State House Passes Bill To Change Erlanger Board

Thursday, February 14, 2013

The Tennessee House of Representatives voted 95-0 on Thursday to pass the bill making changes to the board that operates Erlanger Hospital.

The bill now heads to the state Senate, where it is sponsored by Senators Todd Gardenhire and Bo Watson.

Rep. Gerald McCormick said the bill is designed to eliminate political appointments to the board.

The current board is set to meet Monday night and is expected to name a new CEO from three finalists.

County Commissioner Tim Boyd earlier Thursday said he has a number of concerns about the legislation.

He outlined 11 issues in a paper he gave to fellow commission members.

Meanwhile, Chancellors Frank Brown and Jeff Atherton have reappointed Russell King to a four-year term on the Erlanger Board.

Mayor Ron Littlefield has reappointed Donnie Hutcherson to a four-year term.

Here is the bill as amended:

SECTION 1. Chapter 297 of the Private Acts of 1976, as amended by Chapter 125 of

the Private Acts of 1977, and any other acts amendatory thereto, is amended by deleting

Section 1 and by substituting instead the following as a new Section 1:

Section 1.

A governmental Hospital Authority known as the Chattanooga – Hamilton County

Hospital Authority, having been established by Chapter 297 of the Private Acts of 1976

as amended by Chapter 125 of the Private Acts of 1977, Chapter 80 of the Private Acts

of 1985; and other subsequent private acts shall hereafter operate in accordance with

this Act. The purpose of the Hospital Authority is to operate Erlanger Health System,

including Baroness Erlanger Hospital, T.C. Thompson Children’s Hospital and such

other facilities and services as determined by the Hospital Authority’s Board of Trustees.

The facilities and services of the Hospital Authority shall be made available without

regard to race, religion or national origin, and to indigent patients, including patients

identified as indigent by the County Auditor, in accordance with policies established by

the Board of Trustees.

SECTION 2. Chapter 297 of the Private Acts of 1976, as amended by Chapter 125 of

the Private Acts of 1977, and any other acts amendatory thereto, is amended by deleting

Section 4 and by substituting instead the following:

Section 4.

Whenever used in this act, unless a different meaning clearly appears from the

context, the following terms whether used in the singular or the plural shall be given the

following respective interpretations:

“Authority” or “Hospital Authority” means the Chattanooga-Hamilton County

Hospital Authority as created by this act;

"Board of Commissioners" means the Board of Commissioners of the City;

“Board of Trustees” means the Board of Trustees of the Authority as provided for

in this act;

"Bonds" means bonds of the authority authorized to be issued by this act.

'Advance refunding bonds' means bonds issued for the purpose of refunding outstanding

bonds which will neither mature by their terms nor be subject to and called for

redemption within a period of 30 days following the date of issuance of said advance

refunding bonds;

"Chancellors" means Chancellors of the Chancery Courts of Hamilton County,

Tennessee;

"Chief Executive Officer" means, as the context requires, the president of the

authority, the mayor of the city, and the county judge of the county;

“City” means the City of Chattanooga, Tennessee;

“Community” means Hamilton County, Tennessee and the surrounding area;

“County” or “Hamilton County” means Hamilton County, Tennessee;

“County Auditor” means the auditor for Hamilton County designated by the

County Commission;

“County Commission” means the County Commission of Hamilton County;

"County Judge" means the county judge or such other chief executive officer of

the county as may be created by subsequent law;

“County Mayor” means the Mayor of Hamilton County;

“Erlanger Health System” means the facilities and services operated by the

Authority, including without limitation Baroness Erlanger Hospital and T.C. Thompson

Children’s Hospital;

"Financial Review Committee" means the Financial Review Committee provided

for in this act;

“Legislative Delegation” means the Hamilton County delegation to the Tennessee

General Assembly, being the Senators and Representatives elected from those districts

lying in whole or in part in the county;

"Mayor" means the mayor of the city or such other chief executive officer of the

city as may be created by subsequent law;

"Notes" means notes of the authority authorized to be issued by this act. "Short-

Term Notes' means nonrenewable notes having a term no longer than three (3) years.

'Long-Term Notes' means renewable short-term notes and notes having a term longer

than three (3) years; and

“Project” or “Facility” shall mean any one or combination of buildings, structures,

facilities or services owned or operated by the Authority, including the site therefore and

all machinery and equipment therein or necessary to the operation thereof.

SECTION 3. Chapter 297 of the Private Acts of 1976, as amended by Chapter 125 of

the Private Acts of 1977, Chapter 71 of the Private Acts of 2012, and any other acts amendatory

thereto, is amended by deleting Section 3 and by substituting instead the following as a new

Section 3:

Section 3.

