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 for-

1-10 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 9, inclusive, of this act.

2-20 Sec. 4. As used in sections 4 to 9, inclusive, of this act, unless the

2-21 context otherwise requires, "for-profit corporation or entity" has the

2-22 meaning ascribed to it in section 13 of this act.

2-23 Sec. 5. The provisions of sections 4 to 9, inclusive, of this act apply

2-24 only to a nonprofit hospital, medical or dental service corporation that is

2-25 described in section 14 of this act.

2-26 Sec. 6. 1. Except as otherwise provided in this section, the

2-27 commissioner shall not grant or continue authority to transact insurance

2-28 in this state to any insurer that:

2-29 (a) Converted from a nonprofit hospital, medical or dental service

2-30 corporation to a for-profit corporation or entity after the effective date of

2-31 this act; and

2-32 (b) Has transacted insurance in this state as a nonprofit hospital,

2-33 medical or dental service corporation.

2-34 2. If an insurer described in subsection 1 is a domestic insurer, the

2-35 commissioner may grant or continue authority to transact insurance in

2-36 this state to the insurer only if the insurer has complied with the

2-37 provisions of sections 13 to 26, inclusive, of this act.

2-38 3. If an insurer described in subsection 1 is a foreign insurer, the

2-39 commissioner may grant or continue authority to transact insurance in

2-40 this state to the insurer only:

2-41 (a) If the commissioner is notified by the attorney general pursuant to

2-42 section 7 of this act that a charitable trust has been established in the

2-43 State of Nevada to serve the health care needs of individuals in this state

3-1 in the manner set forth in sections 21, 22 and 23 of this act with assets

3-2 equal to the full fair market value of the nonprofit hospital, medical or

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

3-4 the State of Nevada at the time of the conversion, as determined in the

3-5 manner set forth in section 21 of this act; or

3-6 (b) For a specified time until the attorney general makes the

3-7 determination pursuant to subsection 2 of section 7 of this act.

3-8 Sec. 7. 1. The commissioner shall notify the attorney general when:

3-9 (a) A foreign insurer that has conducted business in this state as a

3-10 nonprofit hospital, medical or dental service corporation and has

3-11 converted to a for-profit corporation or entity after the effective date of

3-12 this act applies for an original certificate of authority;

3-13 (b) A foreign insurer that has transacted insurance in this state as a

3-14 nonprofit hospital, medical or dental service corporation and has

3-15 converted to a for-profit corporation or entity after the effective date of

3-16 this act files with the commissioner an annual statement required

3-17 pursuant to NRS 680A.270; or

3-18 (c) The commissioner otherwise becomes aware that a foreign insurer

3-19 that is authorized to transact insurance in this state and has transacted

3-20 insurance in this state as a nonprofit hospital, medical or dental service

3-21 corporation has converted to a for-profit corporation or entity after the

3-22 effective date of this act.

3-23 2. Except as otherwise provided in subsection 3, not later than 90

3-24 days after receiving notification from the commissioner pursuant to

3-25 subsection 1 or otherwise becoming aware that a foreign insurer that has

3-26 conducted business in this state as a nonprofit hospital, medical or dental

3-27 service corporation has initiated the process for converting to a for-profit

3-28 corporation or entity in another state, the attorney general shall

3-29 determine:

3-30 (a) Whether, at the time of conversion, the foreign insurer possesses

3-31 charitable assets which are:

3-32 (1) Attributable to business that the foreign insurer has conducted

3-33 as a nonprofit hospital, medical or dental service corporation in the State

3-34 of Nevada; and

3-35 (2) Lawfully subject to this chapter or any other applicable

3-36 provision of NRS;

3-37 (b) In the manner set forth in section 21 of this act, whether or not a

3-38 charitable trust has been established in the manner set forth in section 21

3-39 of this act with assets equal to the full fair market value of the nonprofit

3-40 hospital, medical or dental service corporation attributable to business it

3-41 has conducted in the State of Nevada at the time of the conversion; and

4-1 (c) Whether or not the charitable assets of the charitable trust are

4-2 being held and distributed in the manner set forth in sections 22 and 23 of

4-3 this act.

