ENGROSSED
Senate Bill No. 102
(By Senators Tomblin, Mr. President, and Boley,
By Request of the Executive)
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[Introduced October 15, 1996;
referred to the Committee on Finance.]
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A BILL to amend and reenact sections one, two, three, six and
eight, article eleven-c, chapter eighteen of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended; and to further amend said article by adding thereto
two new sections, designated sections three-a and nine, all
relating to the corporation authorized to operate the West
Virginia university hospital; authorizing the creation of a
parent corporation to be known as the West Virginia health
system; setting forth definitions of terms; setting forth
legislative findings; amending the method by which the
corporation's board is appointed; providing a description of the system and establishing the means by which the West
Virginia health system's board of directors is nominated,
appointed and confirmed; providing for interim directors of
the system; directing that financial audits be open to the
public; prohibiting transfer of the system's membership in
the corporation; addressing conflicts of interest; and
providing disclaimer of liability.
Be it enacted by the Legislature of West Virginia:
That sections one, two, three, six and eight, article
eleven-c, chapter eighteen of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended and
reenacted; and that said article be further amended by adding
thereto two new sections, designated sections three-a and eight-
a, all to read as follows:
ARTICLE 11C. WEST VIRGINIA UNIVERSITY HOSPITAL AND WEST
VIRGINIA HEALTH SYSTEM.
§18-11C-1. Definitions.
The following words used in this article shall, unless the
context clearly indicates a different meaning, be construed as
follows:
(a) "Agreement" means the long-term lease and agreement to be entered into between the board and the corporation pursuant to
section four of this article;
(b) "Assets" means all assets of the board constituting
tangible and intangible personal property credited to the
hospital on the financial ledgers and equipment inventories of
the university at the transfer date, and as more particularly or
additionally identified or supplemented in the agreement,
excluding all hospital funds deposited with the state treasurer;
(c) Notwithstanding section one, article one of this chapter
For the purposes of this article, "board" means the West Virginia
board of regents trustees;
(d) "Corporation" means the non-stock, not-for-profit
corporation to be established under the general corporation laws
of the state, which meets the description prescribed by section
three of this article;
(e) "Corporation employees" means employees of the
corporation;
(f) "Directors" means the board of directors of the
corporation;
(g) "Existing facilities" means the West Virginia university hospital and clinics, other than those used for student health
and family practice, presently existing at the West Virginia
university medical center in Morgantown and owned and operated by
the board;
(h) "Health science schools" means the schools of medicine,
dentistry, pharmacy and nursing and any other schools at the
university deemed considered by the board to be health sciences;
(I) "Hospital" means the in-patient and out-patient health
care services of the board, other than those used for student
health services and family practice clinics, operated in
connection with the university, consisting of the existing
facilities and any other health care service components of the
West Virginia university medical center at Morgantown rendering
patient care services and more particularly identified by the
agreement;
(j) "Liabilities" means all liabilities, except those
specifically excluded by section four of this article, credited
to the hospital on the financial ledgers of the university at the
transfer date and as more particularly or additionally
identified, supplemented or limited in the agreement;
(k) "Medical personnel" means both university personnel and
corporation employees;
(l) "New facilities" means a new hospital facility and out-
patient clinics, appurtenant facilities, equipment and necessary
services to be acquired, built, operated or contracted for by the
corporation on property leased from the board within Monongalia
County, West Virginia, pursuant to the agreement;
(m) "Transfer date" means the first day of July, one
thousand nine hundred eighty-four, or any later date agreed upon
by the board and the corporation and filed with the secretary of
state;
(n) "University" means West Virginia university;
(o) "University personnel" means those employees of the
board or the university for whose services the corporation
contracts with the board or the university, as appropriate; and
(p) "West Virginia health system" or "system" means the non-
stock, not-for-profit corporation to be established under the
general corporation laws of the state, which meets the
description set forth in section three-a of this article.
