Amendment #281 to H4879

Moral Obligation

Ms. Tyler of Boston moves to amend the bill moves to amend the bill by adding the following section:

SECTION XX. Section 10 of chapter 614 of the acts of 1968 is hereby amended by striking out paragraph (g), added by section 48 of chapter 288 of the acts of 2010, and inserting in place thereof the following subsection:-

(g)(1) For the benefit of nonprofit community hospitals and nonprofit community health centers licensed by the department of public health and meeting the definition of a community health center under 114.6 CMR 13.00 as either a community health center or a hospital licensed health center, the authority may create and establish special funds to be known as Community Hospital and Community Health Center Capital Reserve Funds and, to the extent so created, shall pay into each such fund any monies appropriated and made available by the commonwealth for the purposes of such fund, any proceeds from the sale of notes or bonds to the extent provided in the resolution, trust agreement or indenture of the authority authorizing issuance thereof, any other monies or funds and any other monies which may be available to the authority only for the purpose of such fund from any other sources. All monies held in the fund, except as hereinafter provided, shall be used solely for the payment of bonds of the authority which are secured by any such fund, which herein shall include becoming payable at maturity or by sinking fund installment, the purchase or tender price of such bonds, the payment of interest on such bonds or the payment of any redemption premium required to be paid when such bonds are redeemed prior to maturity; provided, however, that monies in a Community Hospital and Community Health Center Capital Reserve Fund shall not be withdrawn therefrom at any time in such amount as would reduce the amount of the fund to less than the maximum amount of principal and interest maturing or becoming due in any succeeding calendar year on outstanding bonds which are secured by the fund, except for the purpose of paying the principal of and interest on such bonds maturing or becoming due or for the retirement of such bonds in accordance with the terms of the trust agreement or other document providing for the issuance of such bonds by the authority and for the payment of which other monies pledged to secure such bonds are not available. Any income or interest earned by, or increment to, a Community Hospital and Community Health Center Capital Reserve Fund due to the investment thereof shall be used by the authority for the purposes of this section.

(2) The authority shall not issue bonds which will be secured by a Community Hospital and Community Health Center Capital Reserve Fund at any time if the maximum amount of principal and interest maturing or becoming due in any succeeding calendar year on such bonds then to be issued and on all other outstanding bonds of the authority which are secured by such fund will exceed the amount of such Community Hospital and Community Health Center Capital Reserve Fund at the time of issuance unless the authority, at the time of issuance of such bonds, shall deposit in such fund from the proceeds of the bonds to be issued, or otherwise, an amount which, together with the amount then in the fund, shall not be less than the maximum amount of principal and interest maturing or becoming due in any succeeding calendar year on such bonds then to be issued and on all other outstanding bonds of the authority which are secured by any such fund.

(3) To assure the continued operation and solvency of the authority for carrying out of the public purposes of this act, provision is made in paragraph (1) for the accumulation in a Community Hospital and Community Health Center Capital Reserve Fund of an amount equal to the maximum amount of principal and interest maturing or becoming due in any succeeding calendar year on all outstanding bonds which are secured by any such fund. In order to further assure the maintenance of a Community Hospital and Community Health Center Capital Reserve Fund, there shall be appropriated annually and paid to the authority for deposit in the fund such sum, if any, as shall be certified by the executive director of the authority to the secretary of administration and finance as necessary to restore the fund to an amount equal to the maximum amount of principal and interest maturing or becoming due in any succeeding calendar year on the outstanding bonds which are secured by any such fund. The executive director of the authority shall annually, on or before December 1, make and deliver to the secretary of administration and finance a certificate stating the amount, if any, required to restore a Community Hospital and Community Health Center Capital Reserve Fund to the amount aforesaid and the amount so stated, if any, shall be appropriated and paid to the authority for deposit to such fund during the then current fiscal year of the commonwealth.

(4) For the purposes of this subsection, in computing the amount of a Community Hospital and Community Health Center Capital Reserve Fund, securities in which all or a portion of the fund are invested shall be valued at par or, if purchased at less than par, at their cost to the authority unless otherwise provided in the resolution, trust agreement or indenture authorizing the issuance of bonds secured by the fund.

(5) For the purposes of this subsection, the amount of a letter of credit, insurance contract, surety bond or similar financial instrument available to be drawn upon and applied to obligations to which money in the Community Hospital and Community Health Center Capital Reserve Fund may be applied shall be counted as money in the fund. For the purposes of this subsection, in calculating the maximum amount of interest due in the future on variable rate bonds or bonds with respect to which the interest rate is not at the time of calculation determinable, the interest rate shall be calculated at the maximum interest rate payable on such bonds as provided in the trust agreement or other document providing for the issuance of such bonds by the authority.

