Queen v. West Virginia University Hospitals, Inc.

• Decision Date: 22 July 1987
• Docket Number: No. 17201,17201
• Citation: 179 W.Va. 95,365 S.E.2d 375
• Parties: , 45 Ed. Law Rep. 372 Mitchell QUEEN v. WEST VIRGINIA UNIVERSITY HOSPITALS, INC. Charles G. BROWN, Attorney General v. WEST VIRGINIA UNIVERSITY HOSPITALS, INC., etc., and David Fine, Chief Executive Officer.
• Court: West Virginia Supreme Court

Page 375

365 S.E.2d 375

179 W.Va. 95, 45 Ed. Law Rep. 372

Mitchell QUEEN v. WEST VIRGINIA UNIVERSITY HOSPITALS, INC.

Charles G. BROWN, Attorney General v. WEST VIRGINIA UNIVERSITY HOSPITALS, INC., etc., and David

Fine, Chief Executive Officer.

No. 17201.

Supreme Court of Appeals of

West Virginia.

July 22, 1987.

Rehearing Denied Feb. 3, 1988.

Syllabus by the Court

1. The Legislature, in West Virginia Code § 18-11C-1 et seq., has mandated the creation of WVUH to be organized as a nonstock, not-for-profit corporation under the general corporation laws of the state, W.Va.Code § 31-1-1 et seq. (1982 Replacement Vol.), for the stated purposes of (1) facilitating health sciences education and research, (2) providing patient care, including specialized services not widely available elsewhere in West Virginia, in the most efficient manner and at the lowest practicable cost, and (3) providing independence and flexibility of management and funding and assuring future economy of operation under changing conditions by separating the business and service functions of the corporation's facilities from the educational functions, and by providing that such facilities will be self-sufficient, removing the tax burden from the state.

2. What constitutes an adequate public purpose in mandating a corporation is a legislative determination which will not be rejected by this Court unless it does not have a reasonable basis or clearly exceeds the power of the Legislature.

3. As a general rule, the general corporation law is the law under which private corporations are organized.

4. WVUH conducts its operations on real property owned by the state and its monumental improvements accrete to the benefit of the state and its people.

5. "The disclosure provisions of this State's Freedom of Information Act, W.Va.Code, 29B-1-1 et seq., as amended, are to be liberally construed, and the exemptions to such Act are to be strictly construed. W.Va.Code, 29B-1-1." Syl. Pt. 4, Hechler v. Casey, 175 W.Va. 434, 333 S.E.2d 799 (1985).

6. Because of the provisions in West Virginia Code § 18-11C-1 et seq. mandating openness and accountability in the management of the corporation and because of the statutory requirement that we liberally construe the disclosure provisions of the West Virginia Freedom of Information Act, W.Va.Code § 29B-1-1 et seq., we hold that West Virginia University Hospitals, Inc. is covered by the latter act and its records are subject to disclosure.

7. The party claiming exemption from the general disclosure requirement under West Virginia Code § 29B-1-4 has the burden of showing the express applicability of such exemption to the material requested.

8. All that is necessary to determine if an entity is a state actor for due process purposes is to evaluate the nature and extent of state involvement so as to determine if its actions are fairly attributable to the state.

9. "The provisions of the Constitution of the State of West Virginia may, in certain instances, require higher standards of protection than afforded by the Federal Constitution." Syl. Pt. 2, Pauley v. Kelly, 162 W.Va. 672, 255 S.E.2d 859 (1979).

10. A symbiotic relationship exists between West Virginia University Hospital, Inc. and the State of West Virginia such as to make the actions of that entity fairly attributable to the state for due process purposes.

11. States create corporations, specifying the powers, rights, and duties of these artificial persons, and it is only the power of the sovereign which breathes life into such a fictitious personality.

12. A person employed by a state actor cannot be summarily discharged without any procedural protections, because the fundamental promise of due process is freedom from arbitrary treatment; the procedures must be sufficient to insure that the action is fair and based on reasonable standards.

Larry Harless, Thomas W. Rodd, Morgantown, for Mitchell Queen.

J. Bradley Russell, Charleston, for Brown, A.G.

James K. Brown, Roger A. Wolfe, Jackson, Kelly, Holt & O'Farrell, Charleston, Glen Moffett, W.V. University Hospitals Inc., Morgantown, for W.V. University Hosp.

Donald G. Logsdon, Charleston, for amicus curiae.

James M. Haviland, Charleston, for AFSCME.

