Brown vetoes hospital merger bill

Facing a deadline,  Gov. Brown struck down legislation to grant state Attorney General Kamala Harris more authority over nonprofit hospital mergers.

The attorney general — a position he once held — already has sufficient authority, he said Monday in his veto message.

“For nearly two decades, the Attorney General has had the authority to approve, deny or place conditions on these transaction in order to evaluate potential impacts on a community’s access to health care services, and safeguard – as much as possible – those assets that have been held in the public trust,” the governor wrote in his veto statement.

“Once a deal is a deal you shouldn’t be able to reopen it,” CHA spokeswoman Jan Emerson-Shea said.

The issue arose in the October 2012 merger between St. Joseph Health and Hoag Memorial Hospital Presbyterian in Southern California, in which questions were raised about the contract agreement. Critics of the merger said the merger resulted in the loss of direct abortion services at the absorbed facility, Hoag Memorial Hospital.

Advocates for the vetoed legislation, SB 1094 by Sen. Ricardo Lara, D-Bell Gardens, argued that some terms of the merger agreement had been misrepresented by St. Joseph to the impacted community.

Failure to sufficiently disclose details of Hoag’s service changes to the public compromised the integrity of the agreement and approval process, according to the attorney general’s office, which backed the bill.

Under the bill, Harris would have been granted more time, from 60 to 90 days, to review such transactions. It would have also expanded her power to revisit the terms of a merger’s contract agreement, such as in the case of St. Joseph Hoag, to make a case for intentional misrepresentations.

Bill opponents, including the California Hospital Association, argued if Harris were given unilateral authority to reopen such deals, it would stifle future mergers.

“We oppose [SB 1094] on the philosophy that once a deal is a deal you shouldn’t be able to reopen it,” CHA spokeswoman Jan Emerson-Shea said.

Currently, the attorney general’s office may appeal to the courts to resolve disputes related to the conditions of approval in these mergers. Brown noted that the attorney general’s office is writing new rules regarding mergers.

“The Attorney General’s office is currently in the process of revising regulations pertaining to these transactions,” Brown said. “We should wait until these new regulations are implemented before deciding what adjustments, if any, are needed to improve the approval process for nonprofit sales.”

Lara was not immediately available for comment.

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