Section 1260 Of Article 1. General From California Health And Safety Code >> Division 2. >> Chapter 2. >> Article 1.
1260
. (a) Except as provided in subdivision (b), any member of the
board of directors of a nonprofit corporation that is subject to
Section 5914 of the Corporations Code, who negotiates the terms and
conditions of a sale or transfer of assets, as described in Section
5914 of the Corporations Code, is prohibited from receiving, directly
or indirectly, any salary, compensation, payment, or other form of
remuneration from the for-profit corporation or entity or mutual
benefit corporation following the close of the sale or other transfer
of assets. This prohibition shall not apply to any reimbursement or
payment made to a member of the board of directors, who is a
physician or other health care provider, for direct patient care
services provided to patients covered by a health insurer, health
care service plan, employer, or other entity that provides health
care coverage, and that is owned, operated, or affiliated with the
purchasing for-profit corporation or entity, provided that the
amounts payable for the services rendered are no greater than the
amounts payable to other physicians or health care providers
providing the same or similar services.
For the purpose of this section, "direct patient care services"
mean health care services provided directly to a patient, and do not
include services provided through an intermediary. Further, in order
to qualify for the exemption in this subdivision, the direct patient
care services must be health care services that are regularly
provided by other physicians or other health care providers in the
community who are also receiving reimbursements or payments from the
same health insurer, health care service plan, employer, or other
entity that is owned or operated by, or affiliated with, the
purchasing for-profit corporation or entity.
(b) After a period of two years following the close of the sale or
other transfer of assets, a person who was a member of the board of
directors of the nonprofit corporation who is prohibited from
receiving any remuneration from the for-profit corporation or entity
or mutual benefit corporation under subdivision (a) may enter into
usual and customary business transactions with the for-profit
corporation or entity or mutual benefit corporation so long as the
following facts are established:
(1) Prior to authorizing or approving the transaction, the
representative of the for-profit corporation or entity or mutual
benefit corporation considered and in good faith determined after
reasonable investigation under the circumstances that the corporation
could not have obtained a more advantageous arrangement with
reasonable effort under the circumstances.
(2) The for-profit corporation or entity or mutual benefit
corporation, in fact could not have obtained a more advantageous
arrangement with reasonable effort under the circumstances.
(c) Any person who is a member of management of the nonprofit
corporation and who presents information or opinions to the board
regarding the sale or other transfer of assets as described in
subdivision (a) that are relied upon, or considered by, any of the
board members in making decisions regarding the sale or transfer, may
make a written affirmative declaration that he or she will not work
for, or receive any form of remuneration from, the for-profit
corporation or entity or the mutual benefit corporation in the
future.
(d) In making any decision regarding the sale or other transfer of
the nonprofit corporation's assets, as described in Section 5914 of
the Corporations Code, the board of the nonprofit corporation is
prohibited from substantially relying on any information presented by
any person to whom subdivision (c) applies who has not made a
written affirmative declaration pursuant to subdivision (c). This
subdivision shall not apply to any person whose only role in the sale
or transfer is to provide to the nonprofit corporation exclusively
factual information about the nonprofit corporation, community,
financial status, or other similar data.
(e) In performing those duties of a director set forth in
subdivision (d), the board of directors may contract with independent
counsel, accountants, financial analysts, or other professionals
whom the board believes to be reliable and competent in the matters
presented, to review and evaluate information and advice presented by
an employee who has not signed an affirmative declaration pursuant
to subdivision (c). Any director who substantially relies on
information and advice presented by such an independent professional
shall be deemed to have not violated subdivision (d).