12 U.S.C. § 1715z–7 | Mortgage insurance for hospitals

(a)

Purpose

The purpose of this section is to assist the provision of urgently needed hospitals for the care and treatment of persons who are acutely ill or who otherwise require medical care and related services of the kind customarily furnished only (or most effectively) by hospitals. Such assistance shall be provided regardless of the amount of public financial or other support a hospital may receive, and the Secretary shall neither require additional security or collateral to guarantee such support, nor impose more stringent eligibility or other requirements on publicly owned or supported hospitals.

(b)

Definitions

For the purposes of this section—

(1)

the term “hospital” means a facility—

(A)

which provides community service for inpatient medical care of the sick or injured (including obstetrical care);

(B)

42 U.S.C. 1395x(mm)(1) not more than 50 per centum of the total patient days of which during any year are customarily assignable to the categories of chronic convalescent and rest, drug and alcoholic, epileptic, mentally deficient, mental, nervous and mental, and tuberculosis, unless the facility is a critical access hospital (as that term is defined in section 1861(mm)(1) of the Social Security Act ()); and

(C)

which is a public facility, proprietary facility, or facility of a private nonprofit corporation or association, licensed or regulated by the State (or, if there is no State law providing for such licensing or regulation by the State, by the municipality or other political subdivision in which the facility is located); and

(2)

section 1713(a) of this title the terms “mortgage” and “mortgagor” shall have the meanings respectfully set forth in .

(c)

Authorization to insure; prohibition of premiums on guarantees of principal and interest under title VII of the Public Health Service Act

42 U.S.C. 292The Secretary is authorized to insure any mortgage (including advances on such mortgage during construction) in accordance with the provisions of this section upon such terms and conditions as he may prescribe and to make commitments for insurance of such mortgage prior to the date of its execution or disbursement thereon. No mortgage insurance premium shall be charged with respect to the amount of principal and interest guaranteed by the Department of Health and Human Services under title VII of the Public Health Service Act [ et seq.].

(d)

Insurance of mortgages covering new or rehabilitated hospitals, including equipment; terms and conditions

In order to carry out the purpose of this section, the Secretary is authorized to insure any mortgage which covers a new or rehabilitated hospital, including equipment to be used in its operation, subject to the following conditions:

(1)

The mortgage shall be executed by a mortgagor approved by the Secretary. The Secretary may in his discretion require any such mortgagor to be regulated or restricted as to charges and methods of financing, and, in addition thereto, if the mortgagor is a corporate entity, as to capital structure and rate of return. As an aid to the regulation or restriction of any mortgagor with respect to any of the foregoing matters, the Secretary may make such contracts with and acquire for not to exceed $100 such stock or interest in such mortgagor as he may deem necessary. Any stock or interest so purchased shall be paid for out of the General Insurance Fund, and shall be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance.

(2)

The mortgage shall involve a principal obligation in the amount requested by the mortgagor if such amount does not exceed 90 percent of the estimated replacement cost of the property or project including—

(A)

equipment to be used in the operation of the hospital, when the proposed improvements are completed and the equipment is installed; and

(B)

section 1703(a) of this title 1

1 See References in Text note below.

a solar energy system (as defined in subparagraph (3) of the last paragraph of ) or residential energy conservation measures (as defined in section 8211(11)(A) through (G) and (I) of title 42)  in cases where the Secretary determines that such measures are in addition to those required under the minimum property standards and will be cost-effective over the life of the measure.

(3)

The mortgage shall—

(A)

provide for complete amortization by periodic payments within such term as the Secretary shall prescribe; and

(B)

bear interest at such rate as may be agreed upon by the mortgagor and the mortgagee.

(4)

(A)

The Secretary shall require satisfactory evidence that the hospital will be located in a State or political subdivision of a State with reasonable minimum standards of licensure and methods of operation for hospitals and satisfactory assurance that such standards will be applied and enforced with respect to the hospital.

(B)

The Secretary shall establish the means for determining need and feasibility for the hospital, if the State does not have an official procedure for determining need for hospitals. If the State has an official procedure for determining need for hospitals, the Secretary shall require that such procedure be followed before the application for insurance is submitted, and the application shall document that need has also been established under that procedure.

