SB-0374, As Passed House, October 6, 2011

SUBSTITUTE FOR

SENATE BILL NO. 374

     A bill to amend 1987 PA 230, entitled

"Municipal health facilities corporations act,"

by amending sections 209 and 258 (MCL 331.1209 and 331.1258),

section 209 as amended by 1994 PA 398 and section 258 as amended by

1990 PA 273.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 209. (1) Each All of the following apply to each board of

trustees of a corporation and subsidiary board of a subsidiary

corporation incorporated by a county:

     (a) The board shall consist of not fewer than at least 5 or

and not more than 15 trustees. The exact number of trustees and the

length of their terms of office shall be as specified in the

articles of incorporation or as provided in under section 203(1).

     (b) Except for the initial appointments to boards a board of

trustees and or subsidiary boards of board of a newly incorporated

corporations and corporation or subsidiary corporations, terms

corporation, the term of office begin of a trustee begins on

January 1.

     (c) The term of office of a trustee appointed to fill a

vacancy on a board of trustees or subsidiary board of a corporation

or subsidiary corporation established by a county begins upon

appointment when he or she is appointed and shall continue

continues for the remainder of the term of the former trustee whose

position became vacant.

     (d) Terms of office of trustees shall be staggered so that an

approximately equal number of terms expire at the end of each year

or each 2 years, except that terms may be fixed so that the

shortest terms do not expire until the end of the second year

following the incorporation of a corporation or a subsidiary

corporation. Notwithstanding any other provision of this

subsection, all trustees shall serve until their successors are

     (e) A trustee whose term of office has expired shall continue

to serve until his or her successor is appointed. In the case of

corporations governed by Act No. 350 of the Public Acts of 1913,

being sections 331.151 to 331.169 of the Michigan Compiled Laws, on

February 27, 1988, the

     (f) The chief executive of the a corporation established by a

county and governed by 1913 PA 350, MCL 331.151 to 331.169, shall

serve as a member of the board of trustees until and unless the

duly adopted articles of incorporation provide otherwise. , and in

other cases the The chief executive officer of a any other

corporation or subsidiary corporation established by a county is

eligible to serve on the board of trustees or a subsidiary board,

either by appointment or, if provided in the articles of

incorporation, ex officio.

     (2) Upon incorporation of If a county incorporates a

corporation by a county pursuant to under this act, the county

board of commissioners shall appoint trustees to all positions on

the initial board of trustees. After the initial board of trustees,

when a trustee's term of office expires or if a trustee's office is

otherwise vacant, the remaining members of the board of trustees

shall fill the vacancy with the advice and consent of the county

board of commissioners. This subsection does not apply to an ex

officio member of a board of trustees who is appointed by a chief

executive officer.

