EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

1-1 Section 1. The legislature hereby finds and declares that:

1-2 1. Nonprofit hospital, medical and dental service corporations have

1-3 historically filled a unique position of community trust as indicated by the

1-4 special consideration that these nonprofit corporations receive in federal

1-5 and state laws. These laws have allowed such nonprofit corporations to

1-6 hold and accumulate assets and real property in order to perform their

1-7 special responsibilities to the residents of the State of Nevada.

1-8 2. When nonprofit hospital, medical or dental service corporations

1-9 which have received special consideration by law in this state convert to

1-10 for-profit corporations, it is in the public interest that assets of such

1-11 corporations remain in this state to be used for their intended purpose

1-12 through distribution to charitable organizations.

2-1 Sec. 2. NRS 679B.120 is hereby amended to read as follows:

2-2 679B.120 The commissioner shall:

2-17 laws of this state.

2-18 Sec. 3. Chapter 680A of NRS is hereby amended by adding thereto the

2-19 provisions set forth as sections 4 to 11, inclusive, of this act.

2-20 Sec. 4. As used in sections 4 to 11, inclusive, of this act, unless the

2-21 context otherwise requires, the words and terms defined in sections 5 and

2-22 6 have the meanings ascribed to them in those sections.

2-23 Sec. 5. "Convert" or any variant thereof means to transfer

2-24 ownership, control, responsibility or governance of assets, operations or

2-25 business of a nonprofit hospital, medical or dental service corporation to

2-26 a for-profit corporation or entity, including, without limitation, selling

2-27 assets, transferring assets, leasing assets, exchanging assets, providing

2-28 an option on assets, conveying assets, giving assets, restructuring the

2-29 nonprofit hospital, medical or dental service corporation, merging the

2-30 nonprofit hospital, medical or dental service corporation, entering into a

2-31 joint venture or otherwise disposing of assets of the nonprofit hospital,

2-32 medical or dental service corporation when:

2-33 1. Five percent or more of the admitted assets, operations or business

2-34 of the nonprofit hospital, medical or dental service corporation, or 25

2-35 percent of the surplus to policyholders as of December 31 next preceding

2-36 the transfer are involved; or

2-37 2. The transfer will result in a change of governance, ownership or

2-38 operational control of 5 percent or more of the admitted assets,

2-39 operations or business of the nonprofit hospital, medical or dental service

2-40 corporation, or 25 percent of the surplus to policyholders to a for-profit

2-41 corporation or entity, when combined with one or more transactions that

2-42 occurred or occur within 5 years before or after the agreement or

2-43 transaction is closed.

3-1 Sec. 6. "For-profit corporation or entity" has the meaning ascribed

3-2 to it in section 15 of this act.

3-3 Sec. 7. The provisions of sections 4 to 11, inclusive, of this act apply

3-4 only to a nonprofit hospital, medical or dental service corporation that is

3-5 described in section 16 of this act.

3-6 Sec. 8. 1. Except as otherwise provided in this section, the

3-7 commissioner shall not grant or continue authority to transact insurance

3-8 in this state to any insurer that:

3-9 (a) Converted from a nonprofit hospital, medical or dental service

3-10 corporation to a for-profit corporation or entity after the effective date of

3-11 this act; and

3-12 (b) Has transacted insurance in this state as a nonprofit hospital,

3-13 medical or dental service corporation.

3-14 2. If an insurer described in subsection 1 is a domestic insurer, the

3-15 commissioner may grant or continue authority to transact insurance in

3-16 this state to the insurer only if the insurer has complied with the

3-17 provisions of sections 15 to 28, inclusive, of this act.

3-18 3. If an insurer described in subsection 1 is a foreign insurer, the

3-19 commissioner may grant or continue authority to transact insurance in

3-20 this state to the insurer only:

3-21 (a) If the commissioner is notified by the attorney general pursuant to

3-22 section 9 of this act that a charitable trust has been established in the

3-23 State of Nevada to serve the health care needs of individuals in this state

3-24 in the manner set forth in sections 23, 24 and 25 of this act with assets

3-25 equal to the full fair market value of the nonprofit hospital, medical or

3-26 dental service corporation attributable to the business it has conducted in

3-27 the State of Nevada at the time of the conversion, as determined in the

3-28 manner set forth in section 23 of this act; or

3-29 (b) For a specified time until the attorney general makes the

3-30 determination pursuant to subsection 2 of section 9 of this act.

