LSC 122 0422-3 1
122nd General Assembly 4
Regular Session Sub. H. B. No. 242 5
1997-1998 6
REPRESENTATIVES VAN VYVEN-MAIER-SCHURING-BENDER-BOGGS-BRADING- 8
BUCHY-CORBIN-FORD-FOX-GARCIA-GRENDELL-HAGAN-HAINES-HEALY- 9
JAMES-JERSE-JONES-KREBS-KRUPINSKI-LEWIS-LOGAN-METELSKY- 10
MILLER-MOTTL-MOTTLEY-OGG-OLMAN-OPFER-ROMAN-SAWYER-SCHULER- 11
SYKES-WESTON-WILSON-TAVARES-PATTON-O'BRIEN-WINKLER-ROBERTS- 12
THOMPSON-VERICH-COLONNA-HARRIS-JOHNSON-THOMAS-MEAD-REID 13
15
A B I L L
To amend section 109.99 and to enact sections 109.34 17
and 109.35 of the Revised Code to require that 18
the Attorney General review transfers of assets 19
by certain nonprofit health care entities to 20
for-profit entities, to require that the attorney 21
general be notified of transfers of assets 22
between certain nonprofit health care entities,
and to declare an emergency. 23
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 25
Section 1. That section 109.99 be amended and sections 27
109.34 and 109.35 of the Revised Code be enacted to read as 28
follows: 29
Sec. 109.34. (A) AS USED IN THIS SECTION AND IN SECTION 31
109.35 OF THE REVISED CODE: 32
(1) "FAIR MARKET VALUE" MEANS THE PRICE THAT THE ASSETS 34
BEING TRANSFERRED WOULD BRING IN A COMPETITIVE AND OPEN MARKET 35
UNDER A FAIR SALE WITH THE BUYER AND SELLER ACTING PRUDENTLY, 37
KNOWLEDGEABLY, AND IN THEIR OWN BEST INTEREST AND A REASONABLE 38
TIME BEING ALLOWED FOR EXPOSURE IN THE MARKET.
(2) "NONPROFIT HEALTH CARE ENTITY" MEANS ANY OF THE 41
FOLLOWING THAT WAS CREATED FOR ANY CHARITABLE OR SOCIAL WELFARE 43
2
PURPOSE RELATED TO HEALTH CARE:
(a) A HOSPITAL, AS DEFINED IN SECTION 3727.01 OF THE 45
REVISED CODE, THAT IS OWNED OR OPERATED BY A CORPORATION 48
ORGANIZED UNDER CHAPTER 1702. OF THE REVISED CODE OR THE 49
NONPROFIT CORPORATION LAW OF ANOTHER STATE; 50
(b) EITHER OF THE FOLLOWING THAT IS OR HAS BEEN EXEMPT 52
FROM TAXATION UNDER SECTION 501(a) OF THE INTERNAL REVENUE CODE: 56
(i) AN ENTITY THAT IS OR HAS BEEN GRANTED A CERTIFICATE OF 59
AUTHORITY UNDER CHAPTER 1742. OF THE REVISED CODE; 62
(ii) A DOMESTIC MUTUAL COMPANY GRANTED A CERTIFICATE OF 65
AUTHORITY UNDER CHAPTER 3941. OF THE REVISED CODE THAT IS IN THE 68
BUSINESS OF PROVIDING SICKNESS AND ACCIDENT INSURANCE AND THAT 69
WAS PREVIOUSLY A HOSPITAL SERVICE ASSOCIATION UNDER FORMER 70
CHAPTER 1739. OF THE REVISED CODE OR CHAPTER 669. OF THE GENERAL 71
CODE OR HAS MERGED OR OTHERWISE CONSOLIDATED WITH A FORMER 73
HOSPITAL SERVICE ASSOCIATION.
