Authority: I normally refer to the West Volusia Hospital Authority simply as the ‘‘Authority’’.
Effective Date: The effective date of Chapter 98-330, Laws of Florida, (commonly ‘‘Ch. 98-330, L.F.’’, or simply ‘‘98-330’’) was 30-May-1998.
Facilities: I use the term ‘‘facilities’’ to refer to the former West Volusia Memorial Hospital together with its supporting properties.
Hospital: I use the term ‘‘Hospital’’ or ‘‘Hospital Corporation’’ to refer to the entity operating the Facilities.
Lease: The term ‘‘lease’’, unless otherwise qualified, refers to that agreement effective 01-Dec-1994 under which Hospital Corporation was to lease and operate the Facilities.
Open Records: and the term ‘‘Open Records’’ to refer to the provisions of §119.07, F.S., together with the provisions of Article 1 §24(a), Constitution of Florida.
Sunshine: I use the term ‘‘Sunshine’’ to refer to the provisions of §286.011, F.S., together with the provisions of Article 1 §24(b), Constitution of Florida.
The Hospital has operated ‘‘out of the sunshine’’ since 1994. By this, it should be understood that the meetings have not been properly noticed to the public, nor has the public been invited to attend and be heard on the decisions made. Additionally, the Hospital has refused production of its books and records for inspection by the public.
On 31-Mar-1999, the Hospital Corporation filed suit against the News Journal Corporation and Tanner Andrews, seeking declaratory relief effectively barring the named defendants, and others similarly situated, from ever inspecting its records or attending its meetings.
The Hospital Corporation claimed that,
pursuant to Ch. 98-330, L.F.,
and, later, also to Ch. 99-356, L.F.,
it was not obliged to comply with the provisions
of Sunshine and Open Records.
However, the constitutionality of these exemptions was
disputed by the named defendants.
Early this year, we saw a ruling from the Circuit Court
saying that neither of the exemptions claimed by the
Hospital Corporation
comported with the Constitution.
See Article 1 §24, Constitution of Florida.
The ruling itself is available on my web site:
http://www.payer.org/wvha/suit/mwv/mwv-rul01.html
From that ruling, we can deduce that the Hospital is obliged to comply with the requirements of Sunshine and Open Records. The Hospital has been under this obligation during the entire period from the beginning unto the time of the ruling. Barring a change in the law, the obligation continues until the Hospital Corporation ceases to operate the Facilities. This is because in operating the Facilities, the Hospital Corporation performs duties that would otherwise be performed by the Authority: prior to the Lease in 1994, the Authority operated the Facilities.
When you joined your respective Boards, each of you was probably given a ‘‘Government in the Sunshine’’ manual. This handy reference can assist the non-lawyer in understanding the requirements of Sunshine, and the consequences of violations.
Perhaps the clearest example of a Sunshine violation would be a subject board meeting and making a decision without informing the public or allowing them to be heard. The law provides that decisions taken out of the Sunshine are null and void from the beginning and of no effect.
A necessary consequence of the ruling in #99-30725-CICI is that all acts of the Hospital, from the effective date of Ch. 98-330, L.F., up through the date of the ruling, or 15-Jan-2002, are null and void from the beginning.
Case #99-30725-CICI appears largely finished; there remain but a few pending post-decision motions before the Court, and the case should be closed.
In 99-30725-CICI, the Court asked that the issues related to acts taken prior to the effective date of Ch. 98-330, L.F., be separated from the issues of constitutionality, and filed as a separate matter. Those acts, together with the appointments of the persons making the acts, are the now subject of #2002-10126-CICI Andrews v MHS. Both Memorial Health Systems (who appointed and members and approved MH-WV budgets) and Memorial Health-West Volusia (who submitted budgets to MHS for approval) are named parties in that matter.
As stated above, acts taken out of the Sunshine are null and void from the beginning and of no effect. The emphasized language is distinguished from ‘‘voidable’’, meaning acts that may be presumed valid and effective until set aside.