(6) Bonds secured by a Community Hospital and Community Health Center Capital Reserve Fund shall be issued by the authority solely for the benefit of nonprofit community hospitals and nonprofit community health centers licensed by the department of public health and meeting the definition of a community health center under 114.6 CMR 13.00 as either a community health center or a hospital licensed health center.

(7) Notwithstanding any provision of this act to the contrary, no loan shall be made by the authority to a nonprofit community hospital or nonprofit community health center from the proceeds of bonds secured by a Community Hospital and Community Health Center Capital Reserve Fund established under this subsection unless: (i) the project to be financed by the loan has been approved by the secretary of health and human services; and (ii) the loan and the issuance and terms of the related bonds have been approved by the secretary of administration and finance. In connection with any loan to a nonprofit community hospital or nonprofit community health center under this subsection, the secretary of health and human services and the secretary of administration and finance may enter into an agreement with the authority and the nonprofit community hospital or nonprofit community health center to: (A) require that the nonprofit community hospital or nonprofit community health center provide financial statements or other information relevant to the financial condition of the nonprofit community hospital or nonprofit community health center and its compliance with the terms of the loan; (B) require that the nonprofit community hospital or nonprofit community health center reimburse the commonwealth for any amounts the commonwealth transfers to the fund under paragraph (3) to replenish the fund as a result of a loan payment default by the nonprofit community hospital or nonprofit community health center; and (C) require compliance by the nonprofit community hospital or nonprofit community health center or the authority with any other terms and conditions that the secretary of health and human services and the secretary of administration and finance consider appropriate in connection with the loan.

(8) When the authority notifies the secretary of administration and finance in writing that an institution that is the recipient of a loan of the proceeds of bonds secured by a Community Hospital and Community Health Center Capital Reserve Fund under this subsection is in default as to the payment of principal or interest on such loan, the secretary of administration and finance shall direct the comptroller to withhold any funds in the comptroller's custody that are due or payable to the institution until the amount of the principal and interest due or anticipated to be due has been paid to the authority or the trustee for the bondholders. Funds subject to withholding under this paragraph shall include, but not be limited to, federal and state grants, contracts, allocations and appropriations.

(9) If the authority further notifies the secretary of administration and finance in writing that no other arrangements are satisfactory, the secretary shall direct the comptroller to make available to the authority without further appropriation any funds withheld from the institution under paragraph (8). The authority shall apply the funds to the amounts due from the institution, including payments required to be made to the authority or trustee for any bondholders of debt service on any loan of the proceeds of bonds issued by the authority for the institution, or payments required to replenish the Community Hospital and Community Health Center Capital Reserve Fund or otherwise required by the terms of the loan or any other law or contract governing the loan or the bonds issued on behalf of the institution upon failure or default, or upon reasonable expectation of failure or default, of the institution to pay the principal or interest on its loan when due.

(10) The secretary of administration and finance may notify any other agency, department or authority of state government that exercises regulatory, supervisory or statutory control over the operations of the institution. Upon notification, the agency, department or authority shall immediately undertake reviews to determine what action, if any, that agency, department or authority should undertake to assist in the payment by the institution of the money due or the steps that the agencies of the commonwealth, other than the comptroller or the authority, should take to assure the continued prudent operation of the institution or provision of services to the people served by the institution.

(11) Notwithstanding any general or special law to the contrary, in the event that a nonprofit community hospital or nonprofit community health center fails to reimburse the commonwealth for any transfers made by the commonwealth to the authority to replenish the Community Hospital and Community Health Center Capital Reserve Fund under paragraph (3) within 6 months after any such transfer and as otherwise provided under the terms of the agreement among the nonprofit community hospital or nonprofit community health center, the authority and the commonwealth authorized under paragraph (7), the secretary of administration and finance may, in the secretary's sole discretion, direct the comptroller to withhold any funds in the comptroller's custody that are due or payable to the nonprofit community hospital or nonprofit community health center to cover all or a portion of the amount the nonprofit community hospital or nonprofit community health center has failed to pay to the commonwealth to reimburse the commonwealth for any such transfers. All contracts issued by the group insurance commission, the commonwealth health insurance connector authority and MassHealth to a third party for the purposes of providing health care insurance paid for by the commonwealth shall provide that, at the direction of the secretary of administration and finance, the third party shall withhold payments to a nonprofit community hospital or nonprofit community health center which fails to reimburse the commonwealth under the agreement authorized under said paragraph (7) and shall transfer the withheld amount to the commonwealth. Any such withheld and transferred amounts shall be considered to have been paid to the nonprofit community hospital or nonprofit community health center for all other purposes of law, and the nonprofit community hospital or nonprofit community health center shall be considered to have reimbursed the commonwealth in an amount equal to such withheld and transferred funds for purposes of the agreement authorized under said paragraph (7).

(12) For the purposes of this subsection, a community hospital or community health center shall not include a hospital where the ratio of the number of physician residents-in-training to the number of inpatient beds exceeds 0.25.