(3) "PARTY" INCLUDES A NONPROFIT HEALTH CARE ENTITY THAT 75
IS THE SUBJECT OF A TRANSACTION OR PROPOSED TRANSACTION, AN 77
ACQUIRING PERSON, AND THE RESULTING ENTITY, IF ANY. 78
(4) "TRANSACTION" MEANS A TRANSFER OF OWNERSHIP OR CONTROL 81
OF ASSETS OF A NONPROFIT HEALTH CARE ENTITY, WHETHER BY PURCHASE, 82
MERGER, CONSOLIDATION, LEASE, GIFT, JOINT VENTURE, OR OTHER 83
TRANSFER, INCLUDING ANY BINDING OBLIGATION IN FURTHERANCE OF THE 84
TRANSACTION, THAT IS EQUAL TO AT LEAST TWENTY PER CENT OF THE 85
ASSETS OF THE ENTITY AND OCCURS IN THE TWENTY-FOUR-MONTH PERIOD 86
PRIOR TO THE DATE NOTICE IS SUBMITTED TO THE ATTORNEY GENERAL IN 87
ACCORDANCE WITH DIVISION (B) OF THIS SECTION. "TRANSACTION" ALSO 89
MEANS A TRANSFER OF OWNERSHIP OR CONTROL OF ANY ASSETS OF A 90
NONPROFIT HEALTH CARE ENTITY, WHETHER BY PURCHASE, MERGER, 91
CONSOLIDATION, LEASE, GIFT, JOINT VENTURE, OR OTHER TRANSFER, 92
INCLUDING ANY BINDING OBLIGATION IN FURTHERANCE OF THE 93
TRANSACTION, IF THE ENTITY IS UNABLE TO FULFILL ITS STATED OR 94
ACTUAL PURPOSE WITHOUT THE ASSETS. "TRANSACTION" DOES NOT 95
INCLUDE EITHER OF THE FOLLOWING:
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(a) A TRANSFER OF OWNERSHIP OR CONTROL OF ASSETS OF A 98
NONPROFIT HEALTH CARE ENTITY BETWEEN NONPROFIT HEALTH CARE 99
ENTITIES AND PERSONS EXEMPT FROM TAXATION UNDER SECTION 501(a) OF 101
THE "INTERNAL REVENUE CODE OF 1986," 100 STAT. 2085, 26 U.S.C. 106
501, AS AMENDED; 107
(b) A TRANSFER OF OWNERSHIP OR CONTROL OF ASSETS OF A 109
NONPROFIT HEALTH CARE ENTITY IN RELATION TO WHICH THE NONPROFIT 110
HEALTH CARE ENTITY, PRIOR TO THE EFFECTIVE DATE OF THIS SECTION, 112
HAS ENTERED INTO A CONSENT DECREE WITH THE ATTORNEY GENERAL THAT 113
REQUIRES DISTRIBUTION OF THE CHARITABLE ASSETS OF THE ENTITY TO 115
AN APPROPRIATE HEALTH-RELATED CHARITY. THE EXEMPTION IN DIVISION 116
(A)(4)(b) OF THIS SECTION DOES NOT LIMIT THE AUTHORITY OF THE 118
ATTORNEY GENERAL TO SEEK REMEDIES FOR BREACHES OF FIDUCIARY DUTY 119
OR OTHER VIOLATIONS OF LAW. 120
(B) A NONPROFIT HEALTH CARE ENTITY PROPOSING TO ENTER INTO 122
A TRANSACTION SHALL PROVIDE NOTICE OF THE PROPOSED TRANSACTION TO 124
THE ATTORNEY GENERAL AND OBTAIN WRITTEN APPROVAL OF THE 126
TRANSACTION IN ACCORDANCE WITH THIS SECTION. THE NONPROFIT
HEALTH CARE ENTITY SHALL SUBMIT THE NOTICE ON FORMS PROVIDED BY 128
THE ATTORNEY GENERAL, AND THE NOTICE SHALL INCLUDE ALL OF THE 129
FOLLOWING: 130
(1) THE NAMES AND ADDRESSES OF THE PARTIES, INCLUDING A 132
LIST OF ALL INDIVIDUALS WHO ARE OR HAVE BEEN CHOSEN AS DIRECTORS, 133
OFFICERS, OR BOARD MEMBERS OF THE PARTIES; 134
(2) THE TERMS OF THE PROPOSED TRANSACTION, INCLUDING A 136
SUMMARY OF ALL CONTRACTS OR OTHER AGREEMENTS OF THE PARTIES; 137
(3) THE AMOUNT, SOURCE, AND NATURE OF CONSIDERATION TO BE 139
PAID TO THE NONPROFIT HEALTH CARE ENTITY, ITS DIRECTORS, 140
OFFICERS, BOARD MEMBERS, EXECUTIVES, OR EXPERTS RETAINED BY THE 141
NONPROFIT HEALTH CARE ENTITY.
