The Georgia Supreme Court heard arguments Monday in a high-profile case that will determine whether Northside Hospital can keep its business secret — even though it operates a hospital that is owned by the public.
The case is being closely watched because it could influence the public’s ability to access the records of public hospitals across Georgia that are operated by non-profit organizations.
The Hospital Authority of Fulton County created Northside Hospital Inc. in 1991 and leased the hospital to the new non-profit organization it created. Northside Hospital Inc. has operated the hospital and a growing healthcare system ever since.
A Georgia court ruling in 1995 established that non-profits carrying out the duties of a public hospital authority are subject to the Georgia Open Records Act. For years, The Atlanta Journal-Constitution and other members of the news media and the public used this ruling to obtain records from hospitals around the state through requests made under the act, also known as the state’s “sunshine law.”
That ruling was consistent with others in the state’s history. A public university, for example, couldn’t keep records about athletic teams secret by creating a private organization to run its sports program, courts ruled.
But Northside Hospital has recently argued it is not subject to the state’s sunshine laws. And the lower court rulings in this case have favored Northside, raising concerns among advocates for public access, who believed the issue requiring Northside and other hospitals to disclose records was settled law.
“It cannot and should not be possible for a government agency to insulate itself from public scrutiny by spinning off a private entity and transferring its assets, duties and public functions to that entity,” wrote attorney David Hudson, in an amicus brief filed on behalf of news organizations, including The Atlanta Journal-Constitution. “
The pending legal case began when attorney E. Kendrick Smith, a partner in the Atlanta office of the Jones Day law firm, requested information from Northside under the state’s sunshine law. He was asking for documents related to Northside’s “$100 million acquisition” of four physician practices.
The request came after an Atlanta Journal-Constitution story in 2013 reported on big jumps in bills for cancer patients that resulted from Northside’s acquisition of two of those practices, which are oncology groups.
Northside refused to hand over the records to Smith, saying that Northside is a private company that isn’t subject to the Open Records Act and that, even if the law did apply to it, the records were “trade secrets.”
A central question in the case is this: Is Northside Hospital Inc. carrying out the work of the public authority that created the non-profit and provided it with a public hospital and other assets? Or, did the authority divest itself of all control over Northside, which is now just a private organization that happens to lease a public building?
Northside claims that the kind of public access Smith wants is well beyond what the law demands, arguing that this view of the law could compel a private organization like the Atlanta Falcons to turn over their internal records because they carry out private athletic events in a stadium owned by a public authority.
Smith and the media organizations disagree with the Falcons analogy, saying Northside is not just leasing a facility like the Falcons are. Northside Hospital Inc. was created by the authority to take over its duties, Smith argues, which requires it to remain open to public scrutiny.
The oral arguments in the case were made before a packed courtroom by two prominent Atlanta attorneys. Peter Canfield represented Smith, while Randy Evans represented Northside.
Justices asked tough questions of both sides during Monday’s arguments. They wondered how extensive access to records could be, when the non-profit Northside Hospital Inc. that was created by the authority now operates a regional system that treats thousands of patients at its hospitals and clinics outside of Fulton County.
But justices also questioned the idea that Northside Hospital Inc. was not set up to carry out the hospital authority’s duties, as Northside has argued. It’s not legal to give public assets to a private entity at below market rates, so if Northside Hospital is just a tenant with no duties to the public, the justices wondered how the public hospital authority could legally lease its assets to the non-profit for favorable rates that are below the market value.
A ruling in the case in not expected before the fall.
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