HOUSE BILL NO. 4078

January 23, 2019, Introduced by Rep. Neeley and referred to the Committee on Health Policy.

"Municipal health facilities corporations act,"

by amending sections 251, 253, 254, 255, 256, and 258 (MCL 331.1251, 331.1253, 331.1254, 331.1255, 331.1256, and 331.1258), sections 251, 253, 254, and 255 as added by 1988 PA 502, section 256 as amended by 2010 PA 331, section 258 as amended by 2011 PA 195, and by adding section 252a.

the people of the state of michigan enact:

Sec. 251. (1) The city council of a city or the village council of a village that owns or operates a public hospital may incorporate 1 or more corporations under this act. The city council of a city or the village council of a village that does not own or operate a public hospital may also establish such a public hospital or other health care facility, or both, by incorporating 1 or more corporations under this act.

(2) The Except as provided in section 252a, the question of establishing 1 or more corporations under this act shall be presented to the city or village electors at a special or regular city or village election before incorporation. An election under this section shall be conducted pursuant to under the Michigan election law, Act No. 116 of the Public Acts of 1954, being sections 168.1 to 168.992 of the Michigan Compiled Laws.1954 PA 116, MCL 168.1 to 168.992.

Sec. 252a. (1) A city hospital that was established under the home rule cities act, 1909 PA 279, MCL 117.1 to 117.38, is in a city that has a population of fewer than 103,000 as of the most recent federal decennial census, and is not incorporated as of the effective date of this section, is considered a corporation incorporated and existing under this act, without the adoption or filing of articles of incorporation, without a vote of the electors, and without diminishing the terms of office of individuals serving on the board of the city hospital on the effective date of this section.

(2) The city council of a city that operates a hospital that is considered incorporated by operation of subsection (1) may at any time after the effective date of this section adopt articles of incorporation for the corporation under sections 255(2) and 256. Until the effective date of articles of incorporation adopted under this subsection, the provisions of this act are considered to constitute the articles of incorporation of the corporation.

Sec. 253. (1) If the city or village electors approve the incorporation of a corporation under this act, the or if a city hospital is incorporated by operation of section 252a(1), all of the following apply:

(a) The corporation shall be is considered to be the successor to the city public hospital for the city or the village public hospital for the village, and the terms of office of the trustees of the city public hospital or village public hospital shall continue.

(b) The corporation shall have has all of the rights, privileges, immunities, and franchises of its predecessor city public hospital or village public hospital, all personal property, all debts due on whatever account, and all choses in action.

(c) All interests and licenses of or belonging to the city public hospital or village public hospital shall be are considered to be transferred to, and vested in, the corporation without further act or deed, . Such and those interests and licenses shall not be considered to have undergone any change of ownership for the purpose of any law or regulation. , nor shall the

(d) The fiscal year of any city public hospital or village public hospital shall not be considered to have ended solely because the city or village incorporates a corporation under this act.

(e) The title to any real estate, or any interest in real estate, vested in any city or city public hospital or village or village public hospital, shall does not revert or in any way be and is not impaired because a corporation succeeds a city public hospital or village public hospital pursuant to under this act.

(2) A corporation incorporated by a city or village under this act shall be or incorporated by operation of section 252a(1) is considered to be the owner of all money and other property then deposited in the treasury of the city or village to the credit of the hospital fund and shall be is entitled to all interest and other earnings accruing on those funds on and after the effective date of the incorporation. The corporation shall be is the owner of all other personal property used exclusively by or for the city public hospital or village public hospital. The treasurer of any city or village having that has custody of money and other property belonging that belongs to a corporation pursuant to under this subsection shall arrange for the prompt transfer of such that money and other property to the custody of the corporation.

(3) A corporation incorporated by a city or village under this act shall be or incorporated by operation of section 252a(1) is the employer of all persons individuals who are employed by the city public hospital or village public hospital and shall assume and be bound by any labor agreement in existence on the effective date of the incorporation and applicable to the city public hospital or village public hospital, but shall not be subject to greater obligations with respect to the terms, conditions, or duration of employment than was the city public hospital or village public hospital immediately preceding the effective date of the incorporation. A representative of the employees or a group of employees who is entitled to represent the employees or group of employees under Act No. 336 of the Public Acts of 1947, being sections 423.201 to 423.216 of the Michigan Compiled Laws, 1947 PA 336, MCL 423.201 to 423.217, shall continue to be the representative of the employees or group of employees. This subsection does not limit the rights of the hospital employees, under applicable law, to assert that a bargaining representative protected by this subsection is no longer the representative of the employees.

