Town of Burlington v. HOSP. ADMIN. DIST.

• Decision Date: 12 April 2001
• Parties: TOWN OF BURLINGTON v. HOSPITAL ADMINISTRATIVE DISTRICT NO. 1 et al.
• Court: Maine Supreme Court

769 A.2d 857

2001 ME 59

TOWN OF BURLINGTON v. HOSPITAL ADMINISTRATIVE DISTRICT NO. 1 et al.

Supreme Judicial Court of Maine.

Argued February 13, 2001.

Decided April 12, 2001.

Wayne R. Foote (orally), Foote & Temple, Bangor, for plaintiff.

Michael A. Duddy (orally), Kelly, Remmel & Zimmerman, Portland, Louis H. Kornreich, Gross Minsky & Mogul, P.A., Bangor, for defendants.

Panel: WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, ALEXANDER, and CALKINS, JJ.

CALKINS, J.

[¶ 1] Hospital Administrative District No. 1 (HAD #1), Ronald Victory, Cedric Russell, and Quorum Health Resources, LLC, (collectively, the hospital parties) appeal from the judgment of the Superior Court (Penobscot County, Hjelm, J.) ordering them to disclose certain records to the Town of Burlington. HAD #1 operates the Penobscot Valley Hospital in Lincoln, Maine. Victory is the chief executive officer of HAD #1, and Russell is president of the board of HAD #1. HAD #1 contracts with Quorum, a Delaware corporation, to manage the hospital.

[¶ 2] The judgment was issued after trial of two consolidated actions. The first was brought by the Town, pursuant to Maine's Freedom of Access Act (FOAA), 1 M.R.S.A. § 409 (1989), seeking disclosure of certain records from the hospital parties. The second is a declaratory judgment action by HAD #1 against Ronald Minott, a selectman of the Town, seeking a declaration as to whether it is required to produce the documents requested by the Town. The Superior Court concluded that FOAA and section 10-A (P.L.1993, ch. 707, § S-1) of the enabling legislation for HAD #1 require the hospital parties to disclose the requested information. The hospital parties contend that FOAA is not applicable because HAD #1 is not a public agency or political subdivision; the requested documents are not public records; and the trade secret exception of FOAA exempts the disclosure. The hospital parties further argue that section 10-A of the enabling legislation is unconstitutional. We agree with the Superior Court that the hospital parties are required to disclose the records requested by the Town, and we affirm.

I. BACKGROUND

[¶ 3] The Legislature created HAD #1 in 1967 by a private and special law, P. & S.L.1967, ch. 58. This enabling legislation provides that the inhabitants of fourteen towns "are constituted and confirmed a body politic and corporate ... in order to provide for the health, welfare and public benefit of the inhabitants of the district." P. & S.L.1999, ch. 84, § A-1, repealing and replacing P. & S.L.1967, ch. 58, § 1.¹ The law further states that "[t]he hospital district shall maintain and operate a hospital or critical access system ... and generally provide for the health, welfare and public benefit of the inhabitants of the district." Id. HAD #1 owns and operates Penobscot Valley Hospital, a small hospital offering acute care, diagnostic services, and an ambulance service. Quorum manages HAD #1 under a management services agreement, and it employs Victory.

[¶ 4] HAD #1 is governed by a board of directors who are elected by the voters in the towns in the district. Id. § A-2, repealing and replacing P. & S.L.1967, ch. 58, § 2. When there is a vacancy on the board the municipal officers of the town in which the vacancy occurred appoint a member. Id. The enabling legislation declares that HAD #1 is a quasi-municipal corporation for purposes of 30-A M.R.S.A. § 5701 (1996). Id. § A-5, amending P. & S.L.1967, ch. 58, § 3. Section 5701 provides that the property of residents located within the boundaries of a quasi-municipal corporation can be taken to pay any debt of the corporation.²See Casco N. Bank v. Bd. of Trs. of Van Buren Hosp. Dist., 601 A.2d 1085, 1086 n. 1, 1088 (Me.1992) (stating that judgment creditor of hospital was entitled to execute on property within Van Buren under 30-A M.R.S.A. § 5701 because hospital district's enabling act declared that the district was a "quasi-municipal corporation").³

[¶ 5] HAD #1's enabling legislation gives it the authority to issue bonds. Id. § A-3, amending P. & S.L.1967, ch. 58, § 3. When the directors of HAD #1 authorize the issuance of any bonds, the inhabitants of the towns in the district are to be notified of the vote authorizing the bonds through publication in a newspaper with circulation in the district. Id. § A-7, repealing and replacing P. & S.L.1967, ch. 58, § 4. Ten percent or more of the voters may request that the bond question be submitted to the voters of the district, in which event a special meeting of voters must be held. Id. The enabling legislation also gives HAD #1 the ability to obtain money through taxation. Id. § A-11, amending P. & S.L.1967, ch. 58, § 9. The directors are given the same authority to collect district taxes as county officials have to collect county taxes. Id. HAD # 1 has issued bonds, but it has never taxed the communities within its district. HAD #1 obtains its operating revenues from the sale of services, charges to patients, vending machines, and donations.