The Hospital Corporation has undertaken many acts during its sad, sorry lifetime. Certain of those acts were taken before the effective date of Ch. 98-330, L.F.; the balance were taken on or after the effective date.
In #2002-10126-CIDL, I am asking the court to declare that all of the acts taken out of the Sunshine during the time from the Lease up to the effective date of Ch. 98-330, L.F., are null and void from the beginning. The most interesting acts taken during this time are probably submissions of subsidy budgets and indigent care reimbursement requests. As these requests for funding were not legally made, the Authority ought to receive a refund of some few tens of millions of dollars. Naturally, the Hospital is going to be rather slow about returning the money.
Other acts purportedly taken during that time include becoming liable for debts (evidenced by bonds) in the amount of several tens of millions of dollars. The approval of the bonded indebtedness was done out of the Sunshine. This affects any claims for defeasance of debt made against the Authority.
The Authority’s policy permits the Hospital Corporation a limited period of time to submit indigent care bills. That time has of course elapsed for bills through 30-May-1998, for which reason none of the bills for that period can be re-submitted to the Authority.
This means that, at some point, the Authority can reasonably expect to receive a refund for those funds paid to the Hospital Corporation pursuant to invalidly submitted bills and subsidy requests. It would be unreasonable to view this as a ‘‘windfall’’ to the taxpayers, since it will be but a refund of the moneys illegally taken from them over the years: restitution does not constitute a windfall.
In 1997, the Authority filed a complaint for declaratory
relief, seeking a determination that it might pay subsidies
and indigent care money to the Hospital Corporation
in spite of the Hospital’s refusal to operate in the Sunshine.
It was determined in 1999 that the Authority might, if it wished,
pay such funds.
However, payment was made subject to a
Covenant and Undertaking of
Memorial Hospital-West Volusia, Inc.,
and
Memorial Health Systems, Inc.
That covenant is available on the web for convenience:
http://www.payer.org/wvha/doc/doc-mhwvcov01.html
That covenant provided, essentially, that if it were determined that the Hospital Corporation had operated illegally out of the Sunshine, that the funds would be returned to the Authority. With the ruling in #99-30725-CICI, it becomes clear that the Hospital Corporation was required to (but did not) operate in the Sunshine.
I do not believe that the Authority has yet acted to collect those funds subject to the covenant. The money is several millions of dollars. The Authority ought therefore to consult with Counsel concerning the most expeditious method of recovery.
I have suggested using the money to form an endowment fund: the Authority would use only the interest, and that only to fund indigent care. This would allow us to lower taxes significantly, if not to eliminate them entirely.
On 04-Sep-2002,
the Hospital again filed suit against the
News Journal Corporation
and
Tanner Andrews.
A copy of the complaint is available on the web site:
http://www.payer.org/wvha/suit/mwv2/mwv2-2002-09-05.tif
In essence, the Hospital is asking for a declaration
that the ruling in #99-30725-CICI does not apply to them
and that the named defendants should not have access
to its records and meetings.
For various reasons, I do not believe that the Hospital is entitled to the relief sought. The basis of their prayer for relief is that in September of 2000, they terminated the Lease and purchased the Facilities from the Authority. However, since such a purported lease termination and purchase were, if attempted at all, were attempted in derogation of Sunshine. Accordingly, they are null and void.
I have made a counter claim to inspect certain records. I have as a subsidiary matter have required that the Court declare the lease termination and purchase to be null and void for non-compliance with the provisions of §286.011, F.S., so that they can not affect my rights of access to records and meetings. I anticipate that the Hospital Corporation will have some objection to this counter claim.
The Lease provided that the special right of early termination would be available only during a specified period of time, with delivery of notice of termination required by the end of March, 2000. That time has elapsed.
The decisions to send notice and to terminate the lease were taken out of the Sunshine. As noted above, such things are void from the beginning. Therefore, the Authority could not have received valid notice during the period in question, nor could the lease have been terminated during that time.
