Court Rejects Arguments Hospital Not Run For Charity
Last updated Thursday, November 6, 2008 10:02 PM CST in News
By John Lyon
THE MORNING NEWS
LITTLE ROCK -- The state Supreme Court on Thursday rejected arguments a hospital that in some years has made more than $1 million in profit is a business, not a charity.
In a 6-1 decision, the court upheld a Johnson County circuit judge's dismissal of a medical negligence lawsuit against Johnson Regional Medical Center in Clarksville. Harvie Anglin alleged negligence by the hospital resulted in injuries to his wife, Margie Anglin, who died after the lawsuit was filed.
The circuit judge agreed with the hospital's argument it was entitled to charitable immunity. Anglin argued on appeal the hospital is a "big business," not a charity.
Anglin pointed out in some years the hospital has made profit in excess of $1 million, although in some years it has operated at a loss.
The Supreme Court said Thursday the hospital meets the definition of a charitable organization. The hospital provides health services free of charge to those who are unable to pay, and any surplus is used to perpetuate its mission, the court said.
"The articles of incorporation state that no part of the net earnings of JRMC shall inure to the benefit of or be distributable to its members, trustees, officers or other private persons, except that JRMC shall be authorized and empowered to pay reasonable compensation for services rendered," Chief Justice Jim Hannah wrote.
The court also rejected Anglin's argument the hospital is not a charity because it sues patients to collect unpaid hospital bills. Anglin did not show the hospital sued patients who could not pay, the court said.
Anglin claimed the question of whether the hospital is a charity or a business is a question of fact that should be up to a jury to decide. The Supreme Court disagreed.
Hannah wrote in the majority opinion the issues in question are "not matters of disputed fact, but rather they are differing legal interpretations of undisputed facts."
In a dissenting opinion, Justice Robert Brown said Anglin demonstrated the hospital receives an insignificant amount of its income from donations, provides charity care as only a very small part of its services, has more than $6 million in reserve and has well-paid administrative employees. That information "at the very least calls into question whether JRMC's profit and reserves are used for charitable care," he wrote.
Brown said he disagreed with the majority's opinion that no questions of fact existed. He said he would have remanded the case for a jury trial.
"It also bears mentioning that Arkansas is one of only four states that still provides absolute charitable immunity for its hospitals," Brown wrote.
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