D.C. Mun. Regs. tit. 22, r. 22-B4009

Current through Register Vol. 71, No. 49, December 6, 2024

Rule 22-B4009 - SALE OR TRANSFER OF EFFECTIVE CONTROL

4009.1

Pursuant to D.C. Official Code § 44-411 a CON may not be sold or transferred. The sale or transfer of effective control over a project for which a current CON has been granted shall cause the CON to be subject to review and approval by SHPDA. The process for reviewing a CON resulting from transfer of effective control is subject to the requirements of D.C. Official Code § 44-406(b) and this section. For the purpose of this section, a current CON means authorization from SHPDA that has not been fully implemented.

4009.2

For purposes of this section the term "effective control" includes:

(a) The ability of any person, by reason of a direct or indirect ownership interest, whether of record or beneficial, in a corporation, partnership, or other entity that holds a CON, to direct or cause the direction of the management or policies of that corporation, partnership, or other entity; and

(b) Creation of a new legal entity regardless of whether the owners remain the same.

4009.3

If a current CON is held by a partnership, either general or limited, the addition of a general partner who was not identified as a general partner in the certificate of partnership on file with SHPDA at the time the original CON was issued, or the succession of a general partner who was named as a general partner by another person at any time after issuance of the original CON, shall be reviewed and approved by SHPDA, or shall cause withdrawal of the CON, effective as of the time at which the addition or succession of a general partner occurs.

4009.4

Any transfer, assignment, or other disposition of ten per cent (10%) of the stock or voting rights thereunder of a corporation or other entity that operates a health care facility, or any transfer, assignment, or other disposition of the stock or voting rights thereunder of he corporation or other entity that results in the ownership or control of more than ten percent (10%) of the stock or voting rights of the corporation or other entity by any person shall, when that corporation or entity holds a current CON, shall cause the CON to be subject to review and approval by SHPDA.

4009.5

For a partnership, ten percent (10%) of the stock or voting rights shall include the following:

(a) The obligation of any partner to provide ten percent (10%) or more, including property and services, of the total capital contribution of the partnership, as reflected in an amendment of the original certificate of partnership;

(b) The right of any partner to receive distribution of ten percent (10%) or more of the profits of the partnership, as reflected in an amendment of the original certificate of partnership; or

(c) The right of any partner, upon dissolution of the partnership, to receive ten percent (10%) or more of partnership assets remaining after payment of all partnership debts, as reflected in an amendment of the original certificate of partnership.

4009.6

A party proposing to gain effective control of a project for which a CON has been granted, or of an entity that holds a CON, shall apply for a new CON. No Letter of Intent shall be required in this circumstance.

4009.7

The criteria and standards normally applicable to a CON application shall apply to a sale or transfer of effective control. SHPDA shall also weigh the qualifications of the party proposing to gain effective control to effectively operate the project.

4009.8

SHPDA shall review a CON application under this section by examining the financial responsibility and business interests of the person or entity seeking to obtain the effective control in addition to any other prescribed and published SHPDA review criteria.

4009.9

Under D.C. Official Code § 44-416(e), failure to obtain a new CON before effecting the sale, transfer, assignment, or other disposition of effective control over, or the acquisition of ten per cent (10%) or more of stock or voting rights, in the holder of record of a current CON shall cause the automatic revocation of the current CON, effective as of the time at which the acquisition, sale, transfer, assignment, or other disposition occurs.

D.C. Mun. Regs. tit. 22, r. 22-B4009

Final Rulemaking published at 29 DCR 5569 (December 17, 1982), enacting Proposed Rulemaking published at 29 DCR 4742 (October 29, 1982); as amended by Final Rulemaking published at 61 DCR 1666 (February 28, 2014)

Authority: § 22 of the Health Services Planning Program Re-establishment Act of 1996 (Act), effective April 9, 1997 (D.C. Law 11-191; D.C. Official Code § 44-421 (2012 Repl.)).