(4) A corporation incorporated by a city or village under this act shall be or incorporated by operation of section 252a(1) is responsible and liable for all liabilities and obligations of the city public hospital or village public hospital it succeeds. A claim existing or an action or proceeding pending by or against a city public hospital or village public hospital may be prosecuted by the corporation succeeding it in the name of the city public hospital or village public hospital, or the corporation may be substituted. The rights of creditors and any lien upon the property of a city or a city public hospital or a village or village public hospital existing on the effective date of the incorporation shall not be impaired.

Sec. 254. (1) If, in accordance with sections 251 and 252, connection with the incorporation of a corporation for which a vote of electors is required under section 251, a majority of all the votes cast upon the question are in favor of establishing a corporation, the city council or village council may incorporate a corporation in order to implement or further the public purposes stated in section 102 through the exercise of all or some of the powers provided in under this act.

(2) The board of trustees of a corporation may incorporate 1 or more subsidiary corporations in order to implement or further the public purposes stated in section 102 through the exercise of all or some of the powers provided in this act.

(3) The city council or village council shall adopt a suitable name for any corporation which that it incorporates or that is incorporated by operation of section 252a(1). The board of trustees of a corporation shall adopt a suitable name for any subsidiary corporation which that it incorporates.

Sec. 255. (1) The Except as provided in section 252a, the incorporation of a corporation by a city or village shall be accomplished by approval of articles of incorporation by resolution of the city council or village council. The incorporation of a subsidiary corporation shall be accomplished by approval of articles of incorporation by resolution of the city council or village council.

(2) The articles of incorporation approved under subsection (1) or section 252a(2) shall set forth the name of the corporation or subsidiary corporation; the purposes for which it is created, which may include all of the purposes for which a corporation or subsidiary corporation may be organized under this act; the number, terms, and manner of selection of the officers of its board of trustees or subsidiary board, which shall include a chairperson and a secretary, and a general description of their respective powers and duties; the effective date upon which of the incorporation; shall become effective; and the name of the newspaper in which the articles of incorporation shall be published. The articles of incorporation of a subsidiary corporation shall also contain the name of the corporation acting as its parent, and shall specify the size of the subsidiary board in accordance with section 258(2). The articles of incorporation of a corporation may specify transactions otherwise within the powers of its board of trustees which shall that require approval by resolution of the city council or village council, and may also contain other matters considered expedient to be included in the articles of incorporation. The articles of incorporation of a subsidiary corporation may specify transactions otherwise within the powers of its subsidiary board which shall that require approval by resolution of the board of trustees of its designated parent corporation, and may also contain other matters considered expedient to be included in the articles of incorporation.

Sec. 256. (1) The articles of incorporation of a corporation incorporated by a city or village adopted under section 252a(2) shall be executed in duplicate by the chairperson of the city council or the president of the village council or other member of the city council or village council designated by the city council or village council. The articles of incorporation of a subsidiary corporation of a corporation incorporated by a city or village shall be executed in duplicate by the chairperson of the board of trustees of the parent corporation, or other trustee designated by the board of trustees. The articles of incorporation shall then be delivered to the city clerk or village clerk who shall file 1 copy in his or her office and the other with the secretary of the corporation or subsidiary corporation when a secretary is selected. The city clerk or village clerk shall cause a copy of the articles of incorporation to be published once in a newspaper designated in the articles of incorporation and circulating within the city or village, accompanied by a statement that the right exists to question the validity of the incorporation in court as provided in under this section, if applicable.

(2) The city clerk or village clerk shall file 1 printed copy of articles of incorporation delivered to him or her under subsection (1) with the secretary of state and 1 printed copy in his or her office. The city clerk or village clerk shall attach to each of the printed copies his or her certificate setting forth that the copy is a true and complete copy of the original articles of incorporation on file in his or her office.

(3) The Except as provided in section 252a(2), the incorporation of a corporation or a subsidiary corporation described in this section is effective at the time provided in the articles of incorporation, but not before approval of the question of incorporation by the city or village electors under section 251.

(4) The validity of the incorporation of a corporation or a subsidiary corporation described in this section is conclusively presumed unless questioned in a court of competent jurisdiction within 60 days after the certified copy of the articles of incorporation of that corporation or subsidiary corporation is filed with the secretary of state under subsection (2). This subsection does not apply to a corporation incorporated by operation of section 252a(1).

(5) This section does not apply to articles of incorporation of a restructured corporation or restructured subsidiary corporation described in section 305a.

Sec. 258. (1) All of the following apply to each board of trustees and subsidiary board of a corporation incorporated by a city or village, or to a corporation incorporated by operation of section 252a(1) that has adopted articles of incorporation under section 252a(2):

(a) The board shall consist of at least 5 and not more than 15 trustees. The exact number of trustees and the length of their terms of office shall be as specified in the articles of incorporation.

