HLS 25RS-39 ORIGINAL
2025 Regular Session
HOUSE BILL NO. 317
BY REPRESENTATIVE ECHOLS
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
HEALTH CARE/FACILITIES: Establishes prohibited acts by certain healthcare facility
lessors and lessees
1 AN ACT
2To enact Part II-K of Chapter 11 of Title 40 of the Louisiana Revised Statutes of 1950, to
3 be comprised of R.S. 40:2120.81 through 2120.85, relative to the operation of certain
4 healthcare facilities; to provide for prohibited acts; to provide for enforcement; to
5 establish personal liability for certain actions; to provide for definitions; to provide
6 for penalties; to provide for venue; to provide for judicial proceedings; to provide for
7 immunity for certain individuals; and to provide for related matters.
8Be it enacted by the Legislature of Louisiana:
9 Section 1. Part II-K of Chapter 11 of Title 40 of the Louisiana Revised Statutes of
101950, comprised of R.S. 40:2120.81 through 2120.85, is hereby enacted to read as follows:
11 PART II-K. HOSPITAL LEASE ACCOUNTABILITY
12 §2120.81. Short title
13 This Part shall be known and may be cited as the "Hospital Lease
14 Accountability Act".
15 §2120.82. Purpose
16 The purpose of this Part is to ensure that individuals in positions of control
17 over essential services providers may not misuse the corporate veil to shield
18 themselves from liability for their own misconduct. The goal is to promote
19 accountability and transparency in the governance of essential service providers in
20 this state and to prevent corporate officers who exploit the protections of juridical
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1 entities for personal gain while evading financial accountability and threatening the
2 integrity of the healthcare infrastructure in this state.
3 §2120.83. Definitions
4 As used in this Part, the following terms have the following meanings:
5 (1) "Lessee facility" means a partnership, limited liability partnership,
6 limited liability company, corporation, or facility licensed or certified by this state
7 to provide healthcare services.
8 (2) "Lessor entity" means any real estate investment trust, private equity
9 firm, or corporate entity that owns and leases healthcare facilities licensed or
10 certified by this state to provide healthcare services.
11 §2120.84. Prohibited acts; personal liability; penalties
12 A. A court of competent jurisdiction may disregard the separate legal entity
13 and hold executive officers and board members personally liable if a lessee facility
14 experiences financial distress as a result of an egregious act by the executive officers
15 and board members of a lessor entity and such an act causes or significantly
16 contributes to the financial distress.
17 B. A lessee facility experiences financial distress as a result of any of the
18 following:
19 (1) The closure or significant reduction in emergency or inpatient healthcare
20 services at the lessee facility.
21 (2) A failure to pay the employees of a lessee facility for thirty consecutive
22 days.
23 (3) The lessee facility filing for bankruptcy under the United States
24 Bankruptcy Code.
25 C. If the lessee facility experiences financial distress, as described in
26 Subsection A of this Section, the lessor entity shall do all of the following:
27 (1) Provide funds sufficient to pay for operating expenses to ensure the
28 continued operation of the lessee facility for twelve months from the date the
29 financial distress occurred.
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1 (2) Reimburse the state for any funds expended to keep the lessee facility
2 operational.
3 (3) Provide a detailed financial disclosure of any funds received from the
4 lessee facility including but not limited to lease payments, dividends, loans, or other
5 financial transfers for five years prior to the date the financial distress occurred.
6 D. If a lessee facility experiences financial distress, as provided for in
7 Subsection A of this Section, due to the lease agreement with the lessor entity
8 including but not limited to lease terms, over-leveraging, or financial extractions by
9 a lessor entity, the board members and executive officers of the lessor entity shall be
10 personally liable for all of the following:
11 (1) Repayment of any funds paid or otherwise removed from the lessee
12 facility for lease payments for five years prior to the date the financial distress
13 occurred.
14 (2) Civil penalties up to two hundred and fifty thousand dollars per board
15 member or executive officer for knowingly engaging in or approving financial
16 arrangements that contributed to the financial distress.
17 (3) Disqualification from serving on the board of any healthcare facility
18 licensed in this state for ten years from the date the financial distress occurred.
19 E. A lessee facility operator is prohibited from using funds obtained from
20 Title XIX of the Social Security Act or state-funded emergency grants to fulfill lease
21 payments of the lessee facility.
22 F.(1) The attorney general may investigate a lessee facility and a lessor entity
23 for violations of this Section.
