Bill Text: MI SB1115 | 2009-2010 | 95th Legislature | Engrossed
Bill Title: Businesses; nonprofit corporations; conversion of municipal health facilities corporations into nonprofit corporations; allow. Amends secs. 103, 207, 208, 256, 257 & 306 of 1987 PA 230 (MCL 331.1103 et seq.) & adds sec. 305a.
Spectrum: Partisan Bill (Republican 4-0)
Status: (Passed) 2010-12-29 - Assigned Pa 0331'10 With Immediate Effect [SB1115 Detail]
Download: Michigan-2009-SB1115-Engrossed.html
SB-1115, As Passed Senate, March 25, 2010
SUBSTITUTE FOR
SENATE BILL NO. 1115
A bill to amend 1987 PA 230, entitled
"Municipal health facilities corporations act,"
by amending sections 103, 207, 208, 256, 257, and 306 (MCL
331.1103, 331.1207, 331.1208, 331.1256, 331.1257, and 331.1306),
section 103 as amended and sections 256 and 257 as added by 1988 PA
502 and section 306 as amended by 1998 PA 62, and by adding section
305a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 103. As used in this act:
(a) "Board of trustees" means the board of trustees of a
corporation created under or governed by this act.
(b) "City" means a city establishing a corporation
incorporated under, or governed by, this act.
(c) "City public hospital" means a health care facility that
is owned or operated by a city.
(d) "Corporation" means a municipal health facilities
corporation
incorporated under this act or created under Act No.
350
of the Public Acts of 1913, being sections 331.151 to 331.169
of
the Michigan Compiled Laws 1913 PA 350, MCL 331.151 to 331.169,
or
under Act No. 109 of the Public Acts of 1945, being sections
331.201
to 331.213 of the Michigan Compiled Laws 1945 PA 109, MCL
331.201 to 331.213, and governed by this act. The term includes a
restructured corporation.
(e) "Corporation obligation" means a bond, note, or any other
legal instrument issued by a corporation or subsidiary corporation
pursuant
to under chapter 4 which that evidences
indebtedness of a
corporation or a subsidiary corporation, including principal,
interest,
and premiums, if any, thereon on
that indebtedness. Notes
issued
pursuant to under section 401 shall are
not be considered to
be
corporation obligations.
(f) "County" means a county establishing a corporation
incorporated under, or governed by, this act.
(g) "County public hospital" means a public corporation
organized
and existing or purportedly organized and existing under
Act
No. 350 of the Public Acts of 1913, or under Act No. 109 of the
Public
Acts of 1945 1913 PA 350, MCL
331.151 to 331.169, or under
1945 PA 109, MCL 331.201 to 331.213, on the effective date of this
act.
(h) "Direct provider of health care" means a person or
organization
whose primary current activity is the provision of
providing
health services to individuals. ,
including The term
includes a person or organization licensed, certified, or
registered
under parts 61 to 65 or article 15 of the public health
code,
Act No. 368 of the Public Acts of 1978, being sections
333.6101
to 333.6523 and 333.16101 to 333.18838 of the Michigan
Compiled
Laws, and article 6 or 15 of
the public health code, 1978
PA 368, MCL 333.6101 to 333.6523 and 333.16101 to 333.18838, or
a professional corporation or other public or private organization
composed of or employing direct providers of health care.
(i) "Health care facilities" means buildings, structures, or
equipment suitable and intended for, or incidental or ancillary to,
use in providing health services, including, but not limited to,
hospitals; hospital long-term care units; infirmaries; sanatoria;
nursing homes; medical care facilities; outpatient clinics;
ambulatory care facilities; surgical and diagnostic facilities;
hospices; clinical laboratories; shared service facilities;
laundries; meeting rooms; classrooms and other educational
facilities; students', nurses', interns', or physicians'
residences; administration buildings; facilities for use as or by
health maintenance organizations; facilities for ambulance
operations, advanced mobile emergency care services, and limited
advanced mobile emergency care services; research facilities;
facilities for the care of dependent children; maintenance,
storage, and utility facilities; parking lots and structures;
garages; office facilities not less than 80% of the net leasable
space of which is intended for lease to or other use by direct
providers of health care; facilities for the temporary lodging of
outpatients or families of patients; residential facilities for use
by the aged or disabled; and all necessary, useful, or related
equipment, furnishings, and appurtenances and all lands necessary
or
convenient as sites for the foregoing health care facilities
described in this subdivision.