(4) A STATEMENT ACKNOWLEDGING THAT THE NONPROFIT HEALTH 143
CARE ENTITY IS UNDER A CONTINUING DUTY TO NOTIFY THE ATTORNEY 144
GENERAL OF ANY CHANGES IN THE INFORMATION CONTAINED IN THE NOTICE 145
OR OTHER DOCUMENTS REQUIRED BY THIS SECTION AND THAT A VIOLATION 147
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OF THIS DUTY MAY DELAY APPROVAL OF THE PROPOSED TRANSACTION. THE 148
STATEMENT SHALL BE SIGNED BY A REPRESENTATIVE OF THE NONPROFIT 150
HEALTH CARE ENTITY AT THE TIME THE NOTICE IS SUBMITTED TO THE 152
ATTORNEY GENERAL. 153
(C) IN ADDITION TO THE NOTICE DESCRIBED IN DIVISION (B) OF 156
THIS SECTION, THE NONPROFIT HEALTH CARE ENTITY SHALL SUBMIT ALL 157
OF THE FOLLOWING:
(1) AUDITED FINANCIAL STATEMENTS FOR THE NONPROFIT HEALTH 159
CARE ENTITY FOR THE THREE FISCAL YEARS PRIOR TO THE DATE THE 160
NONPROFIT HEALTH CARE ENTITY SUBMITTED THE NOTICE TO THE ATTORNEY 161
GENERAL;
(2) A VALUATION STATEMENT PREPARED BY AN INDEPENDENT, 164
QUALIFIED EXPERT, INCLUDING AN INVESTMENT BANKER, ACTUARY, 166
APPRAISER, CERTIFIED PUBLIC ACCOUNTANT, OR OTHER EXPERT, THAT 167
ASSESSES THE FULL AND FAIR MARKET VALUE OF THE NONPROFIT HEALTH 168
CARE ENTITY;
(3) COPIES OF ALL CONTRACTS AND OTHER AGREEMENTS BETWEEN 171
THE PARTIES OR THEIR OFFICERS, DIRECTORS, BOARD MEMBERS, OR OTHER 172
FIDUCIARIES, INCLUDING ANY CONTRACTS OR OTHER FINAL AGREEMENTS 173
RELATING TO THE CLOSE OF THE PROPOSED TRANSACTION; 174
(4) ANY ADDITIONAL INFORMATION THE ATTORNEY GENERAL 176
CONSIDERS NECESSARY TO VALUE THE NONPROFIT HEALTH CARE ENTITY'S 178
ASSETS AS REQUIRED IN RULES ADOPTED BY THE ATTORNEY GENERAL IN 180
ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE.
(D) THE NOTICE AND ALL OTHER DOCUMENTS OR MATERIALS 182
SUBMITTED PURSUANT TO THIS SECTION ARE PUBLIC RECORDS PROVIDED 183
THEY MEET THE DEFINITION SET FORTH IN SECTION 149.43 OF THE 185
REVISED CODE. 186
(E) NOT LATER THAN TWO BUSINESS DAYS AFTER THE DISCOVERY 189
OF ANY CHANGES IN INFORMATION CONTAINED IN THE NOTICE OR OTHER 190
DOCUMENTS REQUIRED BY THIS SECTION, THE NONPROFIT HEALTH CARE 191
ENTITY SHALL PROVIDE COPIES TO THE ATTORNEY GENERAL OF ANY 192
DOCUMENTS AND OTHER MATERIAL RELEVANT TO THE CHANGES. IN 194
ADDITION TO THE NINETY-DAY EXTENSION AUTHORIZED BY DIVISION (A) 195
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OF SECTION 109.35 OF THE REVISED CODE, THE ATTORNEY GENERAL FOR
GOOD CAUSE MAY DELAY APPROVAL OF THE PROPOSED TRANSACTION UP TO 197
THIRTY DAYS FOLLOWING RECEIPT OF THE DOCUMENTS AND OTHER MATERIAL 199
RELEVANT TO THE CHANGES.