(b) Except for the initial appointments to a board of trustees or subsidiary board of a newly incorporated corporation or subsidiary corporation, or to the initial appointment to the board of trustees of a corporation incorporated by operation of section 252a(1) that has adopted articles of incorporation under section 252a(2), the term of office of a trustee begins on January 1.

(c) The terms of office of trustees shall be staggered so that an approximately equal number of terms expire at the end of each year or each 2 years, except that terms may be fixed so that the shortest terms do not expire until the end of the second year following the incorporation of a corporation or a subsidiary corporation or the effective date of articles of incorporation adopted under section 252a(2) by a corporation incorporated by operation of section 252a(1). A trustee whose term of office has expired expires shall continue to serve until his or her successor is appointed.

(2) If a city or village incorporates a corporation under this act, the city council or village council shall appoint the initial board of trustees. After If an unincorporated city hospital that is already in existence as of the effective date of the amendatory act that added section 252a is automatically incorporated under section 252a(1), appointments to the board of trustees shall be made in the manner previously specified in the city charter, until the effective date of articles of incorporation adopted under section 252a(2) that specify otherwise. For a city hospital that is already in existence as of the effective date of the amendatory act that added section 252a, after the initial board of trustees, when a trustee's term of office expires or if a trustee's office is otherwise vacant, the remaining members of the board of trustees shall fill the vacancy with the advice and consent of the city council or village council. This subsection does not apply to an ex officio member of a board of trustees who is appointed by a chief executive officer.

(3) The terms of office of trustees serving on the board of a city public hospital or village public hospital before incorporation that is subsequently incorporated under this act or before the effective date of articles of incorporation adopted under section 252a(2) by a corporation incorporated by operation of section 252a(1) shall not be diminished, except that the articles of incorporation for that successor corporation may prospectively establish new lengths of terms of office for the board of trustees, and may prospectively alter the board size.

(4) If a city or village incorporates a subsidiary corporation, the board of trustees of the parent corporation shall appoint the initial subsidiary board with the advice and consent of the city council or village council. After the initial subsidiary board, when a trustee's term of office expires or if a trustee's office is otherwise vacant, the board of trustees of the parent corporation shall fill the vacancy with the advice and consent of the city council or village council. This subsection does not apply to an ex officio member of a subsidiary board who is appointed by a chief executive officer.

(5) A trustee of a corporation or subsidiary corporation established by a city or village, or a trustee of a corporation incorporated by operation of section 252a(1) that adopts articles of incorporation under section 252a(2), shall be chosen based on his or her qualifications for that office, but not more than 1/3 of the trustees serving at any time shall be direct providers of health care. The articles of incorporation of the corporation or subsidiary corporation may require that a trustee be a resident of the city or village. A trustee of the parent corporation, including its chief executive officer, and the chief executive officer of a subsidiary corporation are eligible for appointment to a subsidiary board, and those offices are not incompatible. A trustee is eligible for reappointment.

(6) Within 9 days after commencing his or her term of office, a trustee shall take the oath of office as provided in section 1 of article XI of the state constitution of 1963.

(7) A trustee of a corporation incorporated by a city or village, or a trustee of a corporation incorporated by operation of section 252a(1) that adopts articles of incorporation under section 252a(2), may be removed from office for cause either by vote of a majority of the members then serving on the city council or village council or by vote of a majority of the members then serving on the board of trustees of the corporation. A trustee of a subsidiary corporation may be removed from office for cause either by vote of a majority of the members then serving on the city council or village council or by vote of a majority of the members then serving on the board of trustees of the parent corporation. As used in this subsection, "cause" includes, but is not limited to, incompetency to properly exercise duties; official misconduct; or habitual or willful neglect of duty, including, but not limited to, failure to attend meetings, including committee meetings, in accordance with standards determined by the board of trustees of the corporation or subsidiary board.

(8) A trustee of a corporation incorporated by a city or village, or a trustee of a corporation incorporated by operation of section 252a(1) that adopts articles of incorporation under section 252a(2), shall not be removed from office on grounds of misconduct or neglect unless the trustee is served with a notice of hearing and a copy of the asserted ground for removal, and is given full opportunity to be heard, either in person or by counsel, before a vote is taken on the question of removal from office.

(9) Subsections (1) to (8) do not apply to a city hospital that exists on the effective date of the amendatory act that added this subsection, that is incorporated by operation of section 252a(1), and that has not adopted articles of incorporation under section 252a(2). Until a city hospital incorporated by operation of section 252a(1) adopts articles of incorporation under 252a(2), the city charter of the city that established the hospital shall govern the number, term of office, appointment, qualification, and removal of trustees serving on the board of that corporation.

Enacting section 1. This amendatory act takes effect 90 days after the date it is enacted into law.