As Passed by the Senate 1
122nd General Assembly 4
Regular Session Am. 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
SENATORS BLESSING-CUPP-OELSLAGER-LATTA-DRAKE-B. JOHNSON- 14
CARNES-WATTS-GILLMOR-KEARNS-NEIN-GARDNER 15
17
A B I L L
To amend section 109.99 and to enact sections 109.34 19
and 109.35 of the Revised Code to require that 20
the Attorney General review transfers of assets 21
by certain nonprofit health care entities to 22
for-profit entities, to require that the attorney 23
general be notified of transfers of assets 24
between certain nonprofit health care entities,
and to declare an emergency. 25
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 27
Section 1. That section 109.99 be amended and sections 29
109.34 and 109.35 of the Revised Code be enacted to read as 30
follows: 31
Sec. 109.34. (A) AS USED IN THIS SECTION AND IN SECTION 33
109.35 OF THE REVISED CODE: 34
(1) "FAIR MARKET VALUE" MEANS THE PRICE THAT THE ASSETS 36
BEING TRANSFERRED WOULD BRING IN A COMPETITIVE AND OPEN MARKET 37
UNDER A FAIR SALE WITH THE BUYER AND SELLER ACTING PRUDENTLY, 39
KNOWLEDGEABLY, AND IN THEIR OWN BEST INTEREST AND A REASONABLE 40
TIME BEING ALLOWED FOR EXPOSURE IN THE MARKET.
2
(2) "NONPROFIT HEALTH CARE ENTITY" MEANS ANY OF THE 43
FOLLOWING THAT WAS CREATED FOR ANY CHARITABLE OR SOCIAL WELFARE 45
PURPOSE RELATED TO HEALTH CARE:
(a) A HOSPITAL, AS DEFINED IN SECTION 3727.01 OF THE 47
REVISED CODE, THAT IS OWNED OR OPERATED BY A CORPORATION 50
ORGANIZED UNDER CHAPTER 1702. OF THE REVISED CODE OR THE 51
NONPROFIT CORPORATION LAW OF ANOTHER STATE; 52
(b) EITHER OF THE FOLLOWING THAT IS OR HAS BEEN EXEMPT 54
FROM TAXATION UNDER SECTION 501(a) OF THE INTERNAL REVENUE CODE: 58
(i) AN ENTITY THAT IS OR HAS BEEN GRANTED A CERTIFICATE OF 61
AUTHORITY UNDER CHAPTER 1742. OF THE REVISED CODE; 64
(ii) AN ENTITY THAT IS AUTHORIZED OR HAS BEEN AUTHORIZED 66
TO TRANSACT BUSINESS IN THIS STATE UNDER TITLE XXXIX OF THE 68
REVISED CODE, THAT IS IN THE BUSINESS OF PROVIDING SICKNESS AND 70
ACCIDENT INSURANCE, AND THAT WAS PREVIOUSLY A HOSPITAL SERVICE 71
ASSOCIATION UNDER FORMER CHAPTER 1739. OF THE REVISED CODE OR 72
CHAPTER 669. OF THE GENERAL CODE, HAS MERGED OR OTHERWISE 73
CONSOLIDATED WITH A FORMER HOSPITAL SERVICE ASSOCIATION, OR ANY 74
OF WHOSE PREDECESSORS IN INTEREST HAS MERGED OR OTHERWISE 75
CONSOLIDATED WITH A FORMER HOSPITAL SERVICE ASSOCIATION. 76
(3) "PARTY" INCLUDES A NONPROFIT HEALTH CARE ENTITY THAT 78
IS THE SUBJECT OF A TRANSACTION OR PROPOSED TRANSACTION, AN 80
ACQUIRING PERSON, AND THE RESULTING ENTITY, IF ANY. 81
(4) "TRANSACTION" MEANS A TRANSFER OF OWNERSHIP OR CONTROL 84