(j) "Health services" means 1 or more of the following:
(i) Diagnosis and medical and surgical treatment by direct
providers of health care of persons suffering from illness, injury,
and disability, including persons suffering from tuberculosis and
other contagious and infectious diseases, and persons requiring
maternity care, rehabilitation, psychiatric care, or substance
abuse services; dentistry and related services; podiatric medicine
and surgery; optometric services; psychological services; skilled,
basic, and visiting nursing services and home health services;
ambulance operations; advanced mobile emergency care services and
limited advanced emergency services; physical, respiratory, and
occupational therapy; health maintenance services; services for the
prevention of illness, injury, and disability and for the
promotion, maintenance, and improvement of public health and
welfare; food services and care for dependent children, the
disabled,
and the elderly; together with and social
work and
chaplaincy services provided in conjunction with other health
services described in this subparagraph.
(ii) Conduct of or participation in programs for the education
and training of health services personnel, including undergraduate,
internship, residency, postgraduate, and continuing education
programs for physicians; schools and other training programs for
nurses, technicians, therapists, pharmacists, and other health
services personnel; and in-service education of employees of health
care facilities.
(iii) Research relating to the cause, prevention, and treatment
of illness, injury, and disability, and the protection, promotion,
or improvement of public health and welfare.
(k) "Local governmental unit" means a county, city, or
village.
(l) "Nonprofit health care organization" means a public body
organized and existing under the laws of this state and authorized
to
provide health services, or a nonprofit corporation incorporated
under
the nonprofit corporation act, Act No. 162 of the Public Acts
of
1982, being sections 450.2101 to 450.3192 of the Michigan
Compiled
Laws 1982 PA 162, MCL
450.2101 to 450.3192, or a not-for-
profit corporation incorporated under the laws of another state and
qualified
to do business in this state, which that is organized and
operated exclusively for charitable, scientific, educational, or
religious purposes and authorized to provide health services, no
part of the net earnings of which inures to the benefit of any
private shareholder or individual.
(m) "Project costs" means the total of the reasonable or
necessary costs incurred for carrying out the acquisition,
construction, repair, remodeling, equipping, or re-equipping of
health
care facilities. These include The
term includes, but are is
not limited to, any of the following costs: studies, surveys,
plans, and specifications; architectural and engineering services;
fees, charges, and expenses incurred in obtaining permits,
approvals, and licenses for the acquisition, and initial operation
of the health care construction, financing, facilities; legal,
organizational, marketing, and other special services; acquisition,
demolition, construction, equipment, and site development of new
and rehabilitated buildings; rehabilitation, construction, repair,
or remodeling of existing buildings; interest and carrying charges
during construction and before full earnings are achieved but for a
period not to exceed 3 years after the date of the corporation
obligations; operating expenses before full earnings are achieved,
but for a period not to exceed 1 year following completion of
construction; and reasonable reserves for payment of principal and
interest on corporation obligations, not exceeding 15% of the
principal amount of the corporation obligations. Project costs
shall also include reimbursement of a corporation or a subsidiary
corporation
for any of the foregoing project
costs described in
this
section expended prior to before the issuance and delivery of
the corporation obligations.
(n) "Restructured corporation" means a corporation that has
completed the process described in section 305a.
(o) "Restructured subsidiary corporation" means a subsidiary
corporation that has completed the process described in section
305a.
