CHA News Article

Hospital Transaction Regulations Receive Partial Approval

Regulations proposed by the California Attorney General (AG) governing the sale of nonprofit hospitals have been approved in part — with one key provision rejected by the Office of Administrative Law (OAL). The regulations require applicants seeking the AG’s approval for a transaction to make additional information available to the AG and the public.

The key provision rejected by the OAL relates to enforcement of representations during the application process. This provision, which was the subject of legislation vetoed by the Governor last year, originally would have allowed the AG to retroactively change elements of the transaction. After the Governor’s veto, the proposed regulations were amended to allow the AG the right to “require the transferee to fulfill all representations made during the application process…” CHA opposed this provision because it would authorize an enforcement action based on hearsay rather than on the terms of a final agreement, documents submitted to the AG or statements made on the record. The OAL rejected the provision. The rest of the regulation was approved and will take effect Oct. 15.