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

4-5 subsection 2 within 90 days, he may extend the period for not more than

4-6 60 days by giving notice to the commissioner and the foreign insurer.

4-7 4. The attorney general shall immediately notify the commissioner of

4-8 his determinations made pursuant to subsection 3.

4-9 Sec. 8. 1. The attorney general may:

4-10 (a) Advise, receive advice from, consult and cooperate with other

4-11 agencies of this state, the Federal Government, agencies of other states,

4-12 interstate agencies and with other persons to carry out the provisions of

4-13 sections 4 to 9, inclusive, of this act;

4-14 (b) Adopt such regulations as are necessary to carry out the provisions

4-15 of sections 4 to 9, inclusive, of this act;

4-16 (c) Contract with an agency of this state to assist the attorney general

4-17 in carrying out the provisions of sections 4 to 9, inclusive, of this act; and

4-18 (d) Contract with one or more consultants or experts to assist with a

4-19 determination to be made pursuant to subsection 2 of section 7 of this act,

4-20 including, without limitation, establishing the full fair market value of the

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

4-22 business it has conducted in the State of Nevada at the time of the

4-23 conversion.

4-24 2. The total costs incurred by the attorney general through contracts

4-25 entered into for obtaining assistance in making the determination

4-26 pursuant to subsection 2 of section 7 of this act must be reasonable and

4-27 necessary.

4-28 3. The attorney general may require the parties involved in the

4-29 conversion to enter into an agreement, on terms established by the

4-30 attorney general, to pay for any costs incurred by the attorney general

4-31 pursuant to paragraph (d) of subsection 1 and for all reasonable costs

4-32 incurred by the attorney general in executing his duties pursuant to this

4-33 section, including, without limitation, attorney’s fees. Such an agreement

4-34 may include, without limitation:

4-35 (a) Requiring the parties involved in the conversion to make a cash

4-36 deposit with an escrow agent in a manner approved by the attorney

4-37 general, and authorizing the attorney general to withdraw money from

4-38 the escrow account to cover any costs incurred pursuant to paragraph (d)

4-39 of subsection 1;

4-40 (b) Requiring the parties to pay the attorney general an amount of

4-41 money in advance to cover the expected costs that will be incurred

4-42 pursuant to paragraph (d) of subsection 1;

5-1 (c) Requiring the parties to make monthly payments to the attorney

5-2 general for the costs incurred by the attorney general pursuant to

5-3 paragraph (d) of subsection 1; or

5-4 (d) Any combination thereof.

5-5 Sec. 9. In carrying out the duties set forth in sections 4 to 9,

5-6 inclusive, of this act, the attorney general may:

5-7 1. Issue subpoenas requiring the attendance and testimony of

5-8 witnesses and the production of reports, papers, documents and other

5-9 evidence which he deems necessary;

5-10 2. Administer oaths; and

5-11 3. Compel a person to subscribe to his testimony after it has been

5-12 correctly reduced to writing.

5-13 Sec. 10. NRS 680A.095 is hereby amended to read as follows:

5-14 680A.095 1. Except as otherwise provided in subsection 3, an insurer

5-26 NRS.

5-27 Sec. 11. NRS 680A.175 is hereby amended to read as follows:

5-28 680A.175 1. If a domestic insurer transfers its domicile to another

5-35 state.

5-36 Sec. 12. Chapter 695B of NRS is hereby amended by adding thereto

5-37 the provisions set forth as sections 13 to 27, inclusive, of this act.

5-38 Sec. 13. As used in sections 13 to 27, inclusive, of this act, unless the

5-39 context otherwise requires, "for-profit corporation or entity" means a

5-40 corporation, partnership, proprietorship, business association, stock

5-41 insurer and any other similar organization that conducts an activity for

5-42 profit.