§18-11C-2. Findings.
(a) It is hereby found and determined with regard to the
hospital that:
(a) (1) The purposes of the existing facilities are to facilitate
the clinical education and research of the health science schools
and to provide patient care, including specialized services not
widely available elsewhere in West Virginia. The eventual
termination of such the services in lieu of replacement or
modernization would create an unreasonable hardship on patients
in the area and throughout the state;
(b) (2) These purposes separately and collectively serve the
highest public interest and are essential to the public health
and welfare, but must be realized in the most efficient manner
and at the lowest cost practicable and consistent with these
purposes;
(d) (3) It is unnecessarily costly and administratively
cumbersome for the board to finance, manage and carry out the
patient care activities of an academic institution within the
existing framework of a state agency. Such The patient care
operations are more efficiently served by contemporary legal,
management and procedural structures utilized by similarly situated private entities throughout the nation;
(e) (4) It is fiscally desirable that the state separate the
business and service functions of the hospital from the
educational functions of the health science schools, that the
board cease operation of the existing facilities, that the board
transfer such the operations to the corporation, that the board
pay certain existing sums and assign the assets and certain
leasehold interests to the corporation in order to acquire the
corporation's agreement to provide certain space and services and
to assume the liabilities, that the agreement and certain other
contractual relationships between the board and the corporation
be authorized, and that the existing facilities operated by the
corporation, and subsequently the new facilities owned and
operated by the corporation, be self-sufficient and will serve to
remove the tax burden of operating the existing facilities from
the state;
(f) (5) A not-for-profit corporate structure with
appropriate governance consistent with the delivery of health
care to the patient and academic need of the university shall be
is the best means of assuring prudent financial management and the future economy of operation under rapidly changing market
conditions, regulation and reimbursement; and
(g) (6) The interests of the citizens of the state will be
best met by the board's entering into and carrying out the
provisions of the agreement as soon as possible, to provide
independence and flexibility of management and funding while
enabling the state's tertiary health care and health science
education needs to be better served.
(b) It is hereby found and determined with regard to the
West Virginia health system that:
(1) The interests of the citizens of the state will be best
served by ensuring the continued vitality and viability of the
West Virginia based health care institutions which are devoted to
addressing the state's tertiary health care and health science
education needs and which possess the flexibility and resources
to effectively and efficiently compete in a rapidly changing
health care environment;
(2) The best interests of the state, and the mission and
purposes of the corporation created by this article, will best be
met by the authorization and creation of a West Virginia health system as a not-for-profit corporate structure to serve as the
parent corporation of the corporation created pursuant to this
article and other corporations and institutions;
(3) The citizens of the state are best served by requiring
representative governance by the board while maintaining
flexibility so that the West Virginia health system may, over
time, authorize and stimulate the creation of an integrated
health care delivery system which may be comprised of one or more
affiliated institutions; and
(4) The citizens of the state are best served by the
creation of a coordinated, integrated, efficient and effective
health science and health care delivery system which is
accountable to the citizens of the state, responsive to the
health care and health science education needs of the citizens of
the state, and responsive to the financial pressures of a dynamic
health care environment.
§18-11C-3. Board authorized to contract with corporation;
description to be met by corporation.
The board is hereby authorized to enter into the agreement
and any other contractual relationships authorized by this
article with the corporation, but only if the corporation meets the following description:
(a) The directors of the corporation, all of whom shall be
voting, shall consist of the president of the university, who
shall serve ex officio as chairman of the directors, the
president of the board or his or her designee, the vice
chancellor for health affairs of the board, the vice president
for health sciences of the university, the vice president for
administration and finance of the university, the chief of the
medical staff of the hospital, the dean of the school of medicine
of the university, the dean of the school of nursing of the
university and the chief executive officer of the corporation,
all of whom shall serve as ex officio members of the directors,
a representative elected at large by the corporation employees
and seven directors to be appointed by the governor, subject to
confirmation by the Senate of the state Legislature, which seven
appointed directors shall be selected in conformance with the
provisions of section six-a, article five-b, chapter sixteen of
this code: Provided, That said seven directors shall be
appointed to six-year terms, but at least one member shall be
from each congressional district and all shall be appointed to assure geographic diversity: Provided, however, That of the
seven directors so appointed by the governor for terms beginning
the year one thousand nine hundred eighty-four, three such
appointments shall be for a term of two years, two shall be for
a term of four years and two shall be for a term of six years.
