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  • Acts
  • 1997
  • Chapter 163 AN ACT AUTHORIZING THE ESTABLISHMENT IN CENTRAL MASSACHUSETTS OF A HEALTH CARE SYSTEM AFFILIATED WITH THE UNIVERSITY OF MASSACHUSETTS MEDICAL SCHOOL.

Whereas , The deferred operation of this act would tend to defeat its purpose, which is to authorize forthwith the board of trustees of the University of Massachusetts to enter into and approve certain agreements with respect to the clinical division of its Worcester campus, and on behalf of the university for Worcester City Campus Corporation, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.


Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:


SECTION 1. The general court hereby finds and declares:

(a) that in order to meet the demands of the rapidly changing health care environment, and continue their public health care missions, many public academic medical centers have had to reassess the manner in which they deliver health care to the citizens they serve and have determined that it is necessary to develop legal, management and procedural structures which have been used successfully by similarly situated private entities throughout the nation in order to continue to meet the public need; and

(b) that the purposes of the teaching hospital of the University of Massachusetts medical school are to provide a clinical context for the educational and research missions of the commonwealth's medical school, graduate school of nursing and graduate school of biomedical sciences; and to provide medical care of the type provided by an academic medical center for the benefit of the citizens of the commonwealth and region; and

(c) that the public mission of the teaching hospital and other clinical components of the University of Massachusetts include providing highly specialized clinical services to patients, particularly to the extent not available through other area services, and providing free care to indigent patients, remains an important objective which must be preserved or enhanced; and

(d) that it is essential to the citizens of the commonwealth for the university to maintain its medical school, graduate school of nursing and graduate school of biomedical sciences and the high quality education provided there; and

(e) that it is necessary for the medical school, graduate school of nursing and graduate school of biomedical sciences to maintain an affiliation with a strong clinical operation to sustain high quality academic programs; and

(f) that the aforesaid academic and clinical purposes benefit all citizens of the commonwealth, particularly those with health care needs which can best be met by an academic medical institution, such as extensive tertiary care, major trauma treatment, and sophisticated surgical techniques; and

(g) that the aforesaid purposes include the provision of comprehensive health care to the communities served by the teaching hospital to ensure its availability to citizens of those communities; and

(h) that the aforesaid 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 consistent with their accomplishment; and

(i) that it is fiscally desirable for the commonwealth, and will benefit the medical school, graduate school of nursing and graduate school of biomedical sciences and the citizens of the commonwealth, to separate the operations, assets, liabilities and obligations of the existing clinical division of the University of Massachusetts Worcester from the commonwealth so that the clinical division may operate as a self-supporting entity and that the interests of the citizens of the commonwealth, the region, and the communities served by the clinical division will be best met by transferring the operations, assets, liabilities and obligations of the clinical division to one or more nonprofit corporations in order to create a separate legal and organizational structure for the clinical division for the purpose of ensuring independence and flexibility of management; and

(j) that such a nonprofit corporation or corporations will also further the public purposes of providing high quality health care and medical education, and support the commonwealth's medical school, graduate school of nursing and graduate school of biomedical sciences in a clinical setting by having the ability to merge or consolidate with a complementary health care system, such as that operated by Memorial Health Care, Inc.; and

(k) that such a nonprofit corporation or corporations shall be operated so that no part of its net earnings or assets inures to the benefit of any private individual and so that its activities comply with all applicable laws prohibiting self dealing or otherwise relating to conflicts of interest; and

(l) that such a corporation or corporations would be further strengthened in their ability to carry out the purposes of providing high quality health care and support for the commonwealth's medical school, graduate school of nursing and graduate school of biomedical sciences if certain assets and subsidiaries of the Worcester City Campus Corporation are consolidated with or transferred to the control of said corporation or corporations; and

(m) that therefore such corporation or corporations will be able to remain competitive and efficient in providing high quality health care in today's rapidly changing health care marketplace, while ensuring: that they continue an ongoing compatible and mutually beneficial relationship with the university and its medical school, graduate school of nursing and graduate school of biomedical sciences; that the commonwealth both will be insulated from financial risk and will receive the benefit of continuing support and clinical affiliations for its medical school, graduate school of nursing and graduate school of biomedical sciences; and that the delivery of health care services in the communities served remains at a high level of quality and access.

SECTION 2. Chapter 75 of the General Laws is hereby amended by adding the following section:-

Section 44. If the chancellor of the Worcester campus becomes responsible either by agreement or legislative action for appointing two or more trustees to a board of trustees of a corporation receiving assets from the clinical operations of the Worcester campus and maintaining an affiliation with said campus, the chancellor shall appoint the elected student representative of the Worcester campus pursuant to section 1A as one of said trustees.

SECTION 3. As used in this act, the following words shall, unless the context otherwise requires, have the following meanings:

"Chancellor", the chief executive officer of the University of Massachusetts Worcester as appointed by the authority of the trustees.

"Clinical division", the clinical components of the University of Massachusetts Worcester, including the University of Massachusetts medical school teaching hospital, the University of Massachusetts medical school group practice, and ancillary support and operating services.

"Corporation" or "corporations", any one or more corporations established under chapter 180 of the General Laws, of which the parent corporation shall initially be known as UMass Memorial Health Care, Inc., to which the trustees transfer or otherwise make available for use the operations, and certain assets, liabilities, and obligations of the clinical division, and any subsidiaries or affiliates of said corporations; provided however, that with respect to transfer of the assets and liabilities of the clinical division's Malpractice Insurance Trust Fund or Self Insurance Trust Fund, corporation shall include one or more corporations or other entities established under other chapters of the General Laws or the laws of any other jurisdiction or country.

"Creditable service", service to the commonwealth computed in accordance with sections 3 and 4 of chapter 32 of the General Laws, determined after taking into account any established prior service credits. In identifying an employee as long service or short service, this definition shall include any prior service credits that would subsequently have become available under chapter 71 of the acts of 1996 if his employment with the university had continued beyond ten years; provided, however, that prior service credits shall only be taken into account for said purpose if the purchase of the service credits shall have been initiated on or before 120 days after the effective date of this act.

"Defined benefit pension plan", the defined benefit pension plan or plans offered to employees of the corporations as said may be modified, terminated or replaced from time to time.