(F) NOT LATER THAN SEVEN DAYS AFTER SUBMITTING THE NOTICE 201
AND OTHER DOCUMENTS REQUIRED BY THIS SECTION, THE NONPROFIT 202
HEALTH CARE ENTITY SHALL PUBLISH NOTICE OF THE PROPOSED 203
TRANSACTION IN AT LEAST ONE DAILY NEWSPAPER OF GENERAL 204
CIRCULATION IN THE COUNTY WHERE THE NONPROFIT HEALTH CARE ENTITY 205
HAS ITS PRINCIPAL PLACE OF BUSINESS. THE NOTICE SHALL STATE THE 206
NAMES OF THE PARTIES AND A DESCRIPTION OF THE PROPOSED 207
TRANSACTION.
(G) NOTWITHSTANDING DIVISION (A)(4)(a) OF THIS SECTION, AS 210
USED IN THIS DIVISION, "NONPROFIT COMBINATION" MEANS A 211
TRANSACTION BETWEEN A NONPROFIT HEALTH CARE ENTITY AND ANOTHER
UNRELATED NONPROFIT HEALTH CARE ENTITY. 212
NOT LESS THAN SIXTY DAYS BEFORE THE CLOSING OF A NONPROFIT 214
COMBINATION, A NONPROFIT HEALTH CARE ENTITY THAT IS A PARTY TO 216
THE COMBINATION AND IS THE PARTY TO BE ACQUIRED SHALL PROVIDE
NOTICE OF THE NONPROFIT COMBINATION TO THE ATTORNEY GENERAL BY 219
SUBMITTING THE INFORMATION DESCRIBED IN DIVISIONS (B)(1) AND (3) 220
OF THIS SECTION.
NOT LATER THAN SEVEN DAYS AFTER THE INFORMATION REQUIRED BY 222
THIS SECTION IS SUBMITTED TO THE ATTORNEY GENERAL, EACH OF THE 223
NONPROFIT HEALTH CARE ENTITIES THAT IS A PARTY TO A NONPROFIT 224
COMBINATION SHALL PUBLISH THE NOTICE DESCRIBED IN DIVISION (F) OF 226
THIS SECTION.
Sec. 109.35. (A) NOT LATER THAN SIXTY DAYS AFTER RECEIPT 228
OF A NOTICE AND OTHER DOCUMENTS REQUIRED BY SECTION 109.34 OF THE 229
REVISED CODE, THE ATTORNEY GENERAL SHALL APPROVE OR DISAPPROVE 230
THE PROPOSED TRANSACTION, EXCEPT THAT THE ATTORNEY GENERAL FOR 231
GOOD CAUSE MAY EXTEND THIS PERIOD AN ADDITIONAL NINETY DAYS. 232
(B) IN DETERMINING WHETHER TO APPROVE OR DISAPPROVE A 234
PROPOSED TRANSACTION, THE ATTORNEY GENERAL SHALL CONSIDER: 236
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(1) WHETHER THE PROPOSED TRANSACTION WILL RESULT IN A 238
BREACH OF FIDUCIARY DUTY, AS DETERMINED BY THE ATTORNEY GENERAL, 241
INCLUDING CONFLICTS OF INTEREST RELATED TO PAYMENTS OR BENEFITS 242
TO OFFICERS, DIRECTORS, BOARD MEMBERS, EXECUTIVES, AND EXPERTS 243
EMPLOYED OR RETAINED BY THE PARTIES;
(2) WHETHER THE NONPROFIT HEALTH CARE ENTITY WILL RECEIVE 245
FULL AND FAIR MARKET VALUE FOR ITS CHARITABLE OR SOCIAL WELFARE 246
ASSETS;
(3) WHETHER THE PROCEEDS OF THE PROPOSED TRANSACTION WILL 248
BE USED CONSISTENT WITH THE NONPROFIT HEALTH CARE ENTITY'S 250
ORIGINAL CHARITABLE PURPOSE;
(4) ANY OTHER CRITERIA THE ATTORNEY GENERAL CONSIDERS 252
NECESSARY TO DETERMINE WHETHER THE NONPROFIT HEALTH CARE ENTITY 253
WILL RECEIVE FULL AND FAIR MARKET VALUE FOR ITS CHARITABLE OR 254
SOCIAL WELFARE ASSETS AS REQUIRED IN RULES ADOPTED BY THE 255
ATTORNEY GENERAL IN ACCORDANCE WITH CHAPTER 119. OF THE REVISED 256
CODE.