3-31 Sec. 9. 1. The commissioner shall notify the attorney general

3-32 when:

3-33 (a) A foreign insurer that has conducted business in this state as a

3-34 nonprofit hospital, medical or dental service corporation and has

3-35 converted to a for-profit corporation or entity after the effective date of

3-36 this act applies for an original certificate of authority;

3-37 (b) A foreign insurer that has transacted insurance in this state as a

3-38 nonprofit hospital, medical or dental service corporation and has

3-39 converted to a for-profit corporation or entity after the effective date of

3-40 this act files with the commissioner an annual statement required

3-41 pursuant to NRS 680A.270; or

3-42 (c) The commissioner otherwise becomes aware that a foreign insurer

3-43 that is authorized to transact insurance in this state and has transacted

4-1 insurance in this state as a nonprofit hospital, medical or dental service

4-2 corporation has converted to a for-profit corporation or entity after the

4-3 effective date of this act.

4-4 2. Except as otherwise provided in subsection 3, not later than 90

4-5 days after receiving notification from the commissioner pursuant to

4-6 subsection 1 or otherwise becoming aware that a foreign insurer that has

4-7 conducted business in this state as a nonprofit hospital, medical or dental

4-8 service corporation has initiated the process for converting to a for-profit

4-9 corporation or entity in another state, the attorney general shall

4-10 determine:

4-11 (a) Whether, at the time of conversion, the foreign insurer possesses

4-12 assets which are:

4-13 (1) Attributable to business that the foreign insurer has conducted

4-14 as a nonprofit hospital, medical or dental service corporation in the State

4-15 of Nevada; and

4-16 (2) Lawfully subject to this chapter or any other applicable

4-17 provision of NRS;

4-18 (b) In the manner set forth in section 23 of this act, whether or not a

4-19 charitable trust has been established in the manner set forth in section 23

4-20 of this act with assets equal to the full fair market value of the nonprofit

4-21 hospital, medical or dental service corporation attributable to business it

4-22 has conducted in the State of Nevada at the time of the conversion; and

4-23 (c) Whether or not the charitable assets of the charitable trust are

4-24 being held and distributed in the manner set forth in sections 24 and 25

4-25 of this act.

4-26 3. If the attorney general cannot make a determination pursuant to

4-27 subsection 2 within 90 days, he may extend the period for not more than

4-28 60 days by giving notice to the commissioner and the foreign insurer.

4-29 4. The attorney general shall immediately notify the commissioner of

4-30 his determinations made pursuant to subsection 3.

4-31 Sec. 10. 1. The attorney general may:

4-32 (a) Advise, receive advice from, consult and cooperate with other

4-33 agencies of this state, the Federal Government, agencies of other states,

4-34 interstate agencies and with other persons to carry out the provisions of

4-35 sections 4 to 11, inclusive, of this act;

4-36 (b) Adopt such regulations as are necessary to carry out the provisions

4-37 of sections 4 to 11, inclusive, of this act;

4-38 (c) Contract with an agency of this state to assist the attorney general

4-39 in carrying out the provisions of sections 4 to 11, inclusive, of this act;

4-40 and

4-41 (d) Contract with one or more consultants or experts to assist with a

4-42 determination to be made pursuant to subsection 2 of section 9 of this

4-43 act, including, without limitation, establishing the full fair market value

5-1 of the nonprofit hospital, medical or dental service corporation

5-2 attributable to business it has conducted in the State of Nevada at the

5-3 time of the conversion.

5-4 2. The total costs incurred by the attorney general through contracts

5-5 entered into for obtaining assistance in making the determination

5-6 pursuant to subsection 2 of section 9 of this act must be reasonable and

5-7 necessary.

5-8 3. The attorney general may require the parties involved in the

5-9 conversion to enter into an agreement, on terms established by the

5-10 attorney general, to pay for any costs incurred by the attorney general

5-11 pursuant to paragraph (d) of subsection 1 and for all reasonable costs

5-12 incurred by the attorney general in executing his duties pursuant to this

5-13 section, including, without limitation, attorney’s fees. Such an agreement

5-14 may include, without limitation:

5-15 (a) Requiring the parties involved in the conversion to make a cash

5-16 deposit with an escrow agent in a manner approved by the attorney

5-17 general, and authorizing the attorney general to withdraw money from

5-18 the escrow account to cover any costs incurred pursuant to paragraph (d)

5-19 of subsection 1;

5-20 (b) Requiring the parties to pay the attorney general an amount of

5-21 money in advance to cover the expected costs that will be incurred

5-22 pursuant to paragraph (d) of subsection 1;

5-23 (c) Requiring the parties to make monthly payments to the attorney

5-24 general for the costs incurred by the attorney general pursuant to

5-25 paragraph (d) of subsection 1; or

5-26 (d) Any combination thereof.

