North Carolina 2025-2026 Regular Session

North Carolina Senate Bill S532 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1		GENERAL ASSEMBLY OF NORTH CAROLINA
2	2		SESSION 2025
3		-	S 1
4		-	SENATE BILL 532
	3	+	S D
	4	+	SENATE BILL DRS35190-MGfy-28A
	5	+
5	6
6	7
7	8		Short Title: Preserving Competition in Healthcare Act. (Public)
8	9		Sponsors: Senators Burgin, Mayfield, and Corbin (Primary Sponsors).
9		-	Referred to: ~~Rules and Operations of the Senate~~
10		-	~~March 26, 2025~~
11		-	~~S532 -v-1~~
	10	+	Referred to:
	11	+
	12	+	DRS35190 -MGfy-28A
12	13		A BILL TO BE ENTITLED 1
13	14		AN ACT PRESERVING COMPETITION IN HEALTHCARE BY REGULATING THE 2
14	15		CONSOLIDATION AND CONVEYANCE OF HOSPITALS. 3
15	16		The General Assembly of North Carolina enacts: 4
16	17		SECTION 1. Chapter 131E of the General Statutes is amended by adding a new 5
17	18		Article to read: 6
18	19		"Article 11C. 7
19	20		"Preserving Competition in Healthcare Act. 8
20	21		"§ 131E-214.20. Definitions. 9
21	22		The following definitions apply in this Article: 10
22	23		(1) Acquiring entity. – The person or entity that gains ownership or control of a 11
23	24		hospital entity as a result of a transaction subject to review under this Article. 12
24	25		(2) Attorney General. – The Attorney General or any employee of the Department 13
25	26		of Justice designated by the Attorney General. 14
26	27		(3) Hospital entity. – Any corporation or governmental entity licensed as a 15
27	28		hospital under Article 5 of Chapter 131E of the General Statutes, including 16
28	29		any entity affiliated with such corporation or governmental entity through 17
29	30		ownership, governance, or membership, such as a holding company or 18
30	31		subsidiary. 19
31	32		(4) Person. – Any individual, partnership, trust, estate, corporation, association, 20
32	33		joint venture, joint stock company, or other organization. 21
33	34		(5) State Auditor. – The State Auditor or any employee of the Office of the State 22
34	35		Auditor designated by the State Auditor. 23
35	36		(6) State Treasurer. – The State Treasurer or any employee of the Office of the 24
36	37		State Treasurer designated by the State Treasurer. 25
37	38		(7) Transaction. – Includes all of the following, if the value of the assets, control, 26
38	39		or governance interest equals or exceeds five million dollars ($5,000,000): 27
39	40		a. The sale, transfer, lease, exchange, optioning, conveyance, or other 28
40	41		disposition of no less than fifty percent (50%) of the assets or 29
41	42		operations of any hospital entity to any person or entity other than 30
42	43		another hospital entity that controls, is controlled by, or is under 31
43	44		common control with such hospital entity. 32
44	45		b. The transfer of control or governance of a hospital entity to a person 33
45	46		or entity other than another hospital entity that controls, is controlled 34
46		-	by, or is under common control with such hospital entity. 35 General Assembly Of North Carolina Session 2025
47		-	Page 2 Senate Bill 532-First Edition
	47	+	by, or is under common control with such hospital entity. 35
	48	+	FILED SENATE
	49	+	Mar 25, 2025
	50	+	S.B. 532
	51	+	PRINCIPAL CLERK General Assembly Of North Carolina Session 2025
	52	+	Page 2 DRS35190-MGfy-28A
48	53		c. Any binding legal obligation between two or more persons that results 1
49	54		in a transfer of control, responsibility, or governance of no less than 2
50	55		fifty percent (50%) of a hospital entity's assets to an acquiring entity. 3
51	56		d. Any transaction regardless of exact form that, if structured as a 4
52	57		purchase, merger, or joint venture, would be subject to review under 5
53	58		this Article. 6
54	59		e. Any transaction described in sub-subdivisions a. through d. of this 7
55	60		subdivision that is entered into by a hospital entity or by any person or 8
56	61		entity that controls, is controlled by, or is under common control with 9
57	62		such hospital entity. 10
58	63		f. All sales, transfers, conveyances, or other dispositions of no less than 11
59	64		fifty percent (50%) of a hospital entity's assets made in the course of a 12
60	65		bankruptcy proceeding. 13
61	66		"§ 131E-214.21. Actions and decisions by the State Auditor, Attorney General, and State 14
62	67		Treasurer. 15
63	68		Whenever an action or decision is required by the State Auditor, the Attorney General, and 16
64	69		the State Treasurer under this Article, they shall act or decide together and the opinion of the 17
65	70		majority shall prevail. 18
66	71		"§ 131E-214.22. Applicability; waived transactions. 19
67	72		This Article does not apply to a hospital entity if (i) the transaction is in the usual and regular 20
68	73		course of its activities and (ii) the State Auditor, Attorney General, and State Treasurer have 21
69	74		provided to the hospital entity a written waiver of this Article with respect to the transaction. A 22
70	75		determination by the State Auditor, Attorney General, and State Treasurer that a transaction 23
71	76		merits review under this Article shall be the final decision of the State and shall not be set aside 24
72	77		on judicial review unless found to be arbitrary and capricious. 25
73	78		"§ 131E-214.24. Written notice and certification requirements for proposed transactions; 26
74	79		rules. 27
75	80		(a) Prior to entering into any transaction subject to review under this Article, a hospital 28
76	81		entity shall provide the State Auditor, Attorney General, and State Treasurer with written notice 29
77	82		of the proposed transaction. The hospital entity shall simultaneously provide the State Auditor, 30
78	83		Attorney General, and State Treasurer with written certification that a copy of this Article in its 31
79	84		entirety has been provided to each member of the governing board or board of trustees of the 32
80	85		hospital entity. 33
81	86		(b) A hospital entity and an acquiring entity may provide the State Auditor, Attorney 34
82	87		General, and State Treasurer with a single written notice of a proposed transaction that meets the 35
83	88		requirements of this section; provided, however, that the State Auditor, Attorney General, and 36
84	89		State Treasurer may require additional information that the State Auditor, Attorney General, and 37
85	90		State Treasurer determines is necessary for a complete review of the proposed transaction from 38
86	91		any party. 39
