In this subtitle, unless the context clearly requires otherwise, the following words have the meanings indicated. “Annual contract” means, as to any fiscal year, the contract required by this subtitle to be entered into between the University and the Medical System Corporation stating the obligations between them for that fiscal year. “Board of Directors” means the Board of Directors of the Medical System Corporation. “Board of Regents” means the Board of Regents of the University System of Maryland. “Chief Executive Officer” means the individual elected Chief Executive Officer by the Board of Directors of the Medical System Corporation and also appointed by the Board of Regents as Vice President for the medical system. “Community naturally served” means the hospital’s historic service population and those neighborhoods traditionally served by the hospital as well as any additional population the Medical System Corporation determines with the approval of the Maryland Health Care Commission and the Maryland Department of Health. “Comprehensive services” means comprehensive health care services. “Dental school” means the School of Dentistry of the University. “Includes” or “including” means includes or including by way of illustration and not by way of limitation. “Institute” means the Maryland Institute for Emergency Medical Services Systems. “Medical system” means the University Medical System, consisting of those health care delivery components of the University that are in Baltimore City rendering patient care services and more particularly identified by the Board of Public Works at the time of conveying medical system assets to the Medical System Corporation, including University Hospital, the University Cancer Center, and the clinical component of the Institute. “Medical system assets” means all assets allocated to the medical system as shown on the financial statements of the medical system at the transfer date and as more particularly or additionally identified or supplemented by the Board of Regents and approved by the Board of Public Works and transferred to the Medical System Corporation, including (unless further defined by the Board of Public Works) all related land and buildings and funds deposited with the State Treasurer. “Medical System Corporation” means University of Maryland Medical System Corporation, a private, nonprofit, nonstock corporation formed under the general corporation laws of this State. “Medical System Corporation employees” means employees of the Medical System Corporation. “Medical system liabilities” means all liabilities allocated to the medical system as shown on the financial statements of the medical system at the transfer date. “Medical system personnel” means both medical system University personnel and Medical System Corporation employees. “Medical system University personnel” means those employees of the University who report to the Chief Executive Officer and for whose services the Medical System Corporation contracts with the University. “President” means the President of the University of Maryland, Baltimore Campus. “School of Medicine” means the School of Medicine of the University. “Transfer date” means any date from July 1, 1984, to June 1, 1985, both inclusive, determined by the Board of Public Works and filed with the Secretary of State and the Department of Legislative Services. “University” means the University of Maryland.

It is hereby found and determined that: The purposes of the medical system are to provide medical care of the type unique to University medical facilities for the citizens of the State and region and, in accomplishing this objective, to provide a clinical context for education and research conducted by the faculty of the University; The purposes extend to all citizens of the State, particularly regarding health care needs which only an academic medical institution can adequately meet such as extensive tertiary care, major shock trauma treatment, and sophisticated surgical techniques; The purposes also include rendering comprehensive health care to the community naturally served by University Hospital to assure its availability to citizens of that community; These purposes separately and collectively serve the highest public interest and are essential to the public health and welfare, but must be realized in the most efficient manner and at the lowest cost practicable and consistent with these purposes; It has proven unnecessarily costly and administratively cumbersome for the University to finance, manage, and carry out the patient care activities of an academic institution within the existing framework of a State agency, since many applicable laws, management structures, and procedures were developed to implement types of governmental functions which differ from the operations of a major patient care facility in an environment of State and federal regulation; such patient care operations are more efficiently served by contemporary legal, management, and procedural structures utilized by similarly situated, private entities throughout the nation; It is fiscally desirable for the State of Maryland to separate the operations, revenues, and obligations of the medical system from the State to the end that, to the maximum extent practicable, the medical system be a self–supporting entity to which the State may make grants or with which the State may contract as may be deemed appropriate from time to time; this separation will segregate patient care costs and revenues from unrelated State activities; The interests of the citizens of the State, the region, and the community naturally served by University Hospital will be best met by granting and transferring State assets and liabilities related to the medical system to a private, nonprofit, nonstock corporation in order to create a separate legal and organizational structure for the medical system to provide independence and flexibility of management and funding, while assuring a compatible and mutually beneficial relationship with the University; In order to maintain the highest quality patient care with the maximum efficiency practicable, the R Adams Cowley Shock Trauma Center will be part of the medical system and will be governed by the Board of Directors; and It is the intent of the General Assembly that: Employees of the Medical System Corporation and any subsidiary of the Medical System Corporation who are not medical system University personnel enjoy the rights and protections associated with full freedom of association and collective bargaining afforded to similarly situated citizens of the State; and Each subsidiary established by the Medical System Corporation under § 13–303(k) of this subtitle, including a subsidiary established for the purpose of operating all or a part of the University of Maryland Medical Center, falls within the jurisdiction of the National Labor Relations Board, and the employees of the subsidiary are subject to the benefits and protections of the National Labor Relations Act.