5-27 Sec. 11. In carrying out the duties set forth in sections 4 to 11,

5-28 inclusive, of this act, the attorney general may:

5-29 1. Issue subpoenas requiring the attendance and testimony of

5-30 witnesses and the production of reports, papers, documents and other

5-31 evidence which he deems necessary;

5-32 2. Administer oaths; and

5-33 3. Compel a person to subscribe to his testimony after it has been

5-34 correctly reduced to writing.

5-35 Sec. 12. NRS 680A.095 is hereby amended to read as follows:

5-36 680A.095 1. Except as otherwise provided in subsection 3, an insurer

5-42 inclusive, of this act.

6-1 2. To qualify for authority only to transact reinsurance, an insurer must

6-2 meet the same requirements for capital and surplus as are imposed on an

6-3 insurer which is authorized to transact insurance in this state.

6-4 3. This section does not apply to the joint reinsurance of title insurance

6-5 risks or to reciprocal insurance authorized pursuant to chapter 694B of

6-6 NRS.

6-7 Sec. 13. NRS 680A.175 is hereby amended to read as follows:

6-8 680A.175 1. If a domestic insurer transfers its domicile to another

6-15 state.

6-16 Sec. 14. Chapter 695B of NRS is hereby amended by adding thereto

6-17 the provisions set forth as sections 15 to 29, inclusive, of this act.

6-18 Sec. 15. As used in sections 15 to 29, inclusive, of this act, unless the

6-19 context otherwise requires, "for-profit corporation or entity" means a

6-20 corporation, partnership, proprietorship, business association, stock

6-21 insurer, mutual insurer and any other similar organization that conducts

6-22 an activity for profit.

6-23 Sec. 16. The provisions of sections 15 to 29, inclusive, of this act

6-24 apply only to a nonprofit hospital, medical or dental service corporation

6-25 that is recognized as exempt pursuant to section 501(c)(3) or 501(c)(4) of

6-26 the Internal Revenue Code of 1986 or is subject to the provisions of

6-27 section 833 of the Internal Revenue Code of 1986, future amendments to

6-28 those sections and the corresponding provisions of future internal

6-29 revenue laws and is:

6-30 1. Incorporated pursuant to chapter 82 of NRS;

6-31 2. Subject to the provisions of chapter 695B of NRS;

6-32 3. Exempt from state franchise, property and sales taxes; or

6-33 4. Organized and operated for the promotion of public good or to

6-34 benefit the public and which normally receives more than one-third of its

6-35 support each year from private or public gifts, grants, contributions or

6-36 membership fees.

6-37 Sec. 17. 1. A nonprofit hospital, medical or dental service

6-38 corporation shall not enter into an agreement or transaction to:

6-39 (a) Sell its assets to;

6-40 (b) Transfer its assets to;

6-41 (c) Lease its assets to;

6-42 (d) Exchange its assets with the assets of;

6-43 (e) Provide an option with respect to;

7-1 (f) Convey its assets to;

7-2 (g) Give its assets to;

7-3 (h) Restructure itself as;

7-4 (i) Convert to;

7-5 (j) Merge with;

7-6 (k) Enter into a joint venture with;

7-7 (l) Enter into any other agreement or transaction to transfer control,

7-8 responsibility or governance of its assets, operations or business to; or

7-9 (m) Otherwise dispose of its assets to,

7-10 a for-profit corporation or entity, if 5 percent or more of the admitted

7-11 assets, operations or business of the nonprofit hospital, medical or dental

7-12 service corporation, or 25 percent of the surplus to policyholders as of

7-13 December 31 next preceding the transaction, are involved in the

7-14 agreement or transaction, unless it obtains written approval or written

7-15 conditional approval from the attorney general.

7-16 2. A nonprofit hospital, medical or dental service corporation shall

7-17 not enter into an agreement or transaction set forth in subsection 1 that,

7-18 when combined with one or more transactions that occurred or occur

7-19 within 5 years before or after the agreement or transaction is closed, will

7-20 result in a change of governance, ownership or operational control of 5

7-21 percent or more of the admitted assets, operations or business of the

7-22 nonprofit hospital, medical or dental service corporation, or 25 percent

7-23 of the surplus to policyholders to a for-profit corporation or entity, unless

7-24 it obtains written approval or conditional approval from the attorney

7-25 general.

7-26 Sec. 18. 1. To obtain approval of a proposed agreement or

7-27 transaction set forth in section 17 of this act, a nonprofit hospital,

7-28 medical or dental service corporation shall provide the attorney general

7-29 with a written request for approval. The written request must include:

7-30 (a) Proof that a majority of the board of directors of the nonprofit

7-31 hospital, medical or dental service corporation voted in favor of the

7-32 agreement or transaction;

7-33 (b) Proof that each member of the board of directors of the nonprofit

7-34 hospital, medical or dental service corporation received a copy of the

7-35 provisions of sections 15 to 29, inclusive, of this act and the complete

7-36 written request for approval to be provided to the attorney general

7-37 pursuant to this subsection before voting on whether to approve the

7-38 agreement or transaction; and

7-39 (c) Any other information requested by the attorney general.