(5)

section 1715n(f) of this title section 1721 of this title section 1721 of this title The Secretary shall not insure any mortgage or approve any modification of an existing mortgage insured pursuant to this section or if such insurance or modification is to be made in connection with a guarantee, as authorized pursuant to , of a trust certificate or other security which is exempt from Federal taxation or which is to be used to collateralize obligations which are so exempt, except that the Secretary shall not refuse to insure such a mortgage or approve such a modification solely on the basis that such insurance or modification is to be made in connection with a guarantee, as authorized pursuant to , of a trust certificate or other security which is exempt from Federal taxation or which is to be used to collateralize obligations which are so exempt if—

(A)

March 29, 1979 a written application for such insurance or modification submitted at the express direction of the hospital has been submitted to the appropriate office of the Department of Health and Human Services prior to ; or

(B)

section 1715n(f) of this titleJune 7, 197942 U.S.C. 1395 42 U.S.C. 1396 in the case of a nonprofit mortgagor which is seeking refinancing or modification of an existing mortgage insured pursuant to this section or , the mortgagor (i) had engaged an investment banker for the purpose of obtaining such refinancing or modification, or had undertaken or arranged for the undertaking of a market or feasibility study with respect to the advisability of obtaining such refinancing or modification, and had made written notification of its interest in such refinancing or modification to the Department of Health and Human Services or the Department of Housing and Urban Development prior to ; and (ii) receives from the programs established under titles XVIII [ et seq.] and XIX [ et seq.] of the Social Security Act a percentage of its total revenue which is greater than 125 per centum of the national average for hospitals which derive revenue from such titles.

This paragraph shall not limit the authority of the Secretary to approve a mortgage increase on any mortgage eligible for insurance under this paragraph at any time prior to final endorsement of the loan for insurance; except that such mortgage increase may not be approved for the cost of constructing any improvements not included in the original plans and specifications approved by the Department of Health and Human Services unless approved by the Secretary of Housing and Urban Development and by the Secretary of Health and Human Services.

(6)

To the extent that a private nonprofit or public facility mortgagor is required by the Secretary to provide cash equity in excess of the amount of the mortgage to complete the project, the mortgagor shall be entitled, at the option of the mortgagee, to fund the excess with a letter of credit. In such event, mortgage proceeds may be advanced to the mortgagor prior to any demand being made on the letter of credit.

(e)

Release of part of property or project from lien

The Secretary may consent to the release of a part or parts of the mortgaged property or project from the lien of any mortgage insured under this section upon such terms and conditions as he may prescribe.

(f)

Encouragement of programs undertaking responsibility to provide comprehensive health care; immediate processing of applications for public hospitals

The activities and functions provided for in this section shall be carried out by the agencies involved so as to encourage programs that undertake responsibility to provide comprehensive health care, including outpatient and preventive care, as well as hospitalization, to a defined population, and, in the case of public hospitals, to encourage programs that are undertaken to provide essential health care services to all residents of a community regardless of ability to pay. The Secretary shall begin immediately to process applications of public facilities for mortgage insurance under this section in accordance with regulations, guidelines, and procedures applicable to facilities of private nonprofit corporations and associations.

(g)

Insurance of mortgages providing permanent financing or refinancing of existing mortgage indebtedness; aggregate principal balance of mortgages

(1)

January 1, 1966August 1, 1968 Notwithstanding any of the other provisions of this subchapter, the Secretary may insure under this section a mortgage which provides permanent financing or refinancing of existing mortgage indebtedness in the case of a hospital whose permanent financing is presently lacking, if the construction of such hospital was completed between , and .

(2)

The aggregate principal balance of all mortgages insured under paragraph (1) and outstanding at any one time shall not exceed $20,000,000.

(h)

Applicability of other laws

lsection 1713 of this title section 1713 of this titleThe provisions of subsections (d), (e), (g), (h), (i), (j), (k), (), and (n) of shall apply to mortgages insured under this section and all references therein to shall be deemed to refer to this section.

(i)

Termination of exemption for critical access hospitals

(1)

In general

July 31, 2016The exemption for critical access hospitals under subsection (b)(1)(B) shall have no effect after .

(2)

Report to Congress

July 31, 2003Not later than 3 years after , the Secretary shall submit a report to Congress detailing the effects of the exemption of critical access hospitals from the provisions of subsection (b)(1)(B) on—

(A)

the provision of mortgage insurance to hospitals under this section; and

(B)

section 1735c of this title the General Insurance Fund established under .

June 27, 1934, ch. 847 Pub. L. 90–448, title XV, § 1501Aug. 1, 196882 Stat. 599 Pub. L. 91–609, title IDec. 31, 197084 Stat. 1772 Pub. L. 93–383, title III, § 304(i)Aug. 22, 197488 Stat. 678 Pub. L. 95–128, title III, § 308Oct. 12, 197791 Stat. 1135 Pub. L. 96–88, title V, § 509(b)Oct. 17, 197993 Stat. 695 Pub. L. 96–153, title III, § 315Dec. 21, 197993 Stat. 1117 Pub. L. 96–399, title III, § 310(h)Oct. 8, 198094 Stat. 1643 Pub. L. 97–35, title III, § 339HAug. 13, 198195 Stat. 418 Pub. L. 98–181, title INov. 30, 198397 Stat. 1210 Pub. L. 98–479, title IIOct. 17, 198498 Stat. 2227 Pub. L. 100–242, title IVFeb. 5, 1988101 Stat. 1905 Pub. L. 108–91Oct. 3, 2003117 Stat. 1158 Pub. L. 109–240, § 2July 10, 2006120 Stat. 515 Pub. L. 113–76, div. L, title II, § 233Jan. 17, 2014128 Stat. 634(, title II, § 242, as added , , ; amended , §§ 109, 110(a), , ; , , ; , , ; , , ; , , ; , , ; , , ; [title IV, §§ 404(b)(15), 436], , , 1222; , §§ 201(a)(1), 204(a)(13), , , 2232; , §§ 411(a), 412(a)–(d), , , 1906; , §§ 2(a), 3(a), , ; , , ; , , .)

