2005 Connecticut Code - Sec. 19a-486c. Sale of nonprofit hospitals: Powers of Attorney General. Grounds for disapproval by Attorney General.

      Sec. 19a-486c. Sale of nonprofit hospitals: Powers of Attorney General. Grounds for disapproval by Attorney General. (a) The Attorney General shall deny an application as not in the public interest if the Attorney General determines that one or more of the following conditions exist: (1) The transaction is prohibited by Connecticut statutory or common law governing nonprofit entities, trusts or charities; (2) the nonprofit hospital failed to exercise due diligence in (A) deciding to transfer, (B) selecting the purchaser, (C) obtaining a fairness evaluation from an independent person expert in such agreements, or (D) negotiating the terms and conditions of the transfer; (3) the nonprofit hospital failed to disclose any conflict of interest, including, but not limited to, conflicts of interest pertaining to board members, officers, key employees and experts of the hospital, the purchaser or any other party to the transaction; (4) the nonprofit hospital will not receive fair market value for its assets, which, for purposes of this subsection, means the most likely price that the assets would bring in a sale in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably and in their own best interest, and with a reasonable time being allowed for exposure in the open market; (5) the fair market value of the assets has been manipulated by any person in a manner that causes the value of the assets to decrease; (6) the financing of the transaction by the nonprofit hospital will place the nonprofit hospital's assets at an unreasonable risk; (7) any management contract contemplated under the transaction is not for reasonable fair value; (8) a sum equal to the fair market value of the nonprofit hospital's assets (A) is not being transferred to one or more persons to be selected by the superior court for the judicial district where the nonprofit hospital is located who are not affiliated through corporate structure, governance or membership with either the nonprofit hospital or the purchaser, unless the nonprofit hospital continues to operate on a nonprofit basis after the transaction and such sum is transferred to the nonprofit hospital to provide health care services, and (B) is not being used for one of the following purposes: (i) For appropriate charitable health care purposes consistent with the nonprofit hospital's original purpose, (ii) for the support and promotion of health care generally in the affected community, or (iii) with respect to any assets held by the nonprofit hospital that are subject to a use restriction imposed by a donor, for a purpose consistent with the intent of said donor; or (9) the nonprofit hospital or the purchaser has failed to provide the Attorney General with information and data sufficient to evaluate the proposed agreement adequately, provided the Attorney General has notified the nonprofit hospital or the purchaser of the inadequacy of the information or data and has provided a reasonable opportunity to remedy such inadequacy.

      (b) The Attorney General may, during the course of a review required by section 19a-486b: (1) Issue in writing and cause to be served upon any person, by subpoena, a demand that such person appear before the Attorney General and give testimony or produce documents as to any matters relevant to the scope of the review; or (2) issue written interrogatories, to be answered under oath, as to any matters relevant to the scope of the review and prescribing a return date that would allow a reasonable time to respond. If any person fails to comply with the provisions of this subsection, the Attorney General may apply to the superior court for the judicial district of Hartford seeking enforcement of the subpoena. The superior court may, upon notice to such person, issue and cause to be served an order requiring compliance. Service of subpoenas ad testificandum, subpoenas duces tecum, notices of deposition and written interrogatories as provided in this subsection may be made by personal service at the usual place of abode or by certified mail, return receipt requested, addressed to the person to be served at such person's principal place of business within or without this state or such person's residence.

      (c) The Attorney General may contract with experts or consultants to assist in reviewing the proposed agreement, including, but not limited to, assistance in independently determining the fair market value of the nonprofit hospital's assets. The Attorney General may appoint, or contract with, another person to conduct the review required by this section and make recommendations to the Attorney General. The Attorney General shall submit any bills for such contracts to the purchaser. The purchaser shall pay such bills within thirty days of receipt. Such bills shall not exceed three hundred thousand dollars.

      (P.A. 88-230, S. 10, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 7, 8; P.A. 95-220, S. 4-6; P.A. 97-188, S. 4, 10; P.A. 98-36, S. 5; P.A. 01-186, S. 15; P.A. 03-73, S. 4; P.A. 04-258, S. 23.)

      History: P.A. 97-188 effective June 26, 1997 (Revisor's note: P.A. 88-230, 90-98, 93-142 and 95-220 authorized substitution of "judicial district of Hartford" for "judicial district of Hartford-New Britain" in public and special acts of 1997, effective September 1, 1998); P.A. 98-36 made technical corrections, deleting reference to nonprofit health care center in Subsec. (a)(8) and changing "in" to "within or without" in Subsec. (b); P.A. 01-186 amended Subsec. (a) by making a technical change for purposes of gender neutrality and, in Subdiv. (8)(A), by adding "for the judicial district where the nonprofit hospital is located"; P.A. 03-73 amended Subsec. (a) by replacing provision re disapproval of proposed agreement with provision re denial of application, made technical changes in Subsec. (b) and amended Subsec. (c) to allow Attorney General to contract for the required review and to increase maximum amount of contract bills from one hundred fifty thousand dollars to three hundred thousand dollars; P.A. 04-258 amended Subsec. (a)(8)(A) by adding exception to the fair market value in exchange for assets requirement in cases where the nonprofit hospital continues to operate on a nonprofit basis after the transaction and the sum transferred to the hospital is used to provide health care services, effective July 1, 2004.

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