Skip to main content Skip to office menu Skip to footer
Minnesota Legislature

Office of the Revisor of Statutes

HF 533

1st Engrossment - 91st Legislature (2019 - 2020) Posted on 03/27/2019 01:16pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 1st Engrossment

Line numbers 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10
1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22 1.23 1.24 2.1 2.2
2.3
2.4 2.5 2.6 2.7
2.8
2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 2.20 2.21 2.22 2.23 2.24 2.25 2.26 2.27 2.28 2.29 2.30 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25 3.26 3.27 3.28 3.29 3.30 3.31 3.32 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11
4.12
4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.29 4.30 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20 5.21 5.22 5.23 5.24 5.25 5.26 5.27 5.28 5.29 5.30 5.31 5.32 5.33 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13 6.14 6.15 6.16 6.17 6.18 6.19 6.20 6.21 6.22 6.23 6.24 6.25 6.26 6.27 6.28 6.29 6.30 6.31 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12 7.13 7.14 7.15 7.16 7.17 7.18 7.19 7.20 7.21 7.22 7.23 7.24 7.25 7.26 7.27 7.28 7.29 7.30 7.31 7.32 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14 8.15 8.16 8.17 8.18 8.19 8.20 8.21 8.22 8.23 8.24 8.25 8.26 8.27 8.28 8.29 8.30 8.31 8.32 8.33 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11 9.12 9.13 9.14 9.15 9.16 9.17 9.18 9.19 9.20 9.21 9.22 9.23 9.24 9.25 9.26 9.27 9.28 9.29 9.30 9.31 9.32 9.33 9.34 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 10.27 10.28 10.29 10.30 10.31
10.32
11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 11.11
11.12
11.13 11.14 11.15 11.16 11.17 11.18
11.19
11.20 11.21 11.22 11.23 11.24 11.25 11.26 11.27 11.28 11.29 11.30 11.31 12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8
12.9
12.10 12.11 12.12
12.13

A bill for an act
relating to health; requiring attorney general review and approval of conversion
transactions by nonprofit health care entities; requiring all net earnings of a
nonprofit health maintenance organization to be used for nonprofit purposes;
extending a moratorium on conversion transactions; imposing penalties; amending
Minnesota Statutes 2018, sections 62D.12, by adding a subdivision; 317A.811,
by adding a subdivision; Laws 2017, First Special Session chapter 6, article 5,
section 11; proposing coding for new law in Minnesota Statutes, chapters 62C;
62D.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text beginFINDINGS.
new text end

new text begin The Legislature of the state of Minnesota finds and declares that:
new text end

new text begin (1) nonprofit health care entities hold their assets in trust, and those assets are irrevocably
dedicated, as a condition of their tax-exempt status, to the specific charitable purpose set
forth in the articles of incorporation of the entities;
new text end

new text begin (2) the public is the beneficiary of that trust;
new text end

new text begin (3) nonprofit health care entities have a substantial and beneficial effect on the quality
of life of the people of Minnesota;
new text end

new text begin (4) transfers of assets by nonprofit health care entities to for-profit entities directly affect
the charitable uses of those assets and may adversely affect the public as the beneficiary of
the charitable assets;
new text end

new text begin (5) it is in the best interest of the public to ensure that the public interest is fully protected
whenever the assets or operations of a nonprofit health care entity are transferred, directly
or indirectly, from a charitable trust to a for-profit or mutual benefit entity; and
new text end

new text begin (6) the attorney general's approval of any transfers of assets or operations by a nonprofit
health care entity is necessary to ensure the protection of these trusts.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 2.

new text begin [62C.045] APPLICATION OF OTHER LAWS.
new text end

new text begin Sections 62D.046 to 62D.047 and Laws 2017, First Special Session chapter 6, article 5,
section 11, as amended by section 7 of this act, apply to service plan corporations operating
under this chapter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 3.