OF ASSETS OF A NONPROFIT HEALTH CARE ENTITY, WHETHER BY PURCHASE, 85
MERGER, CONSOLIDATION, LEASE, GIFT, JOINT VENTURE, OR OTHER 86
TRANSFER, INCLUDING ANY BINDING OBLIGATION IN FURTHERANCE OF THE 87
TRANSACTION, THAT IS EQUAL TO AT LEAST TWENTY PER CENT OF THE 88
ASSETS OF THE ENTITY AND OCCURS IN THE TWENTY-FOUR-MONTH PERIOD 89
PRIOR TO THE DATE NOTICE IS SUBMITTED TO THE ATTORNEY GENERAL IN 90
ACCORDANCE WITH DIVISION (B) OF THIS SECTION. "TRANSACTION" ALSO 92
MEANS A TRANSFER OF OWNERSHIP OR CONTROL OF ANY ASSETS OF A 93
NONPROFIT HEALTH CARE ENTITY, WHETHER BY PURCHASE, MERGER, 94
CONSOLIDATION, LEASE, GIFT, JOINT VENTURE, OR OTHER TRANSFER, 95
3
INCLUDING ANY BINDING OBLIGATION IN FURTHERANCE OF THE 96
TRANSACTION, IF THE ENTITY IS UNABLE TO FULFILL ITS STATED OR 97
ACTUAL PURPOSE WITHOUT THE ASSETS. "TRANSACTION" DOES NOT 98
INCLUDE EITHER OF THE FOLLOWING:
(a) A TRANSFER OF OWNERSHIP OR CONTROL OF ASSETS OF A 101
NONPROFIT HEALTH CARE ENTITY BETWEEN NONPROFIT HEALTH CARE 102
ENTITIES AND PERSONS EXEMPT FROM TAXATION UNDER SECTION 501(a) OF 104
THE "INTERNAL REVENUE CODE OF 1986," 100 STAT. 2085, 26 U.S.C. 109
501, AS AMENDED; 110
(b) A TRANSFER OF OWNERSHIP OR CONTROL OF ASSETS OF A 112
NONPROFIT HEALTH CARE ENTITY IN RELATION TO WHICH THE NONPROFIT 113
HEALTH CARE ENTITY, PRIOR TO THE EFFECTIVE DATE OF THIS SECTION, 115
HAS ENTERED INTO A CONSENT DECREE WITH THE ATTORNEY GENERAL THAT 116
REQUIRES DISTRIBUTION OF THE CHARITABLE ASSETS OF THE ENTITY TO 118
AN APPROPRIATE HEALTH-RELATED CHARITY. THE EXEMPTION IN DIVISION 119
(A)(4)(b) OF THIS SECTION DOES NOT LIMIT THE AUTHORITY OF THE 121
ATTORNEY GENERAL TO SEEK REMEDIES FOR BREACHES OF FIDUCIARY DUTY 122
OR OTHER VIOLATIONS OF LAW. 123
(B) A NONPROFIT HEALTH CARE ENTITY PROPOSING TO ENTER INTO 125
A TRANSACTION SHALL PROVIDE NOTICE OF THE PROPOSED TRANSACTION TO 127
THE ATTORNEY GENERAL AND OBTAIN WRITTEN APPROVAL OF THE 129
TRANSACTION IN ACCORDANCE WITH THIS SECTION. THE NONPROFIT
HEALTH CARE ENTITY SHALL SUBMIT THE NOTICE ON FORMS PROVIDED BY 131
THE ATTORNEY GENERAL, AND THE NOTICE SHALL INCLUDE ALL OF THE 132
FOLLOWING: 133
(1) THE NAMES AND ADDRESSES OF THE PARTIES, INCLUDING A 135
LIST OF ALL INDIVIDUALS WHO ARE OR HAVE BEEN CHOSEN AS DIRECTORS, 136
OFFICERS, OR BOARD MEMBERS OF THE PARTIES; 137
(2) THE TERMS OF THE PROPOSED TRANSACTION, INCLUDING A 139
SUMMARY OF ALL CONTRACTS OR OTHER AGREEMENTS OF THE PARTIES; 140
(3) THE AMOUNT, SOURCE, AND NATURE OF CONSIDERATION TO BE 142
PAID TO THE NONPROFIT HEALTH CARE ENTITY, ITS DIRECTORS, 143
OFFICERS, BOARD MEMBERS, EXECUTIVES, OR EXPERTS RETAINED BY THE 144
NONPROFIT HEALTH CARE ENTITY.