"Elapsed service", service to the commonwealth computed in accordance with sections 3 and 4 of chapter 32 of the General Laws, determined after taking into account any established prior service credits; provided, however, that each month of part-time employment within the clinical division which counts as a fraction of a month of creditable service shall count as a full month of elapsed service.

"Exempt physicians", individuals whose regular compensation for purposes of chapter 32 of the General Laws is not limited by the provisions of section 6 of chapter 733 of the acts of 1974.

"Group insurance commission", the commission established pursuant to section 3 of chapter 32A of the General Laws.

"Group practice", the University of Massachusetts medical school group practice plan established by chapter 733 of the acts of 1974.

"Includes" or "including", by way of illustration and not by way of limitation.

"Long service", having nine or more years of creditable service as of the effective date of this act.

"Medical school", the University of Massachusetts medical school established by section 34 of chapter 75 of the General Laws.

"Medical School Teaching Hospital Trust Fund", the trust fund established by the trustees for operation of the teaching hospital pursuant to section 11 of chapter 75 of the General Laws and item 7411-1006 of section 2 of chapter 363A of the acts of 1977.

"Memorial Health Care, Inc.", a nonprofit corporation organized and existing under the laws of the commonwealth.

"Optional retirement program", a program established in accordance with section 40 of chapter 15A of the General Laws.

"Parent corporation", the corporation organized and established under chapter 180 of the General Laws, to be initially known as UMass Memorial Health Care, Inc., which is the sole member of or otherwise controls all other corporations to which the trustees transfer or otherwise make available for use the operations, and certain assets, liabilities and obligations of the clinical division, and which shall have the authority, pursuant to section 8A of said chapter 180, to approve the sale or other disposition of all or substantially all of the property and assets of each corporation of which it serves as the sole member.

"Ph.D. clinical faculty members", the nonphysician faculty members of the clinical departments of the medical school who hold the degree of Doctor of Philosophy.

"Regular employee", an employee within the clinical division on the effective date of this act who is not a physician or Ph.D. clinical faculty member and who is not as of February 12, 1997 represented by an employee organization recognized in accordance with section 4 of chapter 150E of the General Laws and who is not a consultant, independent contractor or other occasional worker.

"Self Insurance Trust Fund", a university trust fund established by the trustees by vote dated June 5, 1985, pursuant to section 11 of chapter 75 of the General Laws.

"Short service", having less than nine years of creditable service as of the effective date of this act.

"State contract employee", a physician or Ph.D. clinical faculty member employed within the clinical division to the extent such employee provides services to state agencies pursuant to contracts between the university and said agencies and not to a corporation.

"Subsidiary and affiliate", an organization which is controlled by another entity, directly or indirectly, by means of the entity or another subsidiary or affiliate of the entity being the sole member of such organization or having the power to appoint at least one-half of the members, shareholders or governing body of such organization or having retained reserved powers to approve significant activities of such organization or otherwise controlling the governing body of such organization.

"Teaching hospital", the University of Massachusetts medical school teaching hospital provided for by item 8070-10 of section 2 of chapter 138 of the acts of 1969.

"Trustees", the board of trustees of the University of Massachusetts established pursuant to section 1A of chapter 75 of the General Laws.

"University", the University of Massachusetts established by section 1 of chapter 75 of the General Laws.

"Worcester City Campus Corporation", a certain nonprofit corporation organized and existing under the laws of the commonwealth and authorized by section 14 of chapter 139 of the acts of 1992.

SECTION 4. (a) Notwithstanding the provisions of any general or special law to the contrary, the trustees are hereby authorized to transfer to one or more nonprofit corporations management and control of all operations of the clinical division and ownership or use of all properties and assets of the clinical division as the trustees deem necessary for the operation of the clinical division including: all tangible personal property, such as equipment, inventories, supplies, medical records, furniture, automobiles and helicopters; all accounts receivable, notes receivable, cash, cash equivalents, securities, prepaid expenses and other current assets including assets held in the Medical School Teaching Hospital Trust Fund, assets held in the Self Insurance Trust Fund and assets of the group practice; all pledges received for clinical operations; all rights with respect to leases and subleases, governmental and administrative licenses, permits, authorizations, orders, registrations, certificates, variances, approvals, consents, and franchises used or useful in connection with the operation of the clinical division; all patient lists; all rights under any contracts relating to the operation of the clinical division; all business and financial records, books and materials; all rights to insurance policies; all claims and other causes of action, and including all assets conveyed or transferred in accordance with the agreements referred to in subsection (b). If the trustees transfer all or substantially all of the assets and operations of the teaching hospital to a corporation, the corporation shall remain not-for-profit permanently and shall not sell or dispose of any assets or operations transferred from the teaching hospital to a for-profit entity in a transaction that would require notice to the attorney general within the meaning of subsection (c) of section 8A of chapter 180 of the General Laws, governing the disposition of the corporate property and assets of a public charity. The trustees are hereby further authorized to lease or otherwise contract for the use and occupancy for a period of 99 years certain real property and facilities including those currently occupied and used by the clinical division of the University of Massachusetts Worcester to one or more corporations under such terms and conditions as the trustees may determine from time to time to be in the best interests of the university. Any corporation that obtains pursuant to this section any lease or other contract for the use and occupancy of any real property owned by the commonwealth under the control of the university shall be deemed to be an entity the activities of which have been approved by the trustees as furthering the purposes of the university for the purposes of section 3 of chapter 773 of the acts of 1960 for so long as such lease or other contract remains in effect.

The trustees are hereby further authorized to take any and all actions necessary on behalf of the university as sole member of the Worcester City Campus Corporation to permit said entity to transfer substantially all of its assets, including without limitation real property owned by the Worcester City Campus Corporation in its corporate name and as trustee, liabilities and membership rights and interests in its subsidiaries and affiliates to one or more corporations and the trustees are further authorized to transfer funds from the clinical division to the Worcester City Campus Corporation as said trustees deem necessary to support the academic and research mission of the university.