(p) (n)
"Subsidiary board" means
the board of trustees of a
subsidiary corporation.
(q) (o)
"Subsidiary corporation"
means a subsidiary municipal
health facilities corporation incorporated under this act. The term
includes a restructured subsidiary corporation.
(r) (p)
"Trustee" means a person
serving on a board of
trustees or a subsidiary board.
(s) (q)
"Village" means a village
establishing a corporation
incorporated under, or governed by, this act.
(t) (r)
"Village public hospital"
means a health care facility
that is owned or operated by a village.
Sec. 207. (1) The articles of incorporation of a corporation
incorporated by a county shall be executed in duplicate by the
chairperson of the county board of commissioners or other
commissioner designated by the county board of commissioners. The
articles of incorporation of a subsidiary corporation of a
corporation incorporated by a county shall be executed in duplicate
by the chairperson of the board of trustees of the parent
corporation, or other trustee designated by the board of trustees.
The articles of incorporation shall then be delivered to the county
clerk who shall file 1 copy in his or her office and the other with
the secretary of the corporation or subsidiary corporation when a
secretary is selected. The county clerk shall cause a copy of the
articles of incorporation to be published once in a newspaper
designated in the articles of incorporation and circulating within
the county accompanied by a statement that the right exists to
question the validity of the incorporation in court as provided in
this section.
(2)
The county clerk shall file 1 printed copy of the articles
of incorporation delivered to him or her under subsection (1) with
the
secretary of state and 1 printed copy in his or her office. ,
attached
to each of which The county
clerk shall attach to each of
the
printed copies shall be his or
her certificate setting forth
that the copy is a true and complete copy of the original articles
of incorporation on file in his or her office.
(3)
The incorporation shall become of
a corporation or a
subsidiary corporation described in this section is effective at
the time provided in the articles of incorporation.
(4)
The validity of the incorporation shall be of a
corporation or a subsidiary corporation described in this section
is conclusively presumed unless questioned in a court of competent
jurisdiction
within 60 days after filing a the
certified copy with
the
secretary of state of the
articles of incorporation of that
corporation or subsidiary corporation is filed with the secretary
of state under subsection (2).
(5) This section does not apply to articles of incorporation
of a restructured corporation or restructured subsidiary
corporation described in section 305a.
Sec. 208. (1) The articles of incorporation of a corporation
incorporated by a county may be amended by resolution approved by
the affirmative vote of a majority of the members serving on the
county board of commissioners. The articles of incorporation of a
subsidiary corporation of a corporation incorporated by a county
may be amended by resolution approved by the affirmative vote of a
majority of the trustees serving on the board of trustees of the
parent corporation.
(2) The county clerk shall file certified copies of any
amendment to the articles of incorporation of a corporation or
subsidiary corporation approved under subsection (1) in his or her
office, with the secretary of state, and with the secretary of the
corporation
or subsidiary corporation. The amendment shall be is
effective
upon filing when filed with the secretary of state unless
a later effective date is specified in the resolution adopting the
amendment.
Articles of incorporation This
subsection does not apply
to an amendment to the articles of incorporation of a restructured
corporation or a restructured subsidiary corporation.
(3) The articles of incorporation of a corporation or
subsidiary corporation described in this section may be amended to
include
any provision which that could be lawfully included in
articles of incorporation initially adopted under this act at the
time the amendment is approved, and may provide for the alteration
or changing of the name, structure, organization, purposes, powers,
programs, or activities of the corporation or subsidiary
corporation. However, an amendment shall not be effective to impair
the obligation of a corporation obligation, bond, note, or
contract.