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(4) A STATEMENT ACKNOWLEDGING THAT THE NONPROFIT HEALTH 146
CARE ENTITY IS UNDER A CONTINUING DUTY TO NOTIFY THE ATTORNEY 147
GENERAL OF ANY CHANGES IN THE INFORMATION CONTAINED IN THE NOTICE 148
OR OTHER DOCUMENTS REQUIRED BY THIS SECTION AND THAT A VIOLATION 150
OF THIS DUTY MAY DELAY APPROVAL OF THE PROPOSED TRANSACTION. THE 151
STATEMENT SHALL BE SIGNED BY A REPRESENTATIVE OF THE NONPROFIT 153
HEALTH CARE ENTITY AT THE TIME THE NOTICE IS SUBMITTED TO THE 155
ATTORNEY GENERAL. 156
(C) IN ADDITION TO THE NOTICE DESCRIBED IN DIVISION (B) OF 159
THIS SECTION, THE NONPROFIT HEALTH CARE ENTITY SHALL SUBMIT ALL 160
OF THE FOLLOWING:
(1) AUDITED FINANCIAL STATEMENTS FOR THE NONPROFIT HEALTH 162
CARE ENTITY FOR THE THREE FISCAL YEARS PRIOR TO THE DATE THE 163
NONPROFIT HEALTH CARE ENTITY SUBMITTED THE NOTICE TO THE ATTORNEY 164
GENERAL;
(2) A VALUATION STATEMENT PREPARED BY AN INDEPENDENT, 167
QUALIFIED EXPERT, INCLUDING AN INVESTMENT BANKER, ACTUARY, 169
APPRAISER, CERTIFIED PUBLIC ACCOUNTANT, OR OTHER EXPERT, THAT 170
ASSESSES THE FULL AND FAIR MARKET VALUE OF THE NONPROFIT HEALTH 171
CARE ENTITY;
(3) COPIES OF ALL CONTRACTS AND OTHER AGREEMENTS BETWEEN 174
THE PARTIES OR THEIR OFFICERS, DIRECTORS, BOARD MEMBERS, OR OTHER 175
FIDUCIARIES, INCLUDING ANY CONTRACTS OR OTHER FINAL AGREEMENTS 176
RELATING TO THE CLOSE OF THE PROPOSED TRANSACTION; 177
(4) ANY ADDITIONAL INFORMATION THE ATTORNEY GENERAL 179
CONSIDERS NECESSARY TO VALUE THE NONPROFIT HEALTH CARE ENTITY'S 181
ASSETS AS REQUIRED IN RULES ADOPTED BY THE ATTORNEY GENERAL IN 183
ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE.
(D) THE NOTICE AND ALL OTHER DOCUMENTS OR MATERIALS 185
SUBMITTED PURSUANT TO THIS SECTION ARE PUBLIC RECORDS PROVIDED 186
THEY MEET THE DEFINITION SET FORTH IN SECTION 149.43 OF THE 188
REVISED CODE. 189
(E) NOT LATER THAN TWO BUSINESS DAYS AFTER THE DISCOVERY 192
OF ANY CHANGES IN INFORMATION CONTAINED IN THE NOTICE OR OTHER 193
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DOCUMENTS REQUIRED BY THIS SECTION, THE NONPROFIT HEALTH CARE 194
ENTITY SHALL PROVIDE COPIES TO THE ATTORNEY GENERAL OF ANY 195
DOCUMENTS AND OTHER MATERIAL RELEVANT TO THE CHANGES. IN 197
ADDITION TO THE NINETY-DAY EXTENSION AUTHORIZED BY DIVISION (A) 198
OF SECTION 109.35 OF THE REVISED CODE, THE ATTORNEY GENERAL FOR
GOOD CAUSE MAY DELAY APPROVAL OF THE PROPOSED TRANSACTION UP TO 200
THIRTY DAYS FOLLOWING RECEIPT OF THE DOCUMENTS AND OTHER MATERIAL 202
RELEVANT TO THE CHANGES.
(F) NOT LATER THAN SEVEN DAYS AFTER SUBMITTING THE NOTICE 204
AND OTHER DOCUMENTS REQUIRED BY THIS SECTION, THE NONPROFIT 205
HEALTH CARE ENTITY SHALL PUBLISH NOTICE OF THE PROPOSED 206
TRANSACTION IN AT LEAST ONE DAILY NEWSPAPER OF GENERAL 207
CIRCULATION IN THE COUNTY WHERE THE NONPROFIT HEALTH CARE ENTITY 208
HAS ITS PRINCIPAL PLACE OF BUSINESS. THE NOTICE SHALL STATE THE 209
NAMES OF THE PARTIES AND A DESCRIPTION OF THE PROPOSED 210
TRANSACTION.