McGRAW, Chief Justice:

This appeal consolidates two cases heard and decided by the Circuit Court of Monongalia County. In the first case, Mitchell Queen sought an injunction and other relief against his former employer, West Virginia University Hospitals, Inc. (WVUH), alleging he had been discharged without being accorded the procedural protections he says he is due under article III, section 10 of the West Virginia Constitution. After holding a hearing on Queen's complaint, the circuit court granted his request for a preliminary injunction, which has been stayed pending the outcome of this appeal. The second action stems from a request made by the Attorney General's office pursuant to the West Virginia Freedom of Information Act (FOIA). W.Va.Code § 29B-1-1 et seq. (1986 Replacement Vol.). WVUH refused to comply with the Attorney General's request for information on the grounds that it is not a public body subject to that Act and the Attorney General petitioned the circuit court for an injunction and an order of production. After a hearing, the circuit court ordered that WVUH allow the Attorney General to inspect its records, but that decision has also been stayed so as to allow this Court to consider the matter on appeal.

The facilities of the West Virginia University medical center were opened in 1960 and were financed in substantial part by a "pop tax" of one cent on each bottled soft drink sold in West Virginia. See W.Va.Code § 11-19-2 (1983 Replacement Vol.). The medical center facilities are located on the Evansdale campus of West Virginia University in Morgantown. The board of governors (now the board of regents) operated the medical center as well as several schools of health sciences located on the Evansdale campus.

In 1983 the West Virginia Legislature authorized the regents to issue bonds to finance the costs of repairing and renovating the medical center facilities or constructing a new facility. W.Va.Code § 18-11-26 (1984 Replacement Vol.). In 1984 the Legislature enacted a statute which mandated the creation of a nonstock, not-for-profit corporation to which the medical center facilities would be transferred, and which would then finance the construction of a new medical center. W.Va.Code § 18-11C-1 et seq. (Supp.1987).

I.

As an initial matter, we address the corporate nature of WVUH. Both the Attorney General and Appellee Queen present extensive arguments regarding whether WVUH is a "public" or a "private" corporation and attempt to reconcile their conclusions with West Virginia's Constitution. Article XI, section 1 provides that corporations are to be created under general laws and article X, section 6 forbids that the state grant credit to or become liable for the debts of any corporation.

West Virginia Code § 18-11C-1 et seq. makes extensive legislative findings regarding the West Virginia University medical center, excerpts of which are given below:

(a) The purposes of the existing facilities are to facilitate the clinical education and research of the health science schools and to provide patient care, including specialized services not widely available elsewhere in West Virginia.

(b) These purposes separately and collectively serve the highest public interest and are essential to the public health and welfare, but must be realized in the most efficient manner and at the lowest cost practicable and consistent with these purposes.

(c) The existing facilities require substantial renovation, and it is necessary and appropriate and in the best interests of the State and the citizens thereof that a replacement facility be built as soon as possible instead of such renovation.

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(e) It is fiscally desirable that the State separate the business and service functions of the hospital from the educational functions of the health science schools ... and that the existing facilities operated by the corporation, and subsequently the new facilities owned and operated by the corporation, be self-sufficient and will remove the tax burden from the State.

(f) A not-for-profit corporate structure with appropriate governance consistent with the delivery of health care to the patient and academic need of the university shall be the best means of assuring prudent financial management and the future economy of operation under rapidly changing market conditions, regulation and reimbursement.

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W.Va.Code § 18-11C-2 (Supp.1987).

The statute authorizes the regents to enter into a long term lease and agreement transferring the assets of the medical center to the corporate entity contemplated by the statute. Section 3 of the statute sets forth a detailed "description" of the corporation to be formed, including:

(a) The directors of the corporation, all of whom shall be voting, shall consist of [nine members serving by virtue of their position with the regents or the medical center] a representative elected at large by the corporation employees and seven directors to be appointed by the governor, subject to confirmation by the senate of the state legislature, which seven appointed directors shall be selected in conformance with the provisions of section six-a [§ 16-5B-6a], article five-B, chapter sixteen of this Code....

(b) The audited records of the corporation shall be reported publicly and to the joint committee on government and finance at least annually.

(c) Upon liquidation of the corporation, the assets of the corporation shall be transferred to the board for the benefit of the university.

W.Va.Code § 18-11C-3 (Supp.1987).

Section 4 of the statute sets forth the details of the agreement between the regents and WVUH, listing the assets to be transferred from the regents "in order to acquire the...