Prior to the transfer date: The Board of Public Works shall approve the articles of incorporation of the Medical System Corporation which shall reflect the requirements of this subtitle; and The Board of Regents and the Board of Directors shall take all actions necessary to create and organize the Medical System Corporation, which shall be organized for charitable, scientific, and educational purposes and shall attain and maintain exemption from federal income taxation but which shall not be a State agency, political subdivision, public body, public corporation, or municipal corporation and is not subject to any provisions of law affecting only governmental or public entities. On or after the transfer date, the Medical System Corporation shall own, lease, manage, and operate the medical system, including such components or health services as the Board of Directors may determine or agree to undertake from time to time and shall have all powers of a Maryland corporation which are not expressly limited by this subtitle; such powers include the power to convey, lease, mortgage, encumber, and otherwise deal with all its assets including the medical system assets, without limitation or regard to their source, unless a grantor or donor restricts the use of such assets; provided, however, that without in any way limiting the power to mortgage or otherwise encumber such property, any sale or lease of any land or buildings transferred on the transfer date shall be approved by the Board of Regents. The Board of Directors: Shall provide for and maintain, consistent with the policies of the State Health Services Cost Review Commission or other relevant authority, comprehensive services for patient populations naturally served by University Hospital, including uncompensated care and outpatient care; and Shall maintain, create, and develop specialty care services appropriate to an academic medical institution to meet the needs of the State and region. The Board of Directors shall operate the medical system without discrimination based upon race, creed, sex, or national origin. The Board of Directors will conduct procurement activities consistent with minority purchasing standards applicable to State government agencies. The fiscal year of the Medical System Corporation will be the same as the fiscal year of the State unless otherwise approved by the Board of Public Works. The Board of Directors shall cause annual audited financial statements of the Medical System Corporation to be prepared and filed with the Governor, the Joint Audit and Evaluation Committee, and the Board of Regents as soon as practicable following the close of its fiscal year. The Board of Directors shall prepare an annual report describing operations of the Medical System Corporation in the immediately preceding fiscal year, which shall be delivered to the Board of Regents, the Governor, and, subject to § 2–1257 of the State Government Article, the General Assembly as soon as practicable following the close of its fiscal year. The report shall include information about the amount of uncompensated care provided, the number of ambulatory care visits, the number of Medicaid patient visits, the number of patient visits by subdivision during the year, and any other information relevant to the provisions of this section. The General Assembly may take the annual report into consideration when considering requests by the Medical System Corporation for financial assistance from the State, including appropriations for the operating reserve fund under § 13–309 of this subtitle. Requests to the General Assembly for grants from the State for the Medical System Corporation may be submitted only with approval of the Board of Regents. The Board of Directors will coordinate with University fund–raising efforts all Medical System Corporation campaigns and solicitations for private gifts and proposals for private or federal grants. The Board of Directors shall establish a nonprofit subsidiary for the purpose of operating all or a part of the University of Maryland Medical Center, to the extent approved by the University in the annual contract, that shall: Have all powers available under the laws governing the formation of the subsidiary; and Be formed in a manner so that the subsidiary, for the purposes of meeting the jurisdictional requirements of the National Labor Relations Board: Does not constitute a department or administrative arm of the State or any agency, political subdivision, public body, public corporation, or municipal corporation; and Is not administered by individuals who are responsible to public officials or to the general electorate. In addition to establishing a subsidiary under paragraph (1) of this subsection, the Board of Directors may establish nonprofit or for–profit subsidiaries or related entities, to the extent approved by the University in the annual contract. The Board of Directors shall ensure that the medical system shall continue to make available medical services to residents of various State institutions whose residents prior to the effective date of this legislation were served by the Hospital, including State residential centers for individuals with an intellectual disability, State mental hygiene facilities and facilities run by the State Division of Correction, as long as the administrators of those institutions continue to seek care from the Hospital for their residents in accordance with policies and legislative intent incorporated in the State budget. The Hospital is to be compensated by the institutions or other payors for this care in accordance with policies of the State Health Services Cost Review Commission or other relevant authority. The Board of Directors shall ensure that the Medical System Corporation continues to be a private, nonprofit, nonstock corporation that is independent from any State agency. On or before May 31, 2019, the Board of Directors shall adopt a conflict of interest policy for members of the Board that includes: Standards for the disclosure of financial interests; Standards for Board member participation in contracts with the Medical System Corporation in accordance with this subtitle, including an attestation that the Board member has complied with the conflict of interest standards adopted by the Board; Standards for recusal from voting; A requirement that a Board member may not use the Board member’s position on the Board for personal gain when contracting with the Medical System Corporation; and A requirement that a Board member provide an attestation of any business relationship with the Medical System Corporation or any affiliate of the Corporation. The Board of Directors shall send a copy of the conflict of interest policy adopted under paragraph (1) of this subsection to the Governor, the President of the Senate, and the Speaker of the House of Delegates: After the policy is initially adopted; and Each time a change is made to the policy.

