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Ask MRSC

December 2012

Ask MRSC

In the periodic Ask MRSC PHD (Public Hospital Districts) e-newsletter, MRSC consultants respond to questions posed by officials and staff of Washington public hospital districts. Submit your own question via our simple online form.

IN THIS ISSUE

1. Was there a change in state law in recent years that relates to the population of a rural hospital district?

2. Is a resolution statutorily required to change a hospital district's personnel policy related to temporary leave (e.g., maternity leave), and is one required for the board to appoint someone (e.g., the CFO) to temporarily serve as CEO while the CEO is out on such leave?

3. Would it be an unconstitutional gift of public funds under Article VIII, Section 7 of the Washington Constitution to hold free birthing classes at the hospital, or are pregnant women considered "infirm" for the purposes of the exception to this constitutional prohibition?

4. May a hospital district pay for medical/health insurance for board commissioners and their spouses?

5. Our hospital district board of commissioners is wondering if a resolution is required in order to modify/amend an employment contract. Specifically, the contract for the administrator/superintendent.


1. Was there a change in state law in recent years that relates to the population of a rural hospital district?

Yes. A rural hospital district is defined by RCW 70.44.460 as:

 

... a public hospital district authorized under chapter 70.44 RCW whose geographic boundaries do not include a city with a population greater than fifty thousand.

 

(Emphasis added.)

 

The change at issue was made effective in July 2011, through enactment of SB 5117, which substituted "fifty thousand" for "thirty thousand" at the end of RCW 70.44.460.

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2. Is a resolution statutorily required to change a hospital district's personnel policy related to temporary leave (e.g., maternity leave), and is one required for the board to appoint someone (e.g., the CFO) to temporarily serve as CEO while the CEO is out on such leave?

If in doubt, we think the best general strategy is to take such action via resolution. However, we're not aware of specific reference in statute that requires these actions to be taken by resolution.

 

The hospital district statute, chapter 70.44 RCW, specifically requires that particular actions be taken by "resolution." The AWPHD has available a document entitled, "STATUTORILY REQUIRED BOARD ACTIONS BY RESOLUTION" (revised April 22, 2011), that includes a detailed listing of actions that must be done by resolution. That list does not include the actions at issue here.

 

As a point of clarification (and as discussed in more detail below in response to question five), note that case law in Washington state has held that there is no substantive difference between a resolution and a motion. See, e.g., Spokane v. Ridpath, 74 Wash. 4 (1913). Regarding enactment of a resolution by a hospital district board of commissioners, especially where a resolution is required by statute, we recommend that the board explicitly refer to the enactment as a "resolution," and that the board meeting minutes make clear that board action on the particular matter at issue was taken by resolution.

 

Regarding the appointment action at issue here more specifically, pursuant to RCW 70.44.080 the board of commissioners shall appoint a "competent person" to fulfill the CEO's duties "[i]n case of the absence or temporary disability of the superintendent" [or CEO]. RCW 70.44.080 does not refer to the board making such an appointment by resolution which, presumably, means that the appointment can be made by a simple motion of the board or a resolution.

 

Note that RCW 70.44.070, which relates to the appointment of the superintendent more generally, requires a board resolution for appointments and removals of the superintendent. However, since RCW 70.44.080 more specifically and directly addresses the situation at issue here (temporary appointment of a competent person such as the CFO to fulfill the CEO's duties), RCW 70.44.080 governs.

  

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3. Would it be an unconstitutional gift of public funds under Article VIII, Section 7 of the Washington Constitution to hold free birthing classes at the hospital, or are pregnant women considered "infirm" for the purposes of the exception to this constitutional prohibition?

A threshold issue is whether pregnancy would constitute being "infirm" under the constitutional gift of funds exception. See, Article VIII, Section 7 of the Washington Constitution. If the exception applies, the activity is not constitutionally prohibited. (Note that the exception also applies to individuals who are poor, but, for the purposes of responding to this question, we are assuming the individuals at issue are not poor.) Under the exception, it's permissible for a local governmental entity, such as a hospital district, to provide public funds to support private individuals as long as those individuals are infirm (and/or poor), and if there is a legitimate municipal purpose for the expenditure. Although there would be situations in which a woman would be infirm due to pregnancy, we don't think pregnancy necessitates an infirmity.

 

However, it may be that a hospital district can provide such services for free or at a discount and not violate the gift of funds prohibition due to a hospital district's broad mandate to provide public health services, which services may perhaps reasonably include birthing classes. If a hospital district determines there is a legitimate public health need to provide these classes free of charge, we think such an activity would likely be legally permissible. Note, for example, that RCW 70.44.003 provides:

 

The purpose of chapter 70.44 RCW is to authorize the establishment of public hospital districts to own and operate hospitals and other health care facilities and to provide hospital services and other health care services for the residents of such districts and other persons.

 

(Emphasis added.)

 

RCW 70.44.007 defines health services rather broadly as:

 

(2) "Other health care services" means nursing home, extended care, long-term care, outpatient, rehabilitative, health maintenance, and ambulance services and such other services as are appropriate to the health needs of the population served.