(b) In addition to the foregoing, and in recognition of the importance to the continuing operation of the medical school of a close affiliation with a clinical operation of sufficient size, diversity of service and mission to support high quality academic activities, and in light of the complementary missions and services between and among the medical school, the clinical division and Memorial Health Care, Inc., the trustees are hereby authorized to enter into agreements with Memorial Health Care, Inc. and the Worcester City Campus Corporation, in form and substance mutually agreeable to the parties thereto as the same may be amended from time to time, pursuant to which one or more of the corporations may merge or consolidate with Memorial Health Care, Inc. and one or more of its subsidiaries, and the Worcester City Campus Corporation and certain subsidiaries and affiliates of the Worcester City Campus Corporation may transfer their assets to or become controlled by one or more of the corporations. Upon the occurrence of the transfer authorized in subsection (a) or the merger or consolidation authorized by this section, the surviving or resulting corporation or corporations shall have all of the rights, powers, and authorities of a corporation established pursuant to chapter 180 of the General Laws and shall not be deemed to be an agency, commission, authority or other subdivision of the commonwealth or instrumentality of any of the foregoing for any purpose.

The trustees shall transfer the assets pursuant to the authorization in subsection (a) only for the purpose of fulfilling the obligations of an agreement or agreements with Memorial Health Care, Inc. to merge or consolidate as authorized in this subsection. In the event that the trustees transfer all or substantially all of the assets and operations of the teaching hospital to a corporation and enter into an agreement or agreements with Memorial Health Care, Inc. to merge or consolidate with such corporation pursuant to this subsection, the transfer and agreements shall be to and with a corporation which: (1) for ten years following the effective date of this act, shall not, without prior legislative approval, merge or consolidate with another nonprofit entity if as of the date of said merger or consolidation, the merger or consolidation would result in 50 per cent or more of the corporation's or its successor's board consisting of individuals other than those who were trustees of the corporation immediately prior to the merger or consolidation; and (2) shall not merge or consolidate with another nonprofit entity unless such entity agrees that it will continue to operate an acute care hospital in the city of Worcester through the corporation to which the trustees transfer the assets and operations of the teaching hospital pursuant to the authorization in subsection (a) or through its successor so long as such other nonprofit entity operates any acute care hospital in Worcester county. Following the effective date of this act, no officer, trustee or employee of the parent corporation, or of the hospital subsidiary of the parent corporation to which the assets and ownership of the teaching hospital are transferred, shall acquire an equity ownership interest, other than in a nominee capacity, in any for-profit subsidiary or affiliate of the parent corporation.

Any such agreements and other transactions authorized by this act shall not be considered to be or constitute an agreement or combination or series of agreements to provide services which are similar to or in lieu of services provided in whole or part by regular employees of the university. The trustees may include in any written agreement with Memorial Health Care, Inc., the Worcester City Campus Corporation or any corporation in furtherance of the transfer or merger or consolidation a dispute resolution process culminating in final and binding arbitration to be invoked in the event of any dispute concerning interpretation or application of any such agreement.

(c) The governing body of the parent corporation shall be a board of trustees, in this subsection called the board. For a period of four years after the transfer of certain assets of the clinical division to one or more of the corporations, the board shall consist of ten members appointed by the university and ten members appointed by Memorial Health Care, Inc. In the event that any of the individuals initially appointed to the board shall die, resign, or be removed from office during the initial four year term, successors shall be appointed by the remaining trustees initially appointed by Memorial Health Care, Inc. or by the university, as the case may be. The composition of the board may be increased to not more than 23 members during the initial four year term in order to facilitate additional providers joining the system, by a two-thirds vote of the trustees then in office; provided, however, that the board shall include an equal number of Memorial Health Care, Inc. affiliated trustees and university affiliated trustees during such initial four year term. After the expiration of the initial four year term, the board may be increased or decreased by majority vote of the board but shall include the chancellor and four additional trustees appointed by the chancellor with the approval of the president of the university; provided, however, that in no event shall the total number of trustees selected by the chancellor and including the chancellor be less than five-nineteenths of the voting membership of the board.

One or more of the corporations shall: (i) make an annual payment to the trustees in support of the medical school which, in the determination of the trustees, includes reasonable compensation to the medical school for the cost of services and support it contributes to the delivery of medical care by the corporation's teaching hospitals; and (ii) assume the university's outstanding debt obligation on facilities and equipment transferred to or otherwise used or occupied by one or more corporations under this section. All payments made by one or more corporations to the university shall be deposited by the trustees in a trust for the operations of the medical school with said trust to be established and managed by the trustees pursuant to section 11 of chapter 75 of the General Laws.

(d) Upon the occurrence of the transfer or merger or consolidation authorized by this section, the parent corporation shall include as part of its corporate purposes or mission the promotion and support of the medical school and a recognition of the importance of being part of an outstanding scientific and educational community and of providing high quality education and training to the commonwealth's future physicians, nurses and allied health professionals, and such part of its corporate purposes or mission shall not be amended without prior legislative approval.

The medical school and the corporations shall develop complementary academic and clinical strategies that are linked through joint investments in academic and clinical programs designed to foster a cooperative and team-oriented approach; the medical school and the corporations shall inform and consult with each other on major changes in the mission or operations of either, and the medical school and the corporations shall establish a senior management group to review issues of common concern and the chancellor and the chief executive officer of the parent corporation shall consult and use their best efforts to reach mutually acceptable decisions in such areas.

One or more corporations shall serve as the primary teaching hospital and training site for the medical school. To the extent contained in the agreements referenced in subsection (b) the faculty of the medical school shall serve as the primary source of the clinical staff of the corporations and the same individuals shall serve as the academic and clinical department chairs. To the extent contained in the agreements referenced in said subsection (b) all research activities of the corporations shall be managed by the medical school, and the corporations shall work with the medical school to provide necessary clinical and support services for the medical school's contracts with other state agencies and departments.

(e) In connection with the transfer or merger or consolidation authorized by subsections (a) and (b), one or more corporations pursuant to and to the extent contained in the agreements authorized by subsection (b) shall indemnify, defend and hold harmless the university, and its trustees, officers and employees against and in respect of all liabilities, obligations, judgments, liens, injunctions, charges, orders, decrees, rulings, damages, dues, assessments, taxes, losses, fines, penalties, damages, expenses, fees, costs, amounts paid in settlement, including reasonable attorneys' and expert witness fees and disbursements in connection with investigation, defending or settling any action or threatened action, arising out of any claim, complaint, demand, cause of action, audit, investigation, hearing, action, suit or other proceeding asserted or initiated in respect of any matter resulting from any contract, agreement, employment matter and all other existing or future liabilities of the university arising out of or resulting from the operation of the clinical division.