West Virginia health system board. The West Virginia health
system board shall select and appoint the seven appointed members
in accordance with the provisions of section six-a, article five-
b, chapter sixteen of this code: Provided, That the current
directors of the corporation shall continue to serve until they
resign or their term expires. On and after the effective date of
this section, the seven appointed directors shall be appointed by
the system board for staggered six-year terms. The system board
shall select all of the appointed members in a manner which
assures geographic diversity and assures that at least two
members are from each congressional district.
(b) The corporation shall report its audited records of the
corporation shall be reported publicly and to the joint committee
on government and finance at least annually.
(c) Upon liquidation of the corporation, the assets of the corporation shall be transferred to the board for the benefit of
the university.
§18-11C-3a. Description to be met by the West Virginia health
system.
(a) The West Virginia health system shall be a non-stock,
not-for-profit corporation established pursuant to the provisions
of article one, chapter thirty-one of this code, known as the
"West Virginia Corporation Act". The system shall have the
general powers of a corporation including, but not limited to,
the power and authority to affiliate, in any manner, with the
corporation and other health care providers to establish an
integrated health care delivery system.
(b) The West Virginia health system shall meet the
following description:
(1) The board of directors of the system shall initially
consist of eleven voting members, all of whom shall represent the
university. As the system affiliates with other health care
providers, representatives of those providers may be appointed to
the board. The West Virginia health system board shall provide
for the manner and appointment of nonuniversity representatives.
The voting members representing the university are hereby designated as "university representatives". The university
representatives shall include the following ex officio members:
the president of the university, who shall serve as chair of the
board of directors; the vice president for health sciences of the
university; a member or designee of the board of trustees; and a
member of the medical staff of the corporation. For each of the
seven remaining university representative positions the directors
of the corporation shall submit a list of three nominees to the
governor for each open university representative position. If
there is more than one open university position at any one time,
the directors of the corporation may not nominate any person for
more than one of the open university positions. The governor may
appoint the board member from the list of nominees submitted or
he or she may reject the list of nominees for any open university
position and request that the directors of the corporation submit
a list of three different nominees for that open university
position. The board members appointed by the governor shall be
appointed with the advice and consent of the Senate. The
directors of the corporation shall select its nominees and the
governor shall select all of the appointed members in a manner which assures geographic diversity and assures that at least two
members are from each congressional district. The appointed
university representatives shall serve six-year terms: Provided,
That of the initial members appointed, three members shall serve
for a term of two years, two members shall serve for a term of
four years, and two members shall serve for a term of six years.
(2) The number of members of the West Virginia health
system's board may be increased by the majority vote of the
existing system board members. The number of university
representative positions on the system's board shall be
increased, as a matter of law, upon a passing vote by the board
to increase the number of nonuniversity representatives so that
the total number of university representatives shall at all times
constitute a majority of voting members of the system's board.
Any additional system board positions which are created shall be
created to provide for representation valuable to the board,
including, but not limited to, representation of hospitals or
health care providers which may, from time to time, become
affiliated with the system. Newly created university
representative positions shall be filled in accordance with the provisions of subdivision (3) of this subsection. To the extent
possible, persons appointed to newly-created university
representative positions shall be appointed to staggered terms so
that the terms of approximately one third of the appointed
university representatives expire every two years.