87	92		(c) The written notice required under this section shall not become effective until the 40
88	93		State Auditor, Attorney General, and State Treasurer have acknowledged receipt of a complete 41
89	94		notice in accordance with subsection (a) of G.S. 131E-214.26. 42
90	95		(d) The State Auditor, Attorney General, and State Treasurer shall adopt rules specifying 43
91	96		the required contents of the written notice required by this section and the manner in which the 44
92	97		written notice shall be provided to the State Auditor, Attorney General, and State Treasurer in 45
93	98		order to be deemed complete and effective. The rules shall allow for the State Auditor, Attorney 46
94	99		General, and State Treasurer, in their discretion, to require additional information about a 47
95	100		proposed transaction that is not expressly required in the rules adopted pursuant to this section. 48
96	101		"§ 131E-214.26. Time line and process for decision to object or take no action. 49
97	102		(a) When the parties to the proposed transaction have provided the State Auditor, 50
98	103		Attorney General, and State Treasurer with all the information expressly required by the rules 51 General Assembly Of North Carolina Session 2025
99		-	~~Senate Bill 532-First Edition~~ Page 3
	104	+	DRS35190-MGfy-28A Page 3
100	105		adopted under G.S. 131E-214.24(d), the State Auditor, Attorney General, and State Treasurer 1
101	106		shall provide to the hospital entity and acquiring entity written acknowledgement of having 2
102	107		received a complete notice that meets the requirements of G.S. 131E-214.24. Written 3
103	108		acknowledgement by the State Auditor, Attorney General, and State Treasurer pursuant to this 4
104	109		subsection shall constitute the beginning of a 90-day review period. The State Auditor, Attorney 5
105	110		General, and State Treasurer shall not unreasonably withhold a determination that the parties 6
106	111		have provided a complete notice that meets the requirements of G.S. 131E-214.24. 7
107	112		(b) If the State Auditor, Attorney General, and State Treasurer have provided to the 8
108	113		hospital entity and acquiring entity written acknowledgement of having received a complete 9
109	114		notice that meets the requirements of G.S. 131E-214.24, as required by subsection (a) of this 10
110	115		section, a request by the State Auditor, Attorney General, and State Treasurer for additional 11
111	116		information not expressly required by the rules adopted under G.S. 131E-214.24(d) does not 12
112	117		delay the commencement of the 60-day review period under subsection (c) of this section. 13
113	118		(c) The State Auditor, Attorney General, and State Treasurer have a period of 60 days, 14
114	119		commencing on the date they provide written acknowledgement to the hospital entity and 15
115	120		acquiring entity of having received a complete notice that meets the requirements of 16
116	121		G.S. 131E-214.24, to review the proposed transaction and notify the hospital entity, in writing, 17
117	122		of their decision to either object to the proposed transaction or to take no action regarding the 18
118	123		proposed transaction. 19
119	124		(d) Upon notice, in writing, to all parties to the transaction, the State Auditor, Attorney 20
120	125		General, and State Treasurer may extend their 60-day review period for up to an additional 30 21
121	126		days if the extension is necessary to obtain additional information from one or more of the parties 22
122	127		to the transaction or to complete any component of the review process specified in 23
123	128		G.S. 131E-214.30 through G.S. 131E-214.36. 24
124	129		(e) During the review period, the parties to the proposed transaction are prohibited from 25
125	130		consummating the transaction. 26
126	131		"§ 131E-214.28. Published written notice of proposed transaction; failure to give notice. 27
127	132		(a) Within 10 days after providing the State Auditor, Attorney General, and State 28
128	133		Treasurer with written notice of a proposed transaction pursuant to subsection (a) of 29
129	134		G.S. 131E-214.24, without regard to whether or not the State Auditor, Attorney General, and 30
130	135		State Treasurer have acknowledged receipt of a complete notice, the hospital entity shall give 31
131	136		written notice of the proposed transaction by publication in one or more newspapers of general 32
132	137		circulation in every county in which (i) there exists a hospital entity whose control or governance 33
133	138		would be altered by the proposed transaction or (ii) there resides a substantial number of patients 34
134	139		of a hospital entity whose control or governance would be altered by the proposed transaction. 35
135	140		The published written notice shall contain the following: 36
136	141		(1) A brief restatement of the nature of the transaction, as specified in the written 37
137	142		notice provided to the State Auditor, Attorney General, and State Treasurer 38
138	143		under G.S. 131E-214.24, which shall include the following: 39
139	144		a. The name of the hospital entity. 40
140	145		b. The name of the acquiring entity. 41
141	146		c. The names of any other parties to the proposed transaction. 42
142	147		d. The nature of the proposed transaction. 43
143	148		e. The anticipated consideration that will be paid by the acquiring entity. 44
144	149		(2) The following statements: 45
145	150		a. "This notice is provided pursuant to G.S. 131E-214.24." 46
146	151		b. "Any interested party wishing to provide written comments may 47
147	152		submit the written comments directly to the Office of the Attorney 48
148	153		General, 114 W. Edenton Street, Raleigh, NC 27603." 49
149	154		(3) The time, date, and location of any public hearing required under 50
150	155		G.S. 131E-214.30, or the information necessary to access a public hearing 51 General Assembly Of North Carolina Session 2025
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	156	+	Page 4 DRS35190-MGfy-28A
152	157		using teleconferencing or video-conferencing technology, as permitted under 1
153	158		subsection (c) of G.S. 131E-214.30. A public hearing shall not be conducted 2
154	159		earlier than 14 days after the publication of a notice pursuant to this section. 3
155	160		(4) In the event the hospital entity is a nonprofit or publicly owned entity, a link 4
156	161		to a webpage that allows any member of the public to view a detailed summary 5
