE ATTORNEY GENERAL'S
17 WRITTEN ACKNOWLEDGEMENT OF A RECEIPT OF A COMPLETE APPLICATION, THE
18 APPLICANT SHALL POST ITS APPLICATION AND ALL SUCH SUPPORTING MATERIAL
19 ELECTRONICALLY ON THE INTERNET. THE ATTORNEY GENERAL SHALL CAUSE A TRAN-
20 SCRIPT TO BE MADE OF EACH PUBLIC HEARING AND SUCH TRANSCRIPT AND ANY
21 SUBMITTED WRITTEN COMMENTS SHALL BE PUBLIC RECORDS. THE COMMISSIONER OF
22 HEALTH AND THE SUPERINTENDENT SHALL PROMPTLY PROVIDE THE ATTORNEY GENER-
23 AL WITH THE TRANSCRIPT OF ANY OTHER PUBLIC HEARINGS THEY HOLD OR WRITTEN
24 COMMENTS THEY RECEIVE WITH RESPECT TO THE PROPOSED CONVERSION, AND ANY
25 SUCH TRANSCRIPT AND COMMENTS SHALL BE PUBLIC RECORDS.
26 (6) THE ATTORNEY GENERAL SHALL NOT APPROVE AN APPLICATION UNLESS HE OR
27 SHE DETERMINES THAT:
28 (A) THE CHARITABLE ASSET IS BEING TRANSFERRED TO A CHARITABLE ORGAN-
29 IZATION THAT SATISFIES THE CRITERIA OF THIS SUBSECTION, AND THE CHARITA-
30 BLE ASSET SHALL BE IRREVOCABLY DEDICATED TO CHARITABLE HEALTH PURPOSES;
31 (B) THE RECIPIENT OF THE CHARITABLE ASSET IS EITHER AN EXISTING OR NEW
32 TAX-EXEMPT CHARITABLE ORGANIZATION OPERATING PURSUANT TO 26 U.S.C.A.
33 SEC. 501(C)(3) OR 501(C)(4) OF THE FEDERAL INTERNAL REVENUE CODE, AS
34 AMENDED OR ANY COMPARABLE PROVISION OF ANY SUCCESSOR LAW. IN EITHER
35 INSTANCE, WHETHER OR NOT THE CHARITABLE ORGANIZATION IS CLASSIFIED AS A
36 PRIVATE FOUNDATION UNDER SECTION 509 OF THE INTERNAL REVENUE CODE, AS
37 AMENDED OR ANY COMPARABLE PROVISION OF ANY SUCCESSOR LAW, IT SHALL BE
38 SUBJECT TO THE RESTRICTIONS AND LIMITATIONS THAT APPLY TO PRIVATE FOUN-
39 DATIONS IN SECTIONS 4941 THROUGH 4945 OF THE INTERNAL REVENUE CODE, AS
40 AMENDED OR ANY COMPARABLE PROVISION OF ANY SUCCESSOR LAW;
41 (C) THE ASSETS, PROCEEDS OR OTHER VALUE BEING CONVEYED TO SUCH CHARI-
42 TABLE ORGANIZATION ARE AT LEAST EQUAL TO THE FAIR MARKET VALUE OF THE
43 APPLICANT, OR THE PORTION OF THE APPLICANT INVOLVED IN THE CONVERSION,
44 BASED ON AN INDEPENDENT VALUATION OF THE CHARITABLE ASSET. FAIR MARKET
45 VALUE WILL BE DETERMINED AS OF THE TIME OF CONVERSION AND SHALL TAKE
46 INTO ACCOUNT ALL RELEVANT CONSIDERATIONS, INCLUDING, BUT NOT LIMITED TO,
47 MARKET VALUE, INVESTMENT OR EARNINGS VALUE, NET ASSET VALUE, A CONTROL
48 PREMIUM, THE VALUE OF ANY LICENSES THAT MAY BE TRANSFERRED TO THE