new text begin [62D.046] NONPROFIT HEALTH CARE ENTITY CONVERSIONS;
DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin The definitions in this section apply to this section and
section 62D.047.
new text end

new text begin Subd. 2. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of commerce for a
nonprofit health care entity that is a nonprofit health service plan corporation operating
under chapter 62C, or the commissioner of health for a nonprofit health care entity that is
a nonprofit health maintenance organization operating under this chapter.
new text end

new text begin Subd. 3. new text end

new text begin Conversion benefit entity. new text end

new text begin "Conversion benefit entity" means a foundation,
corporation, limited liability company, trust, partnership, or other entity that receives, in
connection with a conversion transaction, the value of any public benefit assets, in accordance
with section 62D.047, subdivision 7.
new text end

new text begin Subd. 4. new text end

new text begin Conversion transaction or transaction. new text end

new text begin "Conversion transaction" or
"transaction" means a transaction otherwise permitted by applicable law in which a nonprofit
health care entity:
new text end

new text begin (1) merges, consolidates, converts, or transfers all or a material amount of its assets to
any entity except a corporation that is also exempt under United States Code, title 26, section
501(c)(3);
new text end

new text begin (2) makes a series of separate transfers within a 24-month period that in the aggregate
constitute a transfer of all or a material amount of the nonprofit health care entity's assets
to any entity except a corporation that is also exempt under United States Code, title 26,
section 501(c)(3); or
new text end

new text begin (3) adds or substitutes one or more members that effectively transfers the control,
responsibility for, or governance of the nonprofit health care entity to any entity except a
corporation that is also exempt under United States Code, title 26, section 501(c)(3).
new text end

new text begin Subd. 5. new text end

new text begin Corporation. new text end

new text begin "Corporation" has the meaning given in section 317A.011,
subdivision 6, and also includes a nonprofit limited liability company organized under
section 322C.1101.
new text end

new text begin Subd. 6. new text end

new text begin Director. new text end

new text begin "Director" has the meaning given in section 317A.011, subdivision
7.
new text end

new text begin Subd. 7. new text end

new text begin Family member. new text end

new text begin "Family member" means a spouse, parent, child, spouse of
a child, brother, sister, or spouse of a brother or sister.
new text end

new text begin Subd. 8. new text end

new text begin Full and fair value. new text end

new text begin "Full and fair value" means the amount that the public
benefit assets of the nonprofit health care entity would be worth if the assets were equal to
stock in the nonprofit health care entity, if the nonprofit health care entity was a for-profit
corporation, and if the nonprofit health care entity had 100 percent of its stock authorized
by the corporation and available for purchase without transfer restrictions. The valuation
shall consider market value, investment or earning value, net asset value, goodwill, the
amount of donations received, and a control premium, if any.
new text end

new text begin Subd. 9. new text end

new text begin Key employee. new text end

new text begin "Key employee" means a person, regardless of title, who:
new text end

new text begin (1) has responsibilities, power, or influence over an organization similar to those of an
officer or director;
new text end

new text begin (2) manages a discrete segment or activity of the organization that represents ten percent
or more of the activities, assets, income, or expenses of the organization, as compared to
the organization as a whole; or
new text end

new text begin (3) has or shares authority to control or determine ten percent or more of the organization's
capital expenditures, operating budget, or compensation for employees.
new text end

new text begin Subd. 10. new text end

new text begin Material amount. new text end

new text begin "Material amount" means the lesser of ten percent of a
nonprofit health care entity's total net admitted assets as of December 31 of the preceding
year, or $10,000,000.
new text end

new text begin Subd. 11. new text end

new text begin Member. new text end

new text begin "Member" has the meaning given in section 317A.011, subdivision
12.
new text end

new text begin Subd. 12. new text end

new text begin Nonprofit health care entity. new text end

new text begin "Nonprofit health care entity" means a nonprofit
health service plan corporation operating under chapter 62C, a nonprofit health maintenance
organization operating under chapter 62D, a corporation that can effectively exercise control
over a nonprofit health service plan corporation or a nonprofit health maintenance
organization, or any other entity that is effectively controlled by a corporation operating a
nonprofit health service plan corporation or a nonprofit health maintenance organization.
new text end

new text begin Subd. 13. new text end

new text begin Officer. new text end

new text begin "Officer" has the meaning given in section 317A.011, subdivision
15.
new text end

new text begin Subd. 14. new text end

new text begin Public benefit assets. new text end

new text begin "Public benefit assets" means the entirety of a nonprofit
health care entity's assets, whether tangible or intangible, including but not limited to its
goodwill and anticipated future revenue.
new text end

new text begin Subd. 15. new text end

new text begin Related organization. new text end

new text begin "Related organization" has the meaning given in section
317A.011, subdivision 18.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 4.

