Roberts v. South Oklahoma City Hosp. Trust, 60999

• Decision Date: 22 July 1986
• Docket Number: No. 60999,60999
• Citation: 1986 OK 52,742 P.2d 1077
• Parties: Richard ROBERTS, Appellant, v. SOUTH OKLAHOMA CITY HOSPITAL TRUST d/b/a South Community Hospital Professional Medical Services Corporation, a corporation; and Dr. Thomas Garrett, Appellees.
• Court: Oklahoma Supreme Court

Page 1077

742 P.2d 1077

1986 OK 52

Richard ROBERTS, Appellant, v. SOUTH OKLAHOMA CITY HOSPITAL TRUST d/b/a South Community

Hospital Professional Medical Services

Corporation, a corporation; and Dr.

Thomas Garrett, Appellees.

No. 60999.

Supreme Court of Oklahoma.

July 22, 1986.

Rehearing Denied Sept. 29, 1987.

Berry & Berry, P.C. by Howard K. Berry, III, Oklahoma City, for appellant.

Fenton, Fenton, Smith Reneau & Moon by Dale Reneau, Oklahoma City, for appellees.

KAUGER, Justice.

The dispositive issue on appeal is whether South Community Hospital Trust d/b/a South Community Hospital is a valid public trust within the purview of the Political Subdivision Tort Claims Act, 51 O.S.Supp.1979 §§ 152(6), 156(D) (Act). If South Community Hospital is in reality a public trust, claims against it must be brought within one year pursuant to § 156(D) of the Act. If the hospital is not a public trust, notwithstanding the trust indenture naming the City of Oklahoma City as beneficiary, the applicable statute is the two year limitations period prescribed by 12 O.S.1981 § 1053(A). Under the facts of this case, judged by the substance of the transaction and not by the form, we find that the conveyance is illusory, masking the retention by South Community Hospital of control of the entity which it purported to convey. ¹ Therefore, because the public trust does not qualify as a political subdivision, the notice provisions of the Act are inapplicable.

On February 10, 1981, Crystal Roberts entered the emergency room of South Community Hospital (appellee). She complained of pain in her arms and in her chest. The emergency room physician examined her and admitted her as a patient of the hospital at 10:20 p.m., February 10, 1981. Because no beds were available in the hospital's coronary care unit, Mrs. Roberts was placed in a regular ward. At 4:30 a.m., February 11, 1981, Mrs. Roberts was found dead in her hospital bed.

On July 27, 1982, the surviving spouse, Richard Roberts (appellant/husband) filed an action alleging that the attending physician and the hospital were negligent in the care and treatment of his wife. The hospital filed its answer September 28, 1982, denying the allegations of negligence and of an agency relationship between the hospital and the attending physician. On May 23, 1983, the hospital amended its answer asserting the failure of the husband to comply with the notice provisions of the Act, 51 O.S.Supp.1979 § 156(D) ² which requires notice to be given within one year after the alleged injury causing the death, and raising a statute of limitations defense. The hospital's motion for summary judgment was sustained by the trial court based on the hospital's status as a public trust.

On appeal, the husband admits that he did not file a claim against the hospital in accordance with the notice provisions of the Act; he further admits that the receipt of suit papers was the first notification that the hospital received of its potential liability for the death of his wife. However, the husband argues that the hospital is not a public trust within the contemplation of the Political Subdivision Tort Claims Act, and that because the hospital carries liability insurance the notification provision of the Act is not related rationally to a legitimate state interest, and is, therefore, unconstitutional. Because we find that the South Oklahoma City Hospital Trust is illusory, we need not address the appellant's constitutional attacks on the Act.

SOUTH COMMUNITY HOSPITAL TRUST D/B/A SOUTH COMMUNITY

HOSPITAL IS NOT A POLITICAL SUBDIVISION SUBJECT TO THE

NOTICE PROVISIONS OF 51 O.S.Supp.1979 § 156(D)

BECAUSE THE UNDERLYING PUBLIC TRUST IS ILLUSORY

(A)

Under the 1979 version of the Political Subdivision Tort Claims Act, 51 O.S.Supp.1979 § 152(6) effective July 1, 1979, the term, political subdivision included a public trust if it named a city, town, school district or county as its beneficiary. ³ The husband contends that South Community Hospital is not a public trust within the contemplation of the Act. He asserts that by the terms of the trust agreement the beneficiary, the City of Oklahoma City, exercises no control over the everyday affairs of the hospital; ⁴ that lack of control over the hospital by a governmental entity exempts the hospital from the statutory definition of a "political subdivision"; and that, therefore, the notice requirement and time-bar limitation of the Act are inapplicable.