49 SUCCESSOR CORPORATION BY THE APPLICANT AND THE ECONOMIC IMPACT OF THE
50 CONVERSION ON THIS STATE RELATED TO THE TRANSFER OF THE FAIR MARKET
51 VALUE. THE ATTORNEY GENERAL MAY PERMIT ALL OR A PORTION OF THE CONSIDER-
52 ATION CONVEYED TO THE CHARITABLE ORGANIZATION TO CONSIST OF EQUITY IN
53 THE FOR-PROFIT ORGANIZATION THAT IS THE SURVIVOR OF THE CONVERSION,
54 PROVIDED THAT ANY CONSTRAINTS ON THE VOTING OR TRANSFERABILITY OF SUCH
55 EQUITY SHALL BE CONSIDERED IN DETERMINING WHETHER FAIR MARKET VALUE OF
56 THE CHARITABLE ASSET IS BEING TRANSFERRED TO THE CHARITABLE ORGANIZA-
A. 7018 4
1 TION. THE APPLICANT SHALL SUBMIT AN INDEPENDENT VALUATION WITH ITS
2 APPLICATION. THE ATTORNEY GENERAL MAY REQUIRE THE APPLICANT TO SUBMIT
3 ADDITIONAL VALUATIONS OR APPRAISALS. THE ATTORNEY GENERAL SHALL UTILIZE
4 INDEPENDENT FINANCIAL EXPERTS OR CONSULTANTS TO REVIEW THE APPLICANT'S
5 VALUATION OR APPRAISAL AND, IF THE ATTORNEY GENERAL DEEMS APPROPRIATE,
6 TO CONDUCT ONE OR MORE SEPARATE INDEPENDENT VALUATIONS;
7 (D) THE FAIR MARKET VALUE OF THE APPLICANT HAS NOT AND IS NOT BEING
8 MANIPULATED, OR OTHERWISE ALTERED IN CONNECTION WITH THE PROPOSED
9 CONVERSION, IN ANY MANNER THAT CAUSES THE CHARITABLE ASSET TO DECREASE
10 OR BE UNDERVALUED;
11 (E) THE CONVERSION WILL NOT RESULT IN INUREMENT TO ANY PRIVATE PERSON
12 OR ENTITY, INCLUDING STOCK OPTIONS, AGREEMENTS NOT TO COMPETE, AND OTHER
13 PRIVATE BENEFITS;
14 (F) THE APPLICANT USED DUE DILIGENCE, SOUGHT AND CONSIDERED ALTERNA-
15 TIVE TRANSACTIONS, AND PERFORMED REASONABLE CHARACTER AND COMPETENCE
16 REVIEW, AND OTHERWISE FULFILLED ITS FIDUCIARY OBLIGATIONS OF DUE CARE,
17 LOYALTY AND OBEDIENCE TO THE APPLICANT, IN SELECTING THE SUCCESSOR ENTI-
18 TY OR PERSONS INVOLVED IN THE CONVERSION, IN NEGOTIATING THE TERMS AND
19 CONDITIONS OF THE CONVERSION, AND IN DECIDING TO CONVERT IN ACCORDANCE
20 WITH THE TERMS OF THE APPLICATION;
21 (G) THE CHARITABLE ORGANIZATION RECEIVING THE CHARITABLE ASSETS, ITS
22 DIRECTORS, OFFICERS AND STAFF SHALL BE AND WILL REMAIN INDEPENDENT OF
23 ANY CONTROL OR INFLUENCE BY THE SURVIVING FOR-PROFIT ORGANIZATION AND
24 ITS AFFILIATES AND SUCCESSORS. SUCH REQUIREMENT SHALL NOT PREVENT THE
25 CHARITABLE ORGANIZATION FROM VOTING ITS EQUITY SHARES IN THE FOR-PROFIT
26 ORGANIZATION TO ELECT DESIGNEES TO THE BOARD OF DIRECTORS OF THE