The government of the Medical System Corporation is vested in the Board of Directors. Subject to paragraphs (2) and (3) of this subsection, the Board of Directors consists of 6 nonvoting members and not less than 22 and not more than 25 voting members appointed by the Governor with the advice and consent of the Senate. On or after October 1, 2014, the Medical System Corporation may amend its articles of incorporation to add up to three voting members to the Board of Directors as the Medical System Corporation determines to be necessary and appropriate. Nominations of additional voting members shall be made by the Board of Directors and submitted to the Board of Regents for comment and to the Governor for consideration. Any member added to the Board of Directors under subparagraph (i) of this paragraph shall: Represent an entity that affiliates with the Medical System Corporation on or after October 1, 2014; Be appointed by the Governor with the advice and consent of the Senate; and Be designated as an affiliate board member. Nothing in this paragraph may be construed to require the Medical System Corporation to nominate a representative of an entity that affiliates with the Medical System Corporation on or after October 1, 2014, to be an additional board member. Notwithstanding the provisions of paragraph (1) of this subsection, for each hospital that affiliates with the medical system on or after June 1, 2019, the Governor may appoint an additional voting member who is a representative from the hospital. Each member shall be a resident of this State. A member of the Board may not be a State or local elected official. Three voting members shall be members of the Board of Regents. One voting member shall be the Governor’s designee. Two voting members shall be appointed as follows: One appointed by the President of the Senate of Maryland; and One appointed by the Speaker of the House of Delegates. At least 1 voting member of the Board shall be appointed by the Governor, upon nomination by the membership of the Community Advisory Council, from the membership of the Community Advisory Council. At least 1 voting member of the Board of Directors shall have expertise in the hospital field. In appointing the voting members of the Board of Directors, the Governor shall ensure that the composition of the Board fairly represents the minority composition of the State. The nonvoting members shall be, ex officio, the Chancellor of the University System of Maryland, the President, the Chief Executive Officer, the Dean of the School of Medicine, the President of the medical staff organization of the medical system, and the Associate Director of nursing services for the medical system. The term of a member is 5 years and begins on the 1st Monday in June of the year of appointment. The terms of members are staggered as required by the terms provided for members of the Board on the transfer date. At the end of a term, a member continues to serve until a successor is appointed and qualifies. A member appointed to fill a vacancy in an unexpired term serves only for the remainder of that term and until a successor is appointed and qualifies. A member may be reappointed, but may not serve more than 2 consecutive full terms. For terms subsequent to initial terms, nominations of members will be made by the Board of Directors and submitted to the Board of Regents for comment and to the Governor for consideration. The Board of Directors may adopt and amend bylaws. The Board of Directors shall determine the time and place of its meetings and may adopt rules for the conduct of its meetings. Eleven voting directors constitute a quorum for transacting business at any meeting, and action by a majority of voting directors present at a meeting shall be the act of the Board unless the bylaws require a greater number. Each year, the Board of Directors shall elect from among its members: A Chairman; and Any other officer it requires. The Board of Directors shall elect a Chief Executive Officer who shall also be appointed by the Board of Regents as Vice President of the University of Maryland Medical System, and who shall begin service in this joint office after the appointment is approved by both boards. The Chief Executive Officer shall serve at the pleasure of the Board of Directors. In the event of a vacancy of the Chief Executive Officer, nominees will be selected by a process to be determined jointly by the Board of Regents and the Board of Directors. Each member of the Board: Serves without compensation; and Is entitled to reimbursement for expenses as provided by the Board of Directors. A member of the Board may not intentionally use the prestige of office or public position for that member’s private gain or that of another. Except as provided in subparagraph (iii) of this paragraph, each member annually shall submit a disclosure of financial interest, including any potential conflicts of interest, to the State Health Services Cost Review Commission. Except as provided in subsubparagraph 2 of this subparagraph, the State Health Services Cost Review Commission shall make freely available to the public on its website, through an online registration program, the statement submitted under subparagraph (i) of this paragraph. The State Health Services Cost Review Commission may not provide public access to the portion of the statement that includes an address that the member has identified as the member’s home address. A newly appointed member shall submit a disclosure of financial interest within 60 days after the member’s appointment to the Board. If the Governor determines that a member has willfully filed a false statement under paragraph (1)(i) of this subsection, the Governor shall remove the member from the Board. The Board of Directors and the compliance officer for the Medical System Corporation shall review each statement submitted under paragraph (1) of this subsection for compliance with the Board’s conflict of interest policy. The State Health Services Cost Review Commission annually shall send a summary of each statement submitted under paragraph (1) of this subsection to the Governor, the President of the Senate, and the Speaker of the House. The Medical System Corporation may not use sole source procurement to award a contract to an active member of the Board of Directors or a business entity that employs or has an affiliation with an active member. The Governor shall remove a member from the Board of Directors who has benefited from a sole source procurement. The Medical System Corporation may not provide a preference for the award of a contract to an active member of the Board of Directors or a business entity that employs or has an affiliation with an active member. The award of a contract or the making of a payment to a member of the Board of Directors or an associated business of a member shall be subject to the approval of the full Board of Directors. Before the Medical System Corporation awards a contract or makes a payment to a member of the Board of Directors, the compliance officer shall: Review the contract or payment and advise the member of the Board of Directors as to whether the contract or payment is appropriate and consistent with the policies of the Medical System Corporation; and Make a recommendation to the Board of Directors as to whether the contract or payment should be approved or disapproved by the Board. The Board of Directors shall develop a policy governing contracts with and payments to a member of the Board of Directors or members of the board of directors of hospitals affiliated with the Medical System Corporation by: The Medical System Corporation; or The affiliated hospital. On or before December 1 each year, the Board of Directors shall submit a report to the Governor and, in accordance with § 2–1257 of the State Government Article, the President of the Senate, the Speaker of the House, the Joint Audit and Evaluation Committee, the Senate Finance Committee, and the House Health and Government Operations Committee on: The policy adopted under paragraph (1) of this subsection; and How the Board of Directors has ensured compliance with the policy by the affiliated hospitals and the members of the board of directors of the affiliated hospitals. The Chairman of the Board of Directors shall appoint representatives from the community naturally served by the medical system having interest in the services of the medical system to 3–year terms as members of a Community Advisory Council. The Board of Directors shall designate at least one of its members to meet with the Community Advisory Council and advise the Community Advisory Council of matters of potential interest. Recommendations of this Community Advisory Council concerning services offered by the Medical System Corporation and its community relationships shall be considered by the Board of Directors.