     (3) Adoption of articles of incorporation for a corporation

succeeding a county public hospital organized and existing under

Act No. 350 of the Public Acts of 1913 or under Act No. 109 of the

Public Acts of 1945, being sections 331.201 to 331.213 of the

Michigan Compiled Laws, 1913 PA 350, MCL 331.151 to 331.169, or

1945 PA 109, MCL 331.201 to 331.213, on February 27, 1988 does not

constitute incorporation of a corporation for purposes of this

subsection (2). The terms of office of trustees serving on the

board of such a that county public hospital shall not be

diminished, except that the adopted articles may prospectively

establish new lengths of terms of office for the board of trustees,

and may prospectively alter the board size. Nominations for a

position on a board of trustees or subsidiary board of a

corporation or subsidiary corporation established by a county,

other than an ex officio position filled by a chief executive

officer, shall be made by submitting the names of 3 qualified

nominees to the county board of commissioners. During the September

immediately preceding the expiration of a term of office on the

board of trustees or subsidiary board of a corporation or

subsidiary corporation established by a county, that board of

trustees or subsidiary board shall make nominations for each

position for which the term of office is about to expire. Upon

creation of a vacancy on the board of trustees or subsidiary board

of a corporation or subsidiary corporation established by a county,

that board of trustees or subsidiary board shall make nominations

for the vacant position. Upon incorporation of

     (4) If a county incorporates a subsidiary corporation, by a

county, the board of trustees of the parent corporation shall make

nominations for each position on the new appoint the initial

subsidiary board . The county board of commissioners, at a meeting

in that or the following month, shall consider the nominations and

shall make appointments to the board of trustees or subsidiary

board from among the persons nominated as considered appropriate by

the county board of commissioners. The county board of

commissioners is not required to fill a position with 1 of the 3

persons nominated, but if it declines to do so, it shall consider

nominees and request additional nominees in the manner provided in

this subsection until the position is filled. with the advice and

consent of the county board of commissioners. After the initial

subsidiary board, when a trustee's term of office expires or if a

trustee's office is otherwise vacant, the board of trustees of the

parent corporation shall fill the vacancy with the advice and

consent of the county board of commissioners. This subsection does

not apply to an ex officio member of a subsidiary board who is

appointed by a chief executive officer.

(5) (3) All trustees A trustee of corporations and a

corporation or subsidiary corporations corporation established by a

county shall be chosen with reference to their fitness for the

based on his or her qualifications for that office, but not more

than 1/3 of the trustees serving at any time shall be direct

providers of health care. Trustees A trustee shall be citizens a

resident of the county unless the articles of incorporation permit

individuals who are not citizens residents of the county to be

trustees a trustee. Trustees A trustee of the parent corporation,

the chief executive officer of the parent corporation, and the

chief executive officer of a subsidiary corporation are eligible

for appointment to a subsidiary board and a trustee or chief

executive officer of a parent corporation are eligible for

appointment as chief executive officer of a subsidiary corporation,

and these those offices are not incompatible. Trustees are A

trustee is eligible for reappointment.

(6) (4) Before the tenth day after commencement of their

Within 9 days after commencing his or her term of office, trustees

a trustee shall qualify by taking take the oath of office as

provided by in section 1 of article XI of the state constitution of

1963.

(7) (5) Any A trustee of a corporation established

incorporated by a county may be removed from office for cause

either by vote of a majority of the members then serving on the

county board of commissioners or by vote of a majority of the

members then serving on the board of trustees of the corporation.

Any trustees A trustee of a subsidiary corporation incorporated by

a county may be removed from office for cause either by vote of a

majority of the members then serving on the county board of

commissioners or by vote of a majority of the members then serving

on the board of trustees of the parent corporation. As used in this

subsection, "cause" includes, but is not limited to, incompetency

to properly exercise duties; official misconduct; or habitual or

willful neglect of duty, including, but not limited to, failure to

attend meetings, including committee meetings, in accordance with

standards determined from time to time by the board of trustees of

the corporation or subsidiary board.

(8) (6) A trustee shall not be removed from office on grounds

of misconduct or neglect unless the trustee is served with a notice

of hearing and a copy of the asserted ground for removal, and is

given full opportunity to be heard, either in person or by counsel,

before a vote is taken on the question of removal from office.

     Sec. 258. (1) Each All of the following apply to each board of

trustees and subsidiary board of a corporation incorporated by a

city or village:

     (a) The board shall consist of not fewer than at least 5 or

and not more than 15 trustees. The exact number of trustees and the

length of their terms of office shall be as specified in the

articles of incorporation.

     (b) Except for the initial appointments to boards a board of

trustees and or subsidiary boards board of a newly incorporated

corporations and corporation or subsidiary corporations, terms

corporation, the term of office begin of a trustee begins on

January 1. Terms

     (c) The terms of office of trustees shall be staggered so that

an approximately equal number of terms expire at the end of each

year or each 2 years, except that terms may be fixed so that the

shortest terms do not expire until the end of the second year

following the incorporation of a corporation or a subsidiary

corporation. Notwithstanding any other provision of this

subsection, trustees shall serve until their successors are A

trustee whose term of office has expired shall continue to serve

until his or her successor is appointed.