(C) THE ATTORNEY GENERAL MAY RETAIN, AT THE NONPROFIT 258
HEALTH CARE ENTITY'S EXPENSE, ONE OR MORE INDEPENDENTLY QUALIFIED 260
EXPERTS, INCLUDING AN INVESTMENT BANKER, ACTUARY, APPRAISER, 261
CERTIFIED PUBLIC ACCOUNTANT, OR OTHER EXPERT, AS THE ATTORNEY 262
GENERAL CONSIDERS REASONABLY NECESSARY TO PROVIDE ASSISTANCE IN 263
MAKING A DECISION UNDER THIS SECTION. THE NONPROFIT HEALTH CARE 264
ENTITY SHALL PROMPTLY REIMBURSE THE ATTORNEY GENERAL FOR THE COST 266
OF RETAINING EXPERTS. THE COST OF RETAINING AN EXPERT SHALL NOT 268
EXCEED AN AMOUNT THAT IS REASONABLE AND NECESSARY TO MAKE A 269
DETERMINATION UNDER THIS SECTION. THE CONTRACT TO RETAIN AN 270
EXPERT IS EXEMPT FROM CHAPTER 125. OF THE REVISED CODE. 271
AT ANY TIME WHILE CONSIDERING A PROPOSED TRANSACTION UNDER 273
THIS SECTION, THE ATTORNEY GENERAL MAY REQUEST ANY ADDITIONAL 274
INFORMATION FROM THE NONPROFIT HEALTH CARE ENTITY THAT THE 275
ATTORNEY GENERAL CONSIDERS APPROPRIATE TO THE VALUATION OF THE 276
ENTITY'S CHARITABLE OR SOCIAL WELFARE ASSETS. THE NONPROFIT 277
HEALTH CARE ENTITY SHALL PROVIDE THE INFORMATION NOT LATER THAN 278
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TEN DAYS AFTER THE DATE OF THE REQUEST. THE ATTORNEY GENERAL FOR 279
GOOD CAUSE MAY DELAY APPROVAL OF THE PROPOSED TRANSACTION UP TO 280
THIRTY DAYS, IN ADDITION TO THE NINETY-DAY EXTENSION AUTHORIZED 281
BY DIVISION (A) OF THIS SECTION, FOLLOWING RECEIPT OF DOCUMENTS 282
AND OTHER MATERIAL CONTAINING THE INFORMATION REQUESTED. 283
(D) THE ATTORNEY GENERAL SHALL APPROVE OR DISAPPROVE A 285
PROPOSED TRANSACTION ON THE BASIS OF THE CRITERIA SET FORTH IN 286
DIVISION (B) OF THIS SECTION. ONCE A PROPOSED TRANSACTION IS 288
APPROVED, ANY SUBSTANTIAL ALTERATION IS A NEW TRANSACTION SUBJECT 290
TO APPROVAL BY THE ATTORNEY GENERAL.
THE NONPROFIT HEALTH CARE ENTITY MAY RESUBMIT A NOTICE AND 292
OTHER DOCUMENTS SEEKING APPROVAL OF A PROPOSED TRANSACTION 294
DISAPPROVED BY THE ATTORNEY GENERAL BUT MAY NOT SUBMIT A NOTICE 295
AND OTHER DOCUMENTS THAT ARE IDENTICAL OR SUBSTANTIALLY SIMILAR 296
TO THE ORIGINAL SUBMISSION.