27 FOR-PROFIT ORGANIZATION. NO PERSON WHO IS AN OFFICER, DIRECTOR OR STAFF
28 MEMBER OF THE APPLICANT AT THE TIME THE APPLICATION IS SUBMITTED TO THE
29 ATTORNEY GENERAL, OR THEREAFTER SHALL BE AN OFFICER, DIRECTOR OR STAFF
30 MEMBER OF THE CHARITABLE ORGANIZATION RECEIVING THE CHARITABLE ASSET. NO
31 DIRECTOR, OFFICER, AGENT OR EMPLOYEE OF THE APPLICANT OR THE CHARITABLE
32 ORGANIZATION RECEIVING THE CHARITABLE ASSET WILL BENEFIT DIRECTLY OR
33 INDIRECTLY FROM THE CONVERSION OR TRANSACTIONS CONTEMPLATED THEREBY;
34 (H) THE CHARITABLE ORGANIZATION RECEIVING THE CHARITABLE ASSETS WILL
35 ESTABLISH FORMAL MECHANISMS TO AVOID CONFLICTS OF INTEREST AND TO
36 PROHIBIT GRANTS BENEFITING THE SURVIVING FOR-PROFIT ORGANIZATION, OR ITS
37 AFFILIATES OR SUCCESSORS, DIRECTORS, MANAGEMENT AND STAFF;
38 (I) THE MISSION OF THE CHARITABLE ORGANIZATION RECEIVING THE CHARITA-
39 BLE ASSET SHALL INCLUDE:
40 (I) EXPANSION OF ACCESS TO HEALTH CARE BY EXTENDING HEALTH INSURANCE
41 COVERAGE TO STATE RESIDENTS WHO CANNOT AFFORD TO PURCHASE THEIR OWN
42 COVERAGE OR WHO HAVE COVERAGE THAT IS INADEQUATE TO MEET THEIR NEEDS;
43 (II) EXPANSION AND ENHANCEMENT OF ACCESS TO HEALTH CARE BY AUGMENTING
44 AND CREATING HEALTH CARE PROGRAMS THAT DELIVER SERVICES TO POPULATIONS
45 THAT ARE UNABLE TO ACCESS HEALTH CARE SOLELY THROUGH EXPANDED HEALTH
46 INSURANCE COVERAGE; AND
47 (III) AUGMENTATION OF ITS OTHER PROGRAM PRIORITIES BY SUPPORTING
48 PROGRAMS THAT INFORM AND EDUCATE NEW YORKERS ABOUT PUBLIC HEALTH ISSUES
49 AND EMPOWER COMMUNITIES TO ADDRESS THESE ISSUES BY BECOMING MORE EFFEC-
50 TIVE AT IDENTIFYING AND ARTICULATING HEALTH CARE NEEDS AND IMPLEMENTING
51 SOLUTIONS.
52 PROGRAMS OR INITIATIVES INSTITUTED BY THE CHARITABLE ORGANIZATION
53 SHALL NOT NEGLECT THE RESIDENTS OR INSTITUTIONS SERVED BY THE APPLICANT
54 PRIOR TO THE CONVERSION;
55 (J) THE APPLICANT HAS CONSULTED WITH SUBSCRIBERS, INSTITUTIONS, HEALTH
56 CARE PROVIDERS AND COMMUNITY LEADERS IN THE SERVICE AREA AND HAS
A. 7018 5
1 RETAINED AN INDEPENDENT CONSULTANT TO MAKE RECOMMENDATIONS FOR APPOINT-
2 MENTS TO THE BOARD OF DIRECTORS OF THE CHARITABLE ORGANIZATION RECEIVING
3 THE CHARITABLE ASSET. THE APPLICANT SHALL SUBMIT ITS PROPOSED NOMINEES
4 TO THE BOARD AND TO THE ATTORNEY GENERAL PRIOR TO THEIR APPOINTMENT, AND
5 THE ATTORNEY GENERAL SHALL NOT APPROVE SUCH NOMINEES UNLESS HE OR SHE