6-1 Sec. 14. The provisions of sections 13 to 27, inclusive, of this act

6-2 apply only to a nonprofit hospital, medical or dental service corporation

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

6-4 the Internal Revenue Code of 1986 or is subject to the provisions of

6-5 section 833 of the Internal Revenue Code of 1986, future amendments to

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

6-7 revenue laws and is:

6-8 1. Incorporated pursuant to chapter 82 of NRS;

6-9 2. Subject to the provisions of chapter 695B of NRS;

6-10 3. Exempt from state franchise, property and sales taxes; or

6-11 4. Organized and operated for the promotion of public good or to

6-12 benefit the public and which normally receives more than one-third of its

6-13 support each year from private or public gifts, grants, contributions or

6-14 membership fees.

6-15 Sec. 15. 1. A nonprofit hospital, medical or dental service

6-16 corporation shall not enter into an agreement or transaction to:

6-17 (a) Sell its assets to;

6-18 (b) Transfer its assets to;

6-19 (c) Lease its assets to;

6-20 (d) Exchange its assets with the assets of;

6-21 (e) Provide an option with respect to;

6-22 (f) Convey its assets to;

6-23 (g) Give its assets to;

6-24 (h) Restructure itself as;

6-25 (i) Convert to;

6-26 (j) Merge with;

6-27 (k) Enter into a joint venture with;

6-28 (l) Enter into any other agreement or transaction to transfer control,

6-29 responsibility or governance of its assets, operations or business to; or

6-30 (m) Otherwise dispose of its assets to,

6-31 a for-profit corporation or entity, if 5 percent or more of the admitted

6-32 assets, operations or business of the nonprofit hospital, medical or dental

6-33 service corporation, or 25 percent of the surplus to policyholders as of

6-34 December 31 next preceding the transaction, are involved in the

6-35 agreement or transaction, unless it obtains written approval or written

6-36 conditional approval from the attorney general.

6-37 2. A nonprofit hospital, medical or dental service corporation shall

6-38 not enter into an agreement or transaction set forth in subsection 1 that,

6-39 when combined with one or more transactions that occurred or occur

6-40 within 5 years before or after the agreement or transaction is closed, will

6-41 result in a change of governance, ownership or operational control of 5

6-42 percent or more of the admitted assets, operations or business of the

7-1 nonprofit hospital, medical or dental, or 25 percent of the surplus to

7-2 policyholders to a for-profit corporation or entity, unless it obtains written

7-3 approval or conditional approval from the attorney general.

7-4 Sec. 16. 1. To obtain approval of a proposed agreement or

7-5 transaction set forth in section 15 of this act, a nonprofit hospital, medical

7-6 or dental service corporation shall provide the attorney general with a

7-7 written request for approval. The written request must include:

7-8 (a) Proof that a majority of the board of directors of the nonprofit

7-9 hospital, medical or dental service corporation voted in favor of the

7-10 agreement or transaction;

7-11 (b) Proof that each member of the board of directors of the nonprofit

7-12 hospital, medical or dental service corporation received a copy of the

7-13 provisions of sections 13 to 27, inclusive, of this act and the complete

7-14 written request for approval to be provided to the attorney general

7-15 pursuant to this subsection before voting on whether to approve the

7-16 agreement or transaction; and

7-17 (c) Any other information requested by the attorney general.

7-18 2. After receiving all necessary information, the attorney general

7-19 shall notify the nonprofit hospital, medical or dental service corporation

7-20 that its written request for approval of an agreement or transaction is

7-21 complete.

7-22 3. Except as otherwise provided in this subsection, not later than 90

7-23 days after notifying a nonprofit hospital, medical or dental service

7-24 corporation that its request for approval of an agreement or transaction is

7-25 complete, the attorney general shall notify the nonprofit hospital, medical

7-26 or dental service corporation in writing whether or not the request for

7-27 approval has been granted. If the attorney general cannot make a

7-28 determination concerning an agreement or transaction within 90 days, he

7-29 may extend the period for not more than 60 days by giving notice to the

7-30 nonprofit hospital, medical or dental service corporation.