 

(Emphasis added.)

 

A key issue for the gift of funds analysis is whether there is donative intent on the part of the hospital district in providing the service for free or at a reduced cost. There is an attorney general opinion, AGO 1986 No. 8, that addresses an analogous situation (involving a hospital district charging discounted rates) and the attorney general's office concludes that the discount would not constitute a gift of funds because, in part, the hospital district would be deriving an economic benefit by providing the discount. That opinion concludes in relevant part:

 

We turn now to your second question, in which you inquire whether the giving of a percentage discount by a hospital district would constitute a gift of public funds and thus be unconstitutional under article VIII, section 7 of the Washington Constitution. In view of our answer to your first question - i.e., that such a discount is authorized by the 1984 amendments to RCW 70.39.140 - an answer to your second question would necessarily involve our opinion on the constitutionality of that statute. It has been the long-standing policy of this office not to opine upon the constitutionality of legislative enactments, for the simple reason that, as the state's legal counsel, the Attorney General's Office is required to defend any legislative enactment against an attack on constitutional grounds.

 

We would point out, however, that in AGO 1980 No. 25, our office did issue an opinion on a somewhat analogous question relating to the operation of a county transportation authority. The question there addressed was whether the establishment of a rate schedule providing for reduced or eliminated fares during certain periods of the day so as to encourage a more evenly balanced use of the transportation system would be permissible. In our opinion, we noted that under such a system, the transportation authority would derive an economic benefit from the more balanced overall use of its equipment resulting from the adoption of such a rate schedule and concluded for that reason, that such a system would be constitutionally permissible. [Fn. 3]

 

The subject matter of your inquiry - rates discounted pursuant to the authority of RCW 70.39.140 - presents, in our opinion, a similar situation, in that such rates must be cost justified in order to meet the statutory criteria. Such cost justification, it appears to us, may equate to an economic benefit to the hospital district, and, thus, the rationale underlying AGO 1980 No. 25 may likewise be applicable in analyzing the issue raised by your second question.

 

[Fn. 3]: Since the question addressed in AGO 1980 No. 25 dealt with county, as opposed to state legislative action, the above-cited policy did not preclude our consideration of the constitutionality of the scheme therein presented.

 

Id. at 4-5.

 

Similarly, here, if providing free birthing classes may equate to an economic benefit to the hospital district by, for example, reducing costs overall through such preventative services, we think the district would have a reasonable basis to provide such services in compliance with state law. More generally, if an economic benefit truly exists for the district in providing such services, and/or if there is a legitimate public health justification for providing the services, there would be no donative intent and, therefore, such an activity would not violate the gift of funds prohibition.

 

We recommend that hospital districts also consult with their legal counsel about such matters.

  

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4. May a hospital district pay for medical/health insurance for board commissioners and their spouses?

Yes, depending upon the circumstances. There is statutory authority to pay for insurance for hospital district board commissioners as well as for their spouses in RCW 70.44.050, which provides in relevant part:

 

Any district providing group insurance for its employees, covering them, their immediate family, and dependents, may provide insurance for its commissioners with the same coverage. ...

 

So, if the district provides medical/health insurance for its employees and its employees' spouses (and dependents, if applicable), it may do so for the board commissioners and their spouses (and dependents, if applicable) as well.

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5. Our hospital district board of commissioners is wondering if a resolution is required in order to modify/amend an employment contract. Specifically, the contract for the administrator/superintendent.

If the amendment here has to do with the superintendent's (or CEO's) salary, then, yes, that would have to be done by resolution. RCW 70.44.070(1) provides:


The public hospital district commission shall appoint a superintendent, who shall be appointed for an indefinite time and be removable at the will of the commission. Appointments and removals shall be by resolution, introduced at a regular meeting and adopted at a subsequent regular meeting by a majority vote. The superintendent shall receive such compensation as the commission shall fix by resolution.

 

However, if the amendment affects terms of the contract other than compensation, then we think a simple motion by the board to approve the contract change would be sufficient (and see note below regarding motions and resolutions).

 

On a related issue regarding approving the superintendent's compensation, unlike board action on the original appointment or removal of the superintendent that is also addressed in RCW 70.44.070(1), the resolution approving his or her compensation need not be introduced at one regular meeting before it can be adopted at a subsequent regular meeting. The board can enact the resolution approving the superintendent's compensation at any regular or special meeting.

 

Note also, as described above in response to question two, that Washington case law has held that there is no difference in substance between a resolution and a motion. However, regarding board enactments for which the hospital district statute (chapter 70.44 RCW) specifically requires a "resolution," we recommend that the board explicitly refer to the enactment as a "resolution." Although the resolution need not necessarily be in the form of a separate document, we recommend, in order to ensure sufficient formality, that the board use a separate document entitled "resolution" to approve such actions, that the meeting minutes clearly specify that the action approved by the board was by resolution, and that the resolution explicitly addresses what is required by the statutory provision at issue. For example, here RCW 70.44.070(1) requires that the board fix the superintendent's compensation by resolution.

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