(f) In connection with the transfer or merger or consolidation authorized by subsections (a) and (b), the medical school, pursuant to and to the extent contained in the agreements authorized by said subsection (b), shall indemnify and hold harmless the parent corporation, its trustees, officers and employees against environmental liabilities and costs to the extent arising out of any condition existing on the University of Massachusetts Worcester at or prior to the said transfer or merger or consolidation that constitutes a violation of, or gives rise to a duty to remediate under, environmental laws without limit in time, knowledge or amount, excluding environmental liabilities and costs relating to the existence of asbestos, polychlorinated biphenyls or other chemical substances within buildings, structures, or self-contained units above ground that are not leaking, such as transformers; provided, however, that claims for personal injuries based in tort shall be excluded from the definition of environmental liabilities and costs. Payment of the environmental indemnification obligation described herein shall be by law in the form of a special appropriation. In the absence of such special appropriation within 12 months, the medical school is hereby authorized to make such payment but such obligation shall be limited solely to such amounts as constitute funds of the medical school other than grants, donor restricted funds or funds received from general appropriations.

(g) Notwithstanding any general or special law or regulations promulgated thereunder to the contrary, this act shall constitute a determination of need for purposes of licensure and change of ownership as well as a determination of suitability for change of ownership and also shall constitute approval of all transfers of ownership of any unimplemented determinations of need, pursuant to sections 25C, 51, 71 and any other relevant sections of chapter 111 of the General Laws or other provisions of the General Laws, and regulations promulgated thereunder, as may be required with respect to the need for, the change of ownership, licensure, operations or other approval relating to any corporation and its hospitals, clinics, health centers, laboratories, nursing homes, substance abuse treatment facilities and other facilities that result from any transfer or merger or consolidation authorized by subsections (a) and (b), including the corporations and hospitals resulting from said transfer or merger or consolidation, and the changes in ownership or control, directly or indirectly, of any subsidiary or affiliate of Worcester City Campus Corporation, including Marlborough Hospital, Inc., and Clinton Hospital Association, and upon application by any corporation or by its subsidiaries or affiliates the department of public health and the department of mental health shall issue to such corporation or any such subsidiaries or affiliates a license or other certificate or approval as may be necessary or appropriate for it to establish, maintain, and operate such hospitals, clinics, health centers, laboratories, nursing homes, substance abuse treatment facilities and other facilities as had been maintained, operated, or owned by the clinical division, Memorial Health Care, Inc., Worcester City Campus Corporation or any of their respective subsidiaries or affiliates prior to the transfer or merger or consolidation. The department of public health and the appropriate corporations shall enter into an agreement with respect to the continuation of the provision of uncompensated care.

SECTION 5. (a) At the discretion of the university, on the effective date of the transfer or merger or consolidation authorized by section 4, each regular employee shall either be an employee of the university whose services are provided to a corporation pursuant to an agreement between the university and a corporation or be offered employment by a corporation. The trustees are hereby authorized to enter into agreements with one or more corporations for the purchase of the services of said university employees by the corporation by payment of such amounts as may be agreed upon by the corporation and the trustees which may include payment of costs described in subsections (e) and (l).

Long service regular employees shall, subject to subsection (h), remain employed by the university, and their services shall be provided by contract to a corporation; provided, however, that the university may at any time, subject to the terms of such contract, terminate the employment of any such employee and cause the employee to be offered employment directly by the corporation either: (i) after February 11, 2008, in which event the employee shall be entitled to a voluntary superannuation retirement allowance pursuant to the provisions of section 5 of chapter 32 of the General Laws and subdivision (1) of section 10 of said chapter 32, or (ii) with the consent of such employee. The university, in its discretion, at any time prior to February 11, 2008, may: (i) offer any long service regular employee who remains employed by the university and whose services are provided by contract to a corporation the option to resign from the university and be offered employment by a corporation, and (ii) provide for such an employee who accepts such employment to be awarded credit pursuant to said chapter 32 for additional years of creditable service equal to (A) the number of additional years of creditable service, if any, that would be necessary for the employee to have 20 years of creditable service such that the employee would be entitled to a voluntary superannuation retirement allowance pursuant to the provisions of sections 5 and 10 of said chapter 32, and (B) 25 per cent of the excess, if any, of ten years, reduced by the number of years elapsed since February 12, 1998, over the number of additional years credited under clause (A).

Short service regular employees other than those described in the next paragraph shall, on a date established by the university within one year of the effective date of the transfer or merger or consolidation authorized by section 4, cease to be university employees and shall be offered employment in comparable positions by and with one or more corporations; provided that every such employee who accepts such a position shall be given full credit by the commonwealth for his creditable service and, notwithstanding the provisions of paragraph (m) of subdivision (1) of said section 5 of said chapter 32, shall be deemed entitled to a voluntary superannuation retirement allowance to be computed in accordance with said section 5 of said chapter 32 based on age and actual creditable service, except that no such individual who has completed less than ten years of creditable service shall be entitled to receive post employment health benefits pursuant to chapter 32A of the General Laws. Said short service regular employees shall receive initial service credit for purposes of the corporations' defined benefit pension plan equal to one times the number of years of creditable service up to five years, and .75 times the number of years of creditable service for those years in excess of five and less than nine.

