Municipality of Anchorage v. Sisters of Providence in Washington, Inc.

• Decision Date: 08 May 1981
• Docket Number: Nos. 5017,5018 and 5329,s. 5017
• Citation: 628 P.2d 22
• Court: Alaska Supreme Court
• Parties: MUNICIPALITY OF ANCHORAGE, Appellant & Cross-Appellee, v. SISTERS OF PROVIDENCE IN WASHINGTON, INC., Appellee & Cross-Appellant.

Page 22

628 P.2d 22

MUNICIPALITY OF ANCHORAGE, Appellant & Cross-Appellee, v. SISTERS OF PROVIDENCE IN WASHINGTON, INC., Appellee & Cross-Appellant.

Nos. 5017, 5018 and 5329.

Supreme Court of Alaska.

May 8, 1981.

R. Michael Jackson and Ken Norman, Asst. Municipal Attys., Anchorage, for appellant.

Patrick B. Gilmore and Robert J. Dickson, Atkinson, Conway, Bell & Gagnon, Anchorage, for appellee.

OPINION

Before RABINOWITZ, C. J., CONNOR, BURKE and MATTHEWS, JJ., and DIMOND, Senior Justice.

RABINOWITZ, Chief Justice.

This appeal involves monies which were paid by the state to the Municipality of Anchorage pursuant to municipal revenue sharing statutes enacted in 1973. The funds in controversy were received by the Municipality under the provisions of former AS 43.18.010(h)(1) ¹ and were generated by the Municipality's inclusion of the hospital operated by Sisters of Providence in Washington, Inc. ("Providence") in its annual revenue sharing applications for fiscal years 1974-76. During those years, the Municipality's position was that former AS 43.18.050 ² gave it discretion to apportion funds received under former AS 43.18.010(h)(1) among health care facilities in Anchorage as it deemed appropriate. Providence, on the other hand, was of the view that AS 43.18.050 required that funds generated by its facilities be paid directly to it. ³

There is a further dispute in regard to $92,071.77 that was paid over to Providence by the Municipality during this period. Of this total sum, $25,532 represents compensation for services rendered by Providence prior to fiscal year 1974. The remaining $66,539.77 was paid for various services provided by Providence during fiscal years 1974-76. Providence argued before the superior court that the $25,532 represented payment pursuant to contractual arrangements entered into and performed prior to the time the revenue sharing scheme became effective. As to the $66,539.77, Providence's position was that the Municipality was under a contractual obligation to pay that amount for services rendered during fiscal years 1974-76 that was entirely separate from its duty to pay over the revenue sharing funds. It is stipulated by the parties that $66,539.77 represents payment for specific services, which consisted of the establishment of a poison information center and the provision of social worker services. The Municipality's position was that the whole of the $92,071.77 was paid from revenue sharing funds and that it had the discretion not only to distribute those funds to various facilities as it saw fit but also to require that facilities receiving funds apply them to specific services.

Both parties agreed that the case involved no triable issues of fact and that, therefore, disposition by summary judgment would be appropriate. The superior court entered summary judgment awarding Providence.$371,350.23, plus prejudgment interest. The court held that under former AS 43.18.050, Providence was entitled to all of the revenue sharing funds generated by the Municipality's inclusion of Providence's facility in the application for those funds but that that statute gave the Municipality the right to direct the specific uses to which those funds were to be put. The.$371,350.23 award was, therefore, determined by setting off the amount received by Providence for services rendered during fiscal years 1974-76 ($66,539.77) against the total amount received by the Municipality that was attributable to the inclusion of Providence in the revenue sharing application ($437,890). The court was of the view that the "wide discretion" the Municipality was entitled to exercise in restricting the use of revenue sharing funds did not justify application of the funds to payment of prior indebtedness. The $25,532 received by Providence for services rendered prior to fiscal year 1974 was, therefore, not included in the set-off allowed by the superior court.

The Municipality has appealed the superior court's interpretation of former AS 43.18.050, its rejection of defenses of laches, waiver, and estoppel, and its award of attorney's fees to Providence. Providence, in its cross-appeal, argues that the superior court erred in finding that the legislature granted the Municipality discretion to restrict the use of these revenue sharing funds and, thus, that the $66,539.77 set-off was improper.