Sec. 256. (1) The articles of incorporation of a corporation
incorporated by a city or village shall be executed in duplicate by
the chairperson of the city council or the president of the village
council or other member of the city council or village council
designated by the city council or village council. The articles of
incorporation of a subsidiary corporation of a corporation
incorporated by a city or village shall be executed in duplicate by
the chairperson of the board of trustees of the parent corporation,
or other trustee designated by the board of trustees. The articles
of incorporation shall then be delivered to the city clerk or
village clerk who shall file 1 copy in his or her office and the
other with the secretary of the corporation or subsidiary
corporation when a secretary is selected. The city clerk or village
clerk shall cause a copy of the articles of incorporation to be
published once in a newspaper designated in the articles of
incorporation and circulating within the city or village
accompanied by a statement that the right exists to question the
validity of the incorporation in court as provided in this section.
(2) The city clerk or village clerk shall file 1 printed copy
of
the articles of incorporation delivered
to him or her under
subsection (1) with the secretary of state and 1 printed copy in
his
or her office. , attached to each of which The city clerk or
village
clerk shall attach to each of the printed
copies shall be
his or her certificate setting forth that the copy is a true and
complete copy of the original articles of incorporation on file in
his or her office.
(3)
The incorporation shall become of
a corporation or a
subsidiary corporation described in this section is effective at
the time provided in the articles of incorporation, but not before
approval of the question of incorporation by the city or village
electors under section 251.
(4)
The validity of the incorporation shall be of a
corporation or a subsidiary corporation described in this section
is conclusively presumed unless questioned in a court of competent
jurisdiction
within 60 days after filing a the
certified copy of
the articles of incorporation of that corporation or subsidiary
corporation
is filed with the secretary of state pursuant
to under
subsection (2).
(5) This section does not apply to articles of incorporation
of a restructured corporation or restructured subsidiary
corporation described in section 305a.
Sec. 257. (1) The articles of incorporation of a corporation
incorporated by a city or village may be amended by resolution
approved by the affirmative vote of a majority of the members
serving on the city council or village council. The articles of
incorporation of a subsidiary corporation of a corporation
incorporated by a city or village may be amended by resolution
approved by the affirmative vote of a majority of the trustees
serving on the board of trustees of the parent corporation.
(2) The city clerk or village clerk shall file certified
copies of any amendment to the articles of incorporation of a
corporation or subsidiary corporation approved under subsection (1)
in his or her office, with the secretary of state, and with the
secretary of the corporation or subsidiary corporation. The
amendment
shall be is effective upon filing when filed with the
secretary of state unless a later effective date is specified in
the
resolution adopting the amendment. Articles of incorporation
This subsection does not apply to an amendment to the articles of
incorporation of a restructured corporation or a restructured
subsidiary corporation.
(3) The articles of incorporation of a corporation or
subsidiary corporation described in this section may be amended to
include
any provision which that could be lawfully included in
articles of incorporation initially adopted under this act at the
time the amendment is approved, and may provide for the alteration
or changing of the name, structure, organization, purposes, powers,
programs, or activities of the corporation or subsidiary
corporation. However, an amendment shall not be effective to impair
the obligation of a corporation obligation, bond, note, or
contract.
Sec. 305a. (1) Subject to applicable licensing and other
regulatory requirements, the requirements of the nonprofit act, and
the requirements of this section, the board of trustees or the
subsidiary board may restructure a corporation or subsidiary
corporation as a nonprofit corporation subject to the nonprofit
act.
(2) A board of trustees or subsidiary board proposing to
restructure a corporation or subsidiary corporation under this
section must adopt a restructuring plan that includes all of the
following:
(a) The terms and conditions of the proposed restructuring.
(b) The proposed articles of incorporation and bylaws that are
to govern the restructured corporation or restructured subsidiary
corporation. The articles and bylaws must comply with the
requirements of the nonprofit act.
(3) If a restructuring plan described in subsection (2) is
approved under this section, the corporation or subsidiary
corporation shall file the articles of incorporation described in
subsection (2)(b) with the administrator, in the manner provided in
the nonprofit act.