157	162		of the proposed transaction and copies of all transactional and collateral 6
158	163		agreements not otherwise exempt from public disclosure under Chapter 132 7
159	164		of the General Statutes or G.S. 131E-97.3. 8
160	165		(b) A failure by the hospital entity giving notice under G.S. 131E-214.24 to provide a 9
161	166		published written notice as required by subsection (a) of this section shall be a sufficient ground 10
162	167		for the State Auditor, Attorney General, and State Treasurer to object to the proposed transaction. 11
163	168		(c) This section does not apply to a sale, transfer, conveyance, or other disposition of a 12
164	169		substantial portion of a hospital entity's assets made in the course of a bankruptcy proceeding. 13
165	170		"§ 131E-214.30. Public hearing requirements; responsibility for public hearing costs; 14
166	171		exemptions and waivers. 15
167	172		(a) Within 30 days after providing the State Auditor, Attorney General, and State 16
168	173		Treasurer with the written notice required under subsection (a) of G.S. 131E-214.24, without 17
169	174		regard to whether or not the State Auditor, Attorney General, and State Treasurer have 18
170	175		acknowledged receipt of a complete notice, the hospital entity and the acquiring entity shall 19
171	176		conduct one or more public hearings at a convenient time and in a convenient location in a county 20
172	177		in which there exists a hospital entity whose control or governance would be altered by the 21
173	178		proposed transaction. The public hearing required by this section shall not be conducted earlier 22
174	179		than 14 days after publication of the written notice required under G.S. 131E-214.28. 23
175	180		(b) At least seven days prior to the date of any public hearing, the hospital entity and the 24
176	181		acquiring entity shall give written notice to the State Auditor, Attorney General, and State 25
177	182		Treasurer of the time, date, and location of the public hearing. In addition, the hospital entity and 26
178	183		the acquiring entity shall give written notice to the governing bodies of both the county and the 27
179	184		municipality in which the hospital entity that is the subject of the proposed transaction is located, 28
180	185		as applicable. 29
181	186		(c) With written notice to, and approval by, the State Auditor, Attorney General, and 30
182	187		State Treasurer, the hospital entity and the acquiring entity may conduct a public hearing required 31
183	188		by this section via online teleconferencing and video-conferencing technology; provided, 32
184	189		however, that doing so does not meaningfully limit the opportunity for public input concerning 33
185	190		the proposed transaction. 34
186	191		(d) At a hearing required by this section, the hospital entity and the acquiring entity shall 35
187	192		provide the following information: 36
188	193		(1) The extent to which the proposed transaction is expected to impact the cost, 37
189	194		availability, accessibility, and quality of healthcare services. 38
190	195		(2) The process involved in reaching a fair sales price for the hospital entity, 39
191	196		including whether any director, officer, agent, or employee of the hospital 40
192	197		entity will benefit directly or indirectly from the proposed transaction. 41
193	198		(e) At a hearing required by this section, the hospital entity and the acquiring entity may 42
194	199		make such presentations as they deem appropriate and shall provide a meaningful opportunity 43
195	200		for public input. The hospital entity and the acquiring entity shall also communicate to attendees 44
196	201		how interested parties may provide written comments about the proposed transaction, which shall 45
197	202		be identical to the statement required by sub-subdivision (2)b. of subsection (a) of 46
198	203		G.S. 131E-214.28. 47
199	204		(f) In any transaction in which the hospital entity is a nonprofit or publicly owned entity, 48
200	205		the hospital entity and the acquiring entity shall provide information regarding the extent to which 49
201	206		the proposed transaction is expected to impact the nonprofit or community benefit activities of 50 General Assembly Of North Carolina Session 2025
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	207	+	DRS35190-MGfy-28A Page 5
203	208		the hospital entity, including a description of the resources that will be committed to the nonprofit 1
204	209		or community benefit activities after the consummation of the transaction. 2
205	210		(g) In addition to any hearing required under this section, the State Auditor, Attorney 3
206	211		General, and State Treasurer may conduct a public hearing regarding a proposed transaction. At 4
207	212		least seven days prior to the public hearing, the State Auditor, Attorney General, and State 5
208	213		Treasurer shall notify the hospital entity and the acquiring entity of the time, date, and location 6
209	214		of any hearing to be conducted by the State Auditor, Attorney General, and State Treasurer or of 7
210	215		the information necessary to access a public hearing to be conducted by the State Auditor, 8
211	216		Attorney General, and State Treasurer via teleconferencing or video-conferencing technology. 9
212	217		At least 14 days prior to the public hearing, the State Auditor, Attorney General, and State 10
213	218		Treasurer shall also give written notice of the hearing by publication in one or more newspapers 11
214	219		of general circulation in any county in which there exists a hospital entity whose control or 12
215	220		governance would be altered by the proposed transaction. At a hearing conducted by the State 13
216	221		Auditor, Attorney General, and State Treasurer, the State Auditor, Attorney General, and State 14
217	222		Treasurer shall provide a meaningful opportunity for public input that includes opportunities for 15
218	223		questions and answers and comments. 16
219	224		(h) The parties to the proposed transaction shall pay for all costs associated with the 17
220	225		public hearing conducted in accordance with subsection (a) of this section. 18
221	226		(i) The provisions of this section do not apply to the sale, transfer, conveyance, or other 19
222	227		disposition of a substantial portion of a hospital entity's assets made in the course of a bankruptcy 20
223	228		proceeding. 21