6 FINDS THAT THE BOARD IS BROADLY REPRESENTATIVE OF THE COMMUNITY AND
7 INCLUDES REPRESENTATIVES OF CONSUMER AND PUBLIC INTEREST ORGANIZATIONS
8 AND INDIVIDUALS WITH EXPERTISE IN PUBLIC HEALTH, HEALTH CARE DELIVERY
9 AND FINANCING, CONSUMER HEALTH ISSUES, INVESTMENTS AND PHILANTHROPIC
10 ADMINISTRATION. THE ATTORNEY GENERAL SHALL ALSO FIND THAT THE CHARITA-
11 BLE ORGANIZATION'S STRUCTURE PROVIDES MECHANISMS FOR ONGOING COMMUNITY
12 CONSULTATION AND ENGAGEMENT INCLUDING, BUT NOT LIMITED TO, THE ESTAB-
13 LISHMENT OF A COMMUNITY ADVISORY BOARD;
14 (K) THE CHARITABLE ORGANIZATION RECEIVING THE CHARITABLE ASSETS AGREES
15 IN WRITING TO REGISTER AND FILE ANNUAL FINANCIAL REPORTS WITH THE ATTOR-
16 NEY GENERAL IN COMPLIANCE WITH SECTION 8-1.4 OF THE ESTATES, POWERS, AND
17 TRUSTS LAW AND TO POST ITS REGISTRATION FILING AND ANNUAL REPORTS ELEC-
18 TRONICALLY ON THE INTERNET; AND
19 (L) A FOR-PROFIT HEALTH PLAN OR PLANS HAVE A SIGNIFICANT MARKET SHARE
20 IN THE GEOGRAPHIC AREAS SERVED BY THE APPLICANT.
21 (7) THE SUPERINTENDENT, WITHIN NINETY DAYS AFTER THE DATE THE ATTORNEY
22 GENERAL PROVIDES NOTICE TO HIM OR HER OF THE APPLICATION, SHALL ADVISE
23 THE APPLICANT AND THE ATTORNEY GENERAL IN WRITING WHETHER THE SUPER-
24 INTENDENT APPROVES, DISAPPROVES OR CONDITIONALLY APPROVES THE APPLICA-
25 TION AND THE REASONS FOR HIS OR HER DECISION. IN MAKING HIS OR HER DECI-
26 SION, THE SUPERINTENDENT SHALL DETERMINE WHETHER THE APPLICATION IS IN
27 THE BEST INTEREST OF POLICYHOLDERS, SUBSCRIBERS AND ENROLLEES AND
28 COMPLIES WITH ALL APPLICABLE PROVISIONS OF THIS CHAPTER AND REGULATIONS
29 THEREUNDER, AND WHETHER FOLLOWING THE CONVERSION, THE FOR-PROFIT ORGAN-
30 IZATION'S SUCCESSOR WILL HAVE SUFFICIENT CAPITAL AND RESERVES TO MEET
31 ITS OBLIGATIONS TO SUBSCRIBERS, POLICYHOLDERS, ENROLLEES AND HEALTH CARE
32 PROVIDERS.
33 (8) AN APPLICANT SHALL NOT SUBMIT ITS PETITION TO THE SUPREME COURT
34 UNTIL IT RECEIVES NOTICE FROM THE SUPERINTENDENT AND THE ATTORNEY GENER-
35 AL OF THEIR DETERMINATIONS PURSUANT TO THIS SUBSECTION OR UNTIL THE TIME
36 FOR THEIR MAKING SUCH DETERMINATIONS HAS CONCLUDED. THE APPLICANT SHALL
37 ATTACH THE DETERMINATIONS OF THE SUPERINTENDENT TO ITS PETITION, AND
38 SERVE THE SUPERINTENDENT WITH NOTICE OF THE COURT SUBMISSION IN THE SAME