24 (2) The attorney general or the district attorney for the parish in which the
25 facility is domiciled may bring a civil action against a lessor entity or individual for
26 violating a provision of this Section.
27 §2120.85. Venue; judicial proceedings; immunity; damages
28 A. A civil action instituted pursuant to this Part may be brought in the
29 following courts:
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1 (1) The Nineteenth Judicial District Court for the parish of East Baton
2 Rouge.
3 (2) A district court in the parish in which a lessee facility is domiciled.
4 B. Upon application of the attorney general or the district attorney, the court
5 may enter any restraining order or injunction or take any action to preserve the
6 availability of the personal assets of the executive officers and board members of the
7 lessor entity until a judicial determination in accordance with the provisions of this
8 Part.
9 C.(1) Upon the petition of the attorney general or the district attorney, a
10 court shall take a rule to show cause why the executive officers and board members
11 of the lessor entity should not be personally liable as provided for in this Part.
12 (2) The hearing on the rule to show cause shall be tried by preference and
13 shall not be held not more than thirty days from the date the motion is filed.
14 D.(1) The court shall enter a judgment holding the executive officers and
15 board members of the lessor entity personally liable if the court finds by a
16 preponderance of the evidence from the facts and evidence deduced at the hearing
17 that the individual executive officers and board members caused or contributed
18 materially to the lessee facility's financial distress.
19 (2) If a court determines that the lessee facility operator utilized funds
20 prohibited by this Section, the court shall award three times the actual damages
21 sustained.
22 E. Any individual who, in good faith, reports misconduct or provides
23 material evidence of a violation of this Part shall be immune from civil liability,
24 retaliation, or adverse employment action.
25 F. If the court awards damages or assesses a civil penalty, the funds shall be
26 collected by the attorney general.
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 317 Original 2025 Regular Session Echols
Abstract: Prohibits certain acts by lessor healthcare facility owners and lessee healthcare
facility operators and establishes penalties including personal liability for hospital
executives and board members for certain acts.
Proposed law defines terms.
Proposed law establishes that a healthcare facility owned by a private entity enters into
financial distress when the facility fails to pay its employees for 30 days, experiences a
closure or a significant reduction in inpatient or emergency services, or files for bankruptcy.
Proposed law states that if a facility experiences financial distress, the entity that owns the
hospital shall provide funds sufficient for the facility to operate for 12 months, reimburse the
state for any emergency funds expended to keep the facility operational, and provide detailed
financial disclosures of any funds received by the facility in the previous five years.
Proposed law states that if a lessee facility experiences financial distress due to unreasonable
lease terms, over-leveraging, or financial extractions, the board members and executive
officers shall be personally liable for the following:
(1)Repayment of funds removed from the lessee facility in the five-year period before
the financial distress.
(2)Civil penalties up to $250,000 per board member for knowingly engaging in
activities that contributed to the financial distress.
(3)Disqualification from serving on the board of any healthcare facility licensed in this
state for 10 years.
Proposed law states that a lessee facility operator is prohibited from using funds from
Medicaid, Medicare, or other state-funded emergency grants to fulfill lease payments.
Proposed law provides that if a court determines that prohibited funds are used to pay lease
obligations, the court shall award damages equal to triple the actual damages.
Proposed law states that the attorney general may investigate and, if a violation is found,
may bring a civil action against the violating entity.
Proposed law states that the attorney general or a district attorney for the parish in which the
lessee facility is located may bring a cause of action for a violation of proposed law.
Proposed law provides that the attorney general or a district attorney may seek and the court
may grant a legal action to preserve the availability of the personal assets of the executive
officers and board members of the lessor entity.
Proposed law provides that venue is proper in the Nineteenth Judicial District in the parish
of East Baton Rouge, or the district court of the parish where the lessee facility is domiciled.
Proposed law provides that upon the petition of the attorney general or district attorney, the
court may take a rule to show cause why the executives and board members of the lessor
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HB NO. 317
facility should not be held personally liable. Proposed law further provides that the hearing
to show cause shall be held not more than 30 days from the date the motion is filed.
Proposed law provides that any individual who, in good faith, reports misconduct or
provides material evidence of violation of proposed law is immune from civil liability,
retaliation, or adverse employment action.
Proposed law provides that if the court awards damages or assesses a civil penalty, the funds
shall be collected by the attorney general.
(Adds R.S. 40:2120.81- 2120.85)
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