Short service regular employees with nine or more years of elapsed service as of the effective date of this act who were employed and participating prior to October 1, 1987 in the state pension plan provided in said chapter 32 shall, subject to subsection (h), remain employed by the university and their services shall be provided by contract to a corporation; provided, however, that the university may at any time, subject to the terms of such contract, terminate the employment of any such employee and cause the employee to be offered employment directly by the corporation either: (i) after February 11, 2008, or (ii) with the consent of such employee. The university, in its discretion, at any time prior to February 11, 2008, may offer any such employee who remains employed by the university and whose services are provided by contract to a corporation the option to resign from the university and be offered employment by a corporation; provided, however, that every such employee who accepts such employment shall be given full credit by the commonwealth for his creditable service and, notwithstanding the provisions of said paragraph (m) of said subdivision (1) of said section 5 of said chapter 32, shall be deemed entitled to a voluntary superannuation retirement allowance to be computed in accordance with said section 5 of said chapter 32 based on age and actual creditable service, except that no such individual who has completed less than ten years of creditable service shall be entitled to receive post retirement health benefits pursuant to said chapter 32A. Any such employee who accepts such employment prior to or upon attaining ten years of creditable service shall receive initial service credit for purposes of the corporations' defined benefit pension plan equal to one times the number of years of creditable service up to five years, and .75 times the number of years of creditable service for those years in excess of five and less than nine; provided, however, that such initial service credit shall be computed as of the date established by the university within one year of the effective date of the transfer or merger or consolidation authorized by section 4 in accordance with the next preceding paragraph.

Any regular employee who becomes an employee of one of the corporations following termination of employment by the university in accordance with this subsection shall be entitled to collect any voluntary superannuation retirement allowance pursuant to the provisions of said chapter 32 during his continued employment with a corporation; provided, however, that no university employee offered employment by a corporation shall be eligible for any benefit under subdivision (2) of said section 10 of said chapter 32.

(b) On the effective date of the transfer or merger or consolidation authorized by section 4, each physician and Ph.D. clinical faculty member of the group practice employed within the clinical division shall either be an employee of the university whose services are provided to a corporation pursuant to an agreement between the university and the corporation or be offered employment by a corporation, as agreed between the university and the corporation. The trustees are hereby authorized to enter into agreements with one or more corporations for the purchase of the services of said university employees by the corporation by payment of such amounts as may be agreed upon by the corporation and the trustees which may include payment of those costs described in subsections (e) and (l). Notwithstanding the foregoing, state contract employees shall be employees of the university whose services as state contract employees are not provided to a corporation except as may otherwise be agreed between the university and a corporation.

Exempt physicians and any long service physicians and Ph.D. clinical faculty members, other than state contract employees and individuals who are participating in the optional retirement system, shall, subject to subsection (h), remain employed by the university, and their services shall be provided by contract to a corporation; provided, however, that the university may at any time, subject to the terms of such contract, terminate the employment of any such employee and cause the employee to be offered employment directly by the corporation either: (i) after February 11, 2008, in which event the employee shall be entitled to a voluntary superannuation retirement allowance pursuant to the provisions of section 5 and subdivision (1) of section 10 of chapter 32 of the General Laws, or (ii) with the consent of such employee.

Short service physicians and Ph.D. clinical faculty members and any long service physicians and Ph.D. clinical faculty members who are participating in the optional retirement system, but excluding exempt physicians and state contract employees, shall, on a date established by the university within one year of the effective date of the transfer or the merger or consolidation authorized by section 4, cease to be university employees and shall be offered employment in comparable positions with one or more corporations; provided, however, that every such employee who accepts such a position other than physicians or Ph.D. clinical faculty members participating in the optional retirement system shall be given full credit by the commonwealth for his creditable service and, notwithstanding the provisions of paragraph (m) of subdivision (1) of said section 5 of said chapter 32 shall be deemed entitled to a voluntary superannuation retirement allowance to be computed in accordance with said section 5 of said chapter 32 based on age and actual creditable service, except that no such individual who has completed less than ten years of creditable service shall be entitled to post employment health benefits pursuant to chapter 32A of the General Laws. Any such short service physician or Ph.D. clinical faculty member who is not participating in the optional retirement system shall receive initial service credit for purposes of the corporations' defined benefit pension plan equal to .51 times the number of years of creditable service up to five years, and 37.5 per cent of times the number of years of creditable service for those years in excess of five and less than nine. Any physician or Ph.D. clinical faculty member who is a participant in the optional retirement system shall not receive any additional creditable years in the optional retirement system, nor shall he receive additional years of service under the corporations' defined benefit pension plan, but he shall be entitled to collect benefits under the optional retirement system during his continued employment with a corporation.

Any physician or Ph.D. clinical faculty member who is not participating in the optional retirement system and becomes an employee of one of the corporations immediately following termination of employment by the university in accordance with this section shall be entitled to collect any voluntary superannuation retirement allowance pursuant to the provisions of said chapter 32 during his continued employment with a corporation; provided, however, that no university employee offered employment by a corporation shall be eligible for any benefit under subdivision (2) of said section 10 of said chapter 32.

(c) Employees of the university within the clinical division who are represented by an employee organization recognized in accordance with section 4 of chapter 150E of the General Laws as of the effective date of this act shall retain all the rights and obligations of collective bargaining agreements in effect as of the effective date of this act, during the term of said agreements so long as the said employees remain so employed and so represented. The trustees are hereby authorized subject to such negotiation as required by law to provide for said employees who leave the clinical division and become employees of a corporation other benefits that include a program for group health insurance consistent with subsection (f) for regular employees who leave the clinical division and become employees of a corporation and a program for creditable service; provided, however, that in no event shall the program for creditable service grant benefits in excess of those benefits granted to regular employees of the clinical division pursuant to subsection (a). The employees of any corporation which hires or employs employees of the same class or category as employees employed within the clinical division whose services are provided by contract to that corporation shall be subject to such terms and conditions of employment as that corporation may determine, subject to any collective bargaining obligation of the corporation.

Neither the university nor a corporation shall interfere with, restrain or coerce any employees in the exercise of their rights to self-organization, to form, join or assist any employee organization for the purpose of bargaining collectively through representatives of their own choosing on questions of wages, hours, and other terms and conditions of employment, and to engage in lawful, concerted activities for the purpose of collective bargaining or other mutual aid or protection, nor discriminate against any employees in regard to hiring, tenure, or any term or condition of employment to encourage or discourage membership in any employee organization.

