H.B. 737
GENERAL ASSEMBLY OF NORTH CAROLINA
Apr 18, 2023
SESSION 2023 HOUSE PRINCIPAL CLERK
H D
HOUSE BILL DRH40194-MGf-112
Short Title: Preserving Competition in Health Care. (Public)
Sponsors: Representative Rudow.
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT PRESERVING COMPETITION IN HEALTH CARE BY REGULATING THE
3 CONSOLIDATION AND CONVEYANCE OF HOSPITALS.
4 The General Assembly of North Carolina enacts:
5 SECTION 1. Chapter 131E of the General Statutes is amended by adding a new
6 Article to read:
7 "Article 11C.
8 "Preserving Competition in Health Care Act.
9 "§ 131E-214.20. Definitions.
10 The following definitions apply in this Article:
11 (1) Acquiring entity. – The person or entity that gains ownership or control of a
12 hospital entity as a result of a transaction subject to review under this Article.
13 (2) Attorney General. – The Attorney General or any employee of the Department
14 of Justice designated by the Attorney General.
15 (3) Hospital entity. – Any corporation or governmental entity licensed as a
16 hospital under Article 5 of Chapter 131E of the General Statutes, including
17 any entity affiliated with such corporation or governmental entity through
18 ownership, governance, or membership, such as a holding company or
19 subsidiary.
20 (4) Person. – Any individual, partnership, trust, estate, corporation, association,
21 joint venture, joint stock company, or other organization.
22 (5) Transaction. – Includes all of the following:
23 a. The sale, transfer, lease, exchange, optioning, conveyance, or other
24 disposition of a material amount of the assets or operations of any
25 hospital entity to any person or entity other than another hospital entity
26 that controls, is controlled by, or is under common control with such
27 hospital entity.
28 b. The transfer of control or governance of a hospital entity to a person
29 or entity other than another hospital entity that controls, is controlled
30 by, or is under common control with such hospital entity.
31 c. Any binding legal obligation between two or more persons that results
32 in a transfer of control, responsibility, or governance of a substantial
33 portion of a hospital entity's assets to an acquiring entity.
34 d. Any transaction regardless of exact form that, if structured as a
35 purchase, merger, or joint venture, would be subject to review under
36 this Article.
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1 e. Any transaction determined by the Attorney General to merit review
2 under this Article because the transaction, if consummated, would
3 have a meaningful effect on competition in any part of this State
4 among hospital entities.
5 f. Any transaction described in sub-subdivisions a. through e. of this
6 subdivision that is entered into by a hospital entity or by any person or
7 entity that controls, is controlled by, or is under common control with
8 such hospital entity.
9 g. All sales, transfers, conveyances, or other dispositions of a substantial
10 portion of a hospital entity's assets made in the course of a bankruptcy
11 proceeding.
12 "§ 131E-214.22. Applicability; waived transactions.
13 This Article does not apply to a hospital entity if (i) the transaction is in the usual and regular
14 course of its activities and (ii) the Attorney General has provided to the hospital entity a written
15 waiver of this Article with respect to the transaction. The Attorney General's determination that
16 a transaction merits review under this Article shall be the final decision of the State and shall not
17 be set aside on judicial review unless found to be arbitrary and capricious.
18 "§ 131E-214.24. Written notice and certification requirements for proposed transactions;
19 rules.
20 (a) Prior to entering into any transaction subject to review under this Article, a hospital
21 entity shall provide the Attorney General with written notice of the proposed transaction. The
22 hospital entity shall simultaneously provide the Attorney General with written certification that
23 a copy of this Article in its entirety has been provided to each member of the governing board or
24 board of trustees of the hospital entity.
25 (b) A hospital entity and an acquiring entity may provide the Attorney General with a
26 single written notice of a proposed transaction that meets the requirements of this section;
27 provided, however, that the Attorney General may require additional information that the
28 Attorney General determines is necessary for a complete review of the proposed transaction from
29 any party.
30 (c) The written notice required under this section shall not become effective until the
31 Attorney General has acknowledged receipt of a complete notice in accordance with subsection
32 (a) of G.S. 131E-214.26.