The medical system will serve as the primary clinical setting for University students in health care fields to receive educational and research experiences. The clinical faculties of the School of Medicine and Dental School will be the sources for the medical staff of the medical system. The same persons will serve both as Chairmen of the Clinical Science Departments of the School of Medicine and chiefs of the corresponding clinical services of the medical system. The University and the Medical System Corporation will institute appropriate procedures to effect such appointments. In this subsection, “Medical System Corporation employees” include the employees of a subsidiary established under § 13–303(k) of this subtitle for the purpose of operating all or a part of the University of Maryland Medical Center. The Medical System Corporation shall utilize both Medical System Corporation employees and medical system University personnel. Prior to the transfer date, each University employee working in the medical system shall elect to be either a Medical System Corporation employee or a part of medical system University personnel. No University employee may be required to become an employee of the Medical System Corporation as a condition of employment or promotion. All medical system University personnel are University employees in all respects. With respect to promotion opportunities, the Medical System Corporation shall treat medical system University personnel on the same basis as Medical System Corporation employees. The Medical System Corporation shall establish an integrated seniority list composed of Medical System Corporation employees and medical system University personnel. Each listed employee’s seniority will be calculated by including all employment with the University or the Medical System Corporation or both. Sections 5–501 through 5–504 of the General Provisions Article shall not bar an official or employee of the University from becoming a director, official, or employee of the Medical System Corporation or participating in matters involving the Corporation and shall not prevent the Executive Director of the Maryland Institute for Emergency Medical Services Systems from becoming a voting Director of the Medical System Corporation.