(G) NOTWITHSTANDING DIVISION (A)(4)(a) OF THIS SECTION, AS 213
USED IN THIS DIVISION, "NONPROFIT COMBINATION" MEANS A 214
TRANSACTION BETWEEN A NONPROFIT HEALTH CARE ENTITY AND ANOTHER
UNRELATED NONPROFIT HEALTH CARE ENTITY. 215
NOT LESS THAN SIXTY DAYS BEFORE THE CLOSING OF A NONPROFIT 217
COMBINATION, A NONPROFIT HEALTH CARE ENTITY THAT IS A PARTY TO 219
THE COMBINATION AND IS THE PARTY TO BE ACQUIRED SHALL PROVIDE
NOTICE OF THE NONPROFIT COMBINATION TO THE ATTORNEY GENERAL BY 222
SUBMITTING THE INFORMATION DESCRIBED IN DIVISIONS (B)(1) AND (3) 223
OF THIS SECTION.
NOT LATER THAN SEVEN DAYS AFTER THE INFORMATION REQUIRED BY 225
THIS SECTION IS SUBMITTED TO THE ATTORNEY GENERAL, EACH OF THE 226
NONPROFIT HEALTH CARE ENTITIES THAT IS A PARTY TO A NONPROFIT 227
COMBINATION SHALL PUBLISH THE NOTICE DESCRIBED IN DIVISION (F) OF 229
THIS SECTION.
Sec. 109.35. (A) NOT LATER THAN SIXTY DAYS AFTER RECEIPT 231
OF A NOTICE AND OTHER DOCUMENTS REQUIRED BY SECTION 109.34 OF THE 232
REVISED CODE, THE ATTORNEY GENERAL SHALL APPROVE OR DISAPPROVE 233
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THE PROPOSED TRANSACTION, EXCEPT THAT THE ATTORNEY GENERAL FOR 234
GOOD CAUSE MAY EXTEND THIS PERIOD AN ADDITIONAL NINETY DAYS. 235
(B) IN DETERMINING WHETHER TO APPROVE OR DISAPPROVE A 237
PROPOSED TRANSACTION, THE ATTORNEY GENERAL SHALL CONSIDER: 239
(1) WHETHER THE PROPOSED TRANSACTION WILL RESULT IN A 241
BREACH OF FIDUCIARY DUTY, AS DETERMINED BY THE ATTORNEY GENERAL, 244
INCLUDING CONFLICTS OF INTEREST RELATED TO PAYMENTS OR BENEFITS 245
TO OFFICERS, DIRECTORS, BOARD MEMBERS, EXECUTIVES, AND EXPERTS 246
EMPLOYED OR RETAINED BY THE PARTIES;
(2) WHETHER THE NONPROFIT HEALTH CARE ENTITY WILL RECEIVE 248
FULL AND FAIR MARKET VALUE FOR ITS CHARITABLE OR SOCIAL WELFARE 249
ASSETS;
(3) WHETHER THE PROCEEDS OF THE PROPOSED TRANSACTION WILL 251
BE USED CONSISTENT WITH THE NONPROFIT HEALTH CARE ENTITY'S 253
ORIGINAL CHARITABLE PURPOSE;
(4) ANY OTHER CRITERIA THE ATTORNEY GENERAL CONSIDERS 255
NECESSARY TO DETERMINE WHETHER THE NONPROFIT HEALTH CARE ENTITY 256
WILL RECEIVE FULL AND FAIR MARKET VALUE FOR ITS CHARITABLE OR 257
SOCIAL WELFARE ASSETS AS REQUIRED IN RULES ADOPTED BY THE 258
ATTORNEY GENERAL IN ACCORDANCE WITH CHAPTER 119. OF THE REVISED 259
CODE.
