Smith v. Northside Hospital, Inc.

807 S.E.2d 909, 302 Ga. 517
CourtSupreme Court of Georgia
DecidedNovember 2, 2017
DocketS16G1463
StatusPublished
Cited by20 cases

This text of 807 S.E.2d 909 (Smith v. Northside Hospital, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Smith v. Northside Hospital, Inc., 807 S.E.2d 909, 302 Ga. 517 (Ga. 2017).

Opinions

Peterson, Justice.

A government agency owns and operates a large and complex hospital as part of its mission to provide healthcare throughout Fulton County. Perhaps concerned that providing healthcare might not be the sweet spot of government competence, the agency decides that a private, nonprofit corporation should be created to do it instead. The agency leases its considerable assets (including the hospital) to the newly-created corporation for 40 years at a relatively minimal rent, and delegates to the corporation nearly all of its governmental powers and responsibilities. The corporation’s organizing documents reflect that its purpose aligns very well with the agency’s: to provide healthcare for the benefit of the public.

Thirty years later, the corporation has become massive, with considerable assets in surrounding counties. With the agency barely even a dwindling dot in the rear-view mirror, the corporation now argues that it doesn’t really do anything on behalf of the agency (in part because the now nearly-nonexistent agency has no idea what the corporation is doing), and thus the corporation’s records of a series of healthcare-related acquisitions aren’t subject to public inspection. If the corporation’s aggressive position were wholly correct, it may well cast serious doubt on the legality of the whole arrangement between the corporation and the agency A lawyer who seeks records from the corporation under this state’s sunshine laws, on the other hand, takes the opposite (but equally aggressive) position, contending that everything the corporation does is for the agency’s benefit and thus all of its records are public. Both are wrong. The corporation’s operation of the hospital and other leased facilities is a service it performs on behalf of the agency, and so records related to that operation are public records. But whether the acquisition-related records sought here are also public records depends on how closely related the acquisition was to the operation of the leased facilities, a factual question for the trial court to determine on remand.

E. Kendrick Smith, an Atlanta lawyer, brought this action to compel the corporation — Northside Hospital, Inc. and its parent [518]*518company, Northside Health Services, Inc. (collectively, “Northside”) — to provide him with access to certain documents in response to his request under the Georgia Open Records Act (“the Act”). The trial court dismissed Smith’s action after a bench trial, and a divided Court of Appeals affirmed. Smith v. Northside Hosp., Inc., 336 Ga. App. 843 (783 SE2d 480) (2016). We granted certiorari to consider whether the lower courts erred in concluding that the documents in question were not “public records” within the meaning of the Act. After oral argument and considerable briefing, we conclude that the Court of Appeals and trial court applied the wrong legal standard, reverse the opinion of the Court of Appeals, and remand the case for the trial court to apply the correct legal standard.

The facts relevant to this appeal are largely undisputed. In 1966, the Commissioners of Roads and Revenues of Fulton County passed a resolution creating the Fulton County Hospital Authority (the “Authority”), which would “have and exercise all of the powers granted and prescribed in the Hospital Authority Laws.” The Authority was created because of the need in Fulton County for improved and increased hospital facilities to serve the community. And to that end, the Authority opened Northside Hospital, which it owned and operated for approximately the next 25 years. In the early 1990s, the Authority, recognizing “the rapidly changing healthcare environment in which it operate[d],” undertook a study to determine how best to improve the hospital’s operations. Ultimately, the Authority concluded that the best option to achieve its goals was to restructure through a long-term lease of the hospital and related assets for operation by a private, charitable, nonprofit corporation. The Authority further determined that “[r]ecent developments and opportunities affecting the ability of the [h]ospital to remain competitive and to enhance its position as a principal provider of specialty healthcare services... reinforced the importance of restructuring to the long term competitive position of the [h]ospital.”

Based on the foregoing assessments, the Authority on November 1, 1991, executed a lease and transfer agreement (“the Agreement”) with the newly-formed Northside Hospital, Inc., a private, nonprofit corporation. Under the Agreement, the Authority leased the hospital’s facilities and transferred all of its “Operating Assets” and “Existing Operations” — terms defined in the Agreement as discussed in detail below — to Northside for a term of 40 years. The “Leased Facilities” — again, a defined term in the Agreement — included certain tracts of real property in Fulton County and the facilities located thereon: Northside Hospital, a surgery center, office buildings, and improvements. The Authority agreed to use its best efforts to cause the issuance of tax-exempt revenue anticipation [519]*519certificates or other evidences of indebtedness in order to fund Northside’s operation and expansion of the hospital system. The Authority also gave Northside the power to act for the Authority Northside was to operate the hospital subject to certain restrictions, pay all of the Authority’s debts and assume all of its liabilities incurred in connection with the Leased Facilities, Operating Assets, and Existing Operations, and make a yearly rent payment of $ 100,000. It appears from the record that the Authority and Northside have continued to renew their 40-year agreement each year. In so doing, the Authority reaffirms its determination that its agreement with Northside will promote the public health needs of the community and gives the Authority sufficient control to ensure compliance with the law and the fulfillment of its mission.

To the extent the Authority has maintained a post-lease existence apart from Northside, it is minimal. Northside board members and officers serve as Authority members. The Authority has no employees or staff of its own. Northside’s director of legal services serves as the Authority’s secretary and maintains the Authority’s records, which are stored at Northside’s legal offices. The Authority generally holds quarterly meetings (usually at Northside) of about 30 minutes each.

Relevant to this dispute, between 2011 and 2013, Northside entered into transactions to acquire four privately-owned physician groups.1 In 2013, after learning of these transactions, Smith sent a letter to Northside and the Authority, entitled “Open Records Request,” seeking access to financial statements and other documents related to the acquisitions.2 The Authority responded by informing Smith that it did not possess any records or documents that were responsive to his request. Northside also responded to Smith, declining to comply with his request. Northside told Smith that it is a private, nonprofit hospital that is not subject to the Act and that even if it were subject to the Act, the requested documents, which are “highly sensitive,” would be [520]*520exempt under various provisions of the Act, including the trade secrets exemption. In addition, Northside informed Smith that it had entered into binding confidentiality agreements that prohibited disclosure of the requested documents.

Smith subsequently filed this lawsuit against Northside, requesting that the trial court compel Northside to comply with his open records request.

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Bluebook (online)
807 S.E.2d 909, 302 Ga. 517, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smith-v-northside-hospital-inc-ga-2017.