Maryland State Statutes - Maryland Attorney Directory

(2) "Closure costs" means the reasonable costs determined by the Health Services Cost Review Commission to be incurred in connection with the closure, delicensure, or conversion of a hospital, including expenses of operating the hospital, payments to employees, employee benefits, fees of consultants, insurance, security services, utilities, legal fees, capital costs, costs of terminating contracts with vendors, suppliers of goods and services and others, debt service, contingencies and other necessary or appropriate costs and expenses.

(3) (i) "Public body obligation" means any bond, note, evidence of indebtedness or other obligation for the payment of borrowed money issued by the Authority, the State, any agency, instrumentality, or public corporation of the State, any public body as defined in Article 31, § 9 of the Code, the Mayor and City Council of Baltimore, or any municipal corporation subject to the provisions of Article XI-E of the Maryland Constitution.

(ii) "Public body obligation" does not include any obligation, or portion of any such obligation, if:

1. The principal of and interest on the obligation or such portion thereof is:

A. Insured by an effective municipal bond insurance policy; and

B. Issued on behalf of a hospital that voluntarily closed in accordance with § 19-120(l) of the Health - General Article;

2. The proceeds of the obligation or such portion thereof were used for the purpose of financing or refinancing a facility or part thereof which is used primarily to provide outpatient services at a location other than the hospital; or

3. The proceeds of the obligation or such portion thereof were used to finance or refinance a facility or part thereof which is primarily used by physicians who are not employees of the hospital for the purpose of providing services to nonhospital patients.

(c) (1) The General Assembly finds that the failure to provide for the payment of public body obligations of a closed, delicensed, or converted hospital could have a serious adverse effect on the ability of Maryland health care facilities, and potentially the ability of the State and local governments, to secure subsequent financing through the issuance of tax-exempt bonds.

(2) The purpose of this section is to preserve the access of Maryland's health care facilities to adequate financing by establishing a program to facilitate the refinancing and payment of public body obligations of a closed, delicensed, or converted hospital.

(d) The Maryland Hospital Bond Program is hereby created within the Maryland Health and Higher Educational Facilities Authority. The Program shall provide for the payment and refinancing of public body obligations of a hospital, as defined in § 19-301 of the Health - General Article, if:

(1) The closure of a hospital is in accordance with § 19-120(l) of the Health - General Article, the delicensure of a hospital is in accordance with § 19-325 of the Health - General Article, or the conversion of a hospital is in accordance with subsection (a)(3) of this section;

(2) There are public body obligations issued on behalf of the hospital outstanding; and

(3) The hospital plan for closure, delicensure, or conversion and the related financing or refinancing plan is acceptable to the Secretary of Health and Mental Hygiene and the Authority.

(e) (1) The Maryland Health Care Commission shall give:

(i) The Authority and the Health Services Cost Review Commission written notification of the filing by a hospital with the Maryland Health Care Commission of any written notice of intent to close under § 19-120(l) of the Health - General Article;

(ii) The Authority and the Health Services Cost Review Commission written notification of the filing by a hospital with the Maryland Health Care Commission of any written notice of intent to convert under subsection (a)(3) of this section; or

(iii) The Authority written notification of the filing with the Secretary of Health and Mental Hygiene of a petition for the delicensure of a hospital under § 19-325 of the Health - General Article.

(2) The notice required by this subsection shall be given within 5 days after the filing of the notice or petition.

(f) (1) After a determination by the Secretary of Health and Mental Hygiene to delicense a hospital in accordance with § 19-325 of the Health - General Article, the Secretary shall give the Authority and the Health Services Cost Review Commission written notification of the determination.

(2) For a hospital that is located in a county with three or more hospitals, the Maryland Health Care Commission shall provide the Authority and the Health Services Cost Review Commission notification that the hospital, in consultation with the Maryland Health Care Commission, held a public information hearing in the county where the hospital is located.

(3) For a hospital that is located in a county with fewer than three hospitals, the Maryland Health Care Commission shall provide the Authority and the Health Services Cost Review Commission notification of its finding on whether the proposed closing is:

(i) In the public interest; and

(ii) Not inconsistent with:

1. The State health plan; or

2. An institution-specific plan developed by the Maryland Health Care Commission.

(4) For a hospital that converts, the Maryland Health Care Commission shall provide the Authority and the Health Services Cost Review Commission notification of its finding on whether the conversion:

(i) Is in the public interest;

(ii) Will result in the delivery of more efficient and effective health care services; and

(iii) Is not inconsistent with:

1. The State health plan; or

2. An institution-specific plan developed by the Maryland Health Care Commission.

(5) The Maryland Health Care Commission and the Secretary of Health and Mental Hygiene shall submit the written notification required in paragraphs (1) through (4) of this subsection no later than 150 days prior to the scheduled date of the hospital closure, delicensure, or conversion and shall include the name and location of the hospital, and the scheduled date of hospital closure, delicensure, or conversion.