All registered nurses employed by the university within the clinical division who are represented by the Massachusetts Nurses Association in accordance with said section 4 of said chapter 150E on the effective date of the transfer or merger or consolidation authorized by section 4 shall either be employees of the university whose services are provided to a corporation pursuant to an agreement between the university and the corporation or be offered employment by a corporation, in either case within the same position and at the same campus or location as immediately prior to said effective date. Such registered nurses who continue to be employed by the university shall continue to be represented by the Massachusetts Nurses Association within the same bargaining unit or units existing immediately prior to said effective date, whether or not the services of such registered nurses are leased or otherwise provided by the university to a corporation.

An employee organization recognized under said chapter 150E representing a unit of employees employed by the university within the clinical division who, after the effective date of this act, become employees of a corporation at a campus or location where such employees have previously been providing services as employees of the university, shall be recognized by such corporation as the exclusive bargaining representative with respect to such employees, and the corporation shall negotiate in good faith with such employee organization concerning wages, hours and other terms and conditions of employment, including the benefits to be established pursuant to the first paragraph of this section.

Registered nurses whose services are provided by the university to a corporation shall not be laid off pursuant to a reduction in force for the purpose of replacing such employees with employees of the corporation.

A corporation shall recognize the Massachusetts Nurses Association as the exclusive bargaining representative of those registered nurses who were employed by the clinical division and who, after the effective date of this act, become employees of such corporation at a campus or location where employees have previously been providing services as employees of the university, and shall be bound by terms of the agreement between the university and the association; provided, however, that, with respect to benefits provided under said agreement the terms of which are determined by statute for or are available only to, public employees as defined in section 1 of said chapter 150E, such corporation shall negotiate with said association to provide benefits to said employees which are comparable, in the aggregate, thereto. If the parties fail to reach agreement concerning the comparability of said benefits, or the aggregate pension or group health insurance benefits provided to said employees under this subsection, to the benefits previously received by them, such disagreement shall be submitted to arbitration under the arbitration procedures provided in said agreement.

A corporation and the Massachusetts Nurses Association may agree to negotiate future collective bargaining agreements for the corporation's registered nurses at the same time and in conjunction with the negotiations conducted by the university for future collective bargaining agreements with said association with respect to bargaining units in which registered nurses whose services are leased or otherwise provided to the corporation by the university and registered nurses employed by the corporation are performing the same work at the same campus or other location or locations, and are represented by the association.

(d) When an individual employed by a corporation relocates from one campus of a corporation to another campus of a corporation or from one corporation to another corporation, or when an individual employed by the university and contracted to a corporation becomes employed by a corporation and relocates as described above, in any such case the seniority and length of service of such employee shall be determined, for any purpose other than post employment benefits and, except when required by federal law, retirement plans, as if all service rendered at the campus or corporation from which the employee relocates had been rendered at the campus or corporation to which the employee is relocated. If the application of this section must be delayed for any reason with respect to employees in any class or category of employees, then this section shall not apply with respect to any other employees within the same class or category, wherever or however employed, during the period of such delay. For employees represented by an employee organization, seniority issues shall be: (1) as provided in collective bargaining agreements in effect as of the effective date of this act during the term of said agreements so long as such employees remain so employed and so represented, and (2) subject to negotiation as required by applicable law.

No medical service unit employing registered nurses shall be relocated from one campus of a corporation to another campus of a corporation, or from one corporation to another corporation, until April, 2000, unless otherwise agreed by all relevant parties; provided, however, that nothing in this paragraph shall preclude said parties from continued negotiation relative to seniority and relocation of said units; and provided, further, that the provisions of this paragraph shall apply at any such campus.

(e) The assessment for fringe benefit costs for employees paid from nonappropriated funds of the University of Massachusetts Worcester pursuant to the provisions of section 5D of chapter 29 of the General Laws, shall ensure that the University of Massachusetts Worcester is paying the actual costs of the fringe benefits for employees paid from such nonappropriated funds for health and retirement benefits earned by or provided to them for all periods subsequent to the July 1, 1989 establishment of the assessment pursuant to the provisions of chapter 653 of the acts of 1989.

For health benefits provided by the group insurance commission for employees pursuant to the provisions of chapter 32A of the General Laws, or pursuant to the provisions of this act, the actual costs shall be the sum of: (A) the employer share of the monthly premium charge to such employees who are active employees plus a proportionate share of the administrative costs of the group insurance commission, and (B) with respect to the cost of post employment health benefits to be provided to an employee for service after July 1, 1989, the service cost, as that term is defined in statement of financial accounting standards number 106.

For pension benefits provided by the state employees retirement system for such employees pursuant to the provisions of chapter 32 of the General Laws, other than those provided pursuant to the provisions of this act, actual costs shall be the actuarially determined employer normal cost plus a proportionate share of the administrative costs of operating the state employees retirement system plus a 15 year amortization of the difference between the actuarial accrued liability and the accumulated value of employer and member contributions made on behalf of employees of the University of Massachusetts Worcester for service on or after the effective date of said chapter 653. For purposes of this paragraph, the normal cost and actuarial accrued liability shall be determined in accordance with the entry age normal cost method in a manner that develops an annual normal cost which is intended to represent a level percentage of the member's pensionable earnings throughout the member's period of employment covered by the state employees retirement system. For this purpose, a member's entry age shall be based upon the date the employee first entered the state employees retirement system, the actuarial accrued liability shall exclude the value of future benefits attributable to periods of service prior to the effective date of said chapter 653, and the actuarial accrued liability shall reflect the value of future benefits of such employees who are active members, vested nonactive members, and retirees in a manner consistent with the methodology described above.

The actuarial analysis regarding University of Massachusetts Worcester employees and retirees to determine the actual pension and post employment health costs of the University of Massachusetts Worcester shall be conducted as if a separate self-contained chapter 32 retirement system had been established on July 1, 1989 for all University of Massachusetts Worcester employees paid from nonappropriated funds for purposes of providing benefits accrued for service on or after July 1, 1989, and as if all payments made by the university to the state retirement system with respect to such employees on or after July 1, 1989 had been made to such separate system.

The actuarial assumptions used to perform this analysis shall reflect the demographics and experience of the University of Massachusetts Worcester employees and be consistent with the standards of the actuarial standards board of the American Academy of Actuaries.