IF THE ATTORNEY GENERAL DISAPPROVES THE PROPOSED 298
TRANSACTION, THE NONPROFIT HEALTH CARE ENTITY MAY APPEAL THE 299
DISAPPROVAL PURSUANT TO DIVISION (H) OF THIS SECTION. 300
(E) IF THE ATTORNEY GENERAL APPROVES THE PROPOSED 303
TRANSACTION, THE NONPROFIT HEALTH CARE ENTITY SHALL HOLD A PUBLIC 304
HEARING TO RECEIVE COMMENT ON THE PROPOSED USE OF THE PROCEEDS OF 305
THE TRANSACTION. THE HEARING SHALL BE HELD IN THE COUNTY WHERE 306
THE NONPROFIT HEALTH CARE ENTITY HAS ITS PRINCIPAL PLACE OF 307
BUSINESS NOT LATER THAN FORTY-FIVE DAYS AFTER RECEIPT OF WRITTEN 308
NOTICE OF THE ATTORNEY GENERAL'S APPROVAL. 309
AT LEAST THIRTY DAYS PRIOR TO THE DATE SET FOR THE HEARING, 312
THE NONPROFIT HEALTH CARE ENTITY SHALL PUBLISH NOTICE OF THE 313
HEARING IN AT LEAST ONE DAILY NEWSPAPER OF GENERAL CIRCULATION IN 314
THE COUNTY WHERE THE NONPROFIT HEALTH CARE ENTITY HAS ITS 315
PRINCIPAL PLACE OF BUSINESS. THE NOTICE SHALL INCLUDE A
STATEMENT THAT A TRANSACTION HAS BEEN APPROVED BY THE ATTORNEY 316
GENERAL, THE NAMES OF THE PARTIES, A DESCRIPTION OF THE PROPOSED 317
TRANSACTION, AND THE DATE, TIME, AND PLACE OF THE HEARING. 319
(F)(1) THE PROCEEDS OF AN APPROVED TRANSACTION SHALL BE 322
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DEDICATED AND TRANSFERRED TO ONE OR MORE EXISTING OR NEW 323
CHARITABLE ORGANIZATIONS EXEMPT FROM TAXATION UNDER SECTION 324
501(a) AND DESCRIBED IN SECTION 501(c)(3) OF THE "INTERNAL 327
REVENUE CODE OF 1986," 100 STAT. 2085, 26 U.S.C.A. 501, AS 331
AMENDED.
(2) THE ATTORNEY GENERAL MAY AUTHORIZE A DEDICATION AND 333
TRANSFER TO A PERSON EXEMPT FROM TAXATION UNDER SECTION 501(a) 335
AND DESCRIBED IN SECTION 501(c)(4) OF THE "INTERNAL REVENUE CODE 339
OF 1986," 100 STAT. 2085, 26 U.S.C.A. 501, AS AMENDED, IF ALL OF 342
THE FOLLOWING CONDITIONS ARE MET: 343
(a) THE ATTORNEY GENERAL DETERMINES THAT THE DEDICATION 346
AND TRANSFER IS NECESSARY TO ENSURE EFFECTIVE MANAGEMENT AND 347
MONETIZATION OF THE EQUITY OWNERSHIP, IF ANY, IN THE NONPROFIT 348
HEALTH CARE ENTITY;
(b) THE PERSON DESCRIBED IN DIVISION (F)(2) OF THIS 351
SECTION AGREES TO ALL OF THE FOLLOWING CONDITIONS: 352
(i) THE PERSON DESCRIBED IN DIVISION (F)(2) OF THIS 355
SECTION WILL RECEIVE FROM THE NONPROFIT HEALTH CARE ENTITY ONLY 356
THE AMOUNT OF PROCEEDS OF THE TRANSACTION AS ARE NECESSARY TO 357
FUND THE LEVEL OF ACTIVITY NECESSARY TO PRESERVE THE PERSON'S 358
TAX-EXEMPT STATUS;
(ii) NO PROCEEDS OF THE TRANSACTION, OR ANY OTHER FUNDS OR 361
RESOURCES CONTROLLED BY THE PERSON DESCRIBED IN DIVISION (F)(2) 362
OF THIS SECTION, WILL BE DISBURSED FOR CAMPAIGN CONTRIBUTIONS, 363
LOBBYING EXPENDITURES, OR OTHER POLITICAL ACTIVITY; 364
(iii) THE PERSON DESCRIBED IN DIVISION (F)(2) OF THIS 367
SECTION AGREES TO ABIDE BY ANY REQUIREMENTS IMPOSED ON PERSONS 368
EXEMPT FROM TAXATION UNDER SECTION 501(a) AND DESCRIBED IN 369
