(a) A member of a municipal hospital’s medical or allied health professional staff who is an officer of the municipal hospital shall not be deemed to be “financially interested,” for purposes of Section 1090, in any of the contracts set forth in subdivision (b) made by any municipal hospital body or board of which the officer is a member if all of the following conditions are satisfied:

(1) The officer abstains from any participation in the making of the contract.

(2) The officer’s relationship to the contract is disclosed to the body or board and noted in its official records.

(3) If paragraphs (1) and (2) are satisfied, the body or board does both of the following, without any participation by the officer:

(A) Finds that the contract is fair to the municipal hospital and in its best interest.

(B) Authorizes the contract in good faith.

(b) Subdivision (a) shall apply to the following contracts:

(1) A contract between the municipal hospital and the officer for the officer to provide professional services to the hospital’s patients, employees, or medical staff members and their respective dependents, provided that similar contracts exist with other staff members and the amounts payable under the contract are no greater than the amounts payable under similar contracts covering the same or similar services.

(2) A contract to provide services to covered persons between the municipal hospital and any insurance company, health care service plan, employer, or other entity which provides health care coverage, and which also has a contract with the officer to provide professional services to its covered persons.

(3) A contract in which the municipal hospital and the officer are both parties if other members of the municipal hospital’s medical or allied health professional staff are also parties, directly or through their professional corporations or other practice entities, provided the officer is offered terms no more favorable than those offered any other party who is a member of the municipal hospital’s medical or allied health professional staff.

(c) This section does not permit an otherwise prohibited individual to be a member of the board of trustees of a municipal hospital, including, but not limited to, individuals described in Section 53227. Nothing in this section shall authorize a contract that would otherwise be prohibited by Section 2400 of the Business and Professions Code.

(d) For purposes of this section, a contract entered into by a professional corporation or other practice entity in which the officer has an interest shall be deemed the same as a contract entered into by the officer directly.

(Added by Stats. 1996, Ch. 447, Sec. 1. Effective January 1, 1997.)