7-40 2. After receiving all necessary information, the attorney general

7-41 shall notify the nonprofit hospital, medical or dental service corporation

7-42 that its written request for approval of an agreement or transaction is

7-43 complete.

8-1 3. Except as otherwise provided in this subsection, not later than 90

8-2 days after notifying a nonprofit hospital, medical or dental service

8-3 corporation that its request for approval of an agreement or transaction

8-4 is complete, the attorney general shall notify the nonprofit hospital,

8-5 medical or dental service corporation in writing whether or not the

8-6 request for approval has been granted. If the attorney general cannot

8-7 make a determination concerning an agreement or transaction within 90

8-8 days, he may extend the period for not more than 60 days by giving

8-9 notice to the nonprofit hospital, medical or dental service corporation.

8-10 4. Except as otherwise provided in subsection 5, the attorney general

8-11 shall approve an agreement or transaction if he determines that the

8-12 provisions of sections 15 to 28, inclusive, of this act have been satisfied.

8-13 If the attorney general determines that the provisions of sections 15 to 28,

8-14 inclusive, of this act have not been satisfied, he shall:

8-15 (a) Notify the nonprofit hospital, medical or dental service corporation

8-16 that the request for approval has been denied and provide the reasons for

8-17 not approving the agreement or transaction; or

8-18 (b) Notify the nonprofit hospital, medical or dental service corporation

8-19 that the request for approval has been conditionally approved, the

8-20 conditions that must be satisfied for the agreement or transaction to be

8-21 fully approved and the date by which such conditions must be satisfied.

8-22 5. The attorney general may deny a request for approval if any party

8-23 to the agreement or transaction fails to provide information in a timely

8-24 manner to the attorney general after being requested to provide such

8-25 information.

8-26 6. If the terms or conditions of a proposed agreement or transaction

8-27 for which a written request for approval has been provided to the

8-28 attorney general pursuant to subsection 1 are materially changed, the

8-29 nonprofit hospital, medical or dental service corporation must provide a

8-30 new written request for approval in the manner set forth in subsection 1.

8-31 7. Any person who is aggrieved by a final decision of the attorney

8-32 general made pursuant to this section, including, without limitation, a

8-33 consumer of health care or community group that represents the citizens

8-34 of this state, may petition for judicial review in the manner provided in

8-35 chapter 233B of NRS.

8-36 Sec. 19. 1. Any agreement or transaction entered into in violation

8-37 of section 17 of this act is void.

8-38 2. Each member of the governing board or the chief financial officer

8-39 of a party to an agreement or transaction entered into in violation of

8-40 section 17 of this act is liable for a civil penalty not to exceed $1,000,000

8-41 for each violation, which may be recovered in a civil action brought in

8-42 the name of the State of Nevada by the attorney general in a court of

8-43 competent jurisdiction.

9-1 3. Each member of the governing board or the chief financial officer

9-2 of a party to an agreement or transaction set forth in section 17 of this

9-3 act who intentionally manipulates the full fair market value of the

9-4 nonprofit hospital, medical or dental service corporation in a manner

9-5 that causes the full fair market value of the nonprofit hospital, medical

9-6 or dental service corporation to decrease is personally liable for a civil

9-7 penalty not to exceed $1,000,000 for each violation, which may be

9-8 recovered in a civil action brought in the name of the State of Nevada by

9-9 the attorney general in a court of competent jurisdiction.

9-10 4. A civil penalty imposed pursuant to this section is in addition to,

9-11 and not exclusive of, any other available remedy or penalty for a

9-12 violation of this section.

9-13 Sec. 20. 1. Not later than 5 working days after receiving

9-14 notification from the attorney general pursuant to section 18 of this act

9-15 that a written request for approval of an agreement or transaction is

9-16 complete, a nonprofit hospital, medical or dental service corporation

9-17 shall:

9-18 (a) Provide public notice of the proposed agreement or transaction in

9-19 a form approved by the attorney general by publication once each week

9-20 for 3 consecutive weeks in at least one newspaper of general circulation

9-21 in each area of this state where the nonprofit hospital, medical or dental

9-22 service corporation provides services; and

9-23 (b) Provide notice of the proposed agreement or transaction by

9-24 mailing notice in a form approved by the attorney general to all

9-25 interested persons of whom the nonprofit hospital, medical or dental

9-26 service corporation is aware, including, without limitation, its subscribers

9-27 and insureds.