7-31 4. Except as otherwise provided in subsection 5, the attorney general

7-32 shall approve an agreement or transaction if he determines that the

7-33 provisions of sections 13 to 26, inclusive, of this act have been satisfied. If

7-34 the attorney general determines that the provisions of sections 13 to 26,

7-35 inclusive, of this act have not been satisfied, he shall:

7-36 (a) Notify the nonprofit hospital, medical or dental service corporation

7-37 that the request for approval has been denied and provide the reasons for

7-38 not approving the agreement or transaction; or

7-39 (b) Notify the nonprofit hospital, medical or dental service corporation

7-40 that the request for approval has been conditionally approved, the

7-41 conditions that must be satisfied for the agreement or transaction to be

7-42 fully approved and the date by which such conditions must be satisfied.

8-1 5. The attorney general may deny a request for approval if any party

8-2 to the agreement or transaction fails to provide information in a timely

8-3 manner to the attorney general after being requested to provide such

8-4 information.

8-5 6. If the terms or conditions of a proposed agreement or transaction

8-6 for which a written request for approval has been provided to the attorney

8-7 general pursuant to subsection 1 are materially changed, the nonprofit

8-8 hospital, medical or dental service corporation must provide a new written

8-9 request for approval in the manner set forth in subsection 1.

8-10 7. Any person who is aggrieved by a final decision of the attorney

8-11 general made pursuant to this section, including, without limitation, a

8-12 consumer of health care or community group that represents the citizens

8-13 of this state, may petition for judicial review in the manner provided in

8-14 chapter 233B of NRS.

8-15 Sec. 17. 1. Any agreement or transaction entered into in violation

8-16 of section 15 of this act is void.

8-17 2. Each member of the governing board or the chief financial officer

8-18 of a party to an agreement or transaction entered into in violation of

8-19 section 15 of this act is liable for a civil penalty not to exceed $1,000,000

8-20 for each violation, which may be recovered in a civil action brought in the

8-21 name of the State of Nevada by the attorney general in a court of

8-22 competent jurisdiction.

8-23 3. Each member of the governing board or the chief financial officer

8-24 of a party to an agreement or transaction set forth in section 15 of this act

8-25 who intentionally manipulates the full fair market value of the nonprofit

8-26 hospital, medical or dental service corporation in a manner that causes

8-27 the full fair market value of the nonprofit hospital, medical or dental

8-28 service corporation to decrease is personally liable for a civil penalty not

8-29 to exceed $1,000,000 for each violation, which may be recovered in a civil

8-30 action brought in the name of the State of Nevada by the attorney general

8-31 in a court of competent jurisdiction.

8-32 4. A civil penalty imposed pursuant to this section is in addition to,

8-33 and not exclusive of, any other available remedy or penalty for a violation

8-34 of this section.

8-35 Sec. 18. 1. Not later than 5 working days after receiving

8-36 notification from the attorney general pursuant to section 16 of this act

8-37 that a written request for approval of an agreement or transaction is

8-38 complete, a nonprofit hospital, medical or dental service corporation

8-39 shall:

8-40 (a) Provide public notice of the proposed agreement or transaction in a

8-41 form approved by the attorney general by publication once each week for

8-42 3 consecutive weeks in at least one newspaper of general circulation in

9-1 each area of this state where the nonprofit hospital, medical or dental

9-2 service corporation provides services; and

9-3 (b) Provide notice of the proposed agreement or transaction by mailing

9-4 notice in a form approved by the attorney general to all interested persons

9-5 of whom the nonprofit hospital, medical or dental service corporation is

9-6 aware, including, without limitation, its subscribers and insureds.

9-7 2. Not later than 10 working days after receiving a completed written

9-8 request from a nonprofit hospital, medical or dental service corporation

9-9 pursuant to section 16 of this act, the attorney general shall mail written

9-10 notice of the proposed agreement or transaction to all persons who have

9-11 requested in writing to receive notice of all written requests for approval

9-12 filed pursuant to section 16 of this act.

9-13 3. The attorney general may charge any party to the proposed

9-14 agreement or transaction for any costs incurred in complying with the

9-15 provisions of this section concerning providing notice, holding public

9-16 hearings and providing records to the public.