Editorial Notes

References in Text

act July 1, 1944, ch. 373 58 Stat. 682 act July 30, 1956, ch. 779, § 2 70 Stat. 717 section 201 of Title 42The Public Health Service Act, referred to in subsec. (c), is , . Title VII of the Act was added by , , and is classified generally to subchapter V (§ 292 et seq.) of chapter 6A of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under and Tables.

Section 8211 of title 42 section 8229 of Title 42June 30, 1989, referred to in subsec. (d)(2)(B), was omitted from the Code pursuant to , The Public Health and Welfare, which terminated authority under that section on .

act Aug. 14, 1935, ch. 531 49 Stat. 620 section 1305 of Title 42The Social Security Act, referred to in subsec. (d)(5)(B), is , . Titles XVIII and XIX of the Act are classified generally to subchapters XVIII (§ 1395 et seq.) and XIX (§ 1396 et seq.) of chapter 7 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see and Tables.

Amendments

Pub. L. 113–76July 31, 2016July 31, 20112014—Subsec. (i)(1). substituted “” for “”.

Pub. L. 109–240July 31, 2011July 31, 20062006—Subsec. (i)(1). substituted “” for “”.

Pub. L. 108–91, § 3(a)(1)42 U.S.C. 1395x(mm)(1)2003—Subsec. (b)(1)(B). , inserted “, unless the facility is a critical access hospital (as that term is defined in section 1861(mm)(1) of the Social Security Act ())” after “tuberculosis”.

Pub. L. 108–91, § 2(a)Subsec. (d)(4). , amended par. (4) generally. Prior to amendment, par. (4) read as follows: “The Secretary shall not insure any mortgage under this section unless he has received, from the State agency designated in accordance with section 604(a)(1) or section 1521 of the Public Health Service Act for the State in which is located the hospital covered by the mortgage, a certification that (A) there is a need for such hospital, and (B) there are in force in such State or the political subdivision of the State in which the proposed hospital would be located reasonable minimum standards of licensure and methods of operation for hospitals. No such mortgage shall be insured under this section unless the Secretary has received such assurance as he may deem satisfactory from the State agency that such standards will be applied and enforced with respect to any hospital located in the State for which mortgage insurance is provided under this section. If no such State agency exists, or if the State agency exists but is not empowered to provide a certification that there is a need for the hospital as set forth in clause (A) of the first sentence, the Secretary shall not insure any mortgage under this section unless (A) the State in which the hospital is located has conducted or commissioned and paid for the preparation of an independent study of market need and feasibility that (i) is prepared in accordance with the principles established by the American Institute of Certified Public Accountants; (ii) assesses, on a marketwide basis, the impact of the proposed hospital on, and its relationship to, other health care facilities and services, the percentage of excess beds, demographic projections, alternative health care delivery systems, and the reimbursement structure of the hospital; (iii) is addressed to and is acceptable to the Secretary in form and substance; and (iv) in the event the State does not prepare the study, is prepared by a financial consultant selected by the State and approved by the Secretary; and (B) the State complies with the other provisions of this paragraph that would otherwise be required to be met by a State agency designated in accordance with section 604(a)(1) or section 1521 of the Public Health Service Act. The proposed mortgagor may reimburse the State for the cost of the independent feasibility study required in the preceding sentence.”

Pub. L. 108–91, § 3(a)(2)Subsec. (i). , added subsec. (i).

Pub. L. 100–242, § 412(a)1988—Subsec. (a). , inserted at end “Such assistance shall be provided regardless of the amount of public financial or other support a hospital may receive, and the Secretary shall neither require additional security or collateral to guarantee such support, nor impose more stringent eligibility or other requirements on publicly owned or supported hospitals.”

Pub. L. 100–242, § 412(b)Subsec. (d)(2). , substituted “The mortgage shall involve a principal obligation in the amount requested by the mortgagor if such amount does not exceed 90 percent of the estimated replacement cost of the property or project including” for “The mortgage shall involve a principal obligation in an amount not to exceed 90 per centum of the estimated replacement cost of the property or project including”.