9-28 2. Not later than 10 working days after receiving a completed written

9-29 request from a nonprofit hospital, medical or dental service corporation

9-30 pursuant to section 18 of this act, the attorney general shall mail written

9-31 notice of the proposed agreement or transaction to all persons who have

9-32 requested in writing to receive notice of all written requests for approval

9-33 filed pursuant to section 18 of this act.

9-34 3. The attorney general may charge any party to the proposed

9-35 agreement or transaction for any costs incurred in complying with the

9-36 provisions of this section concerning providing notice, holding public

9-37 hearings and providing records to the public.

9-38 Sec. 21. 1. Not later than 45 days after receiving a completed

9-39 written request for approval from a nonprofit hospital, medical or dental

9-40 service corporation pursuant to section 18 of this act, the attorney

9-41 general shall hold at least one public hearing in each area of this state

9-42 where the nonprofit hospital, medical or dental service corporation

9-43 provides services. To determine the number of public hearings to hold in

10-1 each area, the attorney general shall consider the number of persons in

10-2 each area and the nature and value of the proposed agreement or

10-3 transaction to ensure that the persons who will be affected by the

10-4 agreement or transaction have an opportunity to provide information to

10-5 the attorney general concerning the agreement or transaction.

10-6 2. At each public hearing held pursuant to this section, the attorney

10-7 general shall obtain comments from persons who will be affected by the

10-8 agreement or transaction concerning the potential risks and benefits of

10-9 the agreement or transaction. Any person may file a written comment or

10-10 exhibit to be distributed at or appear and make comments at a public

10-11 hearing held pursuant to this section. Each party to the proposed

10-12 agreement or transaction must have at least one representative present at

10-13 each public hearing held pursuant to this section.

10-14 3. At least 21 days before each public hearing, the attorney general

10-15 shall provide notice of the time and place of the hearing:

10-16 (a) By publication in at least one newspaper of general circulation in

10-17 the area where the hearing will be held;

10-18 (b) By mailing written notice to the board of county commissioners of

10-19 the county where the hearing will be held; and

10-20 (c) By mailing notice to all other interested persons of whom the

10-21 attorney general is aware, including, without limitation, other nonprofit

10-22 hospital, medical or dental service corporations and the subscribers and

10-23 insureds of the nonprofit hospital, medical or dental service corporation.

10-24 4. The attorney general shall:

10-25 (a) Prepare and maintain a written summary of all written and oral

10-26 comments made in preparation for each public hearing and made at

10-27 each public hearing held pursuant to this section, including, without

10-28 limitation, all questions asked by persons at the hearing;

10-29 (b) Require a response to each question asked at such a hearing from

10-30 an appropriate party to the proposed agreement or transaction and

10-31 include such responses in the summary prepared pursuant to this

10-32 subsection;

10-33 (c) Maintain the summary prepared pursuant to this subsection in the

10-34 office of the attorney general and file the summary with the governing

10-35 authority of each public library in each area of this state where the

10-36 nonprofit hospital, medical or dental service corporation provides

10-37 services; and

10-38 (d) Make copies of the summary prepared pursuant to this subsection

10-39 available free of charge to any person who provides a written request to

10-40 the attorney general.

10-41 5. Records in the possession of the attorney general concerning a

10-42 proposed agreement or transaction are public records and must be open

10-43 to public inspection free of charge at the office of the attorney general

11-1 and the office of the nonprofit hospital, medical or dental service

11-2 corporation that is proposing the agreement or transaction during

11-3 regular business hours.

11-4 6. The attorney general may charge any party to the proposed

11-5 agreement or transaction for any costs incurred in complying with the

11-6 provisions of subsections 1, 2, 3 and 5 concerning providing notice,

11-7 holding public hearings and providing records to the public.

11-8 Sec. 22. 1. The terms and conditions of an agreement or

11-9 transaction set forth in section 17 of this act must be fair and reasonable

11-10 to residents of this state, including, without limitation, recipients of

11-11 health care services, subscribers or policyholders of the nonprofit

11-12 hospital, medical or dental service corporation that is proposing the

11-13 agreement or transaction and the nonprofit hospital, medical or dental

11-14 service corporation that is proposing the agreement or transaction.

11-15 2. An agreement or transaction set forth in section 17 of this act

11-16 must be in the public interest. An agreement or transaction will be

11-17 deemed to be in the public interest only if the nonprofit hospital, medical

11-18 or dental service corporation that is proposing the agreement or

11-19 transaction has taken the appropriate steps to safeguard the value of its

11-20 assets that are required to be placed in a charitable trust pursuant to

11-21 section 23 of this act and to ensure that any proceeds from the agreement

11-22 or transaction are irrevocably dedicated to charitable health care

11-23 purposes.

