Chapter 01. Applications for and Hearings on the Acquisition and Conversion of Nonprofit Hospitals
Regulation .01 Scope.LinkCopy Citation
This chapter applies to the conversion and acquisition of a nonprofit hospital and is intended to effectuate the provisions of State Government Article, Title 6.5, Annotated Code of Maryland, and is not intended to modify or conflict with the provisions of that title.
Regulation .02 Definitions.LinkCopy Citation
A.
In this chapter, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Acquisition” has the meaning stated in State Government Article, §6.5-101(b), Annotated Code of Maryland.
(2)
“Application” means any documents or other materials filed with the Attorney General in accordance with State Government Article, §6.5-201, Annotated Code of Maryland, and Regulation .03 of this chapter.
(3)
“Attorney General” means the Attorney General or a designee of the Attorney General.
(4)
“Board” means the board of directors, board of trustees, or other managing board of a corporation or institution.
(5)
“Certificate of need” has the meaning stated in Health-General Article, §19-114, Annotated Code of Maryland.
(6)
“Consideration” means any cash, stocks, or things of value promised by the transferee to the transferor for completion of the acquisition.
(7)
“Department” means the Secretary of Health or a designee of the Secretary of Health.
(8)
“Fair value” means the value of the transferor considering all relevant factors, including those set forth in State Government Article, §6.5-301(d), Annotated Code of Maryland.
(9)
“Hospital” has the meaning stated in Health-General Article, §19-301(g), Annotated Code of Maryland.
(10)
“Material” means an original or any copy of any information or document, including a card, computerized record, correspondence, disc or diskette, drawing, electronic record, film or microfilm, form, map, photograph, photostat, recording, or tape.
(11)
“Modification” means a temporary or permanent condition that shall be satisfied or executed by the transferee or transferor, or both.
(12)
“Transferee” means the person in an acquisition that received the ownership or control of the nonprofit health entity that is the subject of the acquisition.
(13)
Transferor.
(a)
“Transferor” has the meaning stated in State Government Article, §6.5-101(b), Annotated Code of Maryland.
(b)
“Transferor” includes, for purposes of information sought during the application process, predecessor or merged entities.
Regulation .03 Application.LinkCopy Citation
A.
A person that seeks to engage in an acquisition of a nonprofit health entity shall mail or deliver 30 complete copies of an application to the Office of the Attorney General, 200 St. Paul Place, Baltimore, Maryland 21202.
B.
The application shall include:
(1)
The name, address, and designated representative of:
(a)
The transferor;
(b)
The transferee; and
(c)
Any other parties to the acquisition;
(2)
All of the terms of the proposed acquisition, including consideration to be paid by the transferee;
(3)
A copy of the acquisition agreement or agreements, including any exhibits or attachments;
(4)
A financial and community impact analysis report from an independent expert or consultant that addresses the criteria in State Government Article, §6.5-301, Annotated Code of Maryland;
(5)
Minutes of all board meetings of the transferor and the transferee for the 60 months preceding the filing;
(6)
All reports, analyses, memoranda, correspondence, or other documents submitted to or considered by the board of the transferor in approving the proposed acquisition;
(7)
All requests by the transferor for purchase bids made to any entity during the 60 months preceding the filing;
(8)
All documents comprising, analyzing, or responding to offers of purchase of the transferor from entities other than the transferee for the 60 months preceding the filing;
(9)
All documents describing, proposing, or summarizing compensation to be paid by the transferee or transferor to officers, directors, or employees of the transferor as a result of the proposed acquisition, including any contracts or other documents reflecting continued employment of such officers, directors, or employees after completion of the acquisition;
(10)
All transaction documents that are necessary to be executed in order to effect the proposed acquisition;
(11)
All articles of incorporation and bylaws of the transferor, and any wholly owned subsidiaries of the transferor, adopted since the creation of the transferor;
(12)
All documents describing restrictions on the use of gifts of $5,000 or more that were made to the transferor or its wholly owned subsidiaries;
(13)
All annual reports and audited financial statements of the transferor for the 60 months preceding the application and any audited or unaudited current financial statements of the transferor;
(14)
All documents relating to any certificate of need and any license to operate held by the transferor for the 60 months preceding the application;
(15)
All documents relating to any proposed maintenance of effort after acquisition or any proposed change after acquisition in the provision of health care services in the community in which the transferor-hospital is located; and
(16)
All other documents related to the acquisition.