(a) Upon approval of this act in accordance with SECTION 14, the Board of

Trustees of the Authority shall be reconstituted and thereafter it shall operate in

accordance with this act. The Board of Trustees shall be reflective of the community and

composed of nine (9) individuals as voting members. Seven (7) members of the Board

shall be community residents selected as provided in subsections (b) and (c) and

referred to herein as “community members.” At least one (1) of the community members

shall have experience in corporate compliance as an attorney or otherwise. One (1) of

the members shall be the chief of the medical staff of Erlanger Health System or the

chief of the medical staff's designee, and referred to herein as “medical staff member.”

One (1) member of the Board of Trustees shall be an individual who serves as faculty or

in administration of an institution of higher learning accredited by an agency recognized

by the Tennessee Department of Education and Council on Higher Education and

referred to herein as “academic member.” The community members shall establish the

qualifications, term and limitations on the term of service of the academic member.

(b) The Legislative Delegation, after consultation with the Mayor of Hamilton

County recommend to the Tennessee General Assembly the nominees for members of

the Board of Trustees. The General Assembly shall appoint the initial Board of Trustees,

except for the medical staff board member who serves by reason of the member's

position, and the academic board member who will be appointed by the community

members subject to subsection (a) above. The term of office for community members

shall be three (3) years, provided the initial appointments by the General Assembly of

the community members shall be for staggered terms, so that two (2) such members

have an initial term of one (1) year; two (2) such members shall have an initial term of

two (2) years; and three (3) such members shall have an initial term of three (3) years.

The medical staff member shall serve on the Board of Trustees concurrent with their

appointment as Chief of Medical Staff of Erlanger Health System. The General

Assembly shall also designate one of the community board members to be initial

chairman or chairwoman of the Board of Trustees, and the member so designated shall

serve in this capacity until the end of their term on the Board of Trustees, unless

reelected in accordance with procedures established by the Board of Trustees.

(c) All members of the board shall reside in Hamilton County, Tennessee or in

Tennessee and Georgia counties contiguous to Hamilton County. At least seven (7) of

the nine (9) members shall be full-time residents of Hamilton County, Tennessee.

(d)

(1) No individual may serve as community member for more than three

(3) terms. Upon the vacancy of any seat on the Board of Trustees, other than the

medical staff member, for any reason, the remaining members shall fill the

vacancy by a majority vote of the Board of Trustees remaining in office in

accordance with subdivision (2).

(2) When the remaining members of the Board of Trustees elect a person

to fill a vacant seat, such person’s name shall be submitted in writing to the

Legislative Delegation and to the County Mayor. If both the Legislative

Delegation and the County Commission, within thirty (30) days of receipt of the

name, adopt by majority vote resolutions disapproving of such person for service

on the Board of Trustees and specifying the reasons for disapproval, then such

person shall be disqualified from serving on the Board of Trustees. If a person is

disapproved in accordance with this paragraph, the remaining members of the

Board of Trustees shall undertake to elect a different person to fill the vacancy.

(e) Subject to subsection (b) above, the Board of Trustees shall be authorized to

elect one (1) or more officers and to create from its members one (1) or more

committees including, without limitation, a finance committee and audit committee, which

committees will have the duties and responsibilities determined by the Board of

Trustees.

(f)

(1) The Board of Trustees shall appoint an external audit committee

composed of the County Auditor and at least two (2) residents of Hamilton

County knowledgeable in financial and health care matters. The external audit

committee shall attend all meetings of the Audit Committee of the Board of

Directors. Before taking any action to approve the issuance of bonds or long-term

notes or to approve a budget of the Authority, the Board of Trustees shall request

comment and guidance from the external audit committee. The Board of

Trustees may request the external audit committee to provide advice and

guidance relative to financial planning and analysis matters.

(2) The members of the external audit committee shall serve without

compensation, but may be reimbursed the reasonable cost of attending

meetings. The members of the external audit committee shall be indemnified by

the Authority for any liability they may incur for acts occurring in their official

capacity, to the same extent and subject to their same limitations applicable to

the indemnification by the Authority of members of the Board of Trustees.

SECTION 4. Chapter 297 of the Private Acts of 1976, as amended by Chapter 125 of

the Private Acts of 1977, and any other acts amendatory thereto, is amended by deleting

Section 8 in its entirety and by substituting instead the following:

Section 8.

The board shall establish policies and procedures for the removal of a board

member to include, without limitation, removal for the following reasons:

(1) Refusal or inability of a member of the Board of Trustees to perform

their duties as a member of the board in accordance with the standards of

conduct referenced in Section 19;

(2) Misuse of the office by a member of the board to obtain personal,

pecuniary, or material gain or advantage for themselves or another; or

(3) Material violation of any provision of this act or any policy or

procedure adopted by the Board of Trustees.