9-17 Sec. 19. 1. Not later than 45 days after receiving a completed

9-18 written request for approval from a nonprofit hospital, medical or dental

9-19 service corporation pursuant to section 16 of this act, the attorney general

9-20 shall hold at least one public hearing in each area of this state where the

9-21 nonprofit hospital, medical or dental service corporation provides

9-22 services. To determine the number of public hearings to hold in each

9-23 area, the attorney general shall consider the number of persons in each

9-24 area and the nature and value of the proposed agreement or transaction

9-25 to ensure that the persons who will be affected by the agreement or

9-26 transaction have an opportunity to provide information to the attorney

9-27 general concerning the agreement or transaction.

9-28 2. At each public hearing held pursuant to this section, the attorney

9-29 general shall obtain comments from persons who will be affected by the

9-30 agreement or transaction concerning the potential risks and benefits of

9-31 the agreement or transaction. Any person may file a written comment or

9-32 exhibit to be distributed at or appear and make comments at a public

9-33 hearing held pursuant to this section. Each party to the proposed

9-34 agreement or transaction must have at least one representative present at

9-35 each public hearing held pursuant to this section.

9-36 3. At least 21 days before each public hearing, the attorney general

9-37 shall provide notice of the time and place of the hearing:

9-38 (a) By publication in at least one newspaper of general circulation in

9-39 the area where the hearing will be held;

9-40 (b) By mailing written notice to the board of county commissioners of

9-41 the county where the hearing will be held; and

9-42 (c) By mailing notice to all other interested persons of whom the

9-43 attorney general is aware, including, without limitation, other nonprofit

10-1 hospital, medical or dental service corporations and the subscribers and

10-2 insureds of the nonprofit hospital, medical or dental service corporation.

10-3 4. The attorney general shall:

10-4 (a) Prepare and maintain a written summary of all written and oral

10-5 comments made in preparation for each public hearing and made at each

10-6 public hearing held pursuant to this section, including, without limitation,

10-7 all questions asked by persons at the hearing;

10-8 (b) Require a response to each question asked at such a hearing from

10-9 an appropriate party to the proposed agreement or transaction and

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

10-11 subsection;

10-12 (c) Maintain the summary prepared pursuant to this subsection in the

10-13 office of the attorney general and file the summary with the governing

10-14 authority of each public library in each area of this state where the

10-15 nonprofit hospital, medical or dental service corporation provides

10-16 services; and

10-17 (d) Make copies of the summary prepared pursuant to this subsection

10-18 available free of charge to any person who provides a written request to

10-19 the attorney general.

10-20 5. Records in the possession of the attorney general concerning a

10-21 proposed agreement or transaction are public records and must be open

10-22 to public inspection free of charge at the office of the attorney general

10-23 and the office of the nonprofit hospital, medical or dental service

10-24 corporation that is proposing the agreement or transaction during regular

10-25 business hours.

10-26 6. The attorney general may charge any party to the proposed

10-27 agreement or transaction for any costs incurred in complying with the

10-28 provisions of subsections 1, 2, 3 and 5 concerning providing notice,

10-29 holding public hearings and providing records to the public.

10-30 Sec. 20. 1. The terms and conditions of an agreement or

10-31 transaction set forth in section 15 of this act must be fair and reasonable

10-32 to residents of this state, including, without limitation, recipients of health

10-33 care services, subscribers or policyholders of the nonprofit hospital,

10-34 medical or dental service corporation that is proposing the agreement or

10-35 transaction and the nonprofit hospital, medical or dental service

10-36 corporation that is proposing the agreement or transaction.

10-37 2. An agreement or transaction set forth in section 15 of this act must

10-38 be in the public interest. An agreement or transaction will be deemed to

10-39 be in the public interest only if the nonprofit hospital, medical or dental

10-40 service corporation that is proposing the agreement or transaction has

10-41 taken the appropriate steps to safeguard the value of its assets that are

11-1 required to be placed in a charitable trust pursuant to section 21 of this

11-2 act and to ensure that any proceeds from the agreement or transaction

11-3 are irrevocably dedicated to charitable health care purposes.

11-4 3. An agreement or transaction set forth in section 15 of this act must

11-5 not:

11-6 (a) Result in any benefit to a private person, including, without

11-7 limitation, a stock option, an agreement not to compete or any other

11-8 private benefit; or

11-9 (b) Have an adverse effect on the affordability of health care services

11-10 to individuals who reside in each area where the nonprofit hospital,

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

11-12 transaction provides services or be likely to have such an effect.