(4) The effective date of a restructuring under this section
is the effective date of the articles of incorporation under the
nonprofit act. All of the following apply when a restructuring
under this section takes effect:
(a) The restructured corporation or restructured subsidiary
corporation is considered a continuation of the restructuring
corporation or subsidiary corporation.
(b) The restructured corporation or restructured subsidiary
corporation has all of the liabilities of the restructuring
corporation or subsidiary corporation and the restructuring does
not affect any obligations or liabilities of the corporation or
subsidiary corporation incurred before the restructuring or the
personal liability of any person incurred before the restructuring.
(c) The title to all real estate and other property and rights
owned by the corporation or subsidiary corporation remain vested in
the restructured corporation or restructured subsidiary corporation
without reversion or impairment.
(d) The rights, privileges, powers, and interests in property
of the corporation or subsidiary corporation, as well as the debts,
liabilities, and duties of the corporation or subsidiary
corporation, shall not be considered, as a consequence of the
restructuring, to have been transferred to the restructured
corporation or restructured subsidiary corporation for any purpose
of the laws of this state.
(e) A proceeding pending against the corporation or subsidiary
corporation may be continued as if the restructuring had not
occurred, or the restructured corporation or restructured
subsidiary corporation may be substituted in the proceeding for the
corporation or subsidiary corporation.
(f) The restructured corporation or restructured subsidiary
corporation is considered to be the same entity that existed before
the restructuring and is considered to be incorporated on the date
that the corporation or subsidiary corporation was originally
incorporated.
(g) The restructured corporation or restructured subsidiary
corporation is subject to the nonprofit act and, except as
otherwise provided in this act, is subject to the provisions of
this act.
(h) The articles of incorporation of the corporation or the
subsidiary corporation filed with the county clerk under section
207 or the city clerk or village clerk under section 256 are
considered terminated and the articles of incorporation filed under
the nonprofit act apply to the corporation or subsidiary
corporation. The corporation or subsidiary corporation shall
deliver a copy of the articles of incorporation of the restructured
corporation or restructured subsidiary corporation to that county
clerk, city clerk, or village clerk, and the county clerk, city
clerk, or village clerk will indicate in his or her records that
the corporation or subsidiary corporation has restructured under
this section and that the articles of incorporation previously
filed with him or her under section 207 or 256 are no longer in
effect.
Sneate Bill No. 1115 as amended March 25, 2010
(i) The corporation or subsidiary corporation shall deliver a
copy of the articles of incorporation of the restructured
corporation or restructured subsidiary corporation to the secretary
of state and notify the secretary of state that the articles of
incorporation previously filed with him or her by the county clerk,
city clerk, or village clerk under section 207 or 256 are no longer
in effect.
(5) A subsidiary board may not restructure a subsidiary
corporation as a nonprofit corporation under this section without
the prior approval of the board of trustees of its parent
corporation to the restructuring.
(6) A board of trustees or subsidiary board may not
restructure a corporation or subsidiary corporation under this
section without the prior majority approval of the county board of
commissioners, city council, or village council, as applicable. <<
>>
(7) A board of trustees or subsidiary board may not
restructure a corporation or subsidiary corporation under this
section if the restructuring in any manner impairs the obligation
of the corporation or subsidiary corporation with respect to any
outstanding obligation, bond, note, or contract of that
corporation.
(8) As used in this section:
(a) "Administrator" means that term as defined in section 105
of the nonprofit act, MCL 450.2105.
(b) "Nonprofit act" means the nonprofit corporation act, 1982
PA 162, MCL 450.2101 to 450.3192.
(c) "Nonprofit corporation" means a domestic corporation, as
that term is defined in section 106 of the nonprofit act, MCL
450.2106.