(3) Any vacancies in the university representative
positions shall be filled with qualified university
representatives pursuant to the ex officio designation or
nomination and appointment procedure set forth in subdivision (1)
of this subsection, so as to maintain the university's required
majority of voting members of the system's board. To permit the
orderly operation of the system, vacant university representative
positions may be filled on an interim basis, as follows: (I) If
the vacant position is one of the ex officio positions, then the
position may be filled by the individual designated by the
university to serve in the position on an acting or interim
basis, or if no individual has been designated, the position may
be filled by a member or designee of the board of trustees of the
university; (ii) if the vacant position is among the appointed
university representatives, then the position may be filled by an additional member or designee of the board of trustees of the
university until the vacancy can be filled pursuant to the
nomination and appointment process set forth in subdivision (1)
of this subsection.
(c) The system's board shall make audited records of the
system available to the public and provide those records to the
joint committee on government and finance at least annually.
(d) The system may not, in any manner, assign, transfer or
divest its rights in or to its membership in the corporation.
(e) For purposes of organizing, incorporating and
conducting the business of the West Virginia health system or
otherwise implementing the provisions of this article, the ex
officio members of the system's board are authorized to act on
behalf of the system until the remainder of the system's board
members can be appointed and confirmed.
§18-11C-6. Conflicts of interest; statement; penalties.
(a) Notwithstanding any other provisions of this code to the
contrary, officers and employees of the board and the university
may hold appointments to offices of the corporation and the
system and be members of the boards of directors, or officers or employees of other entities contracting with either the
corporation, the system or the board or the university. The
board and the directors of the corporation and the system, as the
case may be, must be informed of such the appointments annually,
and either the board or the directors of the corporation or the
system may require that an appointment be terminated to avoid an
actual or potential conflict of interest as determined by the
appropriate board: Provided, That between the first and
fifteenth day of January of each year, every member of the board
of the corporation and the system shall, between January one and
January fifteen of each year, file a written statement, which
shall be fully available for public disclosure, with the
appropriate chairman of the board, under oath, setting forth:
(1) The name of every person, firm, corporation,
association, partnership, sole proprietorship or other business
association in which he the member, his the member's spouse or
the his unemancipated minor child or children of the member, in
his or their own name or the member's name, or beneficially, own
at least ten percent of such business entity, or of which he or
they are an officer, director, agent, attorney, representative, employee, partner or employer, and which to his actual knowledge
is then furnishing or within the previous calendar year has
furnished to the state, the board of regents trustees, West
Virginia university or the corporation or system defined in this
article, commodities or printing as those terms are defined in
section one, article one, chapter five-a of this code; and
(2) Any other interest or relationship which might
reasonably be expected to be affected by action taken by the
board of such the corporation or the system or which in the
public interest should be disclosed.
Those persons to whom the provisions of subdivisions (1) and
(2) above of this subsection are not applicable shall file a
written statement to that effect with the chairman of the board
at the same time above specified the reports specified in
subdivisions (1) and (2) are required to be filed.
(b) Any person who shall fail or refuse fails or refuses to
file a written statement under oath as required above in
subsection (a) of this section shall, by operation of law, be
automatically removed from such the board until such the
statement is filed.
(c) Any person who shall intentionally file files a false
statement under this section shall be is guilty of a misdemeanor
and, upon conviction, shall be confined in jail not less than six
months nor more than one year.
§18-11C-8. Not obligation of the state.
Obligations of the corporation and the system shall not
constitute debts or obligations of the university, the board or
the state.
§18-11C-8a. Agreements subject to other provisions of law.
Any agreements entered into between the system and any
county hospital, municipal hospital or hospital created by
special act of the Legislature shall be subject to the provisions
of section three-a, article twenty-three, chapter eight of this
code. No agreements entered into by the system shall relieve any
hospital of any obligation or responsibility imposed upon it by
law, except to the extent that actual and timely performance
thereof by the system or any of its members may be offered in
satisfaction of the obligation or responsibility.