224	229		"§ 131E-214.32. Required considerations by the State Auditor, Attorney General, and State 22
225	230		Treasurer. 23
226	231		(a) The State Auditor, Attorney General, and State Treasurer shall consider all of the 24
227	232		following criteria in making a decision about any transaction subject to the provisions of this 25
228	233		Article: 26
229	234		(1) Whether the fair market value of any asset to be transferred from the hospital 27
230	235		entity to the acquiring entity has been manipulated by the actions of the parties 28
231	236		in a manner that causes the fair market value of the asset to decrease. 29
232	237		(2) Whether healthcare providers will be offered the opportunity to invest or own 30
233	238		an interest in the acquiring entity or a related party, and whether procedures 31
234	239		or safeguards are in place to avoid healthcare providers' conflicts of interest 32
235	240		with respect to patient referrals. 33
236	241		(3) Whether the terms of any management or services contract negotiated in 34
237	242		conjunction with the proposed transaction are reasonable. 35
238	243		(4) Whether the proposed transaction may have a significant effect on the cost, 36
239	244		availability, accessibility, or quality of healthcare services for any affected 37
240	245		community. In making this determination, the State Auditor, Attorney 38
241	246		General, and State Treasurer shall consider all of the following: 39
242	247		a. Whether sufficient safeguards are included to ensure that the affected 40
243	248		community will have continued access to affordable healthcare 41
244	249		services. 42
245	250		b. Whether the proposed transaction creates or has the likelihood of 43
246	251		creating an adverse effect on the cost, availability, accessibility, or 44
247	252		quality of healthcare services within the affected community. 45
248	253		c. Whether the acquiring entity has made a commitment to provide (i) 46
249	254		free care to individuals whose income is three hundred percent (300%) 47
250	255		or less of the federal poverty guidelines, (ii) free or discounted 48
251	256		healthcare to other individuals who are disadvantaged, uninsured, or 49
252	257		underinsured, and (iii) other benefits to the affected community to 50
253	258		promote improved healthcare. In determining whether the level of 51 General Assembly Of North Carolina Session 2025
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255	260		commitment by the acquiring entity will have a significant effect on 1
256	261		the availability, accessibility, or quality of healthcare services for any 2
257	262		affected community if the proposed transaction is approved, the State 3
258	263		Auditor, Attorney General, and State Treasurer shall consider the 4
259	264		number of programs and activities and the amount of funding 5
260	265		dedicated by the acquiring entity, as compared to the hospital entity or 6
261	266		their affiliated foundations, to: 7
262	267		1. The delivery of healthcare services to individuals who are 8
263	268		uninsured or underinsured. 9
264	269		2. The delivery of other services or benefits to the affected 10
265	270		community to promote improved healthcare. 11
266	271		3. Medical education and teaching programs. 12
267	272		4. Medical research programs. 13
268	273		d. Whether the proposed transaction would result in the revocation of 14
269	274		hospital privileges for any healthcare provider. 15
270	275		e. Whether sufficient safeguards are included to maintain appropriate 16
271	276		capacity for health science research and healthcare provider education. 17
272	277		f. Whether the proposed transaction serves the public interest by 18
273	278		promoting the availability and accessibility of safe, essential, and 19
274	279		quality healthcare services and treatment. 20
275	280		(5) Whether the proposed transaction complies with all applicable State and 21
276	281		federal laws and regulations, including antitrust laws. 22
277	282		(6) Whether the proposed transaction will significantly harm competition in any 23
278	283		part of this State among healthcare providers. 24
279	284		(7) Whether the State Auditor, Attorney General, and State Treasurer have 25
280	285		received all the information required by the rules adopted under 26
281	286		G.S. 131E-214.24(d) and timely responses to any additional requests for 27
282	287		information necessary to adequately evaluate the proposed transaction; 28
283	288		provided, however, that this subdivision shall not be a ground for disapproving 29
284	289		the proposed transaction, unless the State Auditor, Attorney General, and State 30
285	290		Treasurer have notified the hospital entity and the acquiring entity of any 31
286	291		inadequacy of information or data and has provided each with a reasonable 32
287	292		opportunity to remedy the inadequacy. 33
288	293		(8) Any objection to the transaction raised in comments submitted to the Attorney 34
289	294		General. 35
290	295		(b) In addition to the considerations specified in subsection (a) of this section, the State 36
291	296		Auditor, Attorney General, and State Treasurer shall also consider all of the following criteria in 37
292	297		making a decision about any proposed transaction subject to the provisions of this Article that 38
293	298		would alter the control or governance of a tax-exempt or publicly owned hospital entity: 39
294	299		(1) Whether the hospital entity would receive fair market value for its charitable 40
295	300		assets or social welfare assets. For the purpose of this subdivision, "social 41
296	301		welfare assets" means the average yearly monetary value of the benefits the 42
297	302		hospital entity provided to the community during the preceding five calendar 43
298	303		years. 44
299	304		(2) Whether the proceeds of the proposed transaction would be used in a manner 45
300	305		consistent with the trust under which the assets are held by the hospital entity. 46
301	306		(3) Whether the proceeds of the proposed transaction would be used by a county 47
302	307		or municipality for general or special revenue obligations not expressly 48
303	308		provided for when the hospital was established. 49
304	309		(4) Whether any proceeds of the proposed transaction would be controlled as 50
305	310		funds independently of the acquiring entity or related entities; provided, 51 General Assembly Of North Carolina Session 2025