33 (d) The Attorney General shall adopt rules specifying the required contents of the written
34 notice required by this section and the manner in which the written notice shall be provided to
35 the Attorney General in order to be deemed complete and effective. The rules shall allow for the
36 Attorney General, in the Attorney General's discretion, to require additional information about a
37 proposed transaction that is not expressly required in the rules adopted pursuant to this section.
38 "§ 131E-214.26. Time line and process for Attorney General's decision to object or take no
39 action.
40 (a) When the parties to the proposed transaction have provided the Attorney General with
41 all the information the Attorney General determines is necessary for a complete review of the
42 proposed transaction, the Attorney General shall provide the hospital entity and acquiring entity
43 with written acknowledgement that the Attorney General has received a complete notice that
44 meets the requirements of G.S. 131E-214.24. The Attorney General's written acknowledgement
45 pursuant to this subsection shall constitute the beginning of a 90-day review period. The Attorney
46 General shall not unreasonably withhold a determination that the parties have provided a
47 complete notice that meets the requirements of G.S. 131E-214.24.
48 (b) Within 90 days after the Attorney General provides written acknowledgement of
49 having received a complete notice that meets the requirements of G.S. 131E-214.24, the Attorney
50 General shall notify the hospital entity, in writing, of the Attorney General's decision to either
51 object to the proposed transaction or to take no action regarding the proposed transaction.
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1 (c) Upon notice, in writing, to all parties to the transaction, the Attorney General may
2 extend the 90-day review period for up to an additional 60 days if the extension is necessary to
3 obtain additional information from one or more of the parties to the transaction or to complete
4 any component of the review process specified in G.S. 131E-214.30 through G.S. 131E-214.36.
5 (d) During the review period, the parties to the proposed transaction are prohibited from
6 consummating the transaction.
7 "§ 131E-214.28. Published written notice of proposed transaction; failure to give notice.
8 (a) Within five days after providing the Attorney General with written notice of a
9 proposed transaction pursuant to subsection (a) of G.S. 131E-214.24, without regard to whether
10 or not the Attorney General has acknowledged receipt of a complete notice, the hospital entity
11 shall give written notice of the proposed transaction by publication in one or more newspapers
12 of general circulation in every county in which (i) there exists a hospital entity whose control or
13 governance would be altered by the proposed transaction or (ii) there resides a substantial number
14 of patients of a hospital entity whose control or governance would be altered by the proposed
15 transaction. The published written notice shall contain the following:
16 (1) A brief restatement of the nature of the transaction, as specified in the written
17 notice provided to the Attorney General under G.S. 131E-214.24, which shall
18 include the following:
19 a. The name of the hospital entity.
20 b. The name of the acquiring entity.
21 c. The names of any other parties to the proposed transaction.
22 d. The nature of the proposed transaction.
23 e. The anticipated consideration that will be paid by the acquiring entity.
24 (2) The following statements:
25 a. "This notice is provided pursuant to G.S. 131E-214.24."
26 b. "Any interested party wishing to provide written comments may
27 submit the written comments directly to the Office of the Attorney
28 General, 114 W. Edenton Street, Raleigh, NC 27603."
29 (3) The time, date, and location of any public hearing required under
30 G.S. 131E-214.30, or the information necessary to access a public hearing
31 using teleconferencing or video-conferencing technology, as permitted under
32 subsection (c) of G.S. 131E-214.30. A public hearing shall not be conducted
33 earlier than 14 days after the publication of a notice pursuant to this section.
34 (4) In the event the hospital entity is a nonprofit or publicly owned entity, a link
35 to a webpage that allows any member of the public to view a detailed summary
36 of the proposed transaction and copies of all transactional and collateral
37 agreements not otherwise exempt from public disclosure under Chapter 132
38 of the General Statutes or G.S. 131E-97.3.
39 (b) A failure by the hospital entity giving notice under G.S. 131E-214.24 to provide a
40 published written notice as required by subsection (a) of this section shall be a sufficient ground
41 for the Attorney General to object to the proposed transaction.
42 (c) This section does not apply to a sale, transfer, conveyance, or other disposition of a
43 substantial portion of a hospital entity's assets made in the course of a bankruptcy proceeding.
44 "§ 131E-214.30. Public hearing requirements; responsibility for public hearing costs;
45 exemptions and waivers.