new text begin [62D.047] NONPROFIT HEALTH CARE ENTITY CONVERSION
TRANSACTIONS; REVIEW, NOTICE, APPROVAL.
new text end

new text begin Subdivision 1. new text end

new text begin Certain conversion transactions prohibited. new text end

new text begin A nonprofit health care
entity shall not enter into a conversion transaction if a person who has been an officer,
director, or key employee of the nonprofit health care entity or of a related organization, or
a family member of such a person:
new text end

new text begin (1) has received or will receive any type of compensation or other financial benefit,
directly or indirectly, in connection with the conversion transaction;
new text end

new text begin (2) has held or will hold, whether guaranteed or contingent, an ownership stake, stock,
securities, investment, or other financial interest in an entity to which the nonprofit health
care entity transfers public benefit assets in connection with the conversion transaction;
new text end

new text begin (3) has received or will receive any type of compensation or other financial benefit from
an entity to which the nonprofit health care entity transfers public benefit assets in connection
with a conversion transaction;
new text end

new text begin (4) has held or will hold, whether guaranteed or contingent, an ownership stake, stock,
securities, investment, or other financial interest in an entity that has or will have a business
relationship with an entity to which the nonprofit health care entity transfers public benefit
assets in connection with the conversion transaction; or
new text end

new text begin (5) has received or will receive any type of compensation or other financial benefit from
an entity that has or will have a business relationship with an entity to which the nonprofit
health care entity transfers public benefit assets in connection with the conversion transaction.
new text end

new text begin Subd. 2. new text end

new text begin Attorney general notice required. new text end

new text begin (a) Before entering into a conversion
transaction, a nonprofit health care entity must notify the attorney general according to
section 317A.811. In addition to the elements listed in section 317A.811, subdivision 1, the
notice required by this subdivision must also include an itemization of the nonprofit health
care entity's public benefit assets and the valuation the nonprofit health care entity attributes
to those assets; a proposed plan for the distribution of the value of those assets to a conversion
benefit entity that meets the requirements of subdivision 4; and other information from the
nonprofit health care entity or the proposed conversion benefit entity that the attorney general
reasonably considers necessary to review the proposed conversion transaction under
subdivision 3.
new text end

new text begin (b) At the time the nonprofit health care entity provides the attorney general with the
notice and other information required under this subdivision, the nonprofit health care entity
must also provide a copy of the notice and other information required under this subdivision
to the commissioner. If the attorney general requests additional information from a nonprofit
health care entity in connection with its review of a proposed conversion transaction, the
nonprofit health care entity must also provide a copy of this information to the commissioner,
at the time this information is provided to the attorney general.
new text end

new text begin Subd. 3. new text end

new text begin Review elements. new text end

new text begin (a) The attorney general may approve, conditionally approve,
or disapprove a proposed conversion transaction under this section. In determining whether
to approve, conditionally approve, or disapprove a proposed transaction, the attorney general,
in consultation with the commissioner, shall consider any factors the attorney general
considers relevant in evaluating whether the proposed transaction is in the public interest,
including whether:
new text end

new text begin (1) the proposed transaction complies with chapters 317A and 501B and other applicable
laws;
new text end

new text begin (2) the proposed transaction involves or constitutes a breach of charitable trust;
new text end

new text begin (3) the nonprofit health care entity will receive full and fair value for its public benefit
assets;
new text end

new text begin (4) the value of the public benefit assets to be transferred has been manipulated in a
manner that causes or has caused the value of the assets to decrease;
new text end

new text begin (5) the proceeds of the proposed transaction will be used in a manner consistent with
the public benefit for which the assets are held by the nonprofit health care entity;
new text end

new text begin (6) the proposed transaction will result in a breach of fiduciary duty, as determined by
the attorney general, including whether:
new text end

new text begin (i) conflicts of interest exist related to payments to or benefits conferred upon officers,
directors, or key employees of the nonprofit health care entity or a related organization;
new text end

new text begin (ii) the nonprofit health care entity's directors exercised reasonable care and due diligence
in deciding to pursue the transaction, in selecting the entity with which to pursue the
transaction, and in negotiating the terms and conditions of the transaction; and
new text end

new text begin (iii) the nonprofit health care entity's directors considered all reasonably viable
alternatives, including any competing offers for its public benefit assets, or alternative
transactions;
new text end

new text begin (7) the transaction will result in financial benefit to a person, including owners, directors,
officers, or key employees of the nonprofit health care entity or of the entity to which the
nonprofit health care entity proposes to transfer public benefit assets;
new text end