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307	312		however, that the proceeds of a proposed transaction may not be returned to 1
308	313		any county or municipal government except to the extent necessary to pay 2
309	314		lawful obligations to such county or municipal government. 3
310	315		(5) Whether the proposed transaction would result in a breach of fiduciary duty, 4
311	316		as determined by the Attorney General, including conflicts of interest related 5
312	317		to payments or benefits to officers, directors, board members, executives, or 6
313	318		experts employed or retained by the parties. 7
314	319		(6) Whether the governing body of the hospital entity exercised due diligence in 8
315	320		deciding to dispose of the hospital entity's assets, selecting the acquiring 9
316	321		entity, and negotiating the terms and conditions of the disposition. 10
317	322		(7) Whether the proposed transaction would result in private inurement to any 11
318	323		person. 12
319	324		(8) Whether any foundation established to hold the proceeds of the proposed 13
320	325		transaction would be broadly based in the community and be representative 14
321	326		of the affected community, taking into consideration the structure and 15
322	327		governance of the foundation. 16
323	328		(c) For any proposed transaction subject to the provisions of this Article that involves a 17
324	329		hospital owned by a municipality, as defined in G.S. 131E-6, or a hospital authority, as defined 18
325	330		in G.S. 131E-16, the State Auditor, Attorney General, and State Treasurer shall also consider 19
326	331		whether the transaction complies with the provisions of Article 2 of Chapter 131E of the General 20
327	332		Statutes governing the sale or conveyance of any rights of ownership the municipality or hospital 21
328	333		authority has in a hospital entity. 22
329	334		"§ 131E-214.34. Reserved for future codification purposes. 23
330	335		"§ 131E-214.36. Contract authority for reviewing proposed transactions; assistance from 24
331	336		the Department of Health and Human Services; fees to recover costs incurred in 25
332	337		conducting reviews. 26
333	338		(a) Within the time periods prescribed by G.S. 131E-214.26, the State Auditor, Attorney 27
334	339		General, or State Treasurer may do any of the following to assist in the review of a proposed 28
335	340		transaction covered by this Article: 29
336	341		(1) Contract with, consult, and receive advice from any agency of the State or the 30
337	342		United States on such terms and conditions as the State Auditor, Attorney 31
338	343		General, and State Treasurer deem appropriate. 32
339	344		(2) At the sole discretion of the State Auditor, Attorney General, and State 33
340	345		Treasurer, contract with experts or consultants the State Auditor, Attorney 34
341	346		General, and State Treasurer deem appropriate to assist them in reviewing the 35
342	347		proposed transaction. 36
343	348		Notwithstanding the provisions of this subsection, the State Auditor, Attorney General, and 37
344	349		State Treasurer shall not incur contract costs that exceed an amount that is reasonable and 38
345	350		necessary for a review of the proposed transaction. 39
346	351		(b) In exercising the authority to enter into contracts pursuant to this section, the State 40
347	352		Auditor, Attorney General, and State Treasurer are exempt from Article 3 of Chapter 143 of the 41
348	353		General Statutes. 42
349	354		(c) The State Auditor, Attorney General, and State Treasurer may request from the 43
350	355		Department of Health and Human Services a report on the anticipated effects of any proposed 44
351	356		transaction on access to, or the pricing of, healthcare services in any part of the State. If the State 45
352	357		Auditor, Attorney General, and State Treasurer did not unreasonably delay in requesting such a 46
353	358		report, the review period prescribed by G.S. 131E-214.26 may be extended an additional 30 days 47
354	359		to allow for the completion of such a report; provided, however, that the total review period for 48
355	360		the State Auditor, Attorney General, and State Treasurer may not exceed 180 days from the date 49
356	361		they notify the parties to the transaction that they have submitted a complete notice pursuant to 50
357	362		subsection (a) of G.S. 131E-214.26. 51 General Assembly Of North Carolina Session 2025
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359	364		(d) The State Auditor, Attorney General, and State Treasurer may impose upon the 1
360	365		acquiring entity a fee of up to fifty thousand dollars ($50,000) to cover one or more of the 2
361	366		following: 3
362	367		(1) The cost of all contracts entered into by the State Auditor, Attorney General, 4
363	368		and State Treasurer pursuant to subsection (a) of this section. 5
364	369		(2) Actual costs incurred by the State Auditor, Attorney General, and State 6
365	370		Treasurer in reviewing any proposed transaction under this Article, including 7
366	371		(i) costs incurred by the State Auditor, Attorney General, and State Treasurer 8
367	372		for conducting a public hearing pursuant to subsections (f) and (g) of 9
368	373		G.S. 131E-214.30 and (ii) attorneys' fees at the maximum billing rate used by 10
369	374		the Attorney General to bill State agencies for legal services. 11
370	375		(3) Actual costs incurred by the Department of Health and Human Services for 12
371	376		preparing a report for the State Auditor, Attorney General, and State Treasurer 13
372	377		pursuant to subsection (c) of this section. Upon receipt of this fee from the 14
373	378		acquiring entity, the State Auditor, Attorney General, and State Treasurer shall 15
374	379		reimburse the Department of Health and Human Services for the actual cost 16
375	380		of preparing the report. Reimbursement of these costs shall receive priority 17
376	381		over any reimbursement of costs that will ultimately inure to the State Auditor, 18
377	382		Attorney General, and State Treasurer. 19
378	383		(e) The acquiring entity may object to paying any fee imposed under this section. If the 20
379	384		acquiring entity objects, it may seek an order from a court of competent jurisdiction to limit the 21
380	385		acquiring entity's liability for the fee. In determining whether to issue an order, the court shall 22
381	386		consider the reasonableness of any contract the State Auditor, Attorney General, and State 23