39 MANNER AND WITHIN THE SAME TIME LIMIT THAT NOTICE IS TO BE GIVEN TO THE
40 ATTORNEY GENERAL. WITHIN TWENTY DAYS FOLLOWING NOTIFICATION OF A PETI-
41 TION TO THE SUPREME COURT BY AN APPLICANT PURSUANT TO AND IN ACCORDANCE
42 WITH THE PROCEDURE SET FORTH IN PARAGRAPH (B) OF SECTION FIVE HUNDRED
43 ELEVEN OF THE NOT-FOR-PROFIT CORPORATION LAW, THE ATTORNEY GENERAL SHALL
44 ADVISE THE COURT IN WRITING AS TO WHETHER THE PETITION SHOULD BE
45 APPROVED, DISAPPROVED OR CONDITIONALLY APPROVED, AND THE REASONS FOR
46 SUCH RECOMMENDATION AND SHALL MAKE EACH RECOMMENDATION AVAILABLE TO THE
47 PUBLIC.
48 (9) IN THE CASE OF A COURT HEARING ON A PETITION FOR CONVERSION
49 SUBMITTED PURSUANT TO THIS SUBSECTION AND/OR SECTIONS FIVE HUNDRED TEN
50 AND FIVE HUNDRED ELEVEN, ARTICLE EIGHT, NINE AND/OR TEN OF THE NOT-FOR-
51 PROFIT CORPORATION LAW, ANY SUBSCRIBERS, ENROLLEES, POLICYHOLDERS OR
52 BENEFICIARIES OF THE APPLICANT OR THEIR DESIGNEES MAY ALSO APPEAR AT THE
53 HEARING AND SHOW CAUSE WHY THE APPLICATION SHOULD OR SHOULD NOT BE
54 GRANTED.
55 (10) IF IT SHALL APPEAR TO THE SATISFACTION OF THE COURT THAT THE
56 CONSIDERATION AND THE TERMS OF THE CONVERSION ARE FAIR AND REASONABLE TO
A. 7018 6
1 THE CHARITABLE ORGANIZATION THAT IS RECEIVING THE CHARITABLE ASSET, THAT
2 THE CHARITABLE PURPOSES OF THE APPLICANT WILL BE PROMOTED, THAT THE
3 CONVERSION IS CONSISTENT WITH THE FIDUCIARY OBLIGATIONS OF THE APPLI-
4 CANT'S DIRECTORS AND OFFICERS, AND THAT THE TERMS AND CONDITIONS OF THE
5 CONVERSION TRANSACTION AND ANY TRANSACTIONS CONTEMPLATED THEREBY ARE IN
6 THE BEST INTERESTS OF THE RESIDENTS OF THE STATE OF NEW YORK AND THE
7 APPLICANT'S POLICYHOLDERS, SUBSCRIBERS, ENROLLEES, AND BENEFICIARIES, IT
8 MAY AUTHORIZE THE PROPOSED CONVERSION FOR SUCH CONSIDERATION AND UPON
9 SUCH TERMS AS THE COURT MAY PRESCRIBE. IN THE EVENT THE SUPREME COURT
10 MAKES AN AUTHORIZATION PURSUANT TO THIS SUBSECTION, THE CHARITABLE
11 ORGANIZATION CREATED PURSUANT TO THE CONVERSION OR RECEIVING THE CHARI-
12 TABLE ASSET SHALL BE SUBJECT TO THE APPLICABLE PROVISIONS OF THE COURT
13 ORDER AUTHORIZING THE CONVERSION.
14 (B) IN THE EVENT THAT THE PROVISIONS OF THIS SECTION CONFLICT WITH THE
15 PROVISIONS OF THE NOT-FOR-PROFIT CORPORATION LAW, THEN THE PROVISIONS OF
16 THIS SUBSECTION SHALL PREVAIL.
17 S 2. This act shall take effect immediately.