In establishing the initial liabilities for pension and post employment health benefits pursuant to this section, the University of Massachusetts Worcester shall utilize a qualified actuary selected pursuant to the terms of the September 22, 1992 memorandum of understanding between the secretary of the executive office of administration and finance and the chancellor which required soliciting recommendations from the division of public employee retirement administration, now known as the public employee retirement administration commission, and the state comptroller. The selected actuary shall provide a certified actuarial report in accordance with accepted actuarial principles that meets the standards of the provisions of section 21 of said chapter 32. Copies of the report determining the respective liabilities and funding obligations for purposes of paying the assessment for fringe benefit costs shall be submitted to the secretary of administration and finance, the office of the state comptroller and the public employee retirement administration commission. Subsequent reports shall be conducted by an actuary selected in the same manner and in accordance with the same standards.

Upon the transfer, merger or consolidation as authorized by section 4, no corporation shall, except as may be provided for in contracts between any corporation and the university, have any responsibility for costs attributable to the service of any employee prior to or including the date of the transfer or merger or consolidation and, except as may be provided for in said contracts, shall not be responsible for any costs in excess of the employer normal cost of such pensions or service cost of such post employment health benefits determined as provided above.

For purposes of this subsection the terms "member", "active", "vested", "vested nonactive" and "retirees" shall have the same meanings as used in said chapter 32.

(f) Each employee of the university as of the effective date of this act who becomes an employee of a corporation immediately after termination of his university employment shall, as an employee of a corporation, be entitled to the tuition waiver benefits that would have been available to said employee at the university if he had remained an employee of the university except that such benefits shall no longer be available when the employee is no longer employed by any corporation.

Each regular employee, physician or Ph.D. clinical faculty member as of the effective date of this act, other than state contract employees and individuals who are participating in the optional retirement system, who becomes an employee of a corporation immediately after termination of his university employment shall, for the period of time he is an employee of a corporation but ending no later than the earlier of: (i) the date that the employee acquires a vested interest in his accrued benefit under the corporation's defined benefit pension plan, or (ii) the date five years after commencing such employment, be considered a member in service solely for the purpose of determining member-survivor benefits pursuant to the provisions of Option (d) of subdivision (2) of section 12 of chapter 32 of the General Laws and section 12B of said chapter 32, but shall not accrue any additional creditable service under said chapter 32 during such period.

Notwithstanding the provisions of section 14 of chapter 75 of the General Laws and section 6 of chapter 733 of the acts of 1974 or any other general or special law to the contrary, the trustees are hereby authorized to provide an alternative program of employee fringe benefits including compensated absences, industrial accident coverage and group insurance for any employees who remain employees of the University of Massachusetts Worcester. The university shall be entitled along with any corporation to exclusivity of the remedy under both the workers' compensation and employers' liability provisions of any workers' compensation program which the university provides with respect to those employees whose services it contracts to such corporation as provided in this section.

With respect to employees of the university within the clinical division as of the effective date of this act who become employees of a corporation immediately upon termination of their employment by the university, and notwithstanding the provisions of chapter 32A of the General Laws or any other general or special law to the contrary, said employees shall for one year from the date of the transfer or merger or consolidation as authorized by section 4, so long as they are employees of a corporation, be considered employees as defined by and for the purposes of said chapter 32A and shall continue, on the same terms and conditions as state employees generally, except as provided in subsection (c), to be eligible for the group health insurance provided to said employees by the group insurance commission; provided, however, that the contribution for premiums made by the commonwealth pursuant to section 8 of said chapter 32A for any employee who is employed by a corporation shall be paid to the group insurance commission by a corporation.

Notwithstanding the provisions of said chapter 32A or any other general or special law to the contrary, the group insurance commission is hereby authorized to purchase such group health, life and accidental death insurance for employees of one or more of the corporations as the group insurance commission and the corporation may agree; provided, however, that if one or more of the corporations elects to obtain such insurance from the commission then such corporation or its employees shall pay the cost of any such insurance.

The agreements providing for the transfer or merger or consolidation authorized in section 4 shall provide that all regular employees and physicians and Ph.D. clinical faculty members who were employees of the university within the clinical division as of the effective date of this act and who immediately become employees of a corporation upon the termination of their employment by the university, shall be provided by the corporation with accrued compensated vacation and sick absence time equal to the amount of available compensated absence time accrued with the clinical division pursuant to the policies of the University of Massachusetts Worcester as of the last day of said employees' employment within the clinical division.

Except as provided in subsection (c), employees who receive a voluntary superannuation retirement allowance pursuant to this section under the provisions of said chapter 32 or receive benefits under the optional retirement system and who accept employment with a corporation shall not receive a pay-out of compensated absence time under subsections (b) to (d), inclusive, of section 31A of chapter 29 of the General Laws upon receipt of such retirement allowance until such time as the employee is no longer employed by any corporation. If at the time the employee is no longer employed by any corporation, and such employee is receiving or begins to receive a voluntary superannuation retirement allowance pursuant to this section and the provisions of said chapter 32, or benefits under the optional retirement system, such employee shall receive a pay-out of unused sick leave pursuant to said section 31A based upon the remaining unused balances of sick leave accrued as of the last day of the employee's employment within the clinical division less any time used by the employee while employed by any corporation.

In the event the trustees transfer assets to one or more corporations pursuant to section 4, said corporation or corporations shall agree to establish a retraining fund of $500,000 on the effective date of the transfer or merger or consolidation authorized by said section 4. Such fund shall be used for the purposes of retraining employees subject to this section or of Memorial Health Care, Inc. or its affiliates who are employees as of the effective date of this act and who are dislocated from their positions within the university or any corporation due to the merger or consolidation authorized by said section 4. Such fund shall be available for the retraining of said employees for a period of 24 months from the effective date of this act. The procedure for distribution and use of the retraining funds for said employees shall be determined by the university and the corporation or corporations after consultation with employees, including representatives of recognized employee organizations.

The state retirement system is hereby authorized to establish a method of payroll deduction for employees who become employees of a corporation following termination of employment by the university in accordance with this section to achieve the purchase of prior service or military service buy backs, so-called, if such purchase shall have been initiated on or before 120 days after the effective date of this act. The corporation shall take all lawful steps necessary to assist the state retirement system in achieving this result.