382	387		Treasurer entered into with any expert and the cost of contracting with the expert relative to the 24
383	388		value of the proposed transaction. If the court declines to enter the acquiring entity's proposed 25
384	389		order, the acquiring entity shall reimburse the State Auditor, Attorney General, and State 26
385	390		Treasurer for costs associated with the litigation and such reimbursement shall not count against 27
386	391		the maximum allowed fee of fifty thousand dollars ($50,000) specified in subsection (d) of this 28
387	392		section. 29
388	393		(f) The failure of an acquiring entity to pay to the State Auditor, Attorney General, and 30
389	394		State Treasurer any fee authorized by this section by the applicable deadline specified in this 31
390	395		subsection shall be sufficient grounds for the State Auditor, Attorney General, and State 32
391	396		Treasurer to object to the proposed transaction: 33
392	397		(1) Absent an objection by the acquiring entity within seven days after the State 34
393	398		Auditor, Attorney General, and State Treasurer impose the fee, the fee is 35
394	399		payable to the State Auditor, Attorney General, or State Treasurer within 30 36
395	400		days after the date the State Auditor, Attorney General, or State Treasurer 37
396	401		imposes the fee. 38
397	402		(2) Upon an objection by the acquiring entity within seven days after the State 39
398	403		Auditor, Attorney General, and State Treasurer impose the fee, the fee is 40
399	404		payable to the State Auditor, Attorney General, and State Treasurer within 30 41
400	405		days after the date the court issues an order determining that the acquiring 42
401	406		entity is liable for the fee. 43
402	407		"§ 131E-214.38. Objection to proposed transaction. 44
403	408		(a) The State Auditor, Attorney General, and State Treasurer may object to any 45
404	409		transaction covered by this Article by providing written notice to the parties within the time frame 46
405	410		prescribed by G.S. 131E-214.26. 47
406	411		(b) If the State Auditor, Attorney General, and State Treasurer object to the transaction, 48
407	412		the State Auditor, Attorney General, and State Treasurer shall file an action in either (i) the 49
408	413		superior court of any county in which there exists a hospital entity whose control or governance 50
409	414		would be altered by the proposed transaction or (ii) the superior court of the county in which the 51 General Assembly Of North Carolina Session 2025
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411	416		acquiring entity's principal place of business is located, if located within the State. The State 1
412	417		Auditor, Attorney General, State Treasurer and the parties to a transaction may mutually agree, 2
413	418		in writing, to extend the time period in which the State Auditor, Attorney General, and State 3
414	419		Treasurer may file such an action. If the time period for the State Auditor, Attorney General, and 4
415	420		State Treasurer to file an action objecting to the transaction is extended by mutual agreement 5
416	421		under this subsection, the parties to the transaction are prohibited from consummating the 6
417	422		transaction during that time. 7
418	423		(c) If the hospital entity is a nonprofit or publicly owned entity: 8
419	424		(1) The State Auditor, Attorney General, and State Treasurer shall file an action 9
420	425		in the name of the State seeking injunctive relief to restrain the parties from 10
421	426		taking further action to consummate the transaction or to compel the parties 11
422	427		to modify the transaction. The court may issue an order granting such 12
423	428		injunctive relief. 13
424	429		(2) The State Auditor, Attorney General, and State Treasurer may apply to the 14
425	430		court for temporary or preliminary injunctive relief pending a final 15
426	431		determination of the case. 16
427	432		(3) The State Auditor, Attorney General, and State Treasurer shall name as 17
428	433		defendants the hospital entity, the governing body of the hospital entity, and 18
429	434		the acquiring entity. Additionally, if the State Auditor, Attorney General, and 19
430	435		State Treasurer allege a breach of fiduciary duty by an individual director or 20
431	436		officer of the hospital entity, the State Auditor, Attorney General, and State 21
432	437		Treasurer may name such director or officer as a defendant. 22
433	438		(4) In any action brought pursuant to this subsection, the State Auditor, Attorney 23
434	439		General, and State Treasurer bear the burden of establishing by clear and 24
435	440		convincing evidence one of the following: 25
436	441		a. A breach of fiduciary duty occurred in the negotiation of the 26
437	442		transaction and consummation of the transaction would result in a 27
438	443		breach of fiduciary duty. 28
439	444		b. The assets of the hospital entity dedicated to charitable purposes prior 29
440	445		to the transaction would not continue to be dedicated to the same or 30
441	446		equivalent charitable purposes following consummation of the 31
442	447		transaction. 32
443	448		c. Consummation of the transaction would have significant and 33
444	449		deleterious effects on the cost, availability, accessibility, and quality 34
445	450		of healthcare in the State or any portion of the State, and the negative 35
446	451		consequences of the transaction would outweigh any potential 36
447	452		benefits. In assessing the disadvantages attributable to a reduction in 37
448	453		competition likely to result from consummation of the transaction, the 38
449	454		court may rely upon determinations by federal courts and North 39
450	455		Carolina courts concerning unreasonable restraint of trade and 40
451	456		antitrust violations. 41
452	457		(5) In determining whether the State Auditor, Attorney General, and State 42
453	458		Treasurer have met the burden of proof under subdivision (4) of this 43
454	459		subsection, the court should consider evidence of any of the applicable criteria 44
455	460		listed in G.S. 131E-214.32. 45
456	461		(6) The court may issue a decision approving the transaction, approving the 46
457	462		transaction subject to modification, or disapproving the transaction. Any party 47
458	463		may appeal a decision of the court approving the transaction subject to 48
459	464		modification, except the State Auditor, Attorney General, and State Treasurer 49