SECTION 501(c)(3) OF THE "INTERNAL REVENUE CODE OF 1986," 100 374
STAT. 2085, 26 U.S.C.A. 501, AS AMENDED, THAT THE ATTORNEY 376
GENERAL DETERMINES APPROPRIATE. 377
(G)(1) NO NONPROFIT HEALTH CARE ENTITY SHALL ENTER INTO A 379
TRANSACTION SUBJECT TO THIS SECTION WITHOUT THE APPROVAL OF THE 381
ATTORNEY GENERAL GRANTED IN ACCORDANCE WITH THIS SECTION. 382
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(2) NO PERSON WHO IS AN OFFICER, DIRECTOR, BOARD MEMBER, 384
OR OTHER FIDUCIARY OF A NONPROFIT HEALTH CARE ENTITY SHALL 385
RECEIVE ANYTHING OF VALUE THAT RELATES TO A TRANSACTION DESCRIBED 386
IN THIS SECTION AND SECTION 109.34 OF THE REVISED CODE AND IS OF 387
SUCH A CHARACTER AS TO MANIFEST A SUBSTANTIAL AND IMPROPER 388
INFLUENCE ON THE PERSON WITH RESPECT TO THE PERSON'S DUTIES. 389
(3) THE ATTORNEY GENERAL MAY INSTITUTE AND PROSECUTE A 391
CIVIL OR CRIMINAL ACTION TO ENFORCE THIS SECTION AND SECTION 392
109.34 OF THE REVISED CODE IN THE COURT OF COMMON PLEAS OF THE 394
COUNTY IN WHICH THE NONPROFIT HEALTH CARE ENTITY HAS ITS
PRINCIPAL PLACE OF BUSINESS OR THE FRANKLIN COUNTY COURT OF 395
COMMON PLEAS. IN ADDITION TO ANY CIVIL REMEDIES THAT EXIST UNDER 396
COMMON LAW OR THE REVISED CODE, A COURT MAY RESCIND THE 397
TRANSACTION, GRANT INJUNCTIVE RELIEF, ASSESS A CIVIL PENALTY IN 398
AN AMOUNT NOT EXCEEDING TEN MILLION DOLLARS, OR IMPOSE ANY 399
COMBINATION OF THESE REMEDIES.
(H) A NONPROFIT HEALTH CARE ENTITY THAT IS A PARTY TO A 401
PROPOSED TRANSACTION THAT HAS BEEN DISAPPROVED BY THE ATTORNEY 403
GENERAL MAY APPEAL THE DISAPPROVAL ONLY BY FOLLOWING THE 404
PROCEDURE SET FORTH IN THIS DIVISION. THE DISAPPROVAL MAY BE 405
APPEALED TO THE COURT OF COMMON PLEAS OF THE COUNTY IN WHICH THE
NONPROFIT HEALTH ENTITY HAS ITS PRINCIPAL PLACE OF BUSINESS. THE 406
COURT OF COMMON PLEAS MAY REVERSE, VACATE, OR MODIFY THE ATTORNEY 407
GENERAL'S DECISION TO DISAPPROVE A TRANSACTION IF THE COURT FINDS 408
THAT THE DECISION WAS UNLAWFUL OR UNREASONABLE. THIS APPEAL 409
SHALL PROCEED AS AN APPEAL DE NOVO. TO BRING AN APPEAL UNDER 410
THIS DIVISION, A NONPROFIT HEALTH CARE ENTITY SHALL FILE A NOTICE
OF APPEAL WITH THE COURT AND THE ATTORNEY GENERAL NOT LATER THAN 411
THIRTY DAYS AFTER THE ENTITY'S RECEIPT OF NOTICE OF THE ATTORNEY 412
GENERAL'S DISAPPROVAL OF THE TRANSACTION. NOT LATER THAN THIRTY 413
DAYS AFTER RECEIPT OF THE NOTICE OF APPEAL, THE ATTORNEY GENERAL 414
SHALL PREPARE AND CERTIFY TO THE COURT OF COMMON PLEAS A COMPLETE 415
RECORD OF ALL OF THE DOCUMENTS SUBMITTED BY THE NONPROFIT HEALTH 416
CARE ENTITY TO THE ATTORNEY GENERAL AND ANY DOCUMENTS GENERATED
10
BY CONSULTANTS AT THE REQUEST OF THE ATTORNEY GENERAL OR OTHER 417
MATERIALS PRODUCED BY THE ATTORNEY GENERAL AS PART OF THE 418
ATTORNEY GENERAL'S DETERMINATION OF WHETHER TO APPROVE OR 419
DISAPPROVE THE TRANSACTION.