Prior to the transfer date and to the 1st day of each fiscal year thereafter, the Board of Regents and the Board of Directors shall each approve an annual contract which shall state all financial obligations, exchanges of services, and any other agreed relationships between the University and the Medical System Corporation for the ensuing fiscal year. The annual contract shall identify all services to be provided and the agreed cost of such services. The annual contract will be developed by the Chief Executive Officer, the Dean of the School of Medicine, and other University officials as determined by the President. The annual contract will be submitted to the Board of Regents upon the recommendation of the President for consideration, modification, and approval. The Board of Directors and Board of Regents may establish procedures for the approval of the annual contract. If the University and the Medical System Corporation do not enter into an annual contract for any fiscal year, the annual contract for the previous year shall remain in force until another annual contract is approved.

On the transfer date the Board of Public Works, the Board of Regents, and any other required State department, agency, or body shall take all legal action necessary to transfer, as a grant without consideration, the medical system assets to the Medical System Corporation. If it is not appropriate or desirable to transfer title to any medical system assets, such assets shall be leased to the Medical System Corporation or other legal arrangement effected giving control and use to the Medical System Corporation, the consideration to be a payment equal to all costs of the University that become due after the transfer date with respect to purchase, maintenance, or repair of such assets. If ownership of medical system assets cannot be legally transferred on the transfer date, ownership shall be transferred as soon as practicable after it is legal to do so. In any event, provisions shall be made, by lease or other arrangement, for the Medical System Corporation to have control and use of all medical system assets on and after the transfer date. The following conditions shall be satisfied before transfer of the medical system assets: The Medical System Corporation must be established in accordance with this subtitle; and An annual contract must be in effect. The approval of such transfer by the Board of Public Works shall constitute a conclusive determination that: Such transfer is in compliance with this subtitle; The articles of incorporation of the Medical System Corporation are in proper form; and All conditions of the transfer have been satisfied.