(g) The provision of services to a corporation created hereunder, pursuant to an agreement between the university and such corporation, by an employee of the university as of the effective date of this act or by an employee who is a university employee immediately prior to the effective date of this act and who becomes an employee, officer or trustee of such corporation in accordance with sections 4 and 5, shall not be deemed to violate the provisions of sections 4, 5, 6, 7 and 23 of chapter 268A of the General Laws.

(h) Except as otherwise provided in subsection (m), this act shall not limit the ability of the university or a corporation to change or terminate the employment status of any employees.

(i) Employees who receive a voluntary superannuation retirement allowance under the provisions of chapter 32 of the General Laws or who receive benefits under the optional retirement system and who accept employment with a corporation without interruption of service shall not receive post employment health benefits pursuant to chapter 32A of the General Laws, if they are entitled to receive such post employment health benefits, until the employee is no longer employed by any corporation.

(j) The determination of whether an employee is an employee within the clinical division shall be made by the chancellor within one year of the effective date of the transfer or merger or consolidation authorized by section 4. Within each class of employees described in each of subsections (a), (b) and (c) who are determined by the chancellor to be employees of the clinical division, any benefits pursuant to chapter 32 of the General Laws including, where applicable, additional service credits described in said subsections (a), (b) and (c) for said class of employees shall be provided to all members of said class.

(k) Any provision of this section requiring action or consent by any corporation shall be contained in the agreements authorized by subsection (b) of section 4.

(l) The University of Massachusetts Worcester shall conduct an actuarial valuation of the liabilities for pension benefits resulting from the provisions of this act. That actuarial valuation shall be conducted in accordance with the standards established in chapter 32 of the General Laws and the assumptions and methodology employed shall be approved by the public employee retirement administration commission. Said commission, on the basis of that valuation, shall establish a funding schedule designed to amortize the liabilities resulting from the pension benefits provided by this act over 15 years through level payments; provided, however, that the University of Massachusetts Worcester may establish a funding schedule that amortizes said liability over a shorter period. In each fiscal year, commencing in fiscal year 1999, the University of Massachusetts Worcester shall contribute the amount set forth in said schedule to the state employees' retirement system. Such costs may be included in any contract between a corporation and the university.

(m) During the period from the effective date of the transfer or merger or consolidation authorized by section 4 up to December 31, 1998, employees who were employed by the clinical division or by Memorial Health Care, Inc. for six months or more as of such effective date and who are classified as nonexempt employees for purposes of the federal Fair Labor Standards Act, as amended, title 29 of the United States Code, section 201, et seq., shall not be laid off from such employment by the university or a corporation due to a consolidation or elimination of services directly resulting from said transfer, merger or consolidation. This subsection shall not apply to any layoffs due to decreases in patient census or in revenue, technological changes or any other operational change that is not a direct result of said transfer, merger or consolidation.

SECTION 6. (a) The trustees may establish policies governing contracts for goods and services between the university and the corporations and such contracts shall be exempt from all state and local laws, rules, regulations, ordinances or bylaws requiring competitive bidding, including sections 29A to 29D, inclusive, of chapter 29 of the General Laws.

(b) Any lease, transfer or other agreement related to real property between the university and one or more corporations and any design, engineering, construction, reconstruction, renovation, repair or improvement undertaken by one or more corporations or the university on any property under the control of the university or at the University of Massachusetts Worcester or on any other property under the control of the university and used or occupied by one or more of the corporations shall be exempt from the provisions of sections 38A½ to 43I, inclusive, of chapter 7 of the General Laws, sections 44A to 44J, inclusive, of chapter 149 of the General Laws, section 39M of chapter 30 of the General Laws or any other general or special law or regulation relating to the advertising, bidding, award or enforcement of design, construction, reconstruction, renovation, repair or improvement of public property, or of contracts relating thereto, to the extent applicable, but shall be subject to sections 26 and 27 of said chapter 149.

(c) The university and all other agencies and officers of the commonwealth are hereby authorized and directed to take such actions as may be necessary or desirable in the judgment of the university to effect the transactions authorized by this act, the transition of assets and employees, and the purposes of this act.

SECTION 7. (a) In authorizing the transfer or merger or consolidation authorized in section 4 for the benefit of the people of the commonwealth, and in full recognition of the implications thereof, it is declared to be the intent of this act to supersede the application to said transaction of all federal competition laws, including sections 1 to 8, inclusive, sections 12 to 27, inclusive, and sections 41 to 58, inclusive, of title 15 of the United States Code, and to preempt the application to said transaction of all competition laws of the commonwealth, including chapters 93 and 93A of the General Laws.

(b) The University of Massachusetts medical school is hereby authorized to provide hospital and other services either directly or indirectly through contracts or other arrangements with other providers, including, but not limited to, the provision of hospital services to medicaid eligible persons and to other low income persons and uninsured persons pursuant to both a provider agreement between the medical school and the division of medical assistance or such other agency as may be responsible for the medicaid program and the commonwealth's programs for providing health care services to low income and uninsured persons and a subprovider agreement between the medical school and one or more corporations.

SECTION 8. Section 2 of chapter 363A of the acts of 1977 is hereby amended by striking out item 7411-1006.

SECTION 9. Notwithstanding the provisions of chapter 733 of the acts of 1974 or any other general or special law to the contrary, and upon the occurrence of the transfer or merger or consolidation authorized by section 4, every physician member and Ph.D. clinical faculty member of the group practice immediately prior to the effective date of the transfer or the merger or consolidation authorized in section 4 who thereafter remains a university employee whose services are provided to a corporation pursuant to an agreement between the university and a corporation shall remain a member of the group practice. Unless otherwise provided pursuant to an agreement between the university and the corporations, all patients receiving medical care from such members of the group practice shall be patients of the corporations and any fees charged to patients of any corporation for professional services rendered by such group practice physicians and Ph.D. clinical faculty members may be assigned to such corporations and may be charged and collected in the name of and by the corporations.

SECTION 10. This act, being necessary for the health and welfare of the citizens of the commonwealth, shall be liberally construed to effect its purposes.

SECTION 11. Insofar as the provisions of this act are inconsistent with the provisions of any general or special law, administrative order or regulation or any limitation imposed by a corporate or municipal charter, the provisions of this act shall be controlling.

Approved November 25, 1997.