(C) THE ATTORNEY GENERAL MAY RETAIN, AT THE NONPROFIT 261
HEALTH CARE ENTITY'S EXPENSE, ONE OR MORE INDEPENDENTLY QUALIFIED 263
EXPERTS, INCLUDING AN INVESTMENT BANKER, ACTUARY, APPRAISER, 264
CERTIFIED PUBLIC ACCOUNTANT, OR OTHER EXPERT, AS THE ATTORNEY 265
GENERAL CONSIDERS REASONABLY NECESSARY TO PROVIDE ASSISTANCE IN 266
MAKING A DECISION UNDER THIS SECTION. THE NONPROFIT HEALTH CARE 267
ENTITY SHALL PROMPTLY REIMBURSE THE ATTORNEY GENERAL FOR THE COST 269
OF RETAINING EXPERTS. THE COST OF RETAINING AN EXPERT SHALL NOT 271
EXCEED AN AMOUNT THAT IS REASONABLE AND NECESSARY TO MAKE A 272
DETERMINATION UNDER THIS SECTION. THE CONTRACT TO RETAIN AN 273
EXPERT IS EXEMPT FROM CHAPTER 125. OF THE REVISED CODE. 274
AT ANY TIME WHILE CONSIDERING A PROPOSED TRANSACTION UNDER 276
THIS SECTION, THE ATTORNEY GENERAL MAY REQUEST ANY ADDITIONAL 277
7
INFORMATION FROM THE NONPROFIT HEALTH CARE ENTITY THAT THE 278
ATTORNEY GENERAL CONSIDERS APPROPRIATE TO THE VALUATION OF THE 279
ENTITY'S CHARITABLE OR SOCIAL WELFARE ASSETS. THE NONPROFIT 280
HEALTH CARE ENTITY SHALL PROVIDE THE INFORMATION NOT LATER THAN 281
TEN DAYS AFTER THE DATE OF THE REQUEST. THE ATTORNEY GENERAL FOR 282
GOOD CAUSE MAY DELAY APPROVAL OF THE PROPOSED TRANSACTION UP TO 283
THIRTY DAYS, IN ADDITION TO THE NINETY-DAY EXTENSION AUTHORIZED 284
BY DIVISION (A) OF THIS SECTION, FOLLOWING RECEIPT OF DOCUMENTS 285
AND OTHER MATERIAL CONTAINING THE INFORMATION REQUESTED. 286
(D) THE ATTORNEY GENERAL SHALL APPROVE OR DISAPPROVE A 288
PROPOSED TRANSACTION ON THE BASIS OF THE CRITERIA SET FORTH IN 289
DIVISION (B) OF THIS SECTION. ONCE A PROPOSED TRANSACTION IS 291
APPROVED, ANY SUBSTANTIAL ALTERATION IS A NEW TRANSACTION SUBJECT 293
TO APPROVAL BY THE ATTORNEY GENERAL.
THE NONPROFIT HEALTH CARE ENTITY MAY RESUBMIT A NOTICE AND 295
OTHER DOCUMENTS SEEKING APPROVAL OF A PROPOSED TRANSACTION 297
DISAPPROVED BY THE ATTORNEY GENERAL BUT MAY NOT SUBMIT A NOTICE 298
AND OTHER DOCUMENTS THAT ARE IDENTICAL OR SUBSTANTIALLY SIMILAR 299
TO THE ORIGINAL SUBMISSION.
IF THE ATTORNEY GENERAL DISAPPROVES THE PROPOSED 301
TRANSACTION, THE NONPROFIT HEALTH CARE ENTITY MAY APPEAL THE 302
DISAPPROVAL PURSUANT TO DIVISION (H) OF THIS SECTION. 303
(E) IF THE ATTORNEY GENERAL APPROVES THE PROPOSED 306
TRANSACTION, THE NONPROFIT HEALTH CARE ENTITY SHALL HOLD A PUBLIC 307
HEARING TO RECEIVE COMMENT ON THE PROPOSED USE OF THE PROCEEDS OF 308
THE TRANSACTION. THE HEARING SHALL BE HELD IN THE COUNTY WHERE 309
THE NONPROFIT HEALTH CARE ENTITY HAS ITS PRINCIPAL PLACE OF 310
BUSINESS NOT LATER THAN FORTY-FIVE DAYS AFTER RECEIPT OF WRITTEN 311
NOTICE OF THE ATTORNEY GENERAL'S APPROVAL. 312
AT LEAST THIRTY DAYS PRIOR TO THE DATE SET FOR THE HEARING, 315
THE NONPROFIT HEALTH CARE ENTITY SHALL PUBLISH NOTICE OF THE 316
HEARING IN AT LEAST ONE DAILY NEWSPAPER OF GENERAL CIRCULATION IN 317
THE COUNTY WHERE THE NONPROFIT HEALTH CARE ENTITY HAS ITS 318
PRINCIPAL PLACE OF BUSINESS. THE NOTICE SHALL INCLUDE A
8
STATEMENT THAT A TRANSACTION HAS BEEN APPROVED BY THE ATTORNEY 319
GENERAL, THE NAMES OF THE PARTIES, A DESCRIPTION OF THE PROPOSED 320
TRANSACTION, AND THE DATE, TIME, AND PLACE OF THE HEARING. 322
(F)(1) THE PROCEEDS OF AN APPROVED TRANSACTION SHALL BE 325
DEDICATED AND TRANSFERRED TO ONE OR MORE EXISTING OR NEW 326
CHARITABLE ORGANIZATIONS EXEMPT FROM TAXATION UNDER SECTION 327
501(a) AND DESCRIBED IN SECTION 501(c)(3) OF THE "INTERNAL 330
REVENUE CODE OF 1986," 100 STAT. 2085, 26 U.S.C.A. 501, AS 334
AMENDED.
