Senate Bill 1044c2

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    Florida Senate - 1998                    CS for CS for SB 1044

    By the Committees on Governmental Reform and Oversight, Health
    Care and Senator Williams




    302-2132-98

  1                      A bill to be entitled

  2         An act relating to public records and meetings;

  3         creating s. 395.3036, F.S.; providing that when

  4         a public lessor complies with the public

  5         finance accountability provisions of s.

  6         155.40(5), F.S., with respect to the transfer

  7         of any public funds to a private lessee, the

  8         records of a private corporation that leases a

  9         public hospital or other public health care

10         facility are confidential and exempt from

11         public records requirements, and the meetings

12         of the governing board of such corporation are

13         exempt from public meeting requirements if the

14         corporation meets specified criteria; providing

15         for future review and repeal; providing a

16         finding of public necessity; providing an

17         effective date.

18

19  Be It Enacted by the Legislature of the State of Florida:

20

21         Section 1.  Section 395.3036, Florida Statutes, is

22  created to read:

23         395.3036  Confidentiality of records and meetings of

24  corporations that lease public hospitals or other public

25  health care facilities.--The records of a private corporation

26  that leases a public hospital or other public health care

27  facility are confidential and exempt from the provisions of s.

28  119.07(1) and s. 24(a), Art. I of the State Constitution, and

29  the meetings of the governing board of a private corporation

30  are exempt from s. 286.011 and s. 24(b), Art. I of the State

31  Constitution when the public lessor complies with the public

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    Florida Senate - 1998                    CS for CS for SB 1044
    302-2132-98




  1  finance accountability provisions of s. 155.40(5) with respect

  2  to the transfer of any public funds to the private lessee and

  3  when the private lessee meets at least three of the five

  4  following criteria:

  5         (1)  The public lessor that owns the public hospital or

  6  other public health care facility was not the incorporator of

  7  the private corporation that leases the public hospital or

  8  other health care facility.

  9         (2)  The public lessor and the private lessee do not

10  commingle any of their funds in any account maintained by

11  either of them, other than the payment of the rent and

12  administrative fees or the transfer of funds pursuant to

13  subsection (2).

14         (3)  Except as otherwise provided by law, the private

15  lessee is not allowed to participate, except as a member of

16  the public, in the decisionmaking process of the public

17  lessor.

18         (4)  The lease agreement does not expressly require the

19  lessee to comply with the requirements of s. 119.07(1) and s.

20  286.011.

21         (5)  The public lessor is not entitled to receive any

22  revenues from the lessee, except for rental or administrative

23  fees due under the lease, and the lessor is not responsible

24  for the debts or other obligations of the lessee.

25         Section 2.  (1)  The Legislature finds that it is a

26  public necessity that all records of a private corporation and

27  all meetings of the governing board of the private corporation

28  be confidential and exempt from the public records and public

29  meeting laws of this state when the private corporation leases

30  a public hospital or other public health care facility from a

31  public entity in accordance with the terms of this act. The

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    Florida Senate - 1998                    CS for CS for SB 1044
    302-2132-98




  1  Legislature further finds that private corporations have

  2  entered into such leases in reliance on the legal standard

  3  governing the application of the public records and open

  4  meeting laws to such lease agreements which was set forth in

  5  case law existing at the time of the transaction. That

  6  standard provided that such private lessees were not "acting

  7  on behalf of" the public entity and, therefore, not subject to

  8  the state's public records laws so long as the public entity

  9  did not retain control over the private lessee. No one factor

10  was used to determine whether the public entity exerted

11  control; instead a "totality of factors" was analyzed and the

12  decision made on the balance of those factors. In a recent

13  decision, however, the Fifth District Court of Appeal has now

14  applied the standard in a manner that may cause more lessees

15  to be subject to public records and meetings requirements. The

16  Legislature finds that the effect of the decision has been:

17         (a)  To create uncertainty with respect to the status

18  of records and meetings under existing lease arrangements; and

19         (b)  To create a disincentive for private corporations

20  to enter into such lease agreements in the future.

