2003 SESSION LAWS
OF KANSAS
CHAPTER 1
SENATE BILL No. 44
An Act relating to hospitals; providing for transfer of hospital
assets under certain circum-
stances to a foundation created under this act; providing for the
creation of such foun-
dations and the appointment of a board of directors therefor;
placing certain limitations
and prohibitions on such foundations and associated
persons; and defining certain terms.
Be it enacted by the Legislature of the State of Kansas:
Section 1. (a) Whenever there is a
proposed change in control of a
not-for-profit hospital by sale, merger, integration or any other
event that
may result in the change or loss of the hospital's federal tax
exempt status
or forfeiture of the hospital's articles of incorporation or
amendment of
the hospital's articles of incorporation that in any manner alters
the orig-
inal purpose of the hospital, and before there is any transfer or
depletion
of the hospital's assets, a new foundation shall be formed pursuant
to
subsection (c), and all Kansas assets of the hospital shall be
transferred
to such foundation.
(b) The purpose of the foundation created
pursuant to this section
shall be to determine disposition of the assets transferred to the
foun-
dation in accordance with subsection (a). Such disposition shall
effectuate
as near as possible the manifested general charitable intention of
the
donor or donors. This section shall not be construed in any way to
limit
the authority of the attorney general provided by the provisions of
K.S.A.
59-22a01 and amendments thereto.
(c) Any foundation formed pursuant to
this section shall be organized
as a Kansas not-for-profit corporation that is not subject to
federal income
taxation pursuant to section 501(c)(3) of the federal internal
revenue
code. The board of directors for any such foundation shall consist
of 18
members, of whom five shall be appointed by the governor, five by
the
attorney general, three by the senate president, three by the
speaker of
the house of representatives, one by the minority leader of the
senate and
one by the minority leader of the house of representatives.
Vacancies
occurring on the foundation board of directors shall be filled by
the re-
spective appointing authority. In selecting members, the appointing
au-
thorities shall consult to give due consideration to whether the
board, as
a whole, represents the geographic, ethnic, gender, age,
socio-economic
and professional diversity of the counties comprising the
hospital's service
area. Members shall not receive compensation for their service on a
foun-
dation board of directors, but may receive actual expenses for such
serv-
ice.
(d) Each foundation board member shall
serve a three year term,
except initially, when two of the governor's appointees, two of the
attorney
general's appointees, one of the president's appointees and one of
the
speaker's appointees shall serve two year terms, and one of the
governor's
appointees, one of the attorney general's appointees, one of the
presi-
dent's appointees, one of the speaker's appointees and the
appointees of
the two minority leaders shall serve one year terms.
(e) Each member of a foundation board of
directors shall be a resi-
dent of one of the counties comprising the hospital's service
area.
(f) No foundation created under this
section shall make any loans to
any of its board members, officers, employees, other person or
entity
employed by or having a contract with the foundation and shall not
engage
in any self-dealing for the benefit of any board member, officer,
em-
ployee, other person or entity having a contract with the
foundation. No
foundation, foundation board member, officer or employee shall,
directly
or indirectly, engage in lobbying or otherwise attempt to influence
leg-
islation, advocate the nomination, election or defeat of any
candidate for
public office, or attempt to influence the outcome of any ballot
initiative
or issue. No asset of the foundation shall be utilized by the
foundation,
foundation board members, officers, employees, or grant recipients
for
lobbying or otherwise attempting to influence legislation,
advocating the
nomination, election or defeat of any candidate for public office,
or at-
tempting to influence the outcome of any ballot initiative or
issue. Noth-
ing in this provision shall be construed to prohibit the
foundation, foun-
dation board members, officers, employees or grant recipients
from
publicizing the services provided by said foundation or grant
recipients,
or publicizing the decisions and actions of the foundation, or to
prohibit
individual foundation board members, officers, employees or grant
recip-
ients from expressing individually held opinions as long as such
opinions
are not expressed as being held by the foundation itself.
(g) As used in this section, ``hospital''
means one or more of the fol-
lowing: (1) a hospital as defined by K.S.A. 65-425 and
amendments
thereto, that is not subject to federal income taxation pursuant to
section
501(c)(3) of the federal internal revenue code and that is licensed
by
either the Kansas department of health and environment pursuant
to
K.S.A. 65-425 et seq. and amendments thereto; or (2) Health
Midwest,
Inc. and any other similarly situated hospital holding company; or
(3) a
licensed Kansas not-for-profit hospital that is a subsidiary or
affiliate of a
domestic or foreign hospital holding company. As used in this
section, a
hospital's ``service area'' means the county or counties in Kansas
that are
served by that hospital.
(h) The provisions of this section shall
apply from and after January
1, 2003.
(i) If any provision of this act or the
application thereof to any person
or circumstance is held invalid, the invalidity does not affect
other pro-
visions or applications of this act which can be given effect
without the
invalid provision or application, and to this end the provisions of
this act
are severable.
(j) This section shall be a part of and
supplemental to the hospital
licensing, inspection and regulation act, K.S.A. 65-425 et
seq.
Sec. 2. This act shall take effect and be in force
from and after its
publication in the Kansas register.
Approved January 24, 2003.
Published in the Kansas Register January 27, 2003.
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