(2) THE ATTORNEY GENERAL MAY AUTHORIZE A DEDICATION AND 336
TRANSFER TO A PERSON EXEMPT FROM TAXATION UNDER SECTION 501(a) 338
AND DESCRIBED IN SECTION 501(c)(4) OF THE "INTERNAL REVENUE CODE 342
OF 1986," 100 STAT. 2085, 26 U.S.C.A. 501, AS AMENDED, IF ALL OF 345
THE FOLLOWING CONDITIONS ARE MET: 346
(a) THE ATTORNEY GENERAL DETERMINES THAT THE DEDICATION 349
AND TRANSFER IS NECESSARY TO ENSURE EFFECTIVE MANAGEMENT AND 350
MONETIZATION OF THE EQUITY OWNERSHIP, IF ANY, IN THE NONPROFIT 351
HEALTH CARE ENTITY;
(b) THE PERSON DESCRIBED IN DIVISION (F)(2) OF THIS 354
SECTION AGREES TO ALL OF THE FOLLOWING CONDITIONS: 355
(i) THE PERSON DESCRIBED IN DIVISION (F)(2) OF THIS 358
SECTION WILL RECEIVE FROM THE NONPROFIT HEALTH CARE ENTITY ONLY 359
THE AMOUNT OF PROCEEDS OF THE TRANSACTION AS ARE NECESSARY TO 360
FUND THE LEVEL OF ACTIVITY NECESSARY TO PRESERVE THE PERSON'S 361
TAX-EXEMPT STATUS;
(ii) NO PROCEEDS OF THE TRANSACTION, OR ANY OTHER FUNDS OR 364
RESOURCES CONTROLLED BY THE PERSON DESCRIBED IN DIVISION (F)(2) 365
OF THIS SECTION, WILL BE DISBURSED FOR CAMPAIGN CONTRIBUTIONS, 366
LOBBYING EXPENDITURES, OR OTHER POLITICAL ACTIVITY; 367
(iii) THE PERSON DESCRIBED IN DIVISION (F)(2) OF THIS 370
SECTION AGREES TO ABIDE BY ANY REQUIREMENTS IMPOSED ON PERSONS 371
EXEMPT FROM TAXATION UNDER SECTION 501(a) AND DESCRIBED IN 372
SECTION 501(c)(3) OF THE "INTERNAL REVENUE CODE OF 1986," 100 377
STAT. 2085, 26 U.S.C.A. 501, AS AMENDED, THAT THE ATTORNEY 379
9
GENERAL DETERMINES APPROPRIATE. 380
(G)(1) NO NONPROFIT HEALTH CARE ENTITY SHALL ENTER INTO A 382
TRANSACTION SUBJECT TO THIS SECTION WITHOUT THE APPROVAL OF THE 384
ATTORNEY GENERAL GRANTED IN ACCORDANCE WITH THIS SECTION. 385
(2) NO PERSON WHO IS AN OFFICER, DIRECTOR, BOARD MEMBER, 387
OR OTHER FIDUCIARY OF A NONPROFIT HEALTH CARE ENTITY SHALL 388
RECEIVE ANYTHING OF SUBSTANTIAL VALUE THAT RELATES TO A 389
TRANSACTION DESCRIBED IN THIS SECTION AND SECTION 109.34 OF THE 391
REVISED CODE AND IS OF SUCH A CHARACTER AS TO MANIFEST A
SUBSTANTIAL AND IMPROPER INFLUENCE ON THE PERSON WITH RESPECT TO 392
THE PERSON'S DUTIES. 393
(3) THE ATTORNEY GENERAL MAY INSTITUTE AND PROSECUTE A 395
CIVIL OR CRIMINAL ACTION TO ENFORCE THIS SECTION AND SECTION 396
109.34 OF THE REVISED CODE IN THE COURT OF COMMON PLEAS OF THE 398