21         (2)  Public entities have chosen to privatize the

22  operations of their public hospitals and public health care

23  facilities in order to alleviate three problems that pose a

24  significant threat to the continued viability of Florida's

25  public hospitals:

26         (a)  A financial drain on the facilities from their

27  forced participation in the Florida Retirement System;

28         (b)  The competitive disadvantage placed on these

29  facilities vis a vis their private competitors resulting from

30  their required compliance with the state's public records and

31  public meeting laws; and

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    Florida Senate - 1998                    CS for CS for SB 1044
    302-2132-98




  1         (c)  State constitutional restrictions on public

  2  facility participation in partnerships with private

  3  corporations as a result of the limitations contained in the

  4  State Constitution. For years, the Legislature has approved

  5  and encouraged these leases, first through special acts that

  6  it has adopted authorizing the lease agreements and, more

  7  recently, through the adoption of section 155.40, Florida

  8  Statutes, which provides for the conversion of public hospital

  9  facilities to private operation by lease, as a means to

10  provide public entities with the necessary flexibility to use

11  these public assets in a manner that best serves the interests

12  of the public. Through such lease arrangement, public entities

13  have been able to obtain substantial and oftentimes

14  desperately needed private capital investment into these

15  facilities and to relieve the oftentimes burdensome drain on

16  public tax revenues which resulted from public operation.

17         (3)  In the absence of a defined and, therefore,

18  predictable statewide standard for determining when the public

19  records and public meetings laws apply to future lease

20  agreements, public entities may find it difficult, if not

21  impossible, to find a private corporation that is willing to

22  enter into a lease to operate the public hospital or other

23  public health care facility. This, in turn, could force the

24  public entity:

25         (a)  To close the hospital or other health care

26  facility, which would result in a reduction in health care

27  services to the public;

28         (b)  To sell the hospital or other health care

29  facility, which sale, if the facility has deteriorated because

30  of inadequate capital investments over time, will likely be at

31  a loss; or

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    Florida Senate - 1998                    CS for CS for SB 1044
    302-2132-98




  1         (c)  To continue operating the hospital or other health

  2  care facility using public tax dollars to subsidize recurring

  3  losses. None of these options is in the best interest of the

  4  public.

  5         (3)  The Legislature, therefore, finds that it is a

  6  public necessity for it, through this act, to clarify when the

  7  public records and public meeting laws apply to private

  8  lessees of public hospital or other public health care

  9  facilities. The Legislature further finds that it is a public

10  necessity for these private lessees to be exempt from the

11  public records and public meetings laws of the state so long

12  as, applying the standard codified by this act, the public

13  entity does not retain control over the private entity.

14         Section 3.  This act shall take effect upon becoming

15  law and shall apply to existing leases and future leases of

16  public hospitals and other health care facilities.

17

18          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
19                            CS/SB 1044

20

21  Exempts private corporation that leases public hospital or
    other public health care facility from public records and
22  meetings requirement if public lessor complies with public
    finance accountability provisions of s. 155.40(5), F.S., and
23  if private lessee meets at least three of five criteria: (1)
    the public lessor that owns public hospital or other health
24  care facility was not the incorporator of the private
    corporation that leases the public hospital or other health
25  care facility; (2) the public lessor and private lessee do not
    commingle any of their funds in any account maintained by
26  either of them, other than the payment of the rent and
    administrative fees or the transfer of funds; (3) except as
27  otherwise provided by law, the private lessee is not allowed
    to participate, except as a member of the public, in the
28  decision-making process of the public lessor; (4) the lease
    agreement does not expressly require the lessee to comply with
29  the requirements of s. 119.07(1) and s. 286.011, F.S.; and (5)
    the public lessor is not entitled to receive any revenues from
30  the lessee, except for rental or administrative fees due under
    the lease, and the lessor is not responsible for the debts or
31  other obligations of the lessee.

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