11-24 3. An agreement or transaction set forth in section 17 of this act

11-25 must not:

11-26 (a) Result in any benefit to a private person, including, without

11-27 limitation, a stock option, an agreement not to compete or any other

11-28 private benefit; or

11-29 (b) Have an adverse effect on the affordability of health care services

11-30 to persons who reside in each area where the nonprofit hospital, medical

11-31 or dental service corporation that is proposing the agreement or

11-32 transaction provides services or be likely to have such an adverse effect.

11-33 4. A nonprofit hospital, medical or dental service corporation that is

11-34 proposing an agreement or transaction set forth in section 17 of this act

11-35 shall use due diligence in selecting the other persons involved in the

11-36 proposed agreement or transaction, and in negotiating the terms and

11-37 conditions of the agreement or transaction.

11-38 Sec. 23. 1. Except as otherwise provided in subsection 6, the

11-39 parties that are proposing to enter into an agreement or transaction set

11-40 forth in section 17 of this act shall, as part of the agreement or

11-41 transaction, establish a charitable trust which must receive assets in an

11-42 amount equal to the full fair market value of the nonprofit hospital,

12-1 medical or dental service corporation as determined by the attorney

12-2 general pursuant to subsection 2.

12-3 2. Except as otherwise provided in subsection 7, the attorney general

12-4 shall use an independent expert to determine the full fair market value of

12-5 the nonprofit hospital, medical or dental service corporation at the time

12-6 when the agreement or transaction is carried out, as if the nonprofit

12-7 hospital, medical or dental service corporation had outstanding voting

12-8 stock and as if 100 percent of its stock was freely transferable and

12-9 available for purchase without restriction. In determining the full fair

12-10 market value of the nonprofit hospital, medical or dental service

12-11 corporation, the attorney general shall consider all relevant factors,

12-12 including, without limitation, its market value, investment or earnings

12-13 value, value of the net assets, value of the goodwill, value of the trade

12-14 name and a control premium, if any.

12-15 3. The nonprofit hospital, medical or dental service corporation shall

12-16 conduct an independent valuation of its full fair market value. The

12-17 attorney general may use an independent expert to review the valuation

12-18 conducted by the nonprofit hospital, medical or dental service

12-19 corporation.

12-20 4. A party to the proposed agreement or transaction shall not

12-21 manipulate the full fair market value of the nonprofit hospital, medical

12-22 or dental service corporation in a manner that causes the full fair market

12-23 value of the nonprofit hospital, medical or dental service corporation to

12-24 decrease.

12-25 5. All or a portion of the consideration conveyed to the charitable

12-26 trust may consist of stock in the for-profit corporation or entity.

12-27 6. Except as otherwise provided in subsection 7, if the nonprofit

12-28 hospital, medical or dental service corporation continues to conduct

12-29 business or has conducted business in another state, the attorney general

12-30 shall determine the full fair market value of the nonprofit hospital,

12-31 medical or dental service corporation that is attributable to the business

12-32 conducted in the State of Nevada separate from the full fair market value

12-33 of the nonprofit hospital, medical or dental service corporation

12-34 attributable to business conducted by the nonprofit hospital, medical or

12-35 dental service corporation in other states. The charitable trust required to

12-36 be established in this state pursuant to this section must have assets in an

12-37 amount equal to the full fair market value of the nonprofit hospital,

12-38 medical or dental service corporation attributable to business it has

12-39 conducted in the State of Nevada at the time the agreement or

12-40 transaction is entered into, as determined by the attorney general in the

12-41 manner set forth in this section.

12-42 7. The attorney general may rely on an independent valuation of the

12-43 full fair market value of the nonprofit hospital, medical or dental service

13-1 corporation or an independent valuation of the full fair market value of

13-2 the nonprofit hospital, medical or dental service corporation that is

13-3 attributable to the business conducted in the State of Nevada that was

13-4 performed by an agency or officer of another state if the attorney general

13-5 determines that the valuation was conducted in a reliable manner.

13-6 Sec. 24. 1. The charitable assets of a charitable trust established

13-7 pursuant to section 23 of this act must be distributed to a tax-exempt

13-8 charitable organization that:

13-9 (a) Is recognized as exempt pursuant to section 501(c)(3) or 501(c)(4)

13-10 of the Internal Revenue Code of 1986, future amendments to that section

13-11 and the corresponding provisions of future internal revenue laws; and

13-12 (b) Complies with the provisions of sections 4941 to 4945, inclusive, of

13-13 the Internal Revenue Code of 1986, future amendments to those sections

13-14 and the corresponding provisions of future internal revenue laws.

