Napata v. Univ. of Md. Med. System Corp...

• Decision Date: 24 January 2011
• Docket Number: Sept. Term,2010.,No. 5,5
• Parties: Reverend Daki NAPATAv.UNIVERSITY OF MARYLAND MEDICAL SYSTEM CORPORATION.
• Court: Maryland Court of Appeals

417 Md. 724

12 A.3d 144

Reverend Daki NAPATA

v.UNIVERSITY OF MARYLAND MEDICAL SYSTEM CORPORATION.

No. 5

Sept. Term

2010.

Court of Appeals of Maryland.

Jan. 24, 2011.

Edward Smith, Jr. (Kerrie Campbell, Baltimore, MD), on brief, for petitioner.Scott R. Haiber (Mark D. Gately and Katherine A. Cooper of Hogan & Hartson LLP, Baltimore, MD), on brief, for respondent.Argued before HARRELL, BATTAGLIA, GREENE, MURPHY, ADKINS, BARBERA and JOHN C. ELDRIDGE (Retired, Specially Assigned), JJ.ADKINS, J.

In this case we must determine the limits of Maryland's Public Information Act (“PIA”).¹ Petitioner Reverend Daki Napata sought access to certain records controlled by Respondent University of Maryland Medical System Corporation (“UMMS”). UMMS denied his request on grounds that it is not an “agency or division of the State of Maryland” and thus not subject to the PIA. Napata then appealed to the Circuit Court for Baltimore City for assistance, but was unsuccessful, and the Court of Special Appeals later affirmed the trial court's judgment. We granted Napata's Petition for Writ of Certiorari to answer the following question:

Did the lower court err in holding that Maryland Annotated Code of Education Article, Section 13–303 states that Respondent is not an instrumentality of the State of Maryland?

We shall hold that, although UMMS is an “instrumentality of the State” for purposes of the PIA, an express exemption from laws affecting only governmental or public entities located in the corporation's enacting statute shields it from the public information law. Thus, we affirm the decision of our intermediate appellate court.

FACTS AND LEGAL PROCEEDINGS

The events in this case are simple and uncontested. Of a greater importance to us is the larger history of UMMS. Thus, before setting forth the facts specific to this dispute, we will provide a brief overview of the corporation.

I. The University Of Maryland Medical System

UMMS's beginnings can be traced back to the University of Maryland (the “University”), and the hospital system that it operated. The University, as an instrumentality of the State,² was subject to those laws affecting government and public entities, including the PIA. Adherence to numerous state regulations, however, proved to be financially burdensome for the University hospital, especially because it relied upon “patient fees for support and receive[d] no state operating or capital funds.” University of Maryland Medical System, Office of Public Affairs, Questions and Answers for Employees About The University Of Maryland Medical System's Governance Change (on file with the Maryland State Law Library). See also Governance Chronology, S. 481, 387 Sess. (1984) (explaining that in 1977, the “Appropriations Committee of the Maryland House of Delegates decided to gradually phase out general fund support for both operations and capital for the University of Maryland Hospital.”) According to the General Assembly,

[i]t [had] proven unnecessarily costly and administratively cumbersome for the University to finance, manage, and carry out the patient care activities of an academic institution within the existing framework of a State agency, since many applicable laws, management structures, and procedures were developed to implement types of governmental functions which differ from the operations of a major patient care facility in an environment of State and federal regulation[.]See Md.Code (1978, 2008 Repl.Vol.), § 13–302(5) of the Education Article (“Ed.”). The General Assembly also remarked that “patient care operations are more efficiently served by contemporary legal, management, and procedural structures utilized by similarly situated, private entities throughout the nation[.]” Id.

As a result, Maryland's legislature sought to “separate the operations, revenues, and obligations of the medical system from the State[.]” Ed. § 13–302(6). It formed UMMS, a “private, nonprofit, nonstock corporation [.]” Ed. § 13–301(m). The General Assembly transferred all University medical system ³ assets, as determined by the Board of Public Works, to UMMS. Ed. § 13–307(a). In exchange for the assets, UMMS assumed the University medical systems' liabilities to the extent provided in the statute or in the annual contract between UMMS and the University. See Ed. § 13–308(a).

UMMS's mission was “to provide medical care of the type unique to University medical facilities for the citizens of the State and region and, in accomplishing this objective, to provide a clinical context for education and research conducted by the faculty of the University[.]” Ed. § 13–302(1). Moreover, UMMS was to “render[ ] comprehensive health care to the community naturally served by University Hospital to assure its availability to citizens of that community[.]” Ed. § 13–302(3). “These purposes separately and collectively serve the highest public interest and are essential to the public health and welfare[.]” Ed. § 13–302(4).