new text begin (8) the conversion benefit entity meets the requirements in subdivision 4; and
new text end

new text begin (9) the attorney general and the commissioner have been provided with sufficient
information by the nonprofit health care entity to adequately evaluate the proposed transaction
and its effects on the public and enrollees, provided the attorney general or commissioner
has notified the nonprofit health care entity or the proposed conversion benefit entity if the
information provided is insufficient and has provided the nonprofit health care entity or
proposed conversion benefit entity with a reasonable opportunity to remedy that insufficiency.
new text end

new text begin (b) In addition to the elements in paragraph (a), the attorney general shall also consider
public comments received under subdivision 5 regarding the proposed conversion transaction
and the proposed transaction's likely effect on the availability, accessibility, and affordability
of health care services to the public.
new text end

new text begin (c) In deciding whether to approve, conditionally approve, or disapprove a transaction,
the attorney general must consult with the commissioner.
new text end

new text begin Subd. 4. new text end

new text begin Conversion benefit entity requirements. new text end

new text begin (a) A conversion benefit entity shall:
new text end

new text begin (1) be an existing or new, domestic, nonprofit corporation operating under chapter 317A
and exempt under United States Code, title 26, section 501(c)(3);
new text end

new text begin (2) have in place procedures and policies to prohibit conflicts of interest, including but
not limited to conflicts of interest relating to any grant-making activities that may benefit:
new text end

new text begin (i) the directors, officers, or key employees of the conversion benefit entity;
new text end

new text begin (ii) any entity to which the nonprofit health care entity transfers public benefit assets in
connection with a conversion transaction; or
new text end

new text begin (iii) any directors, officers, or key employees of an entity to which the nonprofit health
care entity transfers public benefit assets in connection with a conversion transaction;
new text end

new text begin (3) operate to benefit the health of the people of this state; and
new text end

new text begin (4) have in place procedures and policies that prohibit:
new text end

new text begin (i) an officer, director, or key employee of the nonprofit health care entity from serving
as an officer, director, or key employee of the conversion benefit entity for the five-year
period following the conversion transaction;
new text end

new text begin (ii) an officer, director, or key employee of the nonprofit health care entity or of the
conversion benefit entity from directly or indirectly benefitting from the conversion
transaction; and
new text end

new text begin (iii) elected or appointed public officials from serving as an officer, director, or key
employee of the conversion benefit entity.
new text end

new text begin (b) A conversion benefit entity shall not make grants or payments or otherwise provide
financial benefit to an entity to which a nonprofit health care entity transfers public benefit
assets as part of a conversion transaction, or to a related organization of the entity to which
the nonprofit health care entity transfers public benefit assets as part of a conversion
transaction.
new text end

new text begin (c) No person who has been an officer, director, or key employee of an entity that has
received public benefit assets in connection with a conversion transaction may serve as an
officer, director, or key employee of the conversion benefit entity.
new text end

new text begin (d) The attorney general must review and approve the governance structure of a
conversion benefit entity before the conversion benefit entity receives the value of public
benefit assets from a nonprofit health care entity. In order to be approved by the attorney
general under this paragraph, the conversion benefit entity's governance must be broadly
based in the community served by the nonprofit health care entity and must be independent
of the entity to which the nonprofit health care entity transfers public benefit assets as part
of the conversion transaction. As part of the review of the conversion benefit entity's
governance, the attorney general shall hold a public hearing. If the attorney general finds
it necessary, a portion of the value of the public benefit assets shall be used to develop a
community-based plan for use by the conversion benefit entity.
new text end

new text begin (e) The attorney general shall establish a community advisory committee for a conversion
benefit entity receiving the value of public benefit assets. The members of the community
advisory committee must be selected to represent the diversity of the community previously
served by the nonprofit health care entity. The community advisory committee shall:
new text end

new text begin (1) provide a slate of three nominees for each vacancy on the governing board of the
conversion benefit entity, from which the remaining board members shall select new members
to the board;
new text end

new text begin (2) provide the governing board with guidance on the health needs of the community
previously served by the nonprofit health care entity; and
new text end

new text begin (3) promote dialogue and information sharing between the conversion benefit entity and
the community previously served by the nonprofit health care entity.
new text end