The Facilities could not have become available for sale, nor could the Hospital Corporation have bought them, because the lease termination was not properly noticed and carried out. Title to the Facilities, therefore, may prove an interesting issue for Attorneys’ Title Service.
It appears to me that, no one having legitimately terminated the lease or bought the facilities, the Authority still owns and leases them to the Hospital Corporation. This is not likely to be clear for a few years, as we wait for the courts to sort out several years of Sunshine violations.
The Hospital Corporation has held two meetings attempting to cure their Sunshine violations. I fear that neither effort was successful. I understand from counsel for the Hospital Corporation that they anticipate filing another action seeking a declaration that the meetings cured the violations.
I do not believe that the Hospital will prevail in that action. The attempted cure has been raised as an affirmative defense in #2002-10126-CIDL, and I anticipate seeing it again as to the counter claims in #2002-31972-CICI. In the end, however, the requirements of Sunshine do not appear to have been fulfilled and I do not believe that the purported cure will be declared effective.
When the matter is finally sorted out, I expect the Adventists to leave, the Hospital Corporation to fail entirely (whether through bankruptcy or negotiated dissolution is unclear). One morning, the Authority will wake up and have a hospital to run.
If the Adventists do not leave, it seems not unlikely that someone such as the east-side daily may attempt to open operations at the Orange City facility. A lawyer may be able to suggest application of the test set out in News & Sun-Sentinel Co. v. Schwab, Twitty & Hanser Architectural Group, Inc. 596 So. 2d 1029 (FLA 1992) to operations there.
If the Adventists remain in Volusia County, performing the functions formerly performed by the Authority, using tax moneys to do so, it is likely that the east side entities might wish to enquire into the operations of their competition. This seems fair: after all, the operations of the other public hospitals are open to review.
Eventually, the Hospital will be returned to the public because the transfer was done out of the Sunshine; it is accordingly null and void.
It may be noted that, on the face, the Hospital is for the next 32 years, more or less. The lease will not stand: the Hospital Corporation went into technical default in 2000; without some creative bookkeeping, it should have reported default in 1999. Memorial showed themselves incapable of running hospitals during the 1990s, and should not be expected to return.
It is not the custom of the Adventists to pay fair market value for hospitals they acquire; they paid less than $100 of actual money to obtain the Hospital. Since the deal is null and void for want of Sunshine, they would have to make another deal, this time legally, and would likely be required to pay for the Hospital. This they are unlikely to do. Accordingly, I would expect the Authority to be saddled with the operation of the Facilities.
The Authority, contrary to the assertions of one of its Board members, can not be saddled with any debt accompanying the Facilities. This is because neither the Authority, nor any of its surrogates, agreed in public meeting to assume such debts. The public never had the opportunity to be heard on the amount or purpose of any debts incurred by the Hospital Corporation.
The Authority may reasonably expect to receive substantial refunds of those funds accepted illegally by the Hospital Corporation. This may provide a substantial cushion as the Authority considers resumption of hospital operations.
The Authority’s experience with running hospitals has not been particularly outstanding. I do not believe that the current Board wishes to resume direct operation, nor do I anticipate such a desire in a future Board.
Accordingly, the future return of the facilities to the public represents an opportunity to work with the hospital taxing entities in East Volusia. Whether we merge operations immediately, or contract with one of the eastern entities for operation, we should certainly have the opportunity to more closely co-ordinate our services.
I hope that this has been enlightening to the Board members. Nothing contained herein should be construed as legal advice. If you have questions on any legal matter, you should consult with an attorney who is a member in good standing of the Florida Bar.
It is rarely wise to speculate on how the courts will ultimately rule on any matter. None the less, I have every hope that they will follow the law as clearly set forth in the statutes and case law, and that the taxpayers of West Volusia will ultimately see some relief.
More information about the pending lawsuits, including the most interesting of my pleadings and papers, may be found on the web: http://www.payer.org/wvha/suit
A lawyer may be able to more clearly explain the difference between void from the beginning and voidable.