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SB352 INTRODUCED
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SB352
84ILUHF-1
By Senator Albritton
RFD: County and Municipal Government
First Read: 10-Mar-26
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84ILUHF-1 03/04/2026 JC (L)lg 2026-35
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First Read: 10-Mar-26
SYNOPSIS:
Public, nonprofit hospitals and health care
facilities may be operated by regional health care
authorities that are created pursuant to the "Health
Care Authorities Act of 1982." The Health Care
Authorities Act allows the creation of a new health
care authority that is derived from an existing health
care authority, but does not specify any procedural
steps for taking this action.
This bill would allow a county or municipality
to approve the incorporation of a new health care
authority to serve an area that is already within an
existing health care authority. Other counties or
municipalities in the existing health care authority
would be required to cooperate with the separation of a
new health care authority from the existing authority.
This bill would require the boards of directors
of the original health care authority and the
newly-established health care authority to negotiate a
plan of separation to operate their respective health
care authorities, including the transfer of health care
facilities to the new authority and a fair division of
existing liabilities and assets.
If the two authorities are unable to reach a
separation agreement, this bill further provides for
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separation agreement, this bill further provides for
binding arbitration to achieve an agreement under the
jurisdiction of the judge of probate.
A BILL
TO BE ENTITLED
AN ACT
Relating to health care authorities; to add Section
22-21-340.1 to the Code of Alabama 1975, to further provide
for health care authorities by establishing a procedure by
which a new health care authority may be incorporated and
established from an existing health care authority; to provide
for a plan for distribution of assets and liabilities between
an existing health care authority and a new health care
authority; and to provide for settlement by arbitration.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 22-21-340.1 is added to the Code of
Alabama 1975:
§22-21-340.1
(a)(1) Pursuant to Section 22-21-340, a governing body
of a political subdivision that has authorized, or that is
located within the service area of, an existing authority, may
authorize the incorporation of a new authority that is
intended to encompass part of the service area of the existing
authority upon application made to the governing body
according to the requirements of Section 22-21-313.
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according to the requirements of Section 22-21-313.
(2) In a resolution authorizing the incorporation of a
new authority pursuant to Section 22-21-313(b), the governing
body of the authorizing subdivision shall include, as part of
the determination that it is wise, expedient, and necessary
that a new authority be incorporated, as many of the following
reasons as may apply:
a. In the absence of a separate authority, the
financial viability and survival of existing health care
facilities is in doubt.
b. The geographic area proposed to be served by the new
authority may receive more efficient or accessible health care
services and infrastructure than is currently the case under
the existing authority.
c. Conflicts concerning priorities in health care
delivery, planning, budgeting, revenue, or allocation of
resources exist between the board of directors or a governing
body of other authorizing subdivisions of the existing
authority, and the authorizing subdivision or individuals
involved in governance or operation of a health care facility
located in the proposed service area of the new authority,
which, after good faith efforts, cannot be satisfactorily
resolved in the existing authority.
(3)a. Upon authorization of the incorporation of a new
authority under subdivision (1), the applicants shall file a
certificate of incorporation for the new authority according
to, and in conformity with, the requirements of Section
22-21-314. The certificate of incorporation shall include a
description of the existing health care facilities and other
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description of the existing health care facilities and other
assets that the new authority intends to acquire and operate
from the existing authority.
b. The board of directors of the new authority shall be
comprised of members who do not currently serve on the board
of directors of the existing authority, and shall otherwise be
appointed in accordance with Section 22-21-316(a), including
the requirement that a majority of members be chosen by the
governing body of the authorizing subdivision.
(b)(1) The incorporators of the new authority shall
serve by certified U.S. mail, return receipt requested, a copy
of the certificate of incorporation to all of the following:
a. The governing body of each authorizing subdivision
of the existing authority.
b. The board of directors of the existing authority.
c. The board of directors of each health care facility
or hospital corporation located within the service area of the
existing authority.
(2) Upon receipt by the parties listed in subdivision
(1) of the certificate of incorporation of the new authority,
all of the following actions shall occur:
a. The board of the existing authority, pursuant to
Section 22-21-315, shall amend the certificate of
incorporation to reflect that the service area shall no longer
encompass the service area of the new authority. In so doing,
the board may change the name of the existing authority
pursuant to Section 22-21-314(b)(2) to more accurately reflect
the reduction in area of the existing authority.
b. The authorizing subdivisions of the existing
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b. The authorizing subdivisions of the existing
authority shall, by resolution, approve the amendment required
in paragraph a. according to the procedure provided in Section
22-21-315(b).
(3) No more than 10 days after the filing and recording
of the amended certificate of incorporation for the existing
authority in the office of the Judge of Probate as required by
Section 22-21-315(c), the Judge of Probate shall enter an
order that contains all of the following:
a. Directs the board of directors of the existing
authority and the board of directors of the new authority to
commence development of the plan required by subsection (c),
to be finalized in no more than 12 months from the date of
entry of the order.
b. Directs the board of directors of the existing
authority and the board of directors of the new authority to
report periodically to the Judge of Probate on the status of
the plan development required by subsection (c), on no less
than a quarterly basis. Each report shall summarize in writing
the matters upon which the two boards have reached agreement
and the matters upon which agreement has not been attained.