new text begin Subd. 5. new text end

new text begin Hearing; public comment; maintenance of record. new text end

new text begin (a) Before issuing a
decision under subdivision 6, the attorney general shall hold one or more hearings and solicit
public comments regarding the proposed conversion transaction. No later than 45 days after
the attorney general receives notice of a proposed conversion transaction, the attorney
general shall hold at least one public hearing in the area served by the nonprofit health care
entity, and shall hold as many hearings as necessary in various parts of the state to ensure
that each community in the nonprofit health care entity's service area has an opportunity to
provide comments on the conversion transaction. Any person may appear and speak at the
hearing, file written comments, or file exhibits for the hearing. At least 14 days before the
hearing, the attorney general shall provide written notice of the hearing through posting on
the attorney general's website, publication in one or more newspapers of general circulation,
and notice by means of a public listserv or through other means to all persons who request
notice from the attorney general of such hearings. A public hearing is not required if the
waiting period under subdivision 6 is waived or is shorter than 45 days in duration. The
attorney general may also solicit public comments through other means.
new text end

new text begin (b) The attorney general shall develop and maintain a summary of written and oral public
comments made at a hearing and otherwise received by the attorney general, shall record
all questions posed during the public hearing or received by the attorney general, and shall
require answers from the appropriate parties. The summary materials, questions, and answers
shall be maintained on the attorney general's website, and the attorney general must provide
a copy of these materials at no cost to any person who requests them.
new text end

new text begin Subd. 6. new text end

new text begin Approval required; period for approval or disapproval; extension. new text end

new text begin (a)
Notwithstanding the time periods in section 15.99 or 317A.811, a nonprofit health care
entity shall not enter into a conversion transaction until:
new text end

new text begin (1) 150 days after the entity has given written notice to the attorney general, unless the
attorney general waives all or a part of the waiting period. The attorney general shall establish
guidelines for when the attorney general may waive all or part of the waiting period, and
must provide public notice if the attorney general waives all or part of the waiting period;
and
new text end

new text begin (2) the nonprofit health care entity obtains approval of the transaction from the attorney
general, or obtains conditional approval from the attorney general and satisfies the required
conditions.
new text end

new text begin (b) During the waiting period, the attorney general shall decide whether to approve,
conditionally approve, or disapprove the conversion transaction and shall notify the nonprofit
health care entity in writing of its decision. If the transaction is disapproved, the notice must
include the reasons for the decision. If the transaction is conditionally approved, the notice
must specify the conditions that must be met and the reasons for these conditions. The
attorney general may extend the waiting period for an additional 90 days by notifying the
nonprofit health care entity of the extension in writing.
new text end

new text begin (c) The time periods under this subdivision shall be suspended while a request from the
attorney general for additional information is outstanding.
new text end

new text begin Subd. 7. new text end

new text begin Transfer of value of assets required. new text end

new text begin If a proposed conversion transaction is
approved or conditionally approved by the attorney general, the nonprofit health care entity
shall transfer the entirety of the full and fair value of its public benefit assets to one or more
conversion benefit entities as part of the transaction.
new text end

new text begin Subd. 8. new text end

new text begin Assessment of costs. new text end

new text begin (a) The nonprofit health care entity must reimburse the
attorney general or a state agency for all reasonable and actual costs incurred by the attorney
general or the state agency in reviewing the proposed conversion transaction and in exercising
enforcement remedies under this section. Costs incurred may include attorney fees at the
rate at which the attorney general bills state agencies; costs for retaining actuarial, valuation,
or other experts and consultants; and administrative costs. In order to receive reimbursement
under this subdivision, the attorney general or state agency must provide the nonprofit health
care entity with a statement of costs incurred.
new text end

new text begin (b) The nonprofit health care entity must remit the total amount listed on the statement
to the attorney general or state agency within 30 days after the statement date, unless the
entity disputes some or all of the submitted costs. The nonprofit health care entity may
dispute the submitted costs by bringing an action in district court to have the court determine
the amount of the reasonable and actual costs that must be remitted.
new text end

new text begin (c) Money remitted to the attorney general or state agency under this subdivision shall
be deposited in the general fund in the state treasury and is appropriated to the attorney
general or state agency, as applicable, to reimburse the attorney general or state agency for
costs paid or incurred under this section.
new text end

new text begin Subd. 9. new text end

new text begin Challenge to disapproval or conditional approval. new text end

new text begin If the attorney general
disapproves or conditionally approves a conversion transaction, a nonprofit health care
entity may bring an action in district court to challenge the disapproval, or any condition
of a conditional approval, as applicable. To prevail in such an action, the nonprofit health
care entity must clearly establish that the disapproval, or each condition being challenged,
as applicable, is arbitrary and capricious and unnecessary to protect the public interest.
new text end