In support of this argument the appellant cites the Attorney General's Opinion No. 79-303, which addressed the question of whether municipal hospital authorities and municipal housing authorities are subject to the Political Subdivision Tort Claims Act. At the time of the presentation of the question in 1978, the Act did not include public trusts--it provided, however, that the term political subdivision included either an incorporated city or town, a school district or a county and all of their institutions, instrumentalities or agencies. In Hammons v. Muskogee Medical Center Authority, 697 P.2d 539, 541 (Okla.1985), we held that before the 1979 amendment to the Act, a municipal hospital was protected by the Act only if it constituted an agency of a political subdivision.

Although the husband does not question or challenge the fact that the hospital was created by a public trust instrument naming the City of Oklahoma City as its beneficiary, he urges us to construe 51 O.S.1979 Supp. § 152(6) to exclude the hospital from the statutory definition of a political subdivision. ⁵ We begin our analysis by observing that a public trust is any trust created and existing under 60 O.S.1981 § 176 et seq. ⁶ By statute, a public trust may be created to issue obligations to provide funds for any authorized function of the state, county or municipality. South Community Hospital's facade is that of a public trust created under 60 O.S.1981 § 176(a), ⁷ and of a political subdivision under the statutory definition contained in 51 O.S.1981 § 152(6). The husband argues that there is a distinction between a true municipal hospital created under 11 O.S.1981 §§ 30-101 et seq. and a hospital created and operating under only a mere trust authority. His argument is persuasive. ⁸ We agree that because this entity is not being conducted as a trust for the public benefit it is an illusory public trust, which cannot qualify under § 152(6) as a true political subdivision.

An explanatory x-ray of the legal status of a given hospital may be derived via an exploration of its financial anatomy. A municipal hospital created and funded under 11 O.S.1981 § 30-101 is an entity whose financial obligations could affect the fiscal structure of the municipality itself. A Title 11 hospital is funded through submission of its financial statement and an estimate of needs ⁹ to the County Excise Board. The hospital is managed by the municipal governing body; ¹⁰ the treasurer of the hospital is the municipal treasurer; ¹¹ the governing body of the hospital exercises internal control of the hospital ¹² subject to the approval of the municipal governing body, and it hires the hospital's employees; ¹³ the municipality accepts funds and gifts on behalf of the hospital, and the hospital makes an annual report to the municipality. The true municipal hospital is an extension of and an agency of the municipality. Any claim for compensation for harm suffered by an individual at the hands of a Title 11 hospital is potentially disruptive to the orderly process of government. The notice provisions of the Act would be applicable to a traditional municipal hospital ¹⁴--but not, however, to a private hospital masquerading as a municipal institution.

(B)

Unless explicitly immunized by law, political subdivisions are now liable in tort. ¹⁵ Traditionally, the operation of hospitals has been held to be a proprietary function of government subject to liability for tortious conduct. ¹⁶ South Community Hospital's statute-predicated claim to an exception from the general statute of limitation was short-lived in our jurisprudence. In 1984, the Legislature amended the notice provisions of the Act effective October 1, 1985, at 12:01 a.m., ¹⁷ specifically excluded hospitals operating under a trust authority from the Act's protective umbrella.

We have discussed at some length the control mechanisms exercised in a true municipal hospital; and we recognize that there may be valid public trusts whose affairs are conducted on some middle ground between the operation of a municipal hospital and a proprietary hospital. Nevertheless, a comparative examination of South Community Hospital's operating procedures is illuminating. The pleadings filed in this case are styled South Oklahoma City Community Hospital Trust d/b/a South Community Hospital. The answer filed by the hospital is captioned "Separate Answer of Defendant, South Oklahoma City Trust, d/b/a South Community Hospital." The hospital administrator testified in his deposition that the hospital is managed by the South Community Hospital Management Corporation and that the bank account which is used by the management corporation is in the name of South Community Hospital. As he put it: " ... That's the way we do business." South Community Hospital promotes and projects the image of a private hospital in its everyday operations. Fund drives are held in the name of South Community Hospital. Hospital rules and regulations, staffing decisions, and day-to-day operations are not subject to City approval, and the hospital, without consulting the City, chooses its insurance carrier. In effect, the hospital operates under an assumed, fictitious, chameleon-like identity which fails to put its patients on notice that it purports to be a political subdivision; or that it lays claim to a political subdivision's immunity status.

This tenuous relationship between South Community Hospital and the City of Oklahoma City is one of convenience solely...