COUNTY IN WHICH THE NONPROFIT HEALTH CARE ENTITY HAS ITS
PRINCIPAL PLACE OF BUSINESS OR THE FRANKLIN COUNTY COURT OF 399
COMMON PLEAS. IN ADDITION TO ANY CIVIL REMEDIES THAT EXIST UNDER 400
COMMON LAW OR THE REVISED CODE, A COURT MAY RESCIND THE 401
TRANSACTION, GRANT INJUNCTIVE RELIEF, ASSESS A CIVIL PENALTY IN 402
AN AMOUNT NOT EXCEEDING TEN MILLION DOLLARS, OR IMPOSE ANY 403
COMBINATION OF THESE REMEDIES.
(H) A NONPROFIT HEALTH CARE ENTITY THAT IS A PARTY TO A 405
PROPOSED TRANSACTION THAT HAS BEEN DISAPPROVED BY THE ATTORNEY 407
GENERAL MAY APPEAL THE DISAPPROVAL ONLY BY FOLLOWING THE 408
PROCEDURE SET FORTH IN THIS DIVISION. THE DISAPPROVAL MAY BE 409
APPEALED TO THE COURT OF COMMON PLEAS OF THE COUNTY IN WHICH THE
NONPROFIT HEALTH ENTITY HAS ITS PRINCIPAL PLACE OF BUSINESS. THE 410
COURT OF COMMON PLEAS MAY REVERSE, VACATE, OR MODIFY THE ATTORNEY 411
GENERAL'S DECISION TO DISAPPROVE A TRANSACTION IF THE COURT FINDS 412
THAT THE DECISION WAS UNLAWFUL OR UNREASONABLE. THIS APPEAL 413
SHALL PROCEED AS AN APPEAL DE NOVO. TO BRING AN APPEAL UNDER 414
THIS DIVISION, A NONPROFIT HEALTH CARE ENTITY SHALL FILE A NOTICE
OF APPEAL WITH THE COURT AND THE ATTORNEY GENERAL NOT LATER THAN 415
FIFTEEN DAYS AFTER THE ENTITY'S RECEIPT OF NOTICE OF THE ATTORNEY 416
10
GENERAL'S DISAPPROVAL OF THE TRANSACTION. NOT LATER THAN THIRTY 417
DAYS AFTER RECEIPT OF THE NOTICE OF APPEAL, THE ATTORNEY GENERAL 418
SHALL PREPARE AND CERTIFY TO THE COURT OF COMMON PLEAS A COMPLETE 419
RECORD OF ALL OF THE DOCUMENTS SUBMITTED BY THE NONPROFIT HEALTH 420
CARE ENTITY TO THE ATTORNEY GENERAL AND ANY DOCUMENTS GENERATED
BY CONSULTANTS AT THE REQUEST OF THE ATTORNEY GENERAL OR OTHER 421
MATERIALS PRODUCED BY THE ATTORNEY GENERAL AS PART OF THE 422
ATTORNEY GENERAL'S DETERMINATION OF WHETHER TO APPROVE OR 423
DISAPPROVE THE TRANSACTION.
THE JUDGMENT OF THE COURT OF COMMON PLEAS IS FINAL UNLESS 425
REVERSED, VACATED, OR MODIFIED ON APPEAL. AN APPEAL MAY BE TAKEN 426
BY EITHER THE NONPROFIT HEALTH CARE ENTITY OR THE ATTORNEY 427
GENERAL, SHALL PROCEED AS IN THE CASE OF APPEALS IN CIVIL 428
ACTIONS, AND SHALL BE PURSUANT TO THE RULES OF APPELLATE 429
PROCEDURE AND, TO THE EXTENT NOT IN CONFLICT WITH THOSE RULES, 430
CHAPTER 2505. OF THE REVISED CODE.