new text begin Subd. 10. new text end

new text begin Penalties; remedies. new text end

new text begin The attorney general is authorized to bring an action to
unwind a conversion transaction entered into in violation of this section and to recover the
amount of any financial benefit received or held in violation of subdivision 1. In addition
to this recovery, the officers, directors, and key employees of each entity that is a party to,
and who materially participated in, the transaction entered into in violation of this section,
may be subject to a civil penalty of up to the greater of the entirety of any financial benefit
each officer, director, or key employee derived from the transaction or $1,000,000, as
determined by the court. The attorney general is authorized to enforce this section under
section 8.31.
new text end

new text begin Subd. 11. new text end

new text begin Relation to other law. new text end

new text begin (a) This section is in addition to, and does not affect
or limit any power, remedy, or responsibility of a health maintenance organization, a service
plan corporation, a conversion benefit entity, the attorney general, the commissioner of
commerce, or commissioner of health under this chapter, chapter 62C, 317A, or 501B, or
other law.
new text end

new text begin (b) Nothing in this section authorizes a nonprofit health care entity to enter into a
conversion transaction not otherwise permitted under chapter 317A or 501B or other law.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 5.

Minnesota Statutes 2018, section 62D.12, is amended by adding a subdivision to
read:


new text begin Subd. 8a. new text end

new text begin Net earnings. new text end

new text begin All net earnings of a nonprofit health maintenance organization
shall be devoted to the nonprofit purposes of the health maintenance organization in providing
comprehensive health care. A nonprofit health maintenance organization shall not provide
for the payment, whether directly or indirectly, of any part of its net earnings to any person
as a dividend or rebate, except that the health maintenance organization may make payments
to providers or other persons based on the efficient provision of services or as incentives to
provide quality care. The commissioner of health shall, pursuant to this chapter, revoke the
certificate of authority of any nonprofit health maintenance organization in violation of this
subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 6.

Minnesota Statutes 2018, section 317A.811, is amended by adding a subdivision
to read:


new text begin Subd. 1a. new text end

new text begin Nonprofit health care entity; notice and approval required. new text end

new text begin In addition to
the requirements of subdivision 1, a nonprofit health care entity as defined in section
62D.046, subdivision 12, is subject to the notice and approval requirements for certain
transactions under sections 62D.046 and 62D.047.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 7.

Laws 2017, First Special Session chapter 6, article 5, section 11, is amended to
read:


Sec. 11. MORATORIUM ON CONVERSION TRANSACTIONS.

(a) Notwithstanding Laws 2017, chapter 2, article 2, a nonprofit deleted text beginhealthdeleted text end service plan
corporation operating under Minnesota Statutes, chapter 62Cdeleted text begin, ordeleted text endnew text begin; a nonprofitnew text end health
maintenance organization operating under Minnesota Statutes, chapter 62D, as of January
1, 2017deleted text begin,deleted text endnew text begin; or a direct or indirect parent, subsidiary, or other affiliate of such an entity,new text end may
only merge or consolidate with; or convert, or transfer all or a deleted text beginsubstantial portiondeleted text endnew text begin material
amount
new text end of its assets to an entity that is a corporation organized under Minnesota Statutes,
chapter 317A.new text begin For purposes of this section, "material amount" means the lesser of ten percent
of such an entity's total net admitted assets as of December 31 of the preceding year, or
$10,000,000.
new text end

(b) Paragraph (a) does not apply if the new text beginnonprofit new text endservice plan corporation or new text beginnonprofit
new text end health maintenance organization files an intent to dissolve due to insolvency of the
corporation in accordance with Minnesota Statutes, chapter 317A, or insolvency proceedings
are commenced under Minnesota Statutes, chapter 60B.

(c) Nothing in this section shall be construed to authorize a new text beginnonprofit new text endhealth maintenance
organization or a nonprofit deleted text beginhealthdeleted text end service plan corporation to engage in any transaction or
activities not otherwise permitted under state law.

(d) This section expires July 1, deleted text begin2019deleted text endnew text begin 2029new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8. new text beginREVISOR INSTRUCTION.
new text end

new text begin The revisor of statutes shall codify Laws 2017, First Special Session chapter 6, article
5, section 11, as amended by section 7 of this act, in Minnesota Statutes, chapter 62D.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end