C.
An application is complete only if all documents and information required to be provided by §B of this regulation and all expert reports, including those the Attorney General requests as authorized in State Government Article, §6.5-203(e), Annotated Code of Maryland and Regulation .04 of this chapter, are filed. The Attorney General may ask questions of the transferor, transferee, or both, to determine if an application is complete.
Regulation .04 Financial and Community Impact Report and Other Expert Assistance.LinkCopy Citation
A.
The transferee shall file a financial and community impact report prepared by an independent expert that analyzes whether:
(1)
The purchase price represents the fair value of the transferor;
(2)
The fair value of the transferor will be paid in accordance with State Government Article, §6.5-301(b)(2), Annotated Code of Maryland;
(3)
Any part of the public or charitable assets that are subject to the acquisition will inure directly or indirectly to an officer, director, or trustee of the transferor;
(4)
Any conflicts of interest exist for any officer, director, or trustee of the transferor; and
(5)
The transaction is in the public interest, analyzing each factor set forth in State Government Article, §6.5-301(e), Annotated Code of Maryland, including if and to what extent the cost of health care in the community will be affected, and reaching a conclusion on each factor.
B.
After consultation with the Department, the Attorney General may hire an independent expert, at the expense of the transferee, to prepare a financial and community impact report analyzing one or more of the factors in §A of this regulation or in State Government Article, §6.5-301, Annotated Code of Maryland.
C.
After consultation with the Department, the Attorney General may hire experts, at the expense of the transferee, to assist in executing the responsibilities set forth in State Government Article, Title 6.5, Annotated Code of Maryland.
Regulation .05 Public Access to Documents.LinkCopy Citation
A.
Any person may request to inspect or copy all or part of an application or documents generated upon review of an application.
B.
Unless it conflicts with this chapter or State Government Article, Title 6.5, Annotated Code of Maryland, the Maryland Public Information Act, State Government Article, Title 10, Subtitle 6, Annotated Code of Maryland applies to public access to the application or documents generated upon review of an application, including provisions concerning judicial review of a denial of access.
C.
General Rule of Confidentiality and Nondisclosure. Except as provided in §D or E of this regulation or otherwise by law, all information and documents gathered by or filed with the Attorney General pursuant to an application, investigation, or examination under this chapter are:
(1)
Confidential;
(2)
Not subject to subpoena; and
(3)
Not to be made public by the Attorney General or any other party.
D.
Waiver by Written Consent of Person to Which the Material Relates. If the person to whom the material relates gives prior written consent by delivery in a form considered acceptable by the Attorney General, the material may be made public.
E.
Attorney General's Discretion to Disclose. After giving the applicant notice and an opportunity to be heard, if the Attorney General determines that disclosure is in the interest of the stockholders of the transferor or the public, the Attorney General may disclose all or part of material otherwise confidential under §C of this regulation.
F.
Process for Requesting Access.
(1)
A request to inspect or copy materials shall be in writing.
(2)
The request shall be directed to the Attorney General.
(3)
The request shall:
(a)
Contain the requestor's name and address;
(b)
Be signed by the requestor; and
(c)
Contain a brief description of the information sought.
(4)
If the Attorney General grants a request for inspection or copying, the materials shall be produced within a reasonable period not to exceed 30 days from the date of the receipt of the request.
(5)
If the Attorney General denies the request in whole or in part, the denial shall:
(a)
Be mailed within 30 days from the date of the receipt of the request; and
(b)
State the reasons for the denial.