Pub. L. 100–242, § 411(a)Subsec. (d)(4). , inserted provisions at end relating to authority of Secretary to insure a mortgage under this section covering new or rehabilitated hospitals, including equipment, in cases where no State agency exists, or where such agency does exist but is not empowered to provide a certification for the need of such hospital as required under this section.

Pub. L. 100–242, § 412(c)Subsec. (d)(6). , added par. (6).

Pub. L. 100–242, § 412(d)Subsec. (f). , inserted at end “The Secretary shall begin immediately to process applications of public facilities for mortgage insurance under this section in accordance with regulations, guidelines, and procedures applicable to facilities of private nonprofit corporations and associations.”

Pub. L. 98–479, § 201(a)(1)1984—Subsec. (c). , substituted “Health and Human Services” for “Health, Education, and Welfare”.

Pub. L. 98–479, § 204(a)(13)Subsec. (d)(3)(A). , substituted a semicolon for the comma at end.

Pub. L. 98–181, § 436(1)1983—Subsec. (b)(1)(C). , inserted “public facility,” after “which is a”.

Pub. L. 98–181, § 404(b)(15)Subsec. (d)(3)(B). , substituted provision that the interest rate be such a rate as agreed upon by the mortgagor and the mortgagee for provision that the interest rate, exclusive of premium charges for insurance and service charges, not exceed such per centum per annum, not in excess of 6 per centum, on the amount of the principal obligation outstanding at any time, as the Secretary finds necessary to meet the mortgage market.

Pub. L. 98–181, § 436(2)Subsec. (f). , inserted “, and in the case of public hospitals, to encourage programs that are undertaken to provide essential health care services to all residents of a community regardless of ability to pay” after “defined population”.

Pub. L. 97–351981—Subsec. (d)(5). inserted provisions respecting limitation on authority of the Secretary to approve mortgage increases on eligible mortgages.

Pub. L. 96–3991980—Subsec. (d)(2). revised existing provisions into introductory paragraph and subpar. (A) and added subpar. (B).

Pub. L. 96–1531979—Subsec. (d)(5). added par. (5).

Pub. L. 95–128, § 308(b)1977—Subsec. (c). , prohibited charging any mortgage insurance premium with respect to the amount of principal and interest guaranteed by the Department of Health, Education, and Welfare under title VII of the Public Health Service Act.

Pub. L. 95–128, § 308(a)Subsec. (d)(4). , inserted reference to section 1521.

Pub. L. 93–3831974—Subsec. (d)(2). struck out “not to exceed $50,000,000, and” after “an amount”.

Pub. L. 91–609, § 110(a)1970—Subsec. (b)(1)(C). , substituted as definition of “hospital” a facility “which is a proprietary facility, or facility of a private nonprofit corporation or association, licensed or regulated by the State (or, if there is no State law providing for such licensing or regulation by the State, by the municipality or other political subdivision in which the facility is located)” for “prior definition as a facility which is owned and operated by one or more nonprofit corporations or associations no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual”.

Pub. L. 91–609, § 109Subsec. (d)(2). , increased limitation on amount of mortgage from $25,000,000 to $50,000,000.

Statutory Notes and Related Subsidiaries

Change of Name

section 509(b) of Pub. L. 96–88 section 3508(b) of Title 20“Department of Health and Human Services” substituted for “Department of Health, Education, and Welfare” in subsec. (d)(5)(A), (B) pursuant to , which is classified to , Education.

Effective Date of 2003 Amendment

Pub. L. 108–91, § 2(b)Oct. 3, 2003117 Stat. 1158

“(1)

In general .—

Oct. 3, 2003The amendment made by subsection (a) [amending this section] shall take effect and apply as of the date of the enactment of this Act [].

“(2)

Effect of regulatory authority .—

Any authority of the Secretary of Housing and Urban Development to issue regulations to carry out the amendment made by subsection (a) may not be construed to affect the effectiveness or applicability of such amendment under paragraph (1) of this subsection.”

, , , provided that:

Effective Date of 1981 Amendment

Pub. L. 97–35Oct. 1, 1981section 371 of Pub. L. 97–35 section 3701 of this titleAmendment by effective , see , set out as an Effective Date note under .

Regulations

Pub. L. 100–242, title IV, § 411(b)Feb. 5, 1988101 Stat. 1905Feb. 5, 1988, , , directed Secretary of Housing and Urban Development to issue regulations to carry out amendment of this section by not later than expiration of 90-day period following .

section 436 of Pub. L. 98–181Oct. 31, 1984section 104(f) of Pub. L. 98–479 section 1715b of this titleSecretary of Housing and Urban Development directed to issue regulations implementing amendments to this section by , not later than , see , set out as a note under .