Although the General Assembly created a separate corporate entity, it did not relinquish all control of UMMS. The corporation could not exist until its Articles of Incorporation were approved by the Board of Public Works. See Ed. § 13–303(a)(1). Additionally, all voting members on UMMS's Board of Directors are appointed by the Governor, two of whom must be members of the General Assembly and nominated by the President of the Senate and Speaker of the House of Delegates, respectively. See Ed. § 13–304(b) & (c)(3). The Governor also fills any vacancies on the Board. See Ed. § 13–304(d)(4).

UMMS must also submit annual contracts to the University's Board of Regents. See Ed. § 13–306(a). These contracts set forth “all financial obligations, exchanges of services, and any other agreed relationships between the University and [UMMS] for the ensuing fiscal year.” Id. Furthermore, UMMS must annually file audited financial statements with the Governor, the Joint Audit Committee, and University Board of Regents. See Ed. § 13–303(g). UMMS may request grants from the General Assembly only after approval by the University Regents, see Ed. § 13–303(i), and the State Treasurer may loan funds to UMMS, if funds have been appropriated in the annual State budget, only with approval from the Board of Public Works, see Ed. § 13–309. UMMS must also “coordinate with [the] University [any] fundraising efforts[,] all [UMMS] campaigns and solicitations for private gifts[,] and proposals for private or federal grants.” Ed. § 13–303(j).

Finally, if the University Regents and the Board of Public Works determine that UMMS has failed to realize the purposes set forth in its enacting statute, they have the power to terminate UMMS. See Ed. § 13–311(c). Upon dissolution, and after any outstanding debts have been satisfied, all remaining UMMS assets revert to the State. See Ed. § 13–311(b).

II. Napata's Request For UMMS Records

Following the racketeering conviction of former State Senator Thomas Bromwell for his role in influencing the awarding of a UMMS construction contract, ⁴ Petitioner Napata sought access to the UMMS records relating to that contract. UMMS denied his request, explaining that its business records “are not subject to disclosure under the Maryland Public Information Act” because UMMS is a “private, non profit corporation and not an agency or division of the State of Maryland.” (Emphasis in original).

In response, Napata filed this action. He appeared before the Circuit Court for Baltimore City on two separate motions, and was unsuccessful both times. The first involved his own Motion for Summary Judgment, which the judge denied on the grounds that the PIA did not apply to UMMS because the General Assembly intended “to separate [UMMS] from the ties to the University and the state which subjected it to the public scrutiny and bureaucratic processes which formerly obstructed its growth.” A little over a month later, a different judge adopted similar reasoning when granting UMMS's Motion to Dismiss. She concluded that UMMS “is not[,] pursuant to the statute[,] an instrumentality of the State and therefore, not subject to the [PIA].”

Napata appealed the Circuit Court's dismissal of his case to the Court of Special Appeals. Following a thorough analysis, the Court affirmed the lower court's decision, but for different reasons. While it agreed with Napata that UMMS was an instrumentality of the State, the intermediate appellate court concluded that UMMS was exempt from the PIA because the entity's enacting statute expressly provided that the corporation was not subject to laws affecting only governmental or public entities. The Court interpreted the PIA as one of these laws. Napata then petitioned this Court for a writ of certiorari, which we granted. See Napata v. UMMSC, 411 Md. 740, 985 A.2d 538 (2009).

DISCUSSION

I. Standard of Review

The role of an appellate court is substantially similar whether reviewing the grant of summary judgment or the grant of a motion to dismiss. In both instances, the standard is whether the trial court was “legally correct.” Compare Eng'g Mgmt. Servs. v. Md. State Highway Admin., 375 Md. 211, 229, 825 A.2d 966, 976 (2003) (“The standard for appellate review of a summary judgment is whether it is ‘legally correct.’ ”) with Sprenger v. Public Serv. Comm'n., 400 Md. 1, 21, 926 A.2d 238, 250 (“When reviewing the grant of a motion to dismiss, an appellate court is concerned with determining whether the trial court was legally correct.”). Moreover, with regard to both types of motions, “we accept all well-pled facts in the complaint, and reasonable inferences drawn from them, in a light most favorable to the non-moving party.” Sprenger, 400 Md. at 21, 926 A.2d at 249 (motion to dismiss). See also Reiter v. Pneumo Abex, 417 Md. 57, 67, 8 A.3d 725, 731 (2010) (same for grant of summary judgment). The facts of the underlying action are uncontested. Thus, we are simply tasked with a de novo review of the...