13-15 2. The charitable mission of and grants awarded by a charitable

13-16 organization that receives charitable assets pursuant to this section must

13-17 primarily serve the necessary health care needs of this state which are

13-18 not currently being met, including, without limitation, serving the

13-19 medically uninsured and underserved individuals in this state and

13-20 focusing on promoting access to health care services, improving the

13-21 quality of health care services provided to individuals in this state and

13-22 improving the quality and availability of preventative health care services

13-23 to individuals in this state.

13-24 3. A charitable organization that receives charitable assets pursuant

13-25 to this section must provide assistance to persons in the areas of this state

13-26 where the nonprofit hospital, medical or dental service corporation

13-27 previously provided services and its governing board must reflect the

13-28 diversity of the communities in which it is providing assistance.

13-29 4. A charitable organization that receives charitable assets pursuant

13-30 to this section shall place the assets in a trust fund and shall not expend

13-31 more than 90 percent of the earnings on the corpus in a calendar year.

13-32 5. A charitable organization that receives charitable assets pursuant

13-33 to this section must have a board of directors consisting of 11 members

13-34 who are appointed by the governor from a list of 20 names submitted by

13-35 the department of human resources. The term of six of the initial

13-36 members of the board of directors must be 2 years, and the term of five of

13-37 the initial members of the board of directors must be 4 years. After the

13-38 initial terms, the term of each member of the board of directors is 4

13-39 years. After the initial appointments, the board of directors shall fill all

13-40 vacancies occurring on the board in a timely manner. The membership

13-41 of a board of directors must be diverse and may include, without

13-42 limitation:

14-1 (a) Providers of health care from community, rural or institutional

14-2 settings;

14-3 (b) Disabled persons;

14-4 (c) Representatives of the private sector;

14-5 (d) Interested residents; and

14-6 (e) Consumers of health care.

14-7 Sec. 25. 1. A charitable organization that receives charitable assets

14-8 pursuant to section 24 of this act shall provide the attorney general with

14-9 an annual report concerning its administration of the charitable assets it

14-10 receives, including, without limitation, its grant-making and other

14-11 charitable activities. The charitable organization shall cause an audit to

14-12 be performed annually by a certified public accounting firm that is

14-13 independent of the charitable organization. The annual report and audit

14-14 report are public records and must be open to public inspection free of

14-15 charge at the office of the attorney general and the office of the

14-16 charitable organization during regular business hours.

14-17 2. A charitable organization that receives charitable assets pursuant

14-18 to section 24 of this act, and all of its directors, officers and members of

14-19 its staff must be independent of the for-profit corporation or entity and its

14-20 affiliates with whom the nonprofit hospital, medical or dental service

14-21 corporation is proposing to enter into an agreement or transaction.

14-22 3. A director, officer or member of the staff of the nonprofit hospital,

14-23 medical or dental service corporation that is proposing the agreement or

14-24 transaction must not be a director, officer or member of the staff of a

14-25 charitable organization that receives charitable assets pursuant to section

14-26 24 of this act.

14-27 4. No director, officer or member of the staff of the nonprofit

14-28 hospital, medical or dental service corporation that is proposing the

14-29 agreement or transaction, or director, officer or member of the staff of a

14-30 charitable organization that receives charitable assets pursuant to section

14-31 24 of this act may benefit directly or indirectly from the proposed

14-32 agreement or transaction.

14-33 5. A charitable organization that receives charitable assets pursuant

14-34 to section 24 of this act shall establish a procedure for avoiding conflicts

14-35 of interest and for ensuring that the charitable assets are not distributed

14-36 in a manner which will benefit the for-profit corporation or entity with

14-37 whom the nonprofit hospital, medical or dental service corporation is

14-38 proposing to enter into the agreement or transaction, or the board of

14-39 directors or other management of the for-profit corporation or entity.

14-40 6. The attorney general may oversee and monitor the activities

14-41 carried out by a charitable organization that receives charitable assets

14-42 pursuant to section 24 of this act.

15-1 Sec. 26. 1. The attorney general may:

15-2 (a) Advise, receive advice from, consult and cooperate with other

15-3 agencies of this state, the Federal Government, agencies of other states,

15-4 interstate agencies and with other persons to carry out the provisions of

15-5 sections 15 to 28, inclusive, of this act;

15-6 (b) Adopt such regulations as are necessary to carry out the provisions

15-7 of sections 15 to 28, inclusive, of this act;

15-8 (c) Contract with an agency of this state to assist the attorney general

15-9 in carrying out the provisions of sections 15 to 28, inclusive, of this act;

15-10 and

15-11 (d) Contract with one or more consultants or experts to assist in the

15-12 review of a proposed agreement or transaction pursuant to the provisions

15-13 of sections 15 to 28, inclusive, of this act, including, without limitation,

15-14 establishing the full fair market value of the nonprofit hospital, medical

15-15 or dental service corporation that is proposing the agreement or

15-16 transaction.