     (2) Upon incorporation of If a city or village incorporates a

corporation or subsidiary corporation by a city or village pursuant

to under this act, the city council or village council shall

appoint trustees to all positions on the initial board of trustees.

After the initial board of trustees, when a trustee's term of

office expires or if a trustee's office is otherwise vacant, the

remaining members of the board of trustees shall fill the vacancy

with the advice and consent of the city council or village council.

This subsection does not apply to an ex officio member of a board

of trustees who is appointed by a chief executive officer.

     (3) The terms of office of trustees serving on the board of a

city public hospital or village public hospital before

incorporation that is subsequently incorporated under this act

shall not be diminished, except that the adopted articles of

incorporation for that successor corporation may prospectively

establish new lengths of terms of office for the board of trustees,

and may prospectively alter the board size. Upon incorporation of

     (4) If a city or village incorporates a subsidiary

corporation, and during the September preceding the expiration of

all terms of office of trustees of corporations and subsidiary

corporations, the board of trustees of the corporation or parent

corporation shall submit to the city council or village council the

names of 3 qualified nominees for each new or expiring term, other

than the term of the chief executive officer on the board of

trustees, if the chief executive officer of the corporation serves

as a member of the board of trustees. The city council or village

council, at a meeting in that or the following month, shall

consider the nominations and shall make appointments for the board

of trustees or subsidiary board from among the persons nominated as

considered appropriate by the city council or village council. The

city council or village council is not required to fill a position

with 1 of the 3 persons nominated, but if the city council or

village council declines to do so, it shall request that the board

of trustees provide the city council or village council with 3

additional nominees for the position within 30 days, and shall

continue to consider nominees and request additional nominees in

the manner provided in this subsection until the position is

filled. appoint the initial subsidiary board with the advice and

consent of the city council or village council. After the initial

subsidiary board, when a trustee's term of office expires or if a

trustee's office is otherwise vacant, the board of trustees of the

parent corporation shall fill the vacancy with the advice and

consent of the city council or village council. This subsection

does not apply to an ex officio member of a subsidiary board who is

appointed by a chief executive officer.

(5) (3) Trustees shall be chosen with reference to their

fitness for the A trustee of a corporation or subsidiary

corporation established by a city or village shall be chosen based

on his or her qualifications for that office, but not more than 1/3

of the trustees serving at any time shall be direct providers of

health care. The articles of incorporation of the corporation or

subsidiary corporation may require that the trustees be citizens a

trustee be a resident of the city or village. Trustees A trustee of

the parent corporation, including its chief executive officer, and

the chief executive officer of a subsidiary corporation are

eligible for appointment to a subsidiary board, and these those

offices are not incompatible. Trustees are A trustee is eligible

for reappointment.

(6) (4) Before the tenth day after commencement of their

Within 9 days after commencing his or her term of office, trustees

a trustee shall qualify by taking take the oath of office as

provided by in section 1 of article XI of the state constitution of

1963.

(7) (5) A trustee of a corporation incorporated by a city or

village may be removed from office for cause either by vote of a

majority of the members then serving on the city council or village

council or by vote of a majority of the members then serving on the

board of trustees of the corporation. A trustee of a subsidiary

corporation may be removed from office for cause either by vote of

a majority of the members then serving on the city council or

village council or by vote of a majority of the members then

serving on the board of trustees of the parent corporation. As used

in this subsection, "cause" includes, but is not limited to,

incompetency to properly exercise duties; official misconduct; or

habitual or willful neglect of duty, including, but not limited to,

failure to attend meetings, including committee meetings, in

accordance with standards determined by the board of trustees of

the corporation or subsidiary board.

(8) (6) A trustee shall not be removed from office on grounds

of misconduct or neglect unless the trustee is served with a notice

of hearing and a copy of the asserted ground for removal, and is

given full opportunity to be heard, either in person or by counsel,

before a vote is taken on the question of removal from office.