(g) (1) A hospital that intends to close, is scheduled to be delicensed, or is scheduled to convert shall provide the Authority and the Health Services Cost Review Commission with a written statement of any outstanding public body obligations issued on behalf of the hospital, which shall include:

(i) The name of each issuer of a public body obligation on behalf of the hospital;

(ii) The outstanding principal amount of each public body obligation and the due dates for payment or any mandatory redemption or purchase thereof;

(iii) The due dates for the payment of interest on each public body obligation and the interest rates; and

(iv) Any documents and information pertaining to the public body obligations as the Authority or the Health Services Cost Review Commission may request.

(2) The statement required in paragraph (1) of this subsection shall be filed by the hospital:

(i) In the case of closure pursuant to § 19-120(l) of the Health - General Article, within 10 days after the date of filing with the Maryland Health Care Commission of written notice of intent to close;

(ii) In the case of delicensure pursuant to § 19-325 of the Health - General Article, at least 150 days prior to the scheduled date of delicensure; or

(iii) In the case of conversion pursuant to subsection (a)(3) of this section, at least 10 days after the date of filing with the Maryland Health Care Commission of written notice of intent to convert.

(h) (1) The Health Services Cost Review Commission may determine to provide for the payment of all or any portion of the closure costs of a hospital having outstanding public body obligations if the Health Services Cost Review Commission determines that payment of the closing costs is necessary or appropriate to:

(i) Encourage and assist the hospital to close or convert; or

(ii) Implement the program created by this section.

(2) In making the determinations under this subsection, the Health Services Cost Review Commission shall consider:

(i) The amount of the system-wide savings to the State health care system expected to result from the closure, delicensure, or conversion of the hospital over:

1. The period during which the fee to provide for the payment of the closure costs or any bonds or notes issued to finance the closure costs will be assessed; or

2. A period ending 5 years after the date of closure, delicensure, or conversion whichever is the longer; and

(ii) The recommendations of the Maryland Health Care Commission and the Authority.

(3) Within 60 days after receiving the notice of closure or delicensure required by subsection (f) of this section, the Health Services Cost Review Commission shall:

(i) Determine whether to provide for the payment of all or any portion of the closure costs of the hospital in accordance with this subsection; and

(ii) Give written notification of such determination to the Maryland Health Care Commission and the Authority.

(4) The provisions of this subsection may not be construed to require the Health Services Cost Review Commission to make provision for the payment of any closure costs of a closed, delicensed, or converted hospital.

(5) In any suit, action or proceeding involving the validity or enforceability of any bond or note issued to finance any closure costs or any security for a bond or note, the determinations of the Health Services Cost Review Commission under this subsection shall be conclusive and binding.

(i) (1) Within 60 days after receiving the written statement required by subsection (g) of this section, the Authority shall prepare a schedule of payments necessary to meet the public body obligations of the hospital.

(2) As soon as practicable after receipt of the notice of closure, delicensure, or conversion required by subsection (f) of this section and after consultation with the issuer of each public body obligation and the Health Services Cost Review Commission, the Authority shall prepare a proposed plan to finance, refinance or otherwise provide for the payment of public body obligations. The proposed plan may include any tender, redemption, advance refunding or other technique deemed appropriate by the Authority.

(3) As soon as practicable after receipt of written notification that the Health Services Cost Review Commission has determined to provide for the payment of any closure costs of a hospital pursuant to subsection (h) of this section, the Authority shall prepare a proposed plan to finance, refinance or otherwise provide for the payment of the closure costs set forth in the notice.

(4) Upon the request of the Health Services Cost Review Commission, the Authority may begin preparing the plan or plans required by this subsection before:

(i) For a hospital that is located in a county with fewer than three hospitals, the Maryland Health Care Commission determines that the proposed closing is:

1. In the public interest; and

2. Not inconsistent with:

A. The State health plan; or

B. An institution-specific plan developed by the Maryland Health Care Commission.

(ii) Any final determination of delicensure by the Secretary of Health and Mental Hygiene pursuant to § 19-325 of the Health - General Article; or

(iii) Any final determination by the Health Services Cost Review Commission to provide for the payment of any closure costs of the hospital.

(5) The Authority shall promptly submit the schedule of payments and the proposed plan or plans required by this subsection to the Health Services Cost Review Commission.

(j) (1) The Authority may issue negotiable bonds or notes for the purpose of financing, refinancing or otherwise providing for the payment of public body obligations or any closure costs of a hospital in accordance with any plan developed pursuant to subsection (i) of this section.

(2) The bonds or notes shall be payable from the fees provided pursuant to subsection (k) of this section or from other sources as may be provided in the plan.

(3) The bonds or notes shall be authorized, sold, executed and delivered as provided for in this article and shall have terms consistent with all existing constitutional and legal requirements.

(4) In connection with the issuance of any bond or note, the Authority may assign its rights under any loan, lease or other financing agreement between the Authority or any other issuer of a public body obligation and the closed, delicensed, or converted hospital to the State or appropriate agency in consideration for the payment of any public body obligation as provided in this section.