(6)
With the consent of the requestor, any time limit imposed in this process may be extended for an additional period.
G.
Fee for Copying Materials. The Attorney General may:
(1)
Charge a reasonable fee per page of material copied comparable to fees currently charged by other agencies for copies provided under the State Government Article, §10-621, Annotated Code of Maryland; or
(2)
Waive the fee if the Attorney General decides that waiver of the fee is in the public interest.
H.
Judicial Review. The requestor may seek judicial review of a decision by the Attorney General to deny access to materials, but, unless otherwise ordered by a court, the appeal may not delay action upon the application for conversion.
Regulation .06 Public Hearing.LinkCopy Citation
A.
Within 90 days of receiving a complete application, including all expert reports required or requested by the Attorney General, the Attorney General shall hold a public hearing in the jurisdiction in which the hospital to be acquired by the transferee is located. If the acquisition involves hospitals in more than one jurisdiction, the Attorney General shall hold at least one public hearing in each jurisdiction in which a hospital to be acquired by the transferee is located.
B.
The hearing shall be quasi-legislative and not a contested case hearing.
C.
Notice of all hearings shall be published in accordance with State Government Article, §6.5-202, Annotated Code of Maryland.
D.
The transferee is responsible for all reasonable costs related to the public hearings.
E.
The Attorney General shall determine the conduct of the hearing, including:
(1)
The order of presentation; and
(2)
Time limits for questions and testimony.
F.
The Attorney General may:
(1)
Request the attendance of persons to testify or the production of documents;
(2)
Issue a subpoena requiring the:
(a)
Attendance of persons to testify; or
(b)
Production of documents;
(3)
Employ related discovery procedures;
(4)
Request that the Department join the Attorney General in presiding at the hearing;
(5)
Require testimony to be given under oath;
(6)
Ask questions of anyone present at the hearing;
(7)
Take questions from the audience and redirect the questions to others present at the hearing; and
(8)
Record the hearing by audiotape or stenographic means.
G.
Recorded Hearings.
(1)
If the hearing is recorded, the Office of the Attorney General or the Attorney General's designee shall maintain the original audiotape or stenographic record.
(2)
The transferee shall be responsible for the cost of transcribing the record and providing a copy of the record to the:
(a)
Transferee;
(b)
Transferor; and
(c)
Attorney General.
H.
The rules of evidence do not apply to a hearing held under this chapter.
I.
The Attorney General shall receive and mark all exhibits offered at the hearing if they are relevant to the hearing.
J.
The Attorney General shall control and maintain custody of the hearing record, which shall consist of:
(1)
The complete application;
(2)
Notice of all hearings;
(3)
Exhibits and other documents entered into the record as approved by the Attorney General;
(4)
The register of all persons who participated in the hearing;
(5)
Any audiotape of the hearing;
(6)
Any transcript of the hearing; and
(7)
The final decision of the Attorney General.
Regulation .07 Decision.LinkCopy Citation
A.
Within 60 days after the record is closed, including the conclusion of any public hearings, submission of any expert reports, and consultation with the Department, the Attorney General shall issue a decision:
(1)
Approving the application without modification;
(2)
Approving the application with modification; or
(3)
Disapproving the application.
B.
For good cause, the Attorney General may extend the time for a decision for a 60-day period. Only two time extensions may be granted.
C.
The decision of the Attorney General becomes effective 90 days after the date the decision is issued.
D.
Unless otherwise required by law, a person aggrieved by a final decision of the Attorney General may file a petition for review in the circuit court for the county in which the hospital to be acquired by the transferee is located. If the acquisition involves hospitals in more than one county, the appeal may be filed in the circuit court for any of the jurisdictions in which a hospital to be acquired by the transferee is located. A petition for review shall be filed not later than 30 days after the date the Attorney General's final decision becomes effective.
Chapter annotations
Authority: State Government Article, §6.5-103, Annotated Code of Maryland
History: Effective date: December 12, 2002 (29:24 Md. R. 1918)