[¶ 6] HAD #1 is required to produce an annual written report to the inhabitants of the district "showing the financial condition of the district and other matters pertaining to the district and showing the inhabitants of the district how said directors are fulfilling the duties and obligations of the respective trusts." Id. Upon dissolution of HAD #1, all of its property is to be liquidated and the proceeds distributed to the towns in the district. P. & S.L.1967, ch. 211, § 11. HAD #1 is a "political subdivision" for purposes of the Maine Tort Claims Act, 14 M.R.S.A § 8102(3) (Supp.2000), which means that it has the same immunity from tort claims as municipalities.⁴

[¶ 7] In 1993 the Legislature amended the enabling legislation of HAD #1 by adding a new section:

Sec. 10-A. Public records. The administrative records of the district, including the financial and compensation records of any agent employed by, under contract with or utilized in any other managerial capacity by, the district to administer that district, are public records within the meaning of the Maine Revised Statutes, Title 1, chapter 13.

P.L.1993, ch. 707, § S-1. The statutory reference in section 10-A is to FOAA. HAD #1 claims that it was not aware of section 10-A until approximately five years after its enactment.

[¶ 8] In the spring of 1999, the Town requested certain financial information from HAD #1. In response to the request, HAD #1 provided information regarding outstanding bonds but did not provide other information. The requests that remain unsatisfied are for the contract between HAD #1 and Quorum and for the 1998 compensation records for Victory and the hospital's chief financial officer, also a Quorum employee.

[¶ 9] Because the Town would make the records available to the public once it obtained them, the hospital parties do not want to disclose the records. They claim that the Penobscot Valley Hospital competes for patients and personnel from surrounding hospitals. They argue that the compensation of management employees must be kept confidential because release of the records would damage their ability to compete and effectively manage the hospital.

[¶ 10] The Superior Court found that legislation proposed in 1999 prompted the Town to seek the information from the hospital parties. The proposed legislation would have increased the bonding authority of HAD # 1, changed the manner of issuing bonds, and amended the administrative framework. The legislation, however, was not enacted.

[¶ 11] In its thorough decision, the Superior Court ruled that section 10-A of HAD #1's enabling legislation made the documents requested by the Town "public records" within the meaning of FOAA.⁵ The Superior Court rejected the hospital parties' argument that the records are "trade secrets" exempted from disclosure by 1 M.R.S.A. § 402(3)(B) (Supp.2000). Furthermore, the court concluded that section 10-A does not violate the Maine Constitution.⁶

II. APPLICABILITY OF FOAA

[¶ 12] This case involves the construction of two statutory schemes. Statutory construction is an issue of law; therefore, we review the Superior Court's construction of the statutes de novo. Springfield Terminal Ry. Co. v. Dep't of Transp., 2000 ME 126, ¶ 8, 754 A.2d 353, 356.

[¶ 13] The first statutory scheme at issue is FOAA. FOAA mandates a liberal construction "to promote its underlying purposes and policies ...." 1 M.R.S.A. § 401 (1989). The purpose of FOAA is to open public proceedings and require that public actions and records be available to the public. Id. The burden of proof is on the agency or political subdivision to establish just and proper cause for the denial of a FOAA request. Springfield Terminal, 2000 ME 126, ¶ 9, 754 A.2d at 356; see also 1 M.R.S.A. § 409(1) (1989).

[¶ 14] FOAA provides that every person has the right to inspect and copy any public record. 1 M.R.S.A. § 408 (1989). FOAA defines "public record" as:

[A]ny written [or] printed ... matter ... that is in the possession or custody of an agency or public official of this State or any of its political subdivisions, ... and has been received or prepared for use in connection with the transaction of public or governmental business ....

Id. § 402(3) (Supp.2000). To determine whether the requested documents are public records we first look to whether HAD #1 is an agency or political subdivision.⁷

Because the definitional provisions of FOAA do not explicitly state that hospital districts come within its coverage, we turn to the second statutory scheme at issue in the case, the enabling statute for HAD #1, to glean whether it provides that HAD #1 is an agency or political subdivision.

[¶ 15] We have recited at length the authority given to HAD #1 in the enabling legislation. On the basis of the burdens and duties granted to HAD #1 by the Maine Legislature, we conclude that HAD #1 functions as a political subdivision because it has many of the same...