(c)(1) The board of directors of the existing authority
shall promptly negotiate in good faith with the board of
directors of the new authority to develop a plan for the
separation, governance, and operation of the two authorities
which shall address, but not be limited to, all of the
following matters:
a. The transfer of ownership of health care facilities,
health care services, real property, and other tangible or
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health care services, real property, and other tangible or
intangible assets to the new authority.
b. Required changes in corporate ownership or
governance of affected health care facilities or health care
services to be delivered by the new authority, including
amendment, reincorporation, or dissolution of public hospital
corporations that are agents or instrumentalities of, or which
share executives, directors, employees, contractors, or
facilities with, the existing authority.
c. With respect to outstanding liabilities of the
existing authority, including, but not limited to, indentures,
securities, coupon payments, or loans, the assumption by the
new authority of an equitable proportion of outstanding
liabilities, including periodic debt service, that reflects
the benefit conferred on health care infrastructure in the
service area of the new authority by any of the obligations.
d. With respect to income of the existing authority
from revenue sources, including, but not limited to, loan
proceeds, securities, federal, state, or private grants,
revenue streams from the state and authorizing subdivisions
designated to the existing authority in the form of proceeds
from any property tax, privilege tax, license, or other fees,
allocation to the new authority of an equitable proportion of
the income that reflects the intent or purpose of any of the
revenue as applicable to benefit health care delivery or
infrastructure in the service area of the new authority.
e. Distribution to, or sharing between, the two
authorities of outstanding contractual obligations relating to
health care delivery, including physician or other licensed
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health care delivery, including physician or other licensed
health care professional service contracts, laboratory
facilities or services, diagnostic or durable medical
equipment, home health delivery, emergency medical service
providers, or urgent care, including free-standing facilities
or clinics.
f. Distribution to, or sharing between, the two
authorities of contractual obligations relating to operation
or maintenance of health care delivery infrastructure,
including employment or staffing contracts, capital
improvements, provision or maintenance of information
technology, payroll, insurance, cafeteria, office equipment,
security, furniture, vehicles, janitorial service, or
landscaping.
(2) The plan shall be developed to avoid: (i) an
interruption in health care delivery in the communities
affected by the transition from one to two authorities; (ii)
significant disruption in the working conditions or
obligations of employees and contractors; and (iii) default in
servicing outstanding financial obligations.
(3) The negotiating boards may retain, as required,
outside legal and accounting services, and other necessary
expertise to advise, recommend, and provide professional
services necessary to formulate, finalize, and implement the
plan required, the fees for which shall be borne equally by
the two authorities.
(4) At any time, the negotiating boards may retain a
mediator to facilitate discussion and propose resolution of
issues or terms of the plan.
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issues or terms of the plan.
(5) The plan as finalized shall be a contract that is
enforceable by either authority, any authorizing subdivision
of either authority, or any affected health care facility, by
any remedy available at law or equity in the court of probate
with jurisdiction over the plan as provided in subdivision
(b)(3).
(d)(1) At any time during the development of the plan
required by subsection (c), any matter in controversy or
requiring settlement may be referred by the judge of probate
to arbitration by settlement upon:
a. Petition filed by the board of either authority, an
authorizing subdivision of either authority, or an affected
health care facility; or
b. Upon order entered, sua sponte, by the judge of
probate.
(2) The judge of probate shall appoint by order a
disinterested arbitrator who has experience in the resolution
of disputes that involve the acquisition, divestiture, or
dissolution of business or nonprofit entities, assets, and
obligations.
(3) The order required in subdivision (2) shall specify
the matters in controversy for resolution.
(4)a. The arbitration proceedings shall be conducted in
accordance with the Guidelines for Arbitration Proceedings in
Alabama published by the Alabama Supreme Court Commission on
Dispute Resolution.
b. The judge of probate may enter any order concerning
the conduct of the arbitration, on motion of one of the
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the conduct of the arbitration, on motion of one of the
parties in paragraph (1)a. or the arbitrator, or sua sponte,
relating to enforcement of any order of the arbitrator,
including a finding of civil contempt or appropriate
injunctive relief.
(5) The arbitrator shall issue a written award that
resolves the matters referred for arbitration, which shall be
distributed to the negotiating boards. The arbitrator shall
submit the written award to the judge of probate no more 10
days from issuance. The judge of probate may do any of the
following no less than 10 days after submission by the
arbitrator:
a. Adopt and enter the award as an order of the court.
b. Set aside the award in whole or in part, and refer
the matters in dispute to the same arbitrator with
instructions or to a different arbitrator.
c. Schedule a hearing no more than 30 days from the
filing of an objection to the award by one of the negotiating
boards, which objection shall be filed with the judge of
probate no more than 10 days from the arbitrator's issuance of
the award.
(6) If a hearing is conducted pursuant to paragraph
(5)c., the judge of probate shall enter an order no more than
10 days after the hearing which:
a. Adopts and enters the award as an order of the
court, to include any modification that the judge of probate
deems equitable or appropriate; or
b. Sets aside the award in whole or in part, and refers
the matters in dispute to the same arbitrator with
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the matters in dispute to the same arbitrator with
instructions or to a different arbitrator.
(7) An order of the judge of probate approving an award
pursuant to subdivision (5) or (6) shall be final and
conclusive on the two boards and authorities, including an
order approving an award in part as to those matters decided
therein. The terms of the award shall be enforceable by either
authority, any authorizing subdivision of either authority, or
any affected health care facility, by any remedy available at
law or equity in the court of probate with jurisdiction over
development of the plan.
Section 2. This act shall become effective on October
1, 2026.
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