15-17 2. The total costs incurred by the attorney general through contracts

15-18 entered into for obtaining assistance in reviewing the proposed

15-19 agreement or transaction must be reasonable and necessary.

15-20 3. The attorney general may require the parties involved in the

15-21 conversion to enter into an agreement, on terms established by the

15-22 attorney general, to pay for any costs incurred by the attorney general

15-23 pursuant to paragraph (d) of subsection 1 and for all reasonable costs

15-24 incurred by the attorney general in executing his duties pursuant to this

15-25 section, including, without limitation, attorney’s fees. Such an agreement

15-26 may include, without limitation:

15-27 (a) Requiring the parties involved in the conversion to make a cash

15-28 deposit with an escrow agent in a manner approved by the attorney

15-29 general, and authorizing the attorney general to withdraw money from

15-30 the escrow account to cover any costs incurred pursuant to paragraph (d)

15-31 of subsection 1;

15-32 (b) Requiring the parties to pay the attorney general an amount of

15-33 money in advance to cover the expected costs that will be incurred

15-34 pursuant to paragraph (d) of subsection 1;

15-35 (c) Requiring the parties to make monthly payments to the attorney

15-36 general for the costs incurred by the attorney general pursuant to

15-37 paragraph (d) of subsection 1; or

15-38 (d) Any combination thereof.

15-39 Sec. 27. In carrying out the duties set forth in sections 15 to 28,

15-40 inclusive, of this act, the attorney general may:

15-41 1. Issue subpoenas requiring the attendance and testimony of

15-42 witnesses and the production of reports, papers, documents and other

15-43 evidence which he deems necessary;

16-1 2. Administer oaths; and

16-2 3. Compel a person to subscribe to his testimony after it has been

16-3 correctly reduced to writing.

16-4 Sec. 28. Each nonprofit hospital, medical or dental service

16-5 corporation that enters into an agreement or a transaction set forth in

16-6 section 17 of this act and that continues to conduct business as a

16-7 nonprofit hospital, medical or dental service corporation after the

16-8 agreement or transaction has been carried out shall submit an annual

16-9 report to the attorney general describing the manner in which it

16-10 continues to satisfy any obligation it has to the public. The attorney

16-11 general may oversee the nonprofit hospital, medical or dental service

16-12 corporation to ensure that it satisfies any such obligation to the public.

16-13 Sec. 29. The commissioner shall not issue or renew a certificate of

16-14 authority to any corporation proposing to establish, maintain or operate

16-15 a nonprofit hospital, medical or dental service plan if the corporation has

16-16 entered into an agreement or transaction in violation of section 17 of this

16-17 act.

16-18 Sec. 30. NRS 695B.320 is hereby amended to read as follows:

16-19 695B.320 Nonprofit hospital and medical or dental service

16-27 conflict with the express provisions of this chapter.

16-28 Sec. 31. NRS 695F.090 is hereby amended to read as follows:

16-29 695F.090 Prepaid limited health service organizations are subject to

16-41 7. Chapter 683A of NRS.

17-1 8. To the extent applicable, the provisions of NRS 689B.340 to

17-2 689B.600, inclusive, and chapter 689C of NRS relating to the portability

17-3 and availability of health insurance.

17-4 9. NRS 689A.413.

17-5 10. NRS 680B.025 to 680B.039, inclusive, concerning premium tax,

17-6 premium tax rate, annual report and estimated quarterly tax payments. For

17-7 the purposes of this subsection, unless the context otherwise requires that a

17-8 section apply only to insurers, any reference in those sections to "insurer"

17-9 must be replaced by a reference to "prepaid limited health service

17-10 organization."

17-11 11. Chapter 692C of NRS, concerning holding companies.

17-12 12. Sections 4 to 11, inclusive, of this act.

17-13 Sec. 32. 1. There is hereby appropriated from the state general fund

17-14 to the office of the attorney general the sum of $5,000 for initial costs

17-15 related to carrying out additional duties pursuant to the provisions of this

17-16 act.

17-17 2. Any remaining balance of the appropriation made by subsection 1

17-18 must not be committed for expenditure after June 30, 2001, and reverts to

17-19 the state general fund as soon as all payments of money committed have

17-20 been made.

17-21 Sec. 33. This act becomes effective upon passage and approval.