SECTION 5. Chapter 297 of the Private Acts of 1976, as amended by Chapter 125 of

the Private Acts of 1977, Chapter 99 of the Private Acts of 1985, and any other acts amendatory

thereto, is amended by deleting Section 6 and by substituting instead the following as a new

Section 6:

Section 6.

(a) The Board of Trustees shall be vested with the full, absolute and complete

authority and responsibility for the complete operation, management, conduct and

control of the business and affairs of the Authority herein created. The Board of Trustees

shall exercise its duties and responsibilities consistent with the standards of conduct and

obligations described in Section 19. The authority and responsibility of the Board of

Trustees shall include, but shall not be limited to, the establishment, promulgation and

enforcement of the rules, regulations and policies of the Authority, the granting of or the

refusal of medical staff privileges, the upkeep and maintenance of all property, the

administration of all financial affairs of the Authority, including pledging of assets for

expansion and improvement of facilities and any other necessary financial needs of the

Authority. The Authority shall have, but shall not be limited to, the following powers

together with all powers incidental thereto or necessary for the performance of those

hereinafter stated:

(1) To sue and be sued and to prosecute and defend, at law or in equity,

in any court having jurisdiction of the subject matter and of the parties;

(2) To have and use an official seal and to alter the same at pleasure;

(3) To acquire, whether by purchase, construction, exchange, gift, lease,

or otherwise, and to improve, maintain, extend, equip and furnish hospital and

related facilities wherever located, including expressly, but without limitation,

professional office buildings, ancillary residence facilities and data processing

facilities, and including all real and personal properties which the Board of

Trustees may deem necessary in connection therewith and regardless of

whether or not any such facilities shall then be in existence;

(4) To execute all contracts, agreements and other instruments with any

person, partnership, corporation, federal, state, county or municipal government,

including but not limited to the issuance of bonds, mortgages, notes and other

forms of indebtedness, and contracts for the management of hospital and clinic

facilities for the purpose of carrying out any of its business;

(5) Subject to the provisions of this section, to sell, lease, exchange,

donate, and convey any or all of its properties whenever its Board of Trustees

shall find any such action to be in furtherance of the purposes for which the

Authority was created;

(6) As security for the payment of the principal of and interest on any

bonds and notes so issued and any agreements made in connection therewith, to

mortgage and pledge-any or all of its facilities or any part or parts thereof,

whether then owned or thereafter acquired, and to pledge all or any portion of the

revenues and receipts therefrom or from any thereof;

(7) To employ and pay compensation to such employees, and agents,

including attorneys, accountants, engineers, architects and financial consultants,

as the Board of Trustees shall deem necessary for the business of the Authority;

and

(8) To establish bylaws, make all rules and regulations and implement

policies and procedures not inconsistent with the provisions of this act, deemed

expedient for the management of the Authority’s affairs.

(b) The Board of Trustees shall adopt policies and procedures to assure that the

Authority purchases goods and services at competitive prices.

(c) The Board of Trustees shall adopt policies and procedures that (1) clearly

define circumstances that constitute a prohibited conflict of interest for members of the

Board of Trustees and management personnel within the Authority, and (2) state the

consequences of engaging in prohibited conduct.

(d) The Board of Trustees shall have the authority to employ or contract with and

fix the compensation of a chief executive officer of the facilities and services operated by

the Authority. The Board of Trustees shall from time to time determine and prescribe the

duties and responsibilities of such chief executive officer. The Board of Trustees shall

require all employees receiving and disbursing funds of the Authority to be adequately

bonded.

(e) The Board of Trustees shall annually submit to the General Assembly, County

Commission, and County Mayor for informational purposes an audited financial

statement prepared by an independent certified public accounting firm for the preceding

fiscal year and an annual budget for the next fiscal year reflecting in detail all estimated

revenue and expenses of the Authority.

(f) The Authority may reimburse members of the Board of Trustees the

reasonable expense of attending meetings, including training and strategic planning

meetings, but members of the Board of Trustees shall otherwise serve without

compensation.

(g) Any debt or obligation of the Authority incurred by a predecessor board shall

be assumed by the board established pursuant to this 2013 act.

SECTION 7. Chapter 297 of the Private Acts of 1976, as amended by Chapter 125 of

the Private Acts of 1977, and any other acts amendatory thereto, is amended by deleting

Section 8 in its entirety.

SECTION 8. Chapter 297 of the Private Acts of 1976, as amended by Chapter 125 of

the Private Acts of 1977, and any other acts amendatory thereto, is amended adding following

as a new Section 23:

Section 23.