460	465		shall not appeal a decision of the court approving the transaction subject to the 50 General Assembly Of North Carolina Session 2025
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462	467		same modifications initially sought by the State Auditor, Attorney General, 1
463	468		and State Treasurer. 2
464	469		(d) If the hospital entity is a for-profit entity: 3
465	470		(1) The State Auditor, Attorney General, and State Treasurer shall file an action 4
466	471		in the name of the State seeking injunctive relief to restrain the parties from 5
467	472		taking further action to consummate the transaction. The court may issue an 6
468	473		order granting such injunctive relief. 7
469	474		(2) The State Auditor, Attorney General, and State Treasurer may apply to the 8
470	475		court for temporary or preliminary injunctive relief pending final disposition 9
471	476		of the case. 10
472	477		(3) The State Auditor, Attorney General, and State Treasurer shall name as 11
473	478		defendants the hospital entity and the acquiring entity. 12
474	479		(4) In any action brought pursuant to this subsection, the State Auditor, Attorney 13
475	480		General, and State Treasurer shall have the burden of establishing by clear and 14
476	481		convincing evidence that consummation of the transaction would have 15
477	482		significant and deleterious effects on cost, availability, accessibility, and 16
478	483		quality of healthcare in the State or any portion of the State and that the 17
479	484		negative consequences of such a transaction outweigh any potential benefits. 18
480	485		In assessing disadvantages attributable to a reduction in competition likely to 19
481	486		result from consummation of the transaction, the court may rely upon 20
482	487		determinations by federal courts and North Carolina courts concerning 21
483	488		unreasonable restraint of trade and antitrust violations. 22
484	489		(5) In determining whether the State Auditor, Attorney General, and State 23
485	490		Treasurer have met the burden of proof under subdivision (4) of this 24
486	491		subsection, the court should consider evidence of any of the applicable criteria 25
487	492		listed in G.S. 131E-214.32. 26
488	493		(6) The court may issue a final determination approving the transaction, 27
489	494		approving the transaction subject to modification, or disapproving the 28
490	495		transaction. Any party may appeal a decision of the court approving the 29
491	496		transaction subject to modification, except the State Auditor, Attorney 30
492	497		General, and State Treasurer shall not appeal a decision of the court approving 31
493	498		the transaction subject to the same modification the State Auditor, Attorney 32
494	499		General, and State Treasurer initially sought. 33
495	500		(e) Any party to a transaction that is subject to review under this Article may decline to 34
496	501		enter into a transaction that has been modified by order of the court upon a final determination. 35
497	502		However, if the parties agree to enter into a transaction that has been modified by order of the 36
498	503		court upon a final determination, then the modified transaction shall not be subject to renewed 37
499	504		objection from the State Auditor, Attorney General, and State Treasurer. 38
500	505		"§ 131E-214.40. Post-transaction reporting; authorization to file further action. 39
501	506		(a) Following a decision by the State Auditor, Attorney General, and State Treasurer not 40
502	507		to object to a transaction subject to review under this Article, or following a final decision in a 41
503	508		judicial proceeding brought pursuant to G.S. 131E-214.38, the acquiring entity shall submit to 42
504	509		the State Auditor, Attorney General, and State Treasurer an annual report on the acquiring entity's 43
505	510		compliance with the terms of the purchase agreement for the transaction, including any 44
506	511		representations made to, or modifications made by, the State Auditor, Attorney General, and 45
507	512		State Treasurer. The State Auditor, Attorney General, and State Treasurer shall adopt rules 46
508	513		specifying the required contents of the annual report required by this subsection. 47
509	514		(b) If the hospital entity that is a party to the transaction is a nonprofit or publicly owned 48
510	515		entity, the acquiring entity or any foundation or charitable trust established pursuant to the 49
511	516		transaction shall, in addition to submitting the annual report required by subsection (a) of this 50
512	517		section, report annually to the State Auditor, Attorney General, and State Treasurer on its 51 General Assembly Of North Carolina Session 2025
513		-	~~Senate Bill 532-First Edition~~ Page 11
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514	519		charitable activities and the disposition of its charitable assets in the manner and form prescribed 1
515	520		by the State Auditor, Attorney General, and State Treasurer. 2
516	521		(c) If the State Auditor, Attorney General, and State Treasurer deem it reasonable and 3
517	522		necessary to do so based on the acquiring entity's failure to comply with the terms of the 4
518	523		agreement approved by the State Auditor, Attorney General, and State Treasurer or by a court 5
519	524		pursuant to G.S. 131E-214.28, including any modifications to the agreement made by the State 6
520	525		Auditor, Attorney General, and State Treasurer, then the State Auditor, Attorney General, and 7
521	526		State Treasurer may file an action for relief to restore the benefits of healthcare provider 8
522	527		competition in any part of the State, subject to all of the following: 9
523	528		(1) If the transaction was approved only after a final judicial determination 10
524	529		pursuant to G.S. 131E-214.38, the State Auditor, Attorney General, and State 11
525	530		Treasurer shall file the action in the same court that made the final judicial 12
526	531		determination. If the transaction was approved by the State Auditor, Attorney 13
527	532		General, and State Treasurer without a final judicial determination pursuant 14
528	533		to G.S. 131E-214.38, the State Auditor, Attorney General, and State Treasurer 15
529	534		may file an action in either (i) the superior court of any county in which there 16
530	535		exists a hospital entity whose control or governance would be altered by the 17
531	536		proposed transaction or (ii) the superior court of the county in which the 18