11-13 4. A nonprofit hospital, medical or dental service corporation that is

11-14 proposing an agreement or transaction set forth in section 15 of this act

11-15 shall use due diligence in selecting the other persons involved in the

11-16 proposed agreement or transaction, and in negotiating the terms and

11-17 conditions of the agreement or transaction.

11-18 Sec. 21. 1. Except as otherwise provided in subsection 6, the parties

11-19 that are proposing to enter into an agreement or transaction set forth in

11-20 section 15 of this act shall, as part of the agreement or transaction,

11-21 establish a charitable trust which must receive assets in an amount equal

11-22 to the full fair market value of the nonprofit hospital, medical or dental

11-23 service corporation as determined by the attorney general pursuant to

11-24 subsection 2.

11-25 2. Except as otherwise provided in subsection 7, the attorney general

11-26 shall use an independent expert to determine the full fair market value of

11-27 the nonprofit hospital, medical or dental service corporation at the time

11-28 when the agreement or transaction is carried out, as if the nonprofit

11-29 hospital, medical or dental service corporation had outstanding voting

11-30 stock and as if 100 percent of its stock was freely transferable and

11-31 available for purchase without restriction. In determining the full fair

11-32 market value of the nonprofit hospital, medical or dental service

11-33 corporation, the attorney general shall consider all relevant factors,

11-34 including, without limitation, its market value, investment or earnings

11-35 value, value of the net assets, value of the goodwill, value of the trade

11-36 name and a control premium, if any.

11-37 3. The nonprofit hospital, medical or dental service corporation shall

11-38 conduct an independent valuation of its full fair market value. The

11-39 attorney general may use an independent expert to review the valuation

11-40 conducted by the nonprofit hospital, medical or dental service

11-41 corporation.

11-42 4. A party to the proposed agreement or transaction shall not

11-43 manipulate the full fair market value of the nonprofit hospital, medical or

12-1 dental service corporation in a manner that causes the full fair market

12-2 value of the nonprofit hospital, medical or dental service corporation to

12-3 decrease.

12-4 5. All or a portion of the consideration conveyed to the charitable

12-5 trust may consist of stock in the for-profit corporation or entity.

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

12-7 hospital, medical or dental service corporation continues to conduct

12-8 business or has conducted business in another state, the attorney general

12-9 shall determine the full fair market value of the nonprofit hospital,

12-10 medical or dental service corporation that is attributable to the business

12-11 conducted in the State of Nevada separate from the full fair market value

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

12-13 attributable to business conducted by the nonprofit hospital, medical or

12-14 dental service corporation in other states. The charitable trust required to

12-15 be established in this state pursuant to this section must have assets in an

12-16 amount equal to the full fair market value of the nonprofit hospital,

12-17 medical or dental service corporation attributable to business it has

12-18 conducted in the State of Nevada at the time the agreement or transaction

12-19 is entered into, as determined by the attorney general in the manner set

12-20 forth in this section.

12-21 7. The attorney general may rely on an independent valuation of the

12-22 full fair market value of the nonprofit hospital, medical or dental service

12-23 corporation or an independent valuation of the full fair market value of

12-24 the nonprofit hospital, medical or dental service corporation that is

12-25 attributable to the business conducted in the State of Nevada that was

12-26 performed by an agency or officer of another state if the attorney general

12-27 determines that the valuation was conducted in a reliable manner.

12-28 Sec. 22. 1. The charitable assets of a charitable trust established

12-29 pursuant to section 21 of this act must be distributed to a tax-exempt

12-30 charitable organization that:

12-31 (a) Is recognized as exempt pursuant to section 501(c)(3) or 501(c)(4)

12-32 of the Internal Revenue Code of 1986, future amendments to that section

12-33 and the corresponding provisions of future internal revenue laws; and

12-34 (b) Complies with the provisions of sections 4941 to 4945, inclusive, of

12-35 the Internal Revenue Code of 1986, future amendments to those sections

12-36 and the corresponding provisions of future internal revenue laws.

