With help from the Florida Legislature, Buchanan Ingersoll litigators successfully defended Tarpon Springs Hospital Foundation, Inc., doing business as Helen Ellis Memorial Hospital in Tarpon Springs, Pinellas County, Florida, from an attempt by the City of Tarpon Springs to subject this private, non-profit hospital to "sunshine" laws -- laws that require governmental entities to hold certain official meetings and records open to the public.
All 50 states, the District of Columbia and the federal government have some form of "sunshine" law on their books. These laws are generally intended to provide public access to government meetings in the interest of freedom of information. Unbridled and without reasonable limitations, however, freedom of information presents a difficult challenge for private, non-profit hospitals struggling to compete with for-profit giants for their very economic survival.
A prime issue in the Tarpon Springs case was the fact that the City of Tarpon Springs owns the property upon which Helen Ellis Memorial Hospital sits and the purported impact of this fact on the Foundation's status. The Health Facilities Authority leases the hospital facilities from the City and then subleases the facility to the Foundation. The City and HFA claimed that this lease arrangement rendered the hospital a private organization "acting on behalf" of a public agency (the City) and thus exposed the hospital to the requirements of the sunshine and public records laws, a position originally adopted by the trial court.
On May 30, 1998, Section 394.3036, Florida Statutes, became law. The statute exempts a private corporation that leases a public hospital from both Florida's sunshine and public records and meeting laws, providing that the public lessor complies with certain public finance accountability requirements, if applicable, and the private corporation/lessee meets 3 of 5 statutory criteria. A decision of the Fifth District Court of Appeals of Florida led the Florida Legislature to enact Section 395.3036 in order to expressly invalidate that decision and exempt private corporations that lease public hospitals from the scope of the public records and sunshine laws.
The five statutory criteria which must be met to benefit from this "sunscreen" are as follows:
1. the public lessor that owns the public hospital or other public health care facility was not the incorporator of the private corporation that leases the public hospital or other health care facility;
2. the public lessor and the private lessee do not commingle any of their funds in any account maintained by either of them, other than the payment of rent and administrative fees or the transfer of funds pursuant to subsection (2) of the statute;
3. except as otherwise provided by law, the private lessee is not allowed to participate, except as a member of the public, in the decision making process of the public lessor;
4. the lease agreement does not expressly require the lessee to comply with the requirements of the public records and government in the sunshine laws; and
5. the public lessor is not entitled to receive any revenues from the lessee, except for rental or administrative fees due under the lease, and the lessor is not responsible for the debts or other obligations of the lessee.
Citing this new statute, Buchanan Ingersoll persuaded the Sixth Judicial Circuit in and for the County of Pinellas, Florida to reconsider its earlier ruling exposing the Tarpon Springs Hospital Foundation to the rays of sunshine and the glare of its for-profit competitors. Buchanan Ingersoll argued that the Foundation satisfies not only 3, but all 5 of the statutory criteria and successfully obtained a ruling that the Foundation is exempt from the sunshine and public records laws pursuant to the new statute. Thus, Helen Ellis Memorial Hospital can protect from the public and its for-profit competitors the hospital's strategic plans, costs structures, managed care contracts, ideas and strategies discussed at board meetings, and the like.
From a private, non-profit hospital's point of view, the critical importance of this decision stems not only from the obvious competitive disadvantage open meeting requirements might have on these hospitals but also from a public perception standpoint. If the public perceives that a non-profit hospital is government-supported because of open meeting requirements, the hospital's concern is that charitable contributions may drop off significantly -- at a time when they are needed more than ever because of Medicare and private insurer rate cuts. From their standpoint, non-profit hospitals seek to maintain their right to operate behind closed doors not because these hospitals have anything to hide, but because it's a matter of economic survival.
For a copy of the opinion or more information on this topic, contact the author by phone at 412-562-8939 or by e-mail at braversw@bipc.com.