Sec. 306. (1) Subject to applicable licensing and other
regulatory
requirements, and subject to any approvals required
under
subsections (5) and (6) the
requirements of this section,
each
a board of trustees and or a subsidiary
board may enter into
and
carry out agreements for the reorganization and the sale
or
transfer of the ownership of a corporation or subsidiary
corporation, or the sale or transfer of ownership or operation of
some
or all of its the health care facilities and related assets or
health services of the corporation or subsidiary corporation, to a
nonprofit health care organization or to a public authority on
behalf of a nonprofit health care organization by sale, installment
sales agreement, land contract, lease, lease with an option to
purchase, sublease, contract, option, or by any other means.
(2)
In establishing the terms of a reorganization pursuant to
this
section sale or transfer described in subsection (1), the
board of trustees or subsidiary board may take into account, in
addition to the monetary consideration for the sale or transfer, if
any, 1 or more of the following:
(a) The ability and willingness of the nonprofit health care
organization to continue to provide health services to residents of
the local governmental unit.
(b) The assumption by the nonprofit health care organization
of liabilities, obligations, and risks associated with ownership or
operation of the corporation, subsidiary corporation, or health
care facilities and health services sold or transferred, including
those associated with outstanding bonds, notes and obligations,
pension, retirement, and other benefits for employees and employees
and conditions attached to public or private grants.
(c) The willingness and ability of the nonprofit health care
organization to provide services to those unable to pay fully for
their care.
(d) The elimination of or reduction in support required for
the corporation, subsidiary corporation, or health care facilities
or health services from tax revenues or other public sources.
(e) The ability and willingness of the nonprofit health care
corporation to expand or improve the corporation, subsidiary
corporation,
or health care facilities or the health
services being
sold or transferred.
(f)
Such Any other factors bearing on the health and welfare
of
the residents of the local governmental unit as that the
board
of trustees or subsidiary board considers appropriate.
(3) A board of trustees or subsidiary board may accept secured
or unsecured notes, bonds, or obligations given by or on behalf of
a
nonprofit health care organization or such any other
forms of
payment
as that it considers appropriate in full or partial
satisfaction of any monetary consideration provided under an
agreement
for reorganization pursuant to this section a sale or
transfer described in subsection (1).
(4)
Any board of trustees or subsidiary board transferring
health
care facilities pursuant to that
sells or transfers a
corporation, subsidiary corporation, or health facilities under
this section shall require, for a term of not less than 30 years,
that
use of the health care facilities transferred owned by the
sold or transferred corporation or subsidiary corporation or the
sold or transferred health care facilities shall be open to all
regardless of race, religion, color, national origin, sex, age,
disability, marital status, sexual preference, or source of
payment, and that the nonprofit health care organization acquiring
such
those health care facilities or that corporation or subsidiary
corporation shall provide an equal opportunity for employment,
without discrimination as to race, religion, color, national
origin, sex, age, disability, marital status, or sexual preference.
(5)
Any transfer made by a subsidiary board in reliance upon
on this section shall be made only with the prior approval of the
board of trustees of its parent corporation.
(6)
Any transfer sale or transfer of ownership of a
corporation or subsidiary corporation under this section shall be
made only with the prior approval of the county board of
commissioners, city council, or village council. Any sale or
transfer of ownership or operation of health care facilities or
health
services by a corporation or a
subsidiary corporation in
reliance
upon under this section shall be made only with the prior
approval of the county board of commissioners, city council, or
village council, if either of the following applies:
(a) The health care facilities or health services to be
transferred provided more than 10% of the gross revenues of the
corporation or subsidiary corporation making the transfer,
determined in accordance with generally accepted accounting
principles, in either of the 2 full fiscal years of the corporation
or subsidiary corporation completed immediately preceding the date
of the transfer.
(b) A majority of the governing body of the nonprofit health
care organization acquiring the health care facilities or health
services is composed of persons who are also serving as trustees of
the corporation or the subsidiary corporation making the transfer.
(7) Notwithstanding any other provision of this section, no
sale or transfer under this section shall be made in such a way as
to impair the obligation of the corporation or the subsidiary
corporation with respect to any outstanding corporation obligation,
bond, note, or contract.