12-37 2. The charitable mission of and grants awarded by a charitable

12-38 organization that receives charitable assets pursuant to this section must

12-39 primarily serve the necessary health care needs of this state which are not

12-40 currently being met, including, without limitation, serving the medically

12-41 uninsured and underserved individuals in this state and focusing on

12-42 promoting access to health care services, improving the quality of health

12-43 care services provided to individuals in this state and improving the

13-1 quality and availability of preventative health care services to individuals

13-2 in this state.

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

13-4 to this section must provide assistance to individuals in the areas of this

13-5 state where the nonprofit hospital, medical or dental service corporation

13-6 previously provided services. Its governing board must reflect the diversity

13-7 of the communities in which it is providing assistance.

13-8 4. A charitable organization that receives charitable assets pursuant

13-9 to this section shall place the assets in a trust fund and shall not expend

13-10 more than 90 percent of the earnings on the corpus in a calendar year.

13-11 5. A charitable organization that receives charitable assets pursuant

13-12 to section 22 of this act must have a board of directors consisting of 11

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

13-14 submitted by the department of human resources. The term of six of the

13-15 initial members of the board of directors must be 2 years, and the term of

13-16 five of the initial members of the board of directors must be 4 years. After

13-17 the initial terms, the term of each member of the board of directors is 4

13-18 years. After the initial appointments, the board of directors shall fill all

13-19 vacancies occurring on the board in a timely manner. The membership

13-20 of a board of directors must be diverse and may include, without

13-21 limitation:

13-22 (a) Providers of health care from community, rural or institutional

13-23 settings;

13-24 (b) Disabled persons;

13-25 (c) Representatives of the private sector;

13-26 (d) Interested residents; and

13-27 (e) Consumers of health care.

13-28 Sec. 23. 1. A charitable organization that receives charitable assets

13-29 pursuant to section 22 of this act shall provide the attorney general with

13-30 an annual report concerning its administration of the charitable assets it

13-31 receives, including, without limitation, its grant-making and other

13-32 charitable activities. The charitable organization shall cause an audit to

13-33 be performed annually by a certified public accounting firm that is

13-34 independent of the charitable organization. The annual report and audit

13-35 report are public records and must be open to public inspection free of

13-36 charge at the office of the attorney general and the office of the

13-37 charitable organization during regular business hours.

13-38 2. A charitable organization that receives charitable assets pursuant

13-39 to section 22 of this act, and all of its directors, officers and members of

13-40 its staff must be independent of the for-profit corporation or entity and its

13-41 affiliates with whom the nonprofit hospital, medical or dental service

13-42 corporation is proposing to enter into an agreement or transaction.

14-1 3. A director, officer or member of the staff of the nonprofit hospital,

14-2 medical or dental service corporation that is proposing the agreement or

14-3 transaction must not be a director, officer or member of the staff of a

14-4 charitable organization that receives charitable assets pursuant to section

14-5 22 of this act.

14-6 4. No director, officer or member of the staff of the nonprofit

14-7 hospital, medical or dental service corporation that is proposing the

14-8 agreement or transaction, or director, officer or member of the staff of a

14-9 charitable organization that receives charitable assets pursuant to section

14-10 22 of this act may benefit directly or indirectly from the proposed

14-11 agreement or transaction.

14-12 5. A charitable organization that receives charitable assets pursuant

14-13 to section 22 of this act shall establish a procedure for avoiding conflicts

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

14-15 in a manner which will benefit the for-profit corporation or entity with

14-16 whom the nonprofit hospital, medical or dental service corporation is

14-17 proposing to enter into the agreement or transaction, or the board of

14-18 directors or other management of the for-profit corporation or entity.

14-19 6. The attorney general may oversee and monitor the activities

14-20 carried out by a charitable organization that receives charitable assets

14-21 pursuant to section 22 of this act.

