§ 27-66-7 - Review process and review criteria by department of attorney general – Conversions.
SECTION 27-66-7
§ 27-66-7 Review process and reviewcriteria by department of attorney general – Conversions. – (a) The department of attorney general shall review all conversions involving ahealth insurance corporation, health maintenance organization non-profithospital service corporation or non-profit medical service corporation.
(b) The department of attorney general shall, within twenty(20) days of its receipt of an initial application, inform the department ofbusiness regulation and/or the applicant of any additional informationnecessary to its ability to prepare the detailed report required undersubsections (d) and (e) of this section.
(c) Upon receipt by the department of attorney general of theadditional information requested in § 27-66-7(b), the application shall bedeemed complete.
(d) The department of attorney general shall transmit, withinsixty (60) days of the receipt of the completed application, a detailed reportof its findings to the department of business regulation.
(e) The report of the department of the attorney generalshall address each of the following criteria:
(1) Whether any conflict of interest exists concerning theproposed conversion relative to the officers, directors, senior management,experts or consultants engaged in connection with the proposed conversionincluding, but not limited to attorneys, accountants, investment bankers,actuaries, health care experts, or industry analysts;
(2) Whether individuals described in subdivision (1) of thissubsection were provided with contracts or consulting agreements orarrangements that included pecuniary rewards based in whole, or in part on thecontingency of the completion of the conversion;
(3) Whether any members of the board of directors will retainany authority in the new health insurance corporation, health maintenanceorganization, non-profit hospital service corporation or non-profit medicalservice corporation;
(4) Whether individual officers, directors, or seniormanagement engaged legal counsel to consider their individual rights or dutiesin acting in their capacity as a fiduciary in connection with the proposedconversion;
(5) Whether the conversion is proper under the Rhode IslandNonprofit Corporation Act, chapter 6 of title 7;
(6) Whether the conversion is proper under applicable statetax code provisions;
(7) Whether the individuals who represented the existinghealth maintenance organization, non-profit hospital service corporation ornon-profit medical service corporation in negotiations avoided conflicts ofinterest;
(8) Whether the proposed conversion results in an abandonmentof the original purposes of the acquiree or whether a resulting entity willdepart from the traditional purposes and mission of the acquiree such that a cypres proceeding would be necessary; (9) Whether the proposed conversionjeopardizes the tax status of the acquiree;
(10) Whether the transacting parties are in compliance withthe Charitable Trust Act, chapter 9 of title 18;
(11) Whether the proposed conversion will harm the public'sinterest in trust property given, devised, or bequeathed to the acquiree forcharitable, educational or religious purposes located or administered in thisstate;
(12) 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; and
(13) Whether the proposed conversion appropriately providesfor the disposition of proceeds of the conversion, which may include, but notbe limited to:
(i) Whether an existing entity or a new entity will receivethe proceeds;
(ii) Whether appropriate tax status implications of theentity receiving the proceeds have been considered;
(iii) Whether the mission statement and program agenda willbe or should be closely related with the purposes of the mission of theacquiree;
(iv) Whether any conflicts of interest arise in the proposedhandling of the conversion's proceeds;
(v) Whether the bylaws and articles of incorporation havebeen prepared for the new entity;
(vi) Whether the board of any continuing entity will beindependent from the new entity;
(vii) Whether the method for selecting board members, staff,and consultants is appropriate;
(viii)Whether the board will comprise an appropriate numberof individuals with experience in pertinent areas such as foundations, healthcare, business, labor, community programs, financial management, legal,accounting, grant making and public members representing diverse ethnicpopulations of the affected community; and
(ix) Whether the size of the board and proposed length ofboard terms are sufficient.