46 (a) Within 30 days after providing the Attorney General with the written notice required
47 under subsection (a) of G.S. 131E-214.24, without regard to whether or not the Attorney General
48 has acknowledged receipt of a complete notice, the hospital entity and the acquiring entity shall
49 conduct one or more public hearings at a convenient time and in a convenient location in a county
50 in which there exists a hospital entity whose control or governance would be altered by the
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1 proposed transaction. The public hearing required by this section shall not be conducted earlier
2 than 14 days after publication of the written notice required under G.S. 131E-214.28.
3 (b) At least seven days prior to the date of any public hearing, the hospital entity and the
4 acquiring entity shall give written notice to the Attorney General of the time, date, and location
5 of the public hearing. In addition, the hospital entity and the acquiring entity shall give written
6 notice to the governing bodies of both the county and the municipality in which the hospital entity
7 that is the subject of the proposed transaction is located, as applicable.
8 (c) With written notice to, and approval by, the Attorney General, the hospital entity and
9 the acquiring entity may conduct a public hearing required by this section via online
10 teleconferencing and video-conferencing technology; provided, however, that doing so does not
11 meaningfully limit the opportunity for public input concerning the proposed transaction.
12 (d) At a hearing required by this section, the hospital entity and the acquiring entity shall
13 provide the following information:
14 (1) The extent to which the proposed transaction is expected to impact the cost,
15 availability, accessibility, and quality of health care services.
16 (2) The process involved in reaching a fair sales price for the hospital entity,
17 including whether any director, officer, agent, or employee of the hospital
18 entity will benefit directly or indirectly from the proposed transaction.
19 (e) At a hearing required by this section, the hospital entity and the acquiring entity may
20 make such presentations as they deem appropriate and shall provide a meaningful opportunity
21 for public input. The hospital entity and the acquiring entity shall also communicate to attendees
22 how interested parties may provide written comments about the proposed transaction, which shall
23 be identical to the statement required by sub-subdivision (2)b. of subsection (a) of
24 G.S. 131E-214.28.
25 (f) In any transaction in which the hospital entity is a nonprofit or publicly owned entity,
26 the hospital entity and the acquiring entity shall provide information regarding the extent to which
27 the proposed transaction is expected to impact the nonprofit or community benefit activities of
28 the hospital entity, including a description of the resources that will be committed to the nonprofit
29 or community benefit activities after the consummation of the transaction.
30 (g) In addition to any hearing required under this section, the Attorney General may
31 conduct a public hearing regarding a proposed transaction. At least seven days prior to the public
32 hearing, the Attorney General shall notify the hospital entity and the acquiring entity of the time,
33 date, and location of any hearing to be conducted by the Attorney General or of the information
34 necessary to access a public hearing to be conducted by the Attorney General via
35 teleconferencing or video-conferencing technology. At least 14 days prior to the public hearing,
36 the Attorney General shall also give written notice of the hearing by publication in one or more
37 newspapers of general circulation in any county in which there exists a hospital entity whose
38 control or governance would be altered by the proposed transaction. At a hearing conducted by
39 the Attorney General, the Attorney General shall provide a meaningful opportunity for public
40 input that includes opportunities for questions and answers and comments.
41 (h) The parties to the proposed transaction shall pay for all costs associated with every
42 public hearing conducted in accordance with subsection (a) of this section. Additionally, the
43 Attorney General may recover from the parties the costs incurred by the Attorney General for
44 conducting a public hearing on a proposed transaction, subject to the limitations specified in
45 G.S. 131E-214.36.
46 (i) The provisions of this section do not apply to the sale, transfer, conveyance, or other
47 disposition of a substantial portion of a hospital entity's assets made in the course of a bankruptcy
48 proceeding.
49 (j) The parties may forego a public hearing required by this section if the Attorney
50 General provides the parties with a written waiver to do so. As part of such a waiver, the Attorney
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1 General may reduce the number of public hearings required by subsection (a) of this section or
2 eliminate the hearing requirement altogether.
3 "§ 131E-214.32. Required considerations by Attorney General.
4 (a) The Attorney General shall consider all of the following criteria in making a decision
5 about any transaction subject to the provisions of this Article:
6 (1) Whether the fair market value of any asset to be transf