On the transfer date the Medical System Corporation shall take all legal action necessary to assume the medical system liabilities, but only to the extent expressly provided in this subtitle and the annual contract; the Medical System Corporation shall not be liable for any other debts, obligations, or liabilities of the State or the University incurred or arising in connection with the medical system prior to the transfer date. This assumption of liabilities shall be an assumption of such liabilities as they exist on the transfer date; provided, however, this provision shall be construed and applied to give effect to all provisions of law and defenses applicable to such liabilities prior to the transfer date. Regardless of any assumption of liability by the Medical System Corporation, the payment of any settlement or judgment against a State officer or employee incurred or arising in connection with the medical system prior to the transfer date shall be determined pursuant to § 12-404 of the State Government Article, and, if the Board of Public Works determines to make a payment to satisfy such settlement or judgment, such payment shall be made only from the State General Emergency Fund or the State Insurance Trust Fund. Effective on the transfer date, the Medical System Corporation shall assume responsibility for and shall defend, indemnify, and hold harmless the University and the State with respect to: All liabilities and duties of the University pursuant to contracts and agreements for commodities, services, and supplies utilized by the medical system; All claims related to the employment relationship after the transfer date between medical system personnel and the University and the State; and All claims for breach of contract resulting from the Medical System Corporation’s action or failure to act after the transfer date. The Medical System Corporation will designate legal counsel to represent medical system University personnel determined by the Attorney General to be entitled to legal representation pursuant to § 12-304 of the State Government Article, with respect to acts or omissions in the course of services related to the medical system on or after the transfer date. The Attorney General shall not be responsible for representing such individuals for actions on or after the transfer date. The Medical System Corporation shall be responsible for paying any grants approved by the Board of Public Works, pursuant to § 12-404 of the State Government Article, with respect to such actions on or after the transfer date. If the Board of Public Works determines, as provided in the State Government Article, that any individual who is a part of medical system University personnel should be reimbursed for the cost of defending a criminal claim relating to actions on or after the transfer date in the course of services related to the medical system, the Medical System Corporation shall fund such reimbursement. Nothing contained in this subtitle shall be deemed or construed to waive or abrogate in any way the sovereign immunity of the State or to deprive the University or any officer or employee thereof of sovereign immunity.

In order to provide financial independence and stability to the Medical System Corporation, there is an Operating Reserve Fund held by the Treasurer of the State for the Medical System Corporation. The Board of Directors may request funds from the Treasurer from the Operating Reserve Fund and the Treasurer, with the approval of the Board of Public Works, shall transfer the amount requested to the Medical System Corporation but only to the extent that the Operating Reserve Fund has been funded by appropriation in an annual State budget. Advances from the Operating Reserve Fund shall be treated as loans from the State, subordinate to the rights of other creditors of the Medical System Corporation, and the Board of Directors shall cause such advances to be repaid to the Treasurer as soon as the financial condition of the Medical System Corporation reasonably permits. The Treasurer shall hold any repaid advances in the Operating Reserve Fund subject to further advances to the Medical System Corporation. The money in the Operating Reserve Fund may not revert to the general treasury at the end of the State’s fiscal year, and all investment earnings in such Fund shall become a part of such Fund.

Obligations of the Medical System Corporation: Are payable only from assets of the Medical System Corporation; and Are not debts or obligations of the University or the State.

The Medical System Corporation and its corporate existence shall continue until terminated in accordance with law; provided, however, that no such law or termination shall take effect so long as the Medical System Corporation shall have bonds, notes, or other obligations outstanding, unless adequate provision has been made for the payment thereof. Upon termination of the existence of the Medical System Corporation, all its rights and properties shall pass to and be vested in the State, but subject in all cases to any mortgages, liens, or other encumbrances or any other rights or interests of creditors of the Medical System Corporation or other third parties. The articles of incorporation of the Medical System Corporation and the documents of transfer of the medical system assets must state that the Board of Regents and the Board of Public Works may determine that the Medical System Corporation has failed to realize the purposes set forth in this subtitle; in the event of such a determination, the Board of Directors shall be required to undertake appropriate legal proceedings to return all assets of the medical system then held by the Medical System Corporation to the State, but only if adequate provision has been made for the payment of any outstanding bonds, notes, or other obligations of the Medical System Corporation.

This subtitle, being necessary for the health and welfare of the State and its inhabitants, shall be liberally construed to effect the purposes hereof.

The provisions of this subtitle are severable, and if any of its provisions are held unconstitutional by any court of competent jurisdiction, the decision of such court shall not affect or impair any of the remaining provisions.