Arizona § 11-1434 - Operating agreement; required provisions

§ 11-1434. Operating agreement; required provisions

A. An operating agreement under this chapter shall include the following provisions:

1. The nonprofit corporation's assumption of responsibility for managing, maintaining and operating the health system assets that are leased or transferred pursuant to the lease agreement.

2. The nonprofit corporation's assumption, beginning on the transfer date, of responsibility for, and responsibility to defend, indemnify and hold the sponsoring county harmless with respect to, all or some liabilities relating to the health system assets that are leased or transferred to the corporation as stated in the lease agreement. This assumption may include liabilities accruing before, on or after the transfer date.

3. An agreement by the nonprofit corporation to continue to provide health care to the public, including indigent persons, as one of its primary missions.

4. The nonprofit corporation's undertaking, covenants and indemnification to the sponsoring county against all actions, activities and consequences that may arise out of or relate to any actions taken by the nonprofit corporation pursuant to the lease agreement.

B. An operating agreement under this chapter may include provisions requiring the nonprofit corporation to:

1. Obtain the approval of the board of supervisors of any business transaction by the corporation that may materially and adversely affect the sponsoring county's interests.  The agreement shall specify with particularity the type and nature of the transactions that require prior approval of the board of supervisors.

2. Notify the board of supervisors before amending all or part of the corporation's articles of incorporation or bylaws. The articles of incorporation and bylaws may not be amended to remove the requirement prescribed by subsection A, paragraph 3 of this section.

3. Pay all or part of the costs of the board of supervisors that are related to the conveyance and transition of the county health system to the nonprofit corporation.

4. Provide or continue to provide services and programs to the communities and populations served by the county health system.

C. The sponsoring county and nonprofit corporation may also agree in writing to:

1. Any other arrangements, including indemnifications, that they consider appropriate and prudent with respect to the transition of county health system operations to the corporation.

2. Any other provision that is not inconsistent with this chapter or the operating agreement, including contracts for the provision by the sponsoring county or the nonprofit corporation of goods, services and facilities in support of the community health system.

D. Notwithstanding any other law, at its discretion the sponsoring county may agree to provide grants to the nonprofit corporation.

E. Section 42-17106 does not apply to any promise, undertaking, covenant or agreement that is contained in the operating agreement and that commits a sponsoring county to compensate the nonprofit corporation for performing the county's primary function of providing health care services to the indigent. Any such promise, undertaking, covenant or agreement is a lawful long-term contract for all purposes of the constitution and laws of this state.