§ 23-17.14-10 - Review process of department of attorney general and department of health and criteria by department of attorney general – Conversions limited to not-for-profit corporations.
SECTION 23-17.14-10
§ 23-17.14-10 Review process of departmentof attorney general and department of health and criteria by department ofattorney general – Conversions limited to not-for-profit corporations.– (a) In reviewing an application of a conversion involving a hospital in whichthe transacting parties are limited to not-for-profit corporations, thedepartment of attorney general and department of health shall adhere to thefollowing process:
(1) Within thirty (30) days after receipt of an initialapplication, the department of attorney general and department of health shalljointly advise the applicant, in writing, whether the application is complete,and, if not, shall specify all additional information the applicant is requiredto provide;
(2) The applicant will submit the additional informationwithin thirty (30) working days. If the additional information is submittedwithin the thirty (30) day period, the department of attorney general anddepartment of health will have ten (10) working days within which to determineacceptability of the additional information. If the additional information isnot submitted by the applicant within the thirty (30) day period or if eitheragency determines the additional information submitted by the applicant isinsufficient, the application will be rejected without prejudice to theapplicant's right to resubmit, the rejection to be accompanied by a detailedwritten explanation of the reasons for rejection. If the department of attorneygeneral and department of health determine the additional information to be asrequested, the applicant will be notified, in writing, of the date ofacceptance of the application;
(3) Within thirty (30) working days after acceptance of theinitial application, the department of attorney general shall render itsdetermination on confidentiality pursuant to § 23-17.14-32 and thedepartment of attorney general and department of health shall publish notice ofthe application in a newspaper of general circulation in the state and shallnotify by United States mail any person who has requested notice of the filingof the application. The notice shall:
(i) State that an initial application has been received andaccepted for review,
(ii) State the names of the transacting parties,
(iii) State the date by which a person may submit writtencomments to the department of attorney general or department of health, and
(iv) Provide notice of the date, time and place ofinformational meeting open to the public which shall be conducted within sixty(60) days of the date of the notice;
(4) The department of attorney general and department ofhealth shall each approve, approve with conditions directly related to theproposed conversion, or disapprove the application within one hundred andeighty (180) days of the date of acceptance of the application.
(b) In reviewing an application of a conversion involving ahospital in which the transacting parties are limited to not-for-profitcorporations, the department of attorney general may consider the followingcriteria:
(1) Whether the proposed conversion will harm the public'sinterest in trust property given, devised, or bequeathed to the existinghospital for charitable, educational or religious purposes located oradministered in this state;
(2) Whether a trustee or trustees of any charitable trustlocated or administered in this state will be deemed to have exercisedreasonable care, diligence, and prudence in performing as a fiduciary inconnection with the proposed conversion;
(3) Whether the board established appropriate criteria indeciding to pursue a conversion in relation to carrying out its mission andpurposes;
(4) Whether the board considered the proposed conversion asthe only alternative or as the best alternative in carrying out its mission andpurposes;
(5) Whether any conflict of interest exists concerning theproposed conversion relative to members of the board, officers, directors,senior management, experts or consultants engaged in connection with theproposed conversion including, but not limited to, attorneys, accountants,investment bankers, actuaries, health care experts, or industry analysts;
(6) Whether individuals described in subdivision (b)(5) wereprovided with contracts or consulting agreements or arrangements which includedpecuniary rewards based in whole, or in part on the contingency of thecompletion of the conversion;
(7) Whether the board exercised due care in engagingconsultants with the appropriate level of independence, education, andexperience in similar conversions;
(8) Whether the board exercised due care in acceptingassumptions and conclusions provided by consultants engaged to assist in theproposed conversion;
(9) Whether officers, directors, board members or seniormanagement will receive future contracts;
(10) Whether any members of the board will retain anyauthority in the new hospital;
(11) Whether the board accepted fair consideration and valuefor any management contracts made part of the proposed conversion;
(12) Whether individual officers, directors, board members orsenior management engaged legal counsel to consider their individual rights orduties in acting in their capacity as a fiduciary in connection with theproposed conversion;
(13) Whether the proposed conversion results in anabandonment of the original purposes of the existing hospital or whether aresulting entity will depart from the traditional purposes and mission of theexisting hospital such that a cy pres proceeding would be necessary;
(14) Whether the proposed conversion contemplates theappropriate and reasonable fair market value;
(15) Whether the proposed conversion was based uponappropriate valuation methods including, but not limited to, market approach,third-party report or fairness opinion;
(16) Whether the conversion is proper under the Rhode IslandNonprofit Corporation Act;
(17) Whether the conversion is proper under applicable statetax code provisions;
(18) Whether the proposed conversion jeopardizes the taxstatus of the existing hospital;
(19) Whether the individuals who represented the existinghospital in negotiations avoided conflicts of interest;
(20) Whether officers, board members, directors, or seniormanagement deliberately acted or failed to act in a manner that impactednegatively on the value or purchase price;
(21) Whether the transacting parties are in compliance withthe Charitable Trust Act, chapter 9 of title 18.