Section 378 - Unfair competition with small businesses(a) Intent.-- It is the policy of this act that institutions of purely public charity shall not use their tax-exempt status to compete unfairly with small business.(b) General rule.-- An institution of purely public charity may not fund, capitalize, guarantee the indebtedness of, lease obligations of or subsidize a commercial business that is unrelated to the institution's charitable purpose as stated in the institution's charter or governing legal documents.(c) Exceptions.-- Institutions of purely public charity are not in violation of subsection (b) if any of the following apply:(1) The commercial business is intended only for the use of its employees, staff, alumni, faculty, members, students, clients, volunteers, patients or residents. For purposes of this paragraph, a person shall not be considered an employee, staff, member, alumnus, faculty, student, client, volunteer, patient or resident if the person's only relationship with the institution of purely public charity is to receive products or services resulting from the commercial business.(2) The commercial business results in sales to the general public that are incidental or periodic rather than permanent and ongoing.(d) Support for other charities.-- Nothing in this section shall be construed as prohibiting or limiting the ability of an institution of purely public charity to fund, capitalize, guarantee the indebtedness of or otherwise subsidize another institution of purely public charity.(e) Investments.-- The investment in publicly traded stocks and bonds; real estate, whether directly or indirectly; or other investments by an institution of purely public charity does not violate subsection (b).(f) Educational functions.-- Use of facilities to host groups for educational purposes by an institution of purely public charity does not violate subsection (b).(g) Government functions.-- An institution of purely public charity may engage in a new commercial business that may otherwise be in violation of subsection (b) if the institution is formally requested to do so by the Commonwealth or a political subdivision.(h) Existing business arrangements.-- An institution of purely public charity that prior to the effective date of this section funded, capitalized, guaranteed the indebtedness of, leased obligations of or subsidized a commercial business may continue to own and operate such businesses without violating subsection (b) as long as the institution does not substantially expand the scope of the commercial business. In the event an injunction is issued under subsection (i), the effect of such injunction shall be limited to restraining the substantial expansion of the scope of the commercial business which was initiated after the effective date of this section.(i) Remedies.-- The Department of State shall establish a system of mandatory arbitration for the purpose of receiving all complaints from aggrieved small businesses relating to an institution of purely public charity's alleged violation of this section. Upon receipt of such complaint, the department shall direct that the complaint be resolved as provided in this subsection. (1) All complaints shall be in the form of a sworn statement setting forth all allegations and requests for relief and shall be filed with the department, together with a fee as prescribed by the department.(2) Within ten days of filing the complaint with the department, the aggrieved small business shall serve a copy of the complaint on the institution of purely public charity against which the complaint is filed. The institution of purely public charity must respond to the complaint within 30 days of its receipt by the institution of purely public charity.(3) Within 30 days following the period of time allotted to the institution of purely public charity to respond to the complaint, the department shall provide an unbiased and qualified arbitrator who possesses sufficient knowledge regarding such institutions to adjudicate the matter. If the institution of purely public charity does not participate in the arbitration, the arbitrator may issue an order to compel such participation. Such an order shall be enforceable by the court of common pleas in the judicial district where the arbitration takes place.(4) The arbitration shall take place in the judicial district in which the aggrieved small business is located. The department shall provide the arbitrator all relevant material regarding the complaint, including the original complaint, the institution of purely public charity's response to the complaint and copies of any other relevant information which the department may possess. The arbitration shall be completed within one year from the date on which the arbitrator was assigned.(5) Within 30 days of the arbitrator's assignment, the arbitrator shall determine if the complaint sets forth prima facie evidence that a violation of this section has occurred. If the arbitrator determines that the complaint does not contain prima facie evidence, the arbitrator shall issue a written report detailing the findings and shall terminate the arbitration. A small business may appeal such a determination as provided in paragraph (9).(6) The arbitrator shall determine if the activity of the institution of purely public charity is in violation of this section. In making this determination, the arbitrator shall review all relevant law, including previous arbitrators' decisions, regulations, and the charter or governing legal documents of the institution of purely public charity.(7) The decision of the arbitrator shall be set forth in a written decision issued to each party specifying findings of fact and conclusions of law. If the arbitrator finds a violation of this section, the arbitrator may include an order or injunction as part of the decision, provided that no damages may be assessed against an institution of purely public charity.(8) Upon agreement of the parties, the decision of the arbitrator shall be final and binding as to all matters of fact and law and shall be entered by the arbitrator as a final judgment in the court of common pleas of the judicial district in which the arbitration took place. A copy of the arbitrator's final decision shall also be filed with the department.(9) Either party may initiate a de novo appeal from the arbitrator's decision in the court of common pleas of the judicial district in which the arbitration took place within 30 days of the arbitrator's decision.(10) The department may provide for the system of arbitration by maintaining a list of qualified arbitrators or by contracting for qualified arbitration services.(11) The department may adopt regulations necessary to implement this section.(12) The cost of an arbitration proceeding, including the arbitrator's fee, shall be borne by the complainant, unless the arbitrator directs otherwise. Each party shall be responsible for its attorney fees and other costs incurred.(13) Except as set forth in this section or in regulations promulgated by the department under this section, the arbitration shall be governed by 42 Pa.C.S. Ch. 73 Subch. A (relating to statutory arbitration).(14) The remedies set forth in this subsection shall be the exclusive remedies available to an aggrieved small business.1997, Nov. 26, P.L. 508, No. 55, § 8, effective in 120 days.