(I)(1) THE POWERS OF THE ATTORNEY GENERAL UNDER THIS 432
SECTION AND SECTION 109.34 OF THE REVISED CODE ARE IN ADDITION TO 433
THE ATTORNEY GENERAL'S POWERS HELD AT COMMON LAW AND UNDER 434
SECTIONS 109.23 TO 109.33 OF THE REVISED CODE. 436
THIS SECTION AND SECTION 109.34 OF THE REVISED CODE DO NOT 440
LIMIT OR OTHERWISE AFFECT ANY OF THE FOLLOWING:
(a) ANY OTHER CIVIL OR CRIMINAL RIGHT, CLAIM, OR DEFENSE 442
THAT THE ATTORNEY GENERAL OR PARTIES MAY ASSERT UNDER COMMON LAW 444
OR THE REVISED CODE; 445
(b) THE AUTHORITY OF THE ATTORNEY GENERAL TO INSTITUTE AND 447
PROSECUTE AN ACTION TO ENFORCE SECTIONS 109.23 TO 109.33 OF THE 449
REVISED CODE; 450
(c) THE AUTHORITY OF THE ATTORNEY GENERAL TO INVESTIGATE 452
AND PROSECUTE VIOLATIONS OF ANY STATE OR FEDERAL ANTITRUST LAW. 454
(2) NOTHING IN THIS SECTION SHALL BE CONSTRUED TO GRANT TO 457
THE ATTORNEY GENERAL ANY AUTHORITY OF THE SUPERINTENDENT OF
INSURANCE UNDER TITLE XVII OR TITLE XXXIX OF THE REVISED CODE 463
RELATING TO THE SUPERINTENDENT'S REVIEW OF AN ENTITY DESCRIBED IN 464
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DIVISION (A)(2)(b) OF SECTION 109.34 OF THE REVISED CODE. 468
(3) NOTHING IN THIS SECTION OR SECTION 109.34 OF THE 470
REVISED CODE SHALL BE CONSTRUED TO LIMIT THE INDEPENDENT 471
AUTHORITY OF THE ATTORNEY GENERAL TO PROTECT CHARITABLE TRUSTS 472
AND CHARITABLE ASSETS IN THIS STATE.
Sec. 109.99. (A) Whoever violates section 109.26 of the 481
Revised Code shall be fined not less than five hundred nor more 482
than ten thousand dollars or be imprisoned not less than one 483
month nor more than one year, or both. 484
(B) Whoever violates division (G)(1) of section 109.573 of 487
the Revised Code is guilty of unlawful disclosure of DNA database 488
information, a misdemeanor of the first degree.
(C) Whoever violates division (G)(2) of section 109.573 of 490
the Revised Code is guilty of unlawful possession of DNA database 491
information, a misdemeanor of the first degree. 492
(D)(1) WHOEVER VIOLATES DIVISION (G)(1) OF SECTION 109.35 495
OF THE REVISED CODE IS GUILTY OF ENTERING INTO A TRANSACTION
INVOLVING A NONPROFIT HEALTH CARE ENTITY WITHOUT THE APPROVAL OF 497
THE ATTORNEY GENERAL, A FELONY OF THE THIRD DEGREE. 498
(2) WHOEVER VIOLATES DIVISION (G)(2) OF SECTION 109.35 OF 500
THE REVISED CODE IS GUILTY OF RECEIVING IMPROPER COMPENSATION 501
RELATING TO A TRANSACTION INVOLVING A NONPROFIT HEALTH CARE 502
ENTITY, A FELONY OF THE THIRD DEGREE.
Section 2. That existing section 109.99 of the Revised 504
Code is hereby repealed. 505
Section 3. This act is hereby declared to be an emergency 507
measure necessary for the immediate preservation of the public 508
peace, health, or safety. The reason for such necessity is that 509
some transactions involving the acquisition of a nonprofit health 511
care entity by a for-profit health care entity have undervalued 512
the charitable assets in the nonprofit entity, attempted to
channel charitable assets into the for-profit entity, and 514
provided the Attorney General with inadequate time and 515
information to review the transaction. Therefore, this act shall 517
12
go into immediate effect.