14-22 Sec. 24. 1. The attorney general may:

14-23 (a) Advise, receive advice from, consult and cooperate with other

14-24 agencies of this state, the Federal Government, agencies of other states,

14-25 interstate agencies and with other persons to carry out the provisions of

14-26 sections 13 to 26, inclusive, of this act;

14-27 (b) Adopt such regulations as are necessary to carry out the provisions

14-28 of sections 13 to 26, inclusive, of this act;

14-29 (c) Contract with an agency of this state to assist the attorney general

14-30 in carrying out the provisions of sections 13 to 26, inclusive, of this act;

14-31 and

14-32 (d) Contract with one or more consultants or experts to assist in the

14-33 review of a proposed agreement or transaction pursuant to the provisions

14-34 of sections 13 to 26, inclusive, of this act, including, without limitation,

14-35 establishing the full fair market value of the nonprofit hospital, medical

14-36 or dental service corporation that is proposing the agreement or

14-37 transaction.

14-38 2. The total costs incurred by the attorney general through contracts

14-39 entered into for obtaining assistance in reviewing the proposed agreement

14-40 or transaction must be reasonable and necessary.

14-41 3. The attorney general may require the parties involved in the

14-42 conversion to enter into an agreement, on terms established by the

14-43 attorney general, to pay for any costs incurred by the attorney general

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

15-2 incurred by the attorney general in executing his duties pursuant to this

15-3 section, including, without limitation, attorney’s fees. Such an agreement

15-4 may include, without limitation:

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

15-6 deposit with an escrow agent in a manner approved by the attorney

15-7 general, and authorizing the attorney general to withdraw money from

15-8 the escrow account to cover any costs incurred pursuant to paragraph (d)

15-9 of subsection 1;

15-10 (b) Requiring the parties to pay the attorney general an amount of

15-11 money in advance to cover the expected costs that will be incurred

15-12 pursuant to paragraph (d) of subsection 1;

15-13 (c) Requiring the parties to make monthly payments to the attorney

15-14 general for the costs incurred by the attorney general pursuant to

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

15-16 (d) Any combination thereof.

15-17 Sec. 25. In carrying out the duties set forth in sections 13 to 26,

15-18 inclusive, of this act, the attorney general may:

15-19 1. Issue subpoenas requiring the attendance and testimony of

15-20 witnesses and the production of reports, papers, documents and other

15-21 evidence which he deems necessary;

15-22 2. Administer oaths; and

15-23 3. Compel a person to subscribe to his testimony after it has been

15-24 correctly reduced to writing.

15-25 Sec. 26. Each nonprofit hospital, medical or dental service

15-26 corporation that enters into an agreement or a transaction set forth in

15-27 section 15 of this act and that continues to conduct business as a

15-28 nonprofit hospital, medical or dental service corporation after the

15-29 agreement or transaction has been carried out shall submit an annual

15-30 report to the attorney general describing the manner in which it continues

15-31 to satisfy any obligation it has to the public. The attorney general may

15-32 oversee the nonprofit hospital, medical or dental service corporation to

15-33 ensure that it satisfies any such obligation to the public.

15-34 Sec. 27. The commissioner shall not issue or renew a certificate of

15-35 authority to any corporation proposing to establish, maintain or operate a

15-36 nonprofit hospital, medical or dental service plan if the corporation has

15-37 entered into an agreement or transaction in violation of section 15 of this

15-38 act.

15-39 Sec. 28. NRS 695B.320 is hereby amended to read as follows:

15-40 695B.320 Nonprofit hospital and medical or dental service corporations

15-43 687B.010 to 687B.040, inclusive, 687B.070 to 687B.140, inclusive,

16-1 687B.150, 687B.160, 687B.180, 687B.200 to 687B.255, inclusive,

16-2 687B.270, 687B.310 to 687B.380, inclusive, 687B.410, 687B.420,

16-3 687B.430, and chapters 692C and 696B of NRS, and sections 4 to 9,

16-4 inclusive, of this act to the extent applicable and not in conflict with the

16-5 express provisions of this chapter.

16-6 Sec. 29. NRS 695F.090 is hereby amended to read as follows:

16-7 695F.090 Prepaid limited health service organizations are subject to the

16-31 12. Sections 4 to 9, inclusive, of this act.

16-32 Sec. 30. This act becomes effective upon passage and approval.