I. Interpretation of Ch. 87 SLA 1973.

The original Alaska revenue sharing statutes, AS 43.18.010 et seq., were enacted in 1969 and did not include any provision for the funding of health care facilities. See ch. 95, § 10, SLA 1969. In 1970, AS 43.18.010 was amended to provide for the application of revenue sharing funds toward operation and maintenance expenses of "health services or facilities." Ch. 194, § 3, SLA 1970. This amendment read, in pertinent part:

AS 43.18.010 is amended by adding new subsections to read:

(h) During each fiscal year the state shall pay to an organized borough or a city outside an organized borough, in which a health facility is operated, a sum equal to $1,000 for each bed actually used for patient care within the facility, limited to the maximum number of beds provided for in the construction design of the facility, or $4,000 for a facility, if the local government elects to accept payment on that basis for a particular facility. Sums received by a local government under this subsection shall be used for expenses of operation, maintenance or health services or facilities, as the local government determines.

(i) In (h) of this section 'health facility' or 'facility' includes hospitals, public health centers, community mental health centers, facilities for the mentally or physically handicapped, nursing homes and convalescent centers which are licensed by the state under AS 18.20.130 and are owned or operated or both by a local government or by a nonprofit corporation or other nonprofit sponsor; the term excludes facilities operated or wholly supported by the state or the federal government.

In 1973, the above subsections were repealed and replaced by the revenue sharing scheme presently under consideration. ⁴ Ch 87, §§ 1-3, SLA 1973. The re-enactment of AS 43.18.010(h), as it pertains to this dispute, reads as follows:

(h) During each fiscal year the state shall make payments as follows:

(1) $1,000 per hospital bed to organized boroughs having health powers for each hospital bed actually used for patient care, limited to the number of beds provided for in the construction design of the hospital, or $50,000 per hospital for those hospitals with ten or more beds or $20,000 per hospital for those hospitals with less than ten beds as the local government may determine ....

In addition, the legislature added the following section to the statutory scheme:

Sec. 43.18.050. Specific Expenditures. A municipality shall expend funds received for the operation and maintenance of hospitals and health facilities and services under this chapter only for those specific facilities and services.

The crucial alteration, as far as this appeal is concerned, was the removal of the last sentence of the 1970-73 version of AS 43.18.010(h) and its replacement by AS 43.18.050. The change was from the provision for expenditure "as the local government determines" to the requirement that "funds received for the operation and maintenance of hospitals and health facilities and services" be expended "only for those specific facilities and services."

Finally, in 1976, in response to the dispute underlying this litigation, the legislature again amended the revenue sharing plan. ⁵ This enactment made it clear that "payments to the municipality shall be transferred to the hospital in accord with the basis by which the entitlement was generated by the hospital." AS 43.18.010(h)(2)(B). Since July 1, 1976, when that provision took effect, the Municipality has transferred the appropriate revenue sharing funds directly to Providence.

"If the meaning of a statute is plain, it should be enforced as it reads without judicial modification or construction." Horowitz v. Alaska Bar Association, 609 P.2d 39, 41 (Alaska 1980). ⁶ Both parties cite this principle and, emphasizing different words within former AS 43.18.050, argue that the unambiguous language of that statute supports their respective positions. ⁷ Appellant's position is that the statute distinguishes the method by which eligibility for funds is determined (based upon "hospitals and health facilities and services") from the object of expenditure ("facilities and services" only). The contention is that "(h)ad it been intended that hospitals must receive funds under these statutes, the word 'hospitals' would have been included along with 'facilities and services' in the expenditure clause of former AS 43.18.050." Appellant claims therefore, that the clear meaning of the statute limited its discretion as to expenditure of the revenue sharing funds only insofar as it required that funds generated by health care facilities be expended on health care facilities. Appellee's position, based upon the same legal principle, is that the plain meaning of the statutory language requires that municipalities "expend funds received for hospitals and health care facilities on the facilities which generated the funds." We believe that appellee's reading of former AS 43.18.050 is clearly the more reasonable one. But in view of the confusion that provision has generated, and the legislative history underlying it, we think it inappropriate to base our holding solely on the plain meaning rule.

Both parties, likewise, rely on the sequence of legislative enactments discussed above in support of their arguments. It is agreed that prior to fiscal year 1974, Providence had no claim to revenue sharing funds distributed to the Municipality; it is also agreed that the 1976 enactment obliged the Municipality to pay over to Providence all funds of the kind in dispute here.

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