Chapter 280
2019 -- S 0500 SUBSTITUTE A
Enacted 07/16/2019

A N   A C T
RELATING TO HEALTH AND SAFETY - THE HOSPITAL CONVERSIONS ACT

Introduced By: Senators Ruggerio, McCaffrey, Goodwin, Crowley, and Ciccone
Date Introduced: February 27, 2019

It is enacted by the General Assembly as follows:
     SECTION 1. Sections 23-17.14-28, 23-17.14-30 and 23-17.14-34 of the General Laws in
Chapter 23-17.14 entitled "The Hospital Conversions Act" are hereby amended to read as
follows:
     23-17.14-28. Concurrent approval -- License.
     (a) The director may consider the requirement of this chapter and the requirements of §§
23-17-1 -- 23-17-45 together upon completion of the initial application. The director may
approve, approve with conditions, or disapprove one or both requests filed pursuant to this
chapter, including expedited review under section 12.1 § 23-17.14-12.1, and §§ 23-17-1 -- 23-17-
45. The approvals of the director required by this chapter shall be subject to chapter 35 of title 42.
For any conversion subject to this chapter, the director may combine any hearings required by
this chapter with any hearings on similar or related matters required by §§ 23-17-1 -- 23-17-45
and shall consider issues of market share especially as they affect quality, access, and
affordability of services.
     (b) Any approval of a conversion involving a for-profit corporation as an acquiror shall
be subject to any conditions as determined by the director of health, provided those conditions
relate to the purpose of this chapter. Said The conditions may include, but not be limited to, the
conditions contained in this subsection. In the event the director determines that one or more of
the conditions contained in this subsection are not appropriate or desirable in a particular
conversion, the director shall include the rationale for not including such the condition(s) in any
approval.
     (1) Maintain a governing body for each converted hospital whose membership shall
include uncompensated, independent individuals who reside in Rhode Island;
     (2) Make a financially reasonable contribution to support the state's coordinated health
planning process;
     (3) Adhere to reasonable restrictions on financial incentives to patient or health plan
enrollees to receive hospital services outside of the state of Rhode Island;
     (4) Keep the new hospital open and operational for a reasonable minimum period of time;
     (5) Make a reasonable minimum investment to support primary care in the Rhode Island
communities served by the new hospital;
     (6) Not enter into any contract or other service or purchasing arrangements with an
affiliated legal entity except for contracts or arrangements to provide services or products that are
reasonably necessary to accomplish the health care healthcare purposes of the relevant hospital
and for compensation that is consistent with fair-market value for the services actually rendered,
or the products actually provided;
     (7) Report to the director on annual distributions of profit to owners; and
     (8) Require that any corporate allocation, or equivalent charge, to any affiliated
organization(s) in any hospital fiscal year not exceed reasonable fair-market value for the services
rendered or the assets purchased or leased from such the affiliate.
     (c) Any approval of a conversion involving a for-profit corporation as an acquiror shall
be subject to any conditions as determined by the attorney general, provided those conditions
relate to the purpose of this chapter. Said The conditions may include, but not be limited to, the
acquiror's adherence to a minimum investment to protect the assets, financial health, and well-
being of the new hospital and for community benefit. In the event the attorney general determines
that the conditions contained in this subsection are not appropriate or desirable in a particular
conversion, the attorney general shall include the rationale for not including such the condition(s)
in any approval.
     (d) For a period of three (3) five (5) years following the effective date of the conversion,
when approval of a conversion involves either a not-for-profit or a for-profit corporation as an
acquiror:
     (1) The acquiror shall file reports with the department and the attorney general on or
before March 1st of each calendar year detailing compliance with the conditions in subsection (b)
and any other conditions on the conversion approval or license of the new hospital. Failure to
comply with any of such the conditions or the charity care requirements contained in § 23-17.14-
15 shall be cause for penalties to be applied in accordance with § 23-17.14-30;
     (2) The department of health and the department of attorney general shall monitor, assess,
and evaluate the acquiror's compliance with all of the conditions of approval, as well as annually
review the impact of the conversion on health care healthcare costs and services within the
communities served; and
     (3) The acquiror shall pay for the costs of the department of health and the department of
attorney general in performing such the monitoring, evaluation, and assessment in an amount to
be determined by the attorney general or the director as they deem appropriate, which should be
placed in escrow during the term of the monitoring period. No application for a conversion made
pursuant to the requirements of this chapter shall be approved unless an agreement has been
executed with the attorney general and the director for the payment of reasonable costs in
accordance with this section.; and
     (4) The department and/or the attorney general may seek immediate relief in the superior
court to enforce any conditions of approval of a conversion, and may impose penalties for
noncompliance pursuant to § 23-17.14-30.
     23-17.14-30. Failure to comply -- Penalties.
     If any person knowingly violates or fails to comply with any provision of this chapter or
willingly or knowingly gives false or incorrect information:
     (1) The director or attorney general may, after notice and opportunity for a prompt and
fair hearing to the applicant or licensee one or more transacting parties, deny, suspend, or revoke
a license, or in lieu of suspension or revocation of the license, may order the licensee to admit no
additional persons to the facility, to provide health services to no additional persons through the
facility, or to take any corrective action necessary to secure compliance under this chapter, and
impose a fine of not more than two million dollars ($2,000,000); or and
     (2) The superior court may, after notice and opportunity for a prompt and fair hearing,
may impose a fine of not more than one million dollars ($1,000,000) or impose a prison term of
not more than five (5) years. The attorney general may, after notice and opportunity for a prompt
and fair hearing to one or more transacting parties, take any corrective action necessary to secure
compliance under this chapter, and impose a fine of not more than two million dollars
($2,000,000).
     23-17.14-34. Judicial review.
     (a) Notwithstanding any other provision of the general laws, any Any transacting party
aggrieved by a final order of the department of health or the attorney general under this chapter
may seek judicial review by original action filed in the superior court in accordance with § 42-35-
15. Any preliminary, procedural, or intermediate agency act or ruling with respect to the filing of
an application for conversion, including the completeness of the application, confidentiality of
any information or documents produced in connection with a conversion, approval or disapproval
of a conversion and conditions or restrictions proposed or determined with the respect to the
approval of a proposed conversion, is immediately reviewable.
     (b) Any action brought under this section shall be given priority by the superior court.
     (c) In performing such review the superior court shall consider and balance the
reasonable interests of the transacting parties and the reasonable interest of the citizens of the
state in a safe, accessible, and affordable healthcare system.
     (d) The court may affirm the decision of the agency or remand the case for further
proceedings, or it may reverse or modify the decision if substantial rights of the appellant have
been prejudiced because the administrative findings, inferences, conclusions, or decisions are:
     (1) Unreasonable;
     (2) In violation of constitutional or statutory provisions;
     (3) In excess of the statutory authority of the agency;
     (4) Made upon unlawful procedure;
     (5) Affected by other error or law;
     (6) Clearly erroneous in view of the reliable, probative, and substantial evidence on the
whole record; or
     (7) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted
exercise of discretion.
     SECTION 2. This act shall take effect upon passage.
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LC001583/SUB A
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