THE JUDGMENT OF THE COURT OF COMMON PLEAS IS FINAL UNLESS 421
REVERSED, VACATED, OR MODIFIED ON APPEAL. AN APPEAL MAY BE TAKEN 422
BY EITHER THE NONPROFIT HEALTH CARE ENTITY OR THE ATTORNEY 423
GENERAL, SHALL PROCEED AS IN THE CASE OF APPEALS IN CIVIL 424
ACTIONS, AND SHALL BE PURSUANT TO THE RULES OF APPELLATE 425
PROCEDURE AND, TO THE EXTENT NOT IN CONFLICT WITH THOSE RULES, 426
CHAPTER 2505. OF THE REVISED CODE.
(I)(1) THE POWERS OF THE ATTORNEY GENERAL UNDER THIS 428
SECTION AND SECTION 109.34 OF THE REVISED CODE ARE IN ADDITION TO 429
THE ATTORNEY GENERAL'S POWERS HELD AT COMMON LAW AND UNDER 430
SECTIONS 109.23 TO 109.33 OF THE REVISED CODE. 432
THIS SECTION AND SECTION 109.34 OF THE REVISED CODE DO NOT 436
LIMIT OR OTHERWISE AFFECT ANY OF THE FOLLOWING:
(a) ANY OTHER CIVIL OR CRIMINAL RIGHT, CLAIM, OR DEFENSE 438
THAT THE ATTORNEY GENERAL OR PARTIES MAY ASSERT UNDER COMMON LAW 440
OR THE REVISED CODE; 441
(b) THE AUTHORITY OF THE ATTORNEY GENERAL TO INSTITUTE AND 443
PROSECUTE AN ACTION TO ENFORCE SECTIONS 109.23 TO 109.33 OF THE 445
REVISED CODE; 446
(c) THE AUTHORITY OF THE ATTORNEY GENERAL TO INVESTIGATE 448
AND PROSECUTE VIOLATIONS OF ANY STATE OR FEDERAL ANTITRUST LAW. 450
(2) NOTHING IN THIS SECTION SHALL BE CONSTRUED TO GRANT TO 453
THE ATTORNEY GENERAL ANY AUTHORITY OF THE SUPERINTENDENT OF
INSURANCE UNDER TITLE XVII OR TITLE XXXIX OF THE REVISED CODE 459
RELATING TO THE SUPERINTENDENT'S REVIEW OF AN ENTITY DESCRIBED IN 460
DIVISION (A)(2)(b) OF SECTION 109.34 OF THE REVISED CODE. 464
Sec. 109.99. (A) Whoever violates section 109.26 of the 473
Revised Code shall be fined not less than five hundred nor more 474
than ten thousand dollars or be imprisoned not less than one 475
month nor more than one year, or both. 476
11
(B) Whoever violates division (G)(1) of section 109.573 of 479
the Revised Code is guilty of unlawful disclosure of DNA database 480
information, a misdemeanor of the first degree.
(C) Whoever violates division (G)(2) of section 109.573 of 482
the Revised Code is guilty of unlawful possession of DNA database 483
information, a misdemeanor of the first degree. 484
(D)(1) WHOEVER VIOLATES DIVISION (G)(1) OF SECTION 109.35 487
OF THE REVISED CODE IS GUILTY OF ENTERING INTO A TRANSACTION
INVOLVING A NONPROFIT HEALTH CARE ENTITY WITHOUT THE APPROVAL OF 489
THE ATTORNEY GENERAL, A FELONY OF THE THIRD DEGREE. 490
(2) WHOEVER VIOLATES DIVISION (G)(2) OF SECTION 109.35 OF 492
THE REVISED CODE IS GUILTY OF RECEIVING IMPROPER COMPENSATION 493
RELATING TO A TRANSACTION INVOLVING A NONPROFIT HEALTH CARE 494
ENTITY, A FELONY OF THE THIRD DEGREE.
Section 2. That existing section 109.99 of the Revised 496
Code is hereby repealed. 497
Section 3. This act is hereby declared to be an emergency 499
measure necessary for the immediate preservation of the public 500
peace, health, or safety. The reason for such necessity is that 501
some transactions involving the acquisition of a nonprofit health 503
care entity by a for-profit health care entity have undervalued 504
the charitable assets in the nonprofit entity, attempted to
channel charitable assets into the for-profit entity, and 506
provided the Attorney General with inadequate time and 507
information to review the transaction. Therefore, this act shall 509
go into immediate effect.