(k) (1) On the date of closure, delicensure, or conversion of any hospital for which a financing or refinancing plan has been developed in accordance with subsection (i) of this section, the Health Services Cost Review Commission shall assess a fee on all hospitals as provided in § 19-223 of the Health - General Article in an amount sufficient to:

(i) Pay the principal and interest on any public body obligations, or any bonds or notes issued by the Authority pursuant to subsection (j) of this section to finance or refinance public body obligations;

(ii) Pay any closure costs or the principal and interest on any bonds or notes issued by the Authority pursuant to subsection (j) of this section to finance or refinance any closure costs;

(iii) Maintain any reserve required in the resolution, trust agreement or other financing agreement securing public body obligations, bonds, or notes;

(iv) Pay any required financing fees or other similar charges; and

(v) Maintain reserves deemed appropriate by the Authority to ensure that the amounts provided in this subsection are satisfied in the event any hospital defaults in paying the fees.

(2) The fee assessed each hospital shall be equal to that portion of the total fees required to be assessed that is equal to the ratio of the actual gross patient revenues of the hospital to the total gross patient revenues of all hospitals, determined as of the date or dates deemed appropriate by the Authority after consultation with the Health Services Cost Review Commission.

(3) Each hospital shall pay the fee directly to the Authority, any trustee for the holders of any bonds or notes issued by the Authority pursuant to subsection (j) of this section, or as otherwise directed by the Authority. The fee may be assessed at any time necessary to meet the payment requirements of this subsection.

(4) The fees assessed may not be subject to supervision or regulation by any department, commission, board, body or agency of this State. Any pledge of these fees to any bonds or notes issued pursuant to this section or to any other public body obligations, shall immediately subject such fees to the lien of the pledge without any physical delivery or further act. The lien of the pledge shall be valid and binding against all parties having claims of any kind in tort, contract or otherwise against the Authority or any closed or delicensed hospital, irrespective of whether the parties have notice.

(5) In the event the Health Services Cost Review Commission shall terminate by law, the Secretary of Health and Mental Hygiene, in accordance with the provisions of this subsection, shall impose a fee on all hospitals licensed pursuant to § 19-318 of the Health - General Article.

(l) (1) (i) In this subsection the following words have the meanings indicated.

(ii) "Affiliate" means any entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under the common control with another person.

(iii) "Controls", "controlling", "controlled by", or "under common control with" means the direct or indirect possession of the power to direct or cause the direction of the management and policies of a person, through ownership of voting securities, membership interest, or securities convertible into voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, whether or not the power is exercised or sought to be exercised.

(iv) "Value" means the fair market value of any property transferred or retained or services provided.

(2) Notwithstanding any other provision of this article, the amount of any public body obligation that qualifies for payment under the Maryland Hospital Bond Program shall be reduced by the sum of:

(i) The excess, if any, of the total value of all property transferred by a closed, delicensed, or converted hospital to any affiliate or to any person or entity having an interest in the facility after the closure, delicensure, or conversion of the hospital over the total value of all property transferred and all services provided to the closed, delicensed, or converted hospital by the affiliate or other person or entity; and

(ii) The total value of all property to be retained by the hospital or any affiliate following the closure, delicensure, or conversion other than the property to be applied to the payment of closure costs approved by the Health Services Cost Review Commission.

(3) (i) The Authority may determine the value of any property or services based upon an appraisal made by an independent professional appraiser, the report of an independent consultant, or any other method deemed appropriate by the Authority.

(ii) The cost of procuring the appraiser or consultant employed shall be paid by the closed, delicensed, or converted hospital.

(4) The Authority may proceed against the closed, delicensed, or converted hospital or any guaranty or other collateral securing the payment of public body obligations of a closed, delicensed, or converted hospital which was provided by any entity associated with the hospital if such action is determined by the Authority to be:

(i) Necessary to protect the interests of the holders of the public body obligations; or

(ii) Consistent with the public purpose of encouraging and assisting the hospital to close or convert.

(5) In making the determination required under paragraph (4) of this subsection, the Authority shall consider:

(i) The circumstances under which the guaranty or other collateral was provided; and

(ii) The recommendations of the Health Services Cost Review Commission and the Maryland Health Care Commission.

(6) Any amount realized by the Authority or any assignee of the Authority in the enforcement of any claim against the closed, delicensed, or converted hospital or a hospital for which a plan has been developed in accordance with subsection (i) of this section shall be applied to offset the amount of the fee required to be assessed by the Health Services Cost Review Commission pursuant to subsection (k) of this section. The costs and expenses of enforcing the claim, including any costs for maintaining the property prior to its disposition, shall be deducted from this amount.

(m) It is the purpose and intent of this section that the Health Services Cost Review Commission, the Maryland Health Care Commission, and the Authority consult with each other and take into account each others' recommendations in making the determinations required to be made under this section.

(n) Notwithstanding any other provision of this section, in any suit, action or proceeding involving the validity or enforceability of any bond or note or any security for a bond or note, the determinations of the Authority under this section shall be conclusive and binding.

(o) The Health Services Cost Review Commission, the Maryland Health Care Commission, or the Authority may waive any notice required to be given to it under this section.

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