Montana Code Annotated 2023



Part 7. Conversion of Nonprofit Health Entity to For-Profit or Mutual Benefit Corporation

Criteria For Commissioner Approval Of Conversion Transaction

50-4-717. Criteria for commissioner approval of conversion transaction. (1) The commissioner may not approve a conversion transaction except upon a finding that the conversion transaction is in the public interest. If the attorney general or a court pursuant to 50-4-704 determines that the transaction does not involve public assets, the commissioner may not disapprove the conversion transaction under the provisions of this part.

(2) In determining whether a conversion transaction is in the public interest, the commissioner shall consider:

(a) whether the transferor exercised due diligence in deciding to engage in a conversion transaction, selecting the transferee, and negotiating the terms and conditions of the conversion transaction;

(b) the procedures that the transferor used in making the decision, including whether appropriate expert assistance was used;

(c) whether any conflicts of interest were disclosed, including conflicts of interest of board members, executives, and experts retained by the transferor, transferee, or any other parties to the conversion transaction;

(d) whether the conversion has the likelihood of creating a significant adverse effect on the availability or accessibility of health care services or health insurance coverage in the affected community;

(e) whether the conversion transaction includes sufficient safeguards to ensure that the affected community will have continued access to affordable health care;

(f) whether any management contract under the conversion transaction is for reasonable value; and

(g) whether the conversion transaction:

(i) is equitable to the public interest, enrollees, insureds, shareholders, and certificate holders, if any, of the transferor;

(ii) is in compliance with Title 33, chapters 30 and 31;

(iii) ensures that the transferee will possess surplus in an amount sufficient to comply with the surplus required under law and provide for the security of the transferee's certificate holders, if any, and policyholders.

(3) In making the determination required under this section, the commissioner may not determine that a conversion transaction is in the public interest unless the nonprofit health entity considered the risks of a conversion transaction, including whether a conversion transaction:

(a) would result in inefficient economies of scale; or

(b) would violate federal or state antitrust laws.

(4) If an agreement for the conversion of a nonprofit health entity requires payment of money, as liquidated damages or otherwise, in the event of a breach of the agreement by the nonprofit health entity, the commissioner shall determine whether and to what extent the payment by the nonprofit health entity is in the public interest.

History: En. Sec. 15, Ch. 214, L. 2005.