Health Care Authority for Baptist Health v. Davis
2013 Ala. LEXIS 47, 2013 WL 2149493, 158 So.3d 397 (2013)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A health care authority created by a state university under the Health Care Authorities Act is not an 'arm of the State' entitled to sovereign immunity because it functions more like a state franchisee than an immediate and strictly governmental agency. Furthermore, a statutory damages cap applicable to counties and municipalities cannot be constitutionally extended to such an authority, as the cap's validity derives from the unique common-law immunity of those specific local governmental entities.
Facts:
- The University of Alabama Board of Trustees ('the Board') authorized the formation of The Health Care Authority for Baptist Health ('the Authority') to take over operations of hospitals previously run by Baptist Health, a private nonprofit corporation facing financial problems.
- The Authority was formed via an affiliation agreement between the Board, UAB Health System, and Baptist Health, which transferred Baptist Health's assets to the Authority.
- The affiliation agreement granted Baptist Health the right to approve certain major transactions and stipulated that upon the agreement's termination, the Authority's assets would be reconveyed to Baptist Health.
- On September 3, 2005, 73-year-old Lauree Durden Ellison visited the emergency room of Baptist Medical Center East (BMCE), a hospital operated by the Authority, after a fall.
- During her visit, a throat culture was taken for a streptococcus test. Ellison was subsequently discharged.
- After Ellison's discharge, the lab culture revealed the presence of methicillin-resistant staphylococcus aureus (MRSA).
- The BMCE laboratory recorded the MRSA result in its electronic system but did not report it directly to Ellison or her treating physician.
- On November 8, 2005, Ellison died, with her estate alleging the cause of death was MRSA-related pneumonia resulting from the failure to report the test result.
Procedural Posture:
- Kay E. Davis, as executrix of Ellison's estate, sued the Authority in the Montgomery Circuit Court (trial court) for medical malpractice.
- Before trial, the Authority asserted that any damages were subject to a $100,000 statutory cap applicable to local governmental entities.
- The jury returned a verdict in favor of Davis for $3,200,000, and the trial court entered a judgment in that amount.
- The Authority filed a post-judgment motion seeking to reduce the judgment to the $100,000 cap, which the trial court denied.
- The Authority, as appellant, appealed the judgment to the Supreme Court of Alabama. Davis is the appellee.
- On appeal, the Authority argued for the first time that it was entitled to complete sovereign immunity as an arm of the State, which challenges the court's subject-matter jurisdiction.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a health care authority, created by a state university's board of trustees under the Health Care Authorities Act, qualify as an 'arm of the State' entitled to sovereign immunity under § 14 of the Alabama Constitution?
Opinions:
Majority - Murdock, Justice
No. A health care authority created by a state university under the Health Care Authorities Act is not an arm of the State entitled to sovereign immunity. Applying the three-factor Staudt test, the court determined that the Authority functions more like a 'franchisee licensed for some beneficial purpose' than an 'immediate and strictly governmental agenc[y] of the State.' First, the nature of its function—operating a hospital—is not uniquely governmental. Second, its relation to the state is diluted by factors such as the statutory provision that it may 'sue and be sued,' its exemption from state ethics and open meetings laws, the retention of significant control by the private entity Baptist Health, and the fact that its debts and judgments are not payable from the state treasury. Third, the character of its power is more akin to a private corporation, especially given that its assets revert to Baptist Health upon termination of the affiliation agreement. Because the Authority is not an arm of the State, and also not a county or municipality, the $100,000 statutory damages cap in § 11-93-2 is unconstitutional as applied to it, as the cap is constitutionally permissible only due to the unique common-law immunity history of counties and municipalities.
Dissenting - Bolin, Justice
Yes. A health care authority established by a State university is entitled to sovereign immunity. The enabling statute, § 22-21-318(c)(2), plainly states that such an authority 'acts as an agency or instrumentality of its authorizing subdivisions and as a political subdivision of the state.' The authorizing subdivision here is the University of Alabama Board of Trustees, which is indisputably an arm of the State. The legislature's inclusion of a 'sue and be sued' clause is irrelevant because the legislature cannot waive constitutionally-granted sovereign immunity. Therefore, the circuit court lacked subject-matter jurisdiction, and the case should be dismissed.
Dissenting - Shaw, Justice
Yes. The Authority shares the State immunity of its creator, the University of Alabama Board of Trustees. The Authority is controlled by a board dominated by the University Board's nominees and operates to support the University Board's academic and research missions. It is not an autonomous entity. It is internally inconsistent for the legislature to declare the Authority is 'the State' for purposes of anticompetitive conduct but not for purposes of tort liability.
Concurring - Bryan, Justice
I concur that the Authority is not entitled to sovereign immunity and that the damages cap does not apply, but for a different reason regarding the cap. The Court did not need to reach the constitutional question of applying the damages cap. The plain language of the statute, § 22-21-318(a)(2), makes Chapter 93 of Title 11 applicable to the Authority. Chapter 93 defines a 'governmental entity' subject to the cap, and the Authority concedes that it does not meet that definition. Therefore, the cap is inapplicable by its own statutory terms, making a constitutional analysis unnecessary.
Concurring - Moore, Chief Justice
I concur that the Authority is not entitled to sovereign immunity. The determination of immunity rests on whether the entity performs a proper function of government according to the Alabama Constitution. The 'sole object and only legitimate end of government is to protect the citizen in the enjoyment of life, liberty, and property.' Providing health care is not a legitimate function of government unless specifically authorized by constitutional amendment, which has not occurred here in a manner that applies to the Authority. Extending § 14 sovereign immunity in this context would unconstitutionally deprive people of their rights under §§ 11 and 13 to a jury trial and a remedy in open court.
Analysis:
This decision significantly clarifies and constrains the application of sovereign immunity to quasi-governmental public corporations in Alabama. By emphasizing substance over form in its application of the Staudt test, the Court established that creation by a state entity is insufficient to confer immunity, especially when a judgment would not affect the state treasury. This holding prevents a broad expansion of state immunity into the healthcare sector and reinforces the distinction between true state agencies and public-private partnerships. The ruling also narrowly construes the constitutionality of statutory damage caps, limiting their application to the specific local governmental entities for which they were historically and constitutionally justified.
