SENATE BILL No. 44[cf13]*
stances to a foundation created under this act; providing for the creation of such foun-
dations and the appointment of a board of directors therefor; placing certain limitations
Section 1. (a) Whenever there is a proposed change in control of a
not-for-profit hospital by sale, merger, integration or any other event that
may result in the change or loss of the hospital's federal tax exempt status
or forfeiture of the hospital's articles of incorporation or amendment of
the hospital's articles of incorporation that in any manner alters the orig-
inal purpose of the hospital, and before there is any transfer or depletion
of the hospital's assets, a new foundation shall be formed pursuant to
subsection (c), and all Kansas assets of the hospital shall be transferred
to such foundation.
(b) The purpose of the foundation created pursuant to this section
shall be to determine disposition of the assets transferred to the foun-
dation in accordance with subsection (a). Such disposition shall effectuate
as near as possible the manifested general charitable intention of the
donor or donors. This section shall not be construed in any way to limit
the authority of the attorney general provided by the provisions of K.S.A.
59-22a01 and amendments thereto.
(c) Any foundation formed pursuant to this section shall be organized
as a Kansas not-for-profit corporation that is not subject to federal income
taxation pursuant to section 501(c)(3) of the federal internal revenue
code. The board of directors for any such foundation shall consist of 18
members, of whom five shall be appointed by the governor, five by the
attorney general, three by the senate president, three by the speaker of
the house of representatives, one by the minority leader of the senate and
one by the minority leader of the house of representatives. Vacancies
occurring on the foundation board of directors shall be filled by the re-
spective appointing authority. In selecting members, the appointing au-
thorities shall consult to give due consideration to whether the board, as
a whole, represents the geographic, ethnic, gender, age, socio-economic
and professional diversity of the counties comprising the hospital's service
area. Members shall not receive compensation for their service on a foun-
dation board of directors, but may receive actual expenses for such serv-
(d) Each foundation board member shall serve a three year term,
except initially, when two of the governor's appointees, two of the attorney
general's appointees, one of the president's appointees and one of the
speaker's appointees shall serve two year terms, and one of the governor's
appointees, one of the attorney general's appointees, one of the presi-
dent's appointees, one of the speaker's appointees and the appointees of
the two minority leaders shall serve one year terms.
(e) Each member of a foundation board of directors shall be a resi-
dent of one of the counties comprising the hospital's service area.
(f) No foundation created under this section shall make any loans to
any of its board members, officers, employees, other person or entity
employed by or having a contract with the foundation and shall not engage
in any self-dealing for the benefit of any board member, officer, em-
ployee, other person or entity having a contract with the foundation. No
foundation, foundation board member, officer or employee shall, directly
or indirectly, engage in lobbying or otherwise attempt to influence leg-
islation, advocate the nomination, election or defeat of any candidate for
public office, or attempt to influence the outcome of any ballot initiative
or issue. No asset of the foundation shall be utilized by the foundation,
foundation board members, officers, employees, or grant recipients for
lobbying or otherwise attempting to influence legislation, advocating the
nomination, election or defeat of any candidate for public office, or at-
tempting to influence the outcome of any ballot initiative or issue. Noth-
ing in this provision shall be construed to prohibit the foundation, foun-
dation board members, officers, employees or grant recipients from
publicizing the services provided by said foundation or grant recipients,
or publicizing the decisions and actions of the foundation, or to prohibit
individual foundation board members, officers, employees or grant recip-
ients from expressing individually held opinions as long as such opinions
are not expressed as being held by the foundation itself.
(g) As used in this section, ``hospital'' means one or more of the fol-
lowing: (1) a hospital as defined by K.S.A. 65-425 and amendments
thereto, that is not subject to federal income taxation pursuant to section
501(c)(3) of the federal internal revenue code and that is licensed by
either the Kansas department of health and environment pursuant to
K.S.A. 65-425 et seq. and amendments thereto; or (2) Health Midwest,
Inc. and any other similarly situated hospital holding company; or (3) a
licensed Kansas not-for-profit hospital that is a subsidiary or affiliate of a
domestic or foreign hospital holding company. As used in this section, a
hospital's ``service area'' means the county or counties in Kansas that are
served by that hospital.
(h) The provisions of this section shall apply from and after January
(i) If any provision of this act or the application thereof to any person
or circumstance is held invalid, the invalidity does not affect other pro-
visions or applications of this act which can be given effect without the
invalid provision or application, and to this end the provisions of this act
(j) This section shall be a part of and supplemental to the hospital
licensing, inspection and regulation act, K.S.A. 65-425 et seq.
Sec. 2. This act shall take effect and be in force from and after its
publication in the Kansas register.
Approved January 24, 2002.
Published in the Kansas Register January 27, 2002.
Date Composed: 10/29/2003 Date Modified: 10/29/2003