532	537		acquiring entity's principal place of business is located, if located within the 19
533	538		State. 20
534	539		(2) The State Auditor, Attorney General, and State Treasurer may seek any relief 21
535	540		necessary to remedy a violation of the agreement. 22
536	541		(3) The State Auditor, Attorney General, and State Treasurer have the burden of 23
537	542		demonstrating by clear and convincing evidence that the benefits of the relief 24
538	543		sought to restore the benefits of healthcare provider competition in any part of 25
539	544		the State clearly outweigh the costs of doing so, including the transactional 26
540	545		costs associated with doing so and any likelihood that the resulting market 27
541	546		would not provide the benefits of healthcare provider competition in any part 28
542	547		of the State. 29
543	548		(4) No such action may be brought more than five years after the consummation 30
544	549		of a transaction. 31
545	550		(d) After consummation of a transaction, an acquiring entity shall not change the financial 32
546	551		assistance policy regarding patients who are uninsured or underinsured that were in effect for the 33
547	552		hospital entity immediately preceding consummation of the transaction without first providing 34
548	553		120 days' notice, in writing, to the Attorney General; its hospital staff, including physicians in a 35
549	554		contractual relationship with the acquiring entity; and patients who have previously benefited 36
550	555		from the hospital entity's financial assistance policy. This subsection does not prohibit an 37
551	556		acquiring entity from increasing the applicable income limits used to determine patient eligibility 38
552	557		for financial assistance at any time following consummation of the transaction, and it does not 39
553	558		require an acquiring entity to provide prior notice to the State Auditor, Attorney General, and 40
554	559		State Treasurer about the increased income limits. In order to meet the notice requirements of 41
555	560		this subsection with respect to patients who have previously benefited from the hospital entity's 42
556	561		financial assistance policy, the acquiring entity shall do all of the following: 43
557	562		(1) Provide written notice to both the patient's last known mailing address and to 44
558	563		the email address on file for the patient that includes at least all of the 45
559	564		following: 46
560	565		a. A description of how the acquiring entity's new financial assistance 47
561	566		policy will differ from the hospital entity's financial assistance policy. 48
562	567		b. A description of the process for obtaining financial assistance under 49
563	568		the acquiring entity's new financial assistance policy, including a list 50
564	569		of (i) all forms a patient would be required to complete in order to be 51 General Assembly Of North Carolina Session 2025
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566	571		eligible for financial assistance and (ii) all documents a patient would 1
567	572		be required to produce as part of the acquiring entity's new financial 2
568	573		assistance policy. 3
569	574		c. A link to a webpage that allows members of the public to view the new 4
570	575		financial assistance policy and any forms a patient would be required 5
571	576		to complete in order to be eligible for financial assistance. 6
572	577		d. A toll-free telephone number for patients to call to ask questions about 7
573	578		the acquiring entity's new financial assistance policy. 8
574	579		(2) Educate all physicians affiliated with the acquiring entity, including 9
575	580		physicians in a contractual relationship with the acquiring entity, on the new 10
576	581		financial assistance policy. Physicians shall verbally inform patients about the 11
577	582		new financial assistance policy at appointments occurring during the 120-day 12
578	583		notice period required by this subsection. 13
579	584		"§ 131E-214.42. Violations; penalties; preservation of statutory and common law authority 14
580	585		of the State Auditor, Attorney General, and State Treasurer. 15
581	586		(a) Any transactions entered into in violation of this Article shall be null and void. 16
582	587		(b) Each member of the governing boards and each chief financial officer of the parties 17
583	588		to a transaction entered into in violation of this Article are subject to a civil penalty of up to fifty 18
584	589		thousand dollars ($50,000) each per transaction, unless the violation was made in wanton 19
585	590		disregard of the law, in which case the civil penalty may be up to one million dollars ($1,000,000) 20
586	591		each per transaction. The State Auditor, Attorney General, and State Treasurer shall institute 21
587	592		proceedings to impose a civil penalty authorized by this section in a court of competent 22
588	593		jurisdiction in Wake County, and the court shall determine the amount of the civil penalty to be 23
589	594		imposed under this section. The clear proceeds of civil penalties provided for in this subsection 24
590	595		shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C-457.2. 25
591	596		(c) The Department of Health and Human Services shall not issue a new or renewal 26
592	597		license to operate a hospital under Article 5 of Chapter 131E of the General Statutes, or any 27
593	598		applicable rules, on behalf of any hospital that is a party to a transaction entered into in violation 28
594	599		of the notice, public hearing, and review requirements of this Article. 29
595	600		(d) Nothing in this Article shall be construed to limit the statutory or common law 30
596	601		authority of the State Auditor, Attorney General, or State Treasurer to protect charitable trusts 31
597	602		and assets located in this State. The penalties and remedies set forth in this Article are in addition 32
598	603		to, and not a replacement for, any other civil or criminal actions the State Auditor, Attorney 33
599	604		General, or State Treasurer is authorized by statute or common law to file, including actions 34
600	605		seeking rescission of a transaction, injunctive relief, or any combination of these, and other 35
601	606		remedies available under statute or common law." 36
602	607		SECTION 2. This act becomes effective December 1, 2025, and applies to activities 37
603	608		occurring on or after that date. 38