2019 -- H 5695 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO HEALTH AND SAFETY - THE HOSPITAL CONVERSIONS ACT

     

     Introduced By: Representative Raymond H. Johnston

     Date Introduced: February 27, 2019

     Referred To: House Corporations

     (Attorney General)

It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 23-17.14-28, 23-17.14-30 and 23-17.14-34 of the General Laws in

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Chapter 23-17.14 entitled "The Hospital Conversions Act" are hereby amended to read as

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follows:

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     23-17.14-28. Concurrent approval -- License.

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     (a) The director may consider the requirement of this chapter and the requirements of §§

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23-17-1 -- 23-17-45 together upon completion of the initial application. The director may

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approve, approve with conditions, or disapprove one or both requests filed pursuant to this

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chapter, including expedited review under section 12.1, and §§ 23-17-1 -- 23-17-45. The

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approvals of the director required by this chapter shall be subject to chapter 35 of title 42. For any

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conversion subject to this chapter, the director may combine any hearings required by this chapter

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with any hearings on similar or related matters required by §§ 23-17-1 -- 23-17-45 and shall

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consider issues of market share especially as they affect quality, access, and affordability of

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services.

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     (b) Any approval of a conversion involving a for-profit corporation as an acquiror shall

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be subject to any conditions as determined by the director of health, provided those conditions

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relate to the purpose of this chapter. Said conditions may include, but not be limited to, the

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conditions contained in this subsection. In the event the director determines that one or more of

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the conditions contained in this subsection are not appropriate or desirable in a particular

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conversion, the director shall include the rationale for not including such condition(s) in any

 

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approval.

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     (1) Maintain a governing body for each converted hospital whose membership shall

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include uncompensated, independent individuals who reside in Rhode Island;

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     (2) Make a financially reasonable contribution to support the state's coordinated health

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planning process;

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     (3) Adhere to reasonable restrictions on financial incentives to patient or health plan

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enrollees to receive hospital services outside of the state of Rhode Island;

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     (4) Keep the new hospital open and operational for a reasonable minimum period of time;

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     (5) Make a reasonable minimum investment to support primary care in the Rhode Island

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communities served by the new hospital;

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     (6) Not enter into any contract or other service or purchasing arrangements with an

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affiliated legal entity except for contracts or arrangements to provide services or products that are

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reasonably necessary to accomplish the health care purposes of the relevant hospital and for

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compensation that is consistent with fair market value for the services actually rendered, or the

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products actually provided;

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     (7) Report to the director on annual distributions of profit to owners; and

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     (8) Require that any corporate allocation, or equivalent charge, to any affiliated

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organization(s) in any hospital fiscal year not exceed reasonable fair market value for the services

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rendered or the assets purchased or leased from such affiliate.

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     (c) Any approval of a conversion involving a for-profit corporation as an acquiror shall

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be subject to any conditions as determined by the attorney general, provided those conditions

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relate to the purpose of this chapter. Said conditions may include, but not be limited to, the

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acquiror's adherence to a minimum investment to protect the assets, financial health, and well-

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being of the new hospital and for community benefit. In the event the attorney general determines

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that the conditions contained in this subsection are not appropriate or desirable in a particular

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conversion, the attorney general shall include the rationale for not including such condition(s) in

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any approval.

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     (d) For a period of three (3) five (5) years following the effective date of the conversion,

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when approval of a conversion involves either a not-for-profit or a for-profit corporation as an

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acquiror:

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     (1) The acquiror shall file reports with the department and the attorney general on or

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before March 1st of each calendar year detailing compliance with the conditions in subsection (b)

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and any other conditions on the conversion approval or license of the new hospital. Failure to

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comply with any of such conditions or the charity care requirements contained in § 23-17.14-15

 

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shall be cause for penalties to be applied in accordance with § 23-17.14-30;

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     (2) The department of health and the department of attorney general shall monitor, assess

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and evaluate the acquiror's compliance with all of the conditions of approval, as well as annually

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review the impact of the conversion on health care costs and services within the communities

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served; and

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     (3) The acquiror shall pay for the costs of the department of health and the department of

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attorney general in performing such monitoring, evaluation and assessment in an amount to be

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determined by the attorney general or the director as they deem appropriate, which should be

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placed in escrow during the term of the monitoring period. No application for a conversion made

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pursuant to the requirements of this chapter shall be approved unless an agreement has been

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executed with the attorney general and the director for the payment of reasonable costs in

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accordance with this section.; and

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     (4) The department and/or the attorney general may seek immediate relief in the superior

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court to enforce any conditions of approval of a conversion, and may impose penalties for

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noncompliance pursuant to § 23-17.14-30.

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     23-17.14-30. Failure to comply -- Penalties.

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     If any person knowingly violates or fails to comply with any provision of this chapter or

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willingly or knowingly gives false or incorrect information:

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     (1) The director or attorney general may, after notice and opportunity for a prompt and

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fair hearing to the applicant or licensee one or more transacting parties, deny, suspend, or revoke

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a license, or in lieu of suspension or revocation of the license, may order the licensee to admit no

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additional persons to the facility, to provide health services to no additional persons through the

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facility, or to take any corrective action necessary to secure compliance under this chapter, and

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impose a fine of not more than two million dollars ($2,000,000); or and

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     (2) The superior court may, after notice and opportunity for a prompt and fair hearing,

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may impose a fine of not more than one million dollars ($1,000,000) or impose a prison term of

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not more than five (5) years. The attorney general may, after notice and opportunity for a prompt

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and fair hearing to one or more transacting parties, take any corrective action necessary to secure

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compliance under this chapter, and impose a fine of not more than two million dollars

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($2,000,000).

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     23-17.14-34. Judicial review.

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     (a) Notwithstanding any other provision of the general laws, any Any transacting party

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aggrieved by a final order of the department of health or the attorney general under this chapter

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may seek judicial review by original action filed in the superior court in accordance with § 42-35-

 

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15. Any preliminary, procedural, or intermediate agency act or ruling with respect to the filing of

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an application for conversion, including the completeness of the application, confidentiality of

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any information or documents produced in connection with a conversion, approval or disapproval

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of a conversion and conditions or restrictions proposed or determined with the respect to the

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approval of a proposed conversion, is immediately reviewable.

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     (b) Any action brought under this section shall be given priority by the superior court.

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     (c) In performing such review the superior court shall consider and balance the

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reasonable interests of the transacting parties and the reasonable interest of the citizens of the

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state in a safe, accessible, and affordable healthcare system.

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     (d) The court may affirm the decision of the agency or remand the case for further

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proceedings, or it may reverse or modify the decision if substantial rights of the appellant have

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been prejudiced because the administrative findings, inferences, conclusions, or decisions are:

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     (1) Unreasonable;

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     (2) In violation of constitutional or statutory provisions;

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     (3) In excess of the statutory authority of the agency;

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     (4) Made upon unlawful procedure;

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     (5) Affected by other error or law;

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     (6) Clearly erroneous in view of the reliable, probative, and substantial evidence on the

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whole record; or

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     (7) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted

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exercise of discretion.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO HEALTH AND SAFETY - THE HOSPITAL CONVERSIONS ACT

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     This act would extend the monitoring of hospital conversions relating to not-for-profit

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and for-profit corporations from three (3) to five (5) years, increase the monetary fine for

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violations from one million dollars ($1,000,000) to two million dollars ($2,000,000) and simplify

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judicial review provisions of hospital conversions.

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     This act would take effect upon passage.

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