(a) In the event the Authority or its successor shall at any time cease to operate

or own Baroness Erlanger Hospital, T.C. Thompson Children’s Hospital or other

associated hospitals and health centers located on the real estate which was owned on

August 5, 1976, by the county and the city and conveyed to the Authority by the county

and the city, such real estate shall revert in fee simple to the county, subject to such

encumbrances as may be on said property at the time of reversion; provided, however,

that the city shall have an option to require transfer to it of the title to the same proportion

of such real estate as was owned by the city on such date, subject to such

encumbrances on that portion of the real estate.

(b) If the Authority or its successor shall at any time cease to use any parcel or

parcels of real estate described in the preceding subsection for hospital or related

purposes for a period of two (2) years, then the county and the city shall have the option

to require transfer to them of title to such parcel or parcels in fee simple, subject to such

encumbrances as may be on said property at the time of such transfer of title, in the

same proportion as such parcel or parcels were previously owned by the county and the

city. In the event that either the county or the city shall elect not to exercise its option

with respect to any such parcel or parcels of real estate, then the other of them shall

have the option to require transfer to it of the entire parcel or parcels of real estate in

question. In the event that neither the county nor the city decides that they wish to

exercise said option, then the Authority shall have the right to dispose of such property in

whatever manner it deems appropriate.

(c) Nothing in this section shall be construed as creating any financial obligation

on the county or city with respect to the Authority except to the extent of encumbrance

on real estate transferred to the city or county in accordance with this section.

SECTION 9. Chapter 297 of the Private Acts of 1976, as amended by Chapter 125 of

the Private Acts of 1977, and any other acts amendatory thereto, is amended by deleting

Section 19 and by substituting instead the following as a new Section 19:

Section 19.

The Authority shall be a public benefit nonprofit corporation and no part of its net

earnings remaining after payment of its expenses shall inure to the benefit of any

individual, firm or corporation. The Board of Trustees is authorized to undertake any

action consistent with this Act and authorized or permitted by the general law applicable

to public benefit nonprofit corporations and to hospitals and hospital authorities created

by private act of the General Assembly. Members of the Board of Trustees shall be

subject to and conduct themselves in accordance with the general law applicable to

members of a board of directors of a public benefit nonprofit corporation.

SECTION 10. Chapter 297 of the Private Acts of 1976, as amended by Chapter 125 of

the Private Acts of 1977, and any other acts amendatory thereto, is amended by deleting

Section 13 and by substituting instead the following as a new Section 13:

Section 13.

To the extent this act conflicts with or is inconsistent with any private acts, city

ordinances or resolutions, county ordinances or resolutions, court or executive orders

dealing with the organization, operation and control of the Authority, Erlanger Health

System, Baroness Erlanger Hospital or T.C. Thompson Children's Hospital, the

provisions of this act shall control.

SECTION 11. Chapter 297 of the Private Acts of 1976, as amended by Chapter 125 of

the Private Acts of 1977, and any other acts amendatory thereto, is amended by deleting

Section 21 and by substituting instead the following as a new Section 21:

Section 21.

Nothing contained in this act shall be construed:

(1) as creating a new or replacement authority or political subdivision; or

(2) to impair any contract rights that existed prior to the effective date of

this act.

SECTION 12. Chapter 297 of the Private Acts of 1976, as amended by Chapter 125 of

the Private Acts of 1977, Chapter 80 of the Private Acts of 1980, and any other acts amendatory

thereto, is amended by deleting the following language from Section 12:

In any event, the annual appropriation to the Chattanooga Hamilton County Hospital

Authority shall not be less than $3,000,000 in each fiscal year without approval of the

Authority, so long as the 1966 Hamilton County Sales Tax Agreement is in effect.

And by substituting instead the language:

In any event, the annual appropriation to the Chattanooga Hamilton County Hospital

Authority shall not be less than $1,000,000 in each fiscal year without approval of the

Authority; provided, that beginning in fifth year after this 2013 act takes effect and

annually thereafter, the required annual appropriation shall be adjusted for inflation

based on amount used in the prior year in accordance with the consumer price index (all

items-city average), as published by the United States department of labor, bureau of

labor statistics.

SECTION 13. If any provision of this act or the application thereof to any person or

circumstance is held invalid, such invalidity shall not affect other provisions or applications of the

act which can be given effect without the invalid provision or application, and to that end the

provisions of this act are declared to be severable.

SECTION 14. This Act shall have no effect unless it is approved by a two-thirds (2/3)

vote of the legislative body of Hamilton County. Its approval or non-approval shall be proclaimed

by the presiding officer of the county legislative body of Hamilton County and certified to the

Secretary of State.

SECTION 15. For the purposes of approving or rejecting the provisions of this Act, it

shall be effective upon becoming law, the public welfare requiring it